OCTOBER 22, 1991

The Lake County Board of County Commissioners met in special session on Tuesday, October 22, 1991, at 9:00 a.m., in the Board of County Commissioner's Meeting Room, Lake County Courthouse, Tavares, Florida. Commissioners present at the meeting were: Donald B. Bailey, Chairman; C. W. "Chick" Gregg; Richard Swartz; Catherine Hanson; and Michael J. Bakich. Others present were: Annette Star Lustgarten, County Attorney; Mike Anderson, Interim County Manager; Ava Kronz, Assistant to the County Manager; James C. Watkins, Clerk; Robert K. McKee, Chief Deputy Clerk; and Sandra Carter, Deputy Clerk.


Mr. Rick Patterson, Managing Consultant with Public Financial Management (PFM), the financial advisor for Lake County with respect to the Solid Waste Program, appeared before the Board stating that on August 6, 1991, the Board authorized PFM to prepare an analysis that examined the disposal cost for the solid waste system, with and without disposal at the existing waste-to-energy facility. At that time the Board also authorized Post, Buckley, Schuh & Jernigan, Inc., as well as R. W. Beck & Associates, to prepare certain assumptions that would be necessary for the analysis. He stated that the final form of the report was submitted to the Board on October 15, 1991, and that the purpose of the presentation this date was to summarize the methodology that was used in preparing the analysis, to discuss the results and conclusions of the analysis, and to answer any questions that the Board might have about the analysis itself, or the assumptions that were used in preparing it.

Mr. Patterson stated that members of Post, Buckley, Schuh & Jernigan were present in the audience to discuss the assumptions that they provided, which relate primarily to solid waste tonnage projections for the system; capital expenses, and operating revenue

and expense projections for the recycling, composting and landfill programs, as well as the implementation schedule for those programs. He stated that representatives of R. W. Beck were also present to talk about the assumptions that they provided, which relate to the profit component of the operation and maintenance fee that is paid to Ogden Martin Systems of Lake, Inc. He stated that they would also discuss the salvage value of the facility, the assumptions relating to the salvage value, and also the expected useful life of the incinerator itself. He stated that he would be discussing some of the basic scenarios that were examined, noting that they chose to look at a base case that assumed continued disposal at the resource recovery facility and base costs projections of that base case on actual operations since the facility was accepted in March of 1991. He stated that they then chose three hypothetical scenarios under which the County discontinues disposal of waste at the facility (no burn cases) and prepared estimates of the disposal costs for those scenarios during Fiscal Years 1992-2014. They then compared said costs to the projected disposal costs under a case which assumes continued disposal (base case) at the facility, to determine the potential cost for savings associated with discontinued disposal at the facility.

Mr. Patterson then discussed Scenario I (the base case), which assumes the burn or continued use of the facility to dispose of the County's waste. He stated that each of the three no burn cases in the analysis chose a different approach for discontinuing disposal at the facility, and different assumptions regarding the costs of discontinuing that disposal. He stated that the first of the three no burn cases (Scenario II) applies to the facility purchase, and assumes that in October of 1992, as the result of mutual good faith negotiations with Ogden Martin, the County would be able to purchase the facility, at which time they could dismantle it, sell those components of the facility that have a salvage value, and discontinue further disposal at the facility. He stated that it is

assumed that the difference between the price that the County pays to Ogden Martin for the facility, and the salvage value that the County receives for selling the components of the facility, would be financed with the revenue bonds secured by the County's Solid Waste Disposal Fees, similar to the credit structure that was used on the County's 1988 bonds. He stated that the debt service on the financing would be passed through to the users of the system and would be the only costs going forward, associated with resource recovery. He then discussed the second of the no burn cases (Scenario III) being the Merchant Plant Full Service Fee, noting that it takes a completely different approach than the facility purchase approach. He stated that, under this scenario, they assumed that the County would negotiate with Ogden Martin to allow the County to discontinue delivery of waste to the facility, however, different from the facility purchase case, Ogden Martin would continue to own and operate the facility as a merchant plant and would be allowed to continue to process out-of-county waste, but, no county waste would go to the facility. He stated it has been assumed that, if Ogden Martin does not process out-of-county waste, the residue from those operations would be disposed of in an out-of-county landfill, so, really the County system would not include resource recovery, or the bypass of resource recovery, under this particular scenario. He stated that this is one of two scenarios where they assume that the County would attempt to negotiate changes in the service agreement with Ogden Martin and that, while the County would be successful in discontinuing delivery to the facility, the County would continue to have to pay the full service fee, under the service fee formula in the existing service agreement. He stated that they believe this would represent the high disposal fee case associated with the renegotiation of the contract. He stated that the third no burn scenario that they examined (Scenario IV) assumes, similar to Scenario III, that Ogden Martin would continue to operate as a merchant plant, but that the County would be allowed to discontinue

any delivery of waste to the facility. However, with this scenario, they assumed that, rather than paying the full service fee, the County's only obligation to Ogden Martin would be to continue to pay debt service on the 1988 bond. He stated they have assumed that, in no case would the County want to default on that issue, since those bonds carry the County's name and any default on a Lake County bond would affect the County's ability to effect future financings. He stated that he wanted to make it very clear that PFM does not believe that this is a realistic case - that it is very unlikely that the County would be able to renegotiate with Ogden Martin, so that the only payment to them would be payment of the debt service on the bonds. He stated that this scenario was intended to serve as a best case no burn only, and certainly not something that they would expect the County to achieve through negotiations.

Mr. Patterson stated that the final four (4) scenarios, Scenarios V-VIII, look at the difference beyond Scenarios I-IV, noting that the difference between V-VIII and I-IV is that the first four scenarios assume that the County will continue its existing voluntary collection system, and Scenarios V-VIII assume that, beginning in October of 1992, the County will implement a mandatory collection or disposal program, and that residential users in the unincorporated areas of the County will be assessed an annual service fee, or special assessment, for disposal. He stated that this assessment has not been assumed to include collections, at this time, noting that it would be in addition to that assessment.

Mr. Patterson then referred to Page 7 of the report, noting that it pertained to a discussion of potential credit impact, which he discussed, at length. He stated they assumed that, in each of the no-burn cases examined, there would be no unilateral action on the part of the County - no breach of the agreement. He stated they assumed that each of the no-burn cases were achieved through mutual good faith relations between the County and Ogden Martin,

and any of the other counterparts to the documents, that effect either financing of the facility, or ownership and operation of the facility. He stated that, assuming any changes to the agreements are made through good faith negotiations, they do not believe there will be any negative credit impact effected directly with those changes.

Mr. Patterson then discussed credit ratings and how credit agencies assign ratings. He stated that one of the issues that the County can expect the credit agencies to look at, and examine the credit of, is the County's flow control. He stated that PFM had discussed this previously in the report to the Board on fixing the rate on the 1988 bonds, noting that flow control is, basically, the County's ability to ensure that all the waste that is generated within the system is, in fact, delivered to the County system. He stated that flow control is very important in a system like the County's, because if neighboring disposal sites have tipping fees which are lower than the tipping fees that the users in the Lake County system are paying, there is an economic incentive for people to either take waste out of the County, to a cheaper disposal site, or to dump the waste illegally and avoid paying the tipping fee. He stated that the rating agencies are very sensitive, both to what the current levels of tipping fees are in the County, and how those tipping fees might be projected to increase, as a result of any changes to the County structure. He stated that it is reasonable to assume that, if disposal fees increase significantly, the implied rating for the County system may fall, noting that, currently, the County does not have a credit rating on its solid waste issues. The credit behind these issues is currently the National Westminster Letter of Credit. He stated that they assumed in their analysis that the County would be able to obtain a rating of BBB or BAA (which is the minimum investment grade rating for a municipal bond), noting that they made this assumption based on discussions with the investment bankers, their own analysis, and general market conditions that would affect the County system. He

stated that the overall rating of the County system will be determined primarily by what the tipping fees are projected to do in the future, and they will prepare further analysis as the County makes decisions, based on more accurate information at that time. He stated that this ties into capacity on the County to make its debt service payment.

Mr. Patterson stated that the second factor, and one which comes into play if the County is considering making changes to its agreement, is the willingness to make a debt service payment. He stated that willingness is determined by the rating agencies as the demonstrated history of the County to honor its moral or legal obligations. Assuming that the County makes changes to its agreements through good faith negotiation between all parties, he did not think that there would be an assumed or implied breach by the County on any of its existing obligations. He stated that, if the County determines to take unilateral action, and in any way breach an agreement, he feels that the rating agencies could perceive that as lack of the County to honor such obligations, and feels that the rating agencies would draw parallels between the County's ability and willingness to breach a service agreement with the vendor, and a possibility of the County to breach a trust agreement between the County and a bond holder, which he felt would raise serious concerns. He stated that, if the County were to breach on an agreement, he did not think the County would be able to obtain any municipal bondage fronts for future solid waste issues, which he noted would potentially raise the cost of borrowing, and the County would probably not be able to receive an investment grade credit rating on future issues for its solid waste system. He stated that, more importantly than the effect on the system, is the effect on the County, as a whole.

Mr. Patterson stated that, finally, in an extreme case, if the County were to default on its 1988 bond, it is very unlikely that the County would be able to access the credit markets for a period of several years, not only for the solid waste system, but for the

County as well, which would mean that the County would be forced to fund future projects on a pay-as-you-go basis, rather than being able to finance improvements, and would probably have to defer development of those capital improvements until funds were made available. He then addressed the general assumptions that were used in the analysis, discussing only two of the major substances that were used, being the recycling and composting programs, and the assumption to debt service on conversion of the facility bonds. He stated that, if the County determines to fix the rate on the 1988 bond, they would recommend that the County shift debt service payments to the back years, on a repayment schedule, so that tipping fees in the early years are lower, and the County can achieve a level increase in disposal fees over the life of the issue. He stated that for purposes of this analysis, they assumed a level of straight forward debt service structure, the reason being that they wanted to isolate primarily the effects of capital and operating costs on disposal fees, rather than to dispute the results by making different debt service projections for the different scenarios examined. He stated that, in looking at the tipping and disposal fees that were projected for the various scenarios, significantly different debt service structures would have to be assumed to achieve that level of debt service, and they did not want to spew the results of the analysis.

Mr. Patterson then referred to Page 18 of the report which talks about some of the scenarios' specific assumptions, which he discussed at length. He stated that one of the more subjective of the three no-burn cases that was looked at was the facility purchase. He stated that the approach they took in calculating the facility purchase was to look at the projected cash flows to Ogden Martin associated with the facility, over the useful life of that facility. He stated that R. W. Beck has determined that the useful life of the facility would be 35 years, which he noted is a conservative assumption, as he had seen analyses which range from 35 to 50 years, in terms of useful life. He stated that they

projected what cash flows, or profits and losses, would be associated with the facility's operation over that time period. He stated that R. W. Beck has estimated that a reasonable range of profit would be 10% to 15%, noting that PFM selected 15%, both to be conservative and also to represent the fact that the County's facility was procured not through a simultaneous negotiation process, but through a competitive negotiation process. He pointed out the fact that in looking at a 35 year facility life, that facility life will extend 12 years beyond the term of the existing agreement between the County and Ogden Martin, with the County's agreement terminating in July of 2014. He stated that the useful life would extend 12 years beyond that, and they assumed that Ogden Martin will be able to continue operating the facility in those remaining 12 years at the same overall level of probability that they had during the term of the agreement with the County. He stated that there is no assurance that would be the case. Ogden Martin could negotiate a better deal with the County, or with an out-of-county user, at the termination of the service agreement, or it could be that the deal was not as profitable to them, but, they have assumed for the purpose of this analysis that the profitability will continue over the remaining 12 years of the analysis.

Mr. Patterson stated that they also looked at the company's share of electric revenues, revenues from metal sales, the annual revenue makeup, interest income, income tax, construction equity and deferred equity, which he noted is all the cash flows that they would associate with operations. He then discussed the methodology that was used in calculating the purchase price of the facility, noting that the overall methodology that was used in calculating the purchase price was to look at, in each year, what the net cash flow is to Ogden Martin associated with the operation for the 35 year life of the facility, and to discount those back to the value which was in place in 1988 or 1989, when the facility was originally financed and calculate what the net present value to the

company of those cash flows would have been, based on these assumptions. He stated that the calculations indicated that approximately $24.53 million would be the net present value to Ogden Martin of operations during the 35 year life of the facility. If calculated at $46.2 million, it would be the purchase price payable to Ogden Martin in October of 1992, which would give it that same $24.53 million net present value. He stated that, from that number, they assumed that the salvage value of the facility (R. W. Beck estimated $9.6 million) in October of 1992, could be subtracted, giving a net price to the County of $36.6 million, which they assumed would be financed with a revenue bond. He stated that the bond sizing for that financing would be approximately $41 million. He stated that this is how they determined the cost associated with a no-burn case for the facility purchase of Scenarios 2 and 6. In looking at the no-burn for the merchant plant full service fee, Scenarios 3 and 7, they assumed that in 1992 the County discontinues delivery to the facility and the company is able to fill the County to capacity with out-of-county waste. He stated they assumed that the average price per ton for that out-of-county waste would be equal to the $34.42 that the company is currently receiving on the average, from outside waste that is delivered to the facility. Another major assumption that was made on the merchant plant full service fee scenario is the cost that the County would have to pay for disposal of the bypass and ash from the facility at an out-of-county landfill site. The way the service fee is structured, the cost of disposal at an out-of-county landfill would be treated as a pass through cost, which is a cost that would be passed through the County in its service fee, noting that they assumed $65.00 per ton for fiscal year 1992, which is based on current landfill prices across the State, including transportation costs, delivering the waste from the facility to the out-of-county site, and also a premium payable to another county for exhausting its landfill by disposing of the County's ash. Scenarios 4 and 8 assume the same assumptions that

were used in the base case, so one is looking at a scenario where the only service fee that is payable to the company would be debt service on the facility. He stated that this covers the major assumptions that were used that are different from one scenario to another.

At this time, Mr. Patterson reviewed and discussed several overheads with the Board, pertaining to the eight scenarios alluded to earlier. He stated that the overall conclusions of PFM is that, based on the scenarios that they selected, and based on the assumptions that were used in preparing these analysis, there appears to be no economic benefit to the County associated with discontinuing disposal at the facility. Finally, they would not recommend to the County, based on the results of this analysis, that it pursue discontinuing disposal at the facility, noting that in no way did this suggest that the County should not continue its efforts to renegotiate or make changes to the agreement that may produce lower disposal fees to the County. He stated that any way that the County can reduce its disposal fees can be expected to have a positive credit impact with respect to the rating agencies and the municipal bond insurers, and would lower tipping fees and special assessments to the users of the system.

Commr. Bakich questioned what the facility could be salvaged for, to which he was told $9.6 million.

Mr. Pat Kennedy, R. W. Beck, stated that he had not looked at the option of using the building intact and selling it to another user, who could take advantage of the structure that is presently in place, therefore, by not doing so, they were minimizing the value of the structure. He stated that the salvage value of $9.6 million is for the usable equipment, and that he felt it is a conservative figure. He stated that he had not done a full appraisal, nor had he really tested the market for the facility, as it is, so, if there were another use for it, that would boost the salvage value of it.

Commr. Swartz stated that he did not think some of the assumptions that were made either gave a complete picture (in one instance), or resulted in what would be a different conclusion. He stated that, approximately three years ago, the previous Board had an opportunity to consider acquiring the facility and that R. W. Beck did not include any salvage value to the project, at that time, so when one looked at whether or not it was worth acquiring, it appeared that it was not worth acquiring because it had no useful life - no salvage value beyond the 22 to 23 years. He stated, however, that the useful life has now reached 35 years, and questioned why it is now getting more and more useful and the life is longer, noting that the longer the useful life, the more it tends to impact the value of the facility and the potential profits associated with it, to which Mr. Patterson stated that 35 years is the shortest useful life that he has used on any analysis similar to this. He stated that the facility originally had no serviceable value or usefulness, yet it now does. He stated that the availability factor on the facility was always at 85%, yet they are now projecting 90%, so rather than being the 163,000 tons per year, the County is now dealing with numbers that are 173,000 tons per year, questioning why this is so, to which Mr. Omar Smith, Post, Buckley, Schuh & Jernigan, appeared before the Board and responded to this question, stating that he felt the 90% figure was more realistic.

Commr. Swartz then questioned Page 1, Volume 2, Scenario 5 of the report concerning the system tonnage estimates that were given, stating that he did not understand why it increases 48,000 tons by going from voluntary to mandatory collection - a 31% increase in the wastestream, to which Mr. Smith responded, indicating what data they used in compiling this figure.

Commr. Swartz stated he was aware that there will be an increase, if the County goes from voluntary to mandatory, however, questioned a 48,000 ton increase, when the County's staff presented to the Board just a few months ago a figure of 7,000 tons. He

stated that he felt for Mr. Smith to increase the tonnage by 30% was being overly optimistic. He stated that the County is collecting 35,000 tons of out-of-county waste, yet, the report shows 45,000 tons, to which Mr. Smith responded, stating the assumption is that additional waste will be brought in from Flagler County, noting that Ogden Martin is presently negotiating with them to do so.

Commr. Swartz discussed the fact that the figures which the County has been given regarding the base case scenarios for the incinerator have been overly optimistic, and felt that this has been the problem all along. He stated that the consultants are including in their calculations waste from a county that this county has not even contracted with, as yet, and waste from counties that have been bringing their waste into this county, but are not going to continue to do so, because it is negatively impacting their own solid waste system. He stated that the consultants have been wrong about this facility for five years and that is the reason why he has requested, over and over again, that a base case scenario be done that is closer to reality. He then discussed the proposed cost of the landfill and how that cost has been dramatically increased, over the life of the project, in conjunction with the incinerator.

Mr. Robert Willets, a resident of Umatilla, appeared before the Board stating that the County has been given a bad deal and that the Board should take the matter to court and let a jury decide its outcome. If a jury finds that the County was given a bad deal, then the County should try to get out of it - if not, then the County would have to live with it. He stated that he felt those residents who live in the cities should expect to pay to have their garbage collected, however, those residents who live in the unincorporated areas of the County should be given a choice as to whether or not they want to have their garbage collected. He also stated that he felt landfill mining or recycling would be good for the County, as the County will save money on closure costs and will

be able to use landfills that it already owns, and felt that this was an option that should be considered.

Mr. Buddy Buie, Mayor of Eustis, representing the League of Cities, appeared before the Board regarding the matter of the incinerator and concerns that the cities have regarding same. He stated that out of the 14 municipalities in Lake County, 9 were being represented at this meeting, which he noted should lend some significance to their concerns. He stated that they have some serious concerns with what the consultants have pointed out, and concerns with the direction that this Board is going to take. He stated that those representatives present disagree with what

Mr. Willets stated, that the County residents should have a choice as to whether mandatory collection is available or not - he stated that the Board has no choice, as they have a contractual obligation with the municipalities, and the municipalities are going to see to it that that obligation is fulfilled. He stated that those representatives that were present were not present for negotiating purposes, as they have established their direction, and will continue with it; however, they would like to work together with the County to try to establish some solutions to the problems being presented this date. He stated that they, like Commr. Swartz, would like to work with facts, and noted that they had requested from the Board Office copies of the complete study and supporting documents. He stated that they would also like to have copies of the bond application, the profit and loss statements, and the cost of operating the incinerator, in order to establish, along with the Board, whether the incinerator is profitable or not. He stated that they have serious concerns as to whether they are subsidizing the operation, or whether it is carrying itself.

Mr. Buie stated that the League is going to move forward, and that they are exploring other possibilities, with regard to what to do with their solid waste, noting that they will continue to work in the direction of establishing the most economically feasible alternative for their taxpayers and constituents, as they feel that

it has become an issue of financial necessity. He stated that the League of Cities will be meeting on October 29, 1991, at 7:00 p.m., and requested the Board members to be present. He stated that they are in the process of locating a meeting place, and will inform the Board of such when it is established. He stated that they are going to try to establish some direction as to what is the most economical and most likable choice to take in the handling of solid waste in Lake County. He stated they feel that they represent enough voters in the County, that they have a legal right to be heard, and to work with the Board in the negotiation process. He then answered questions presented by the Board.

Commr. Gregg responded to the comments made by Mr. Buie, and stated that he disagreed with the way the matter of the incinerator was being handled, as he felt they were trying to play politics, rather than trying to resolve a problem. He stated that, if the County cancels the contract with Ogden Martin, the taxpayers of Lake County are going to foot the bill, whether they live in the municipalities or in the unincorporated areas of the County, and that it was high time they all got down to doing their jobs and stopped playing politics.

Mr. Welton Cadwell, City Clerk and Administrator for the City of Umatilla, appeared before the Board stating that the cities are frustrated with the whole process too, just as the Board is, and that they would like to sit down with the Board, talk about it, and find a solution that is acceptable to everyone. He stated that their idea of a special assessment would be one for all citizens, even the city residents, as they feel that this would be a fair way of handling it - for disposal costs only. He stated that, at this point, they will probably only want to talk about disposal costs - not collection. He then mentioned the joint meeting between the Board and the cities and requested the Board to consider meeting in the evening, so that they can get more elected officials to attend.

After further discussion, it was the consensus of the members of the League and of the Board that there should be mandatory

assessments enacted inside and outside the cities. It was noted that this matter would be discussed at the League of Cities Meeting, scheduled for October 29, 1991, at 9:00 a.m. All the Board members were invited to attend.

Ms. Eileen Long, a local resident, appeared before the Board stating that she wanted to point out the fact that, if the taxes being discussed this date are too inequitable, there will be many, many more residents choosing to defer their taxes, under Section 197 of the Florida Statutes.

Mr. Claude Smoak, a former county commissioner, appeared before the Board stating that he had the privilege and the honor of representing the people of Lake County for over 20 years -first as a city councilman for the City of Clermont, then nine years as the Mayor of Clermont, and finally, a couple of terms as county commissioner. He stated that he also sat as President of the Lake County League of Cities, so he understands the position that the cities are in, as well as the direction that the cities are taking, however, feels that the confrontation attitude between the cities and the County is the wrong approach. He stated that the Board, nor the cities, is the problem - the problem is a contractual agreement for the handling of garbage in this county that the people perceive to be a bad deal, and feel came about in a way less than the way that they would like to see things happen. He stated that he felt the cities and the County should help each other, instead of directing their anger at each other, as they are fighting the wrong people. He stated that the cities should utilize the ability that many of them have to analyze, with a fine tooth comb, the contract that they have with the incinerator company. He stated that he does not know who owns the incinerator and is not sure that the County knows who owns it. He agreed with what Commr. Swartz had stated earlier, that this County is in the trouble it is in because the Board has listened to experts, to the tune of hundreds of thousands of dollars, many of whom represented both the County and Ogden Martin. He suggested that the Board fire

all the consultants and get back to basic business and economics, and sit down with whoever owns the incinerator and try to make it make economic sense.

Mr. Smoak stated that when the numbers first came up from the consultants, the payoff date of the incinerator, in 22 years, concurred with the day that the plant wore out, to the day; however, the consultants are now telling the Board that this plant will last much longer than the 22 years. He stated that the people of Lake County cannot understand, if the County guaranteed a private company a substantial profit, with a 5.3% minimum escalator, annually, in the contract, or the CPI, whichever is higher; if the people of the County agreed to pay their property taxes; agreed to pay for any new equipment that may be required by government during the life of the contract; agreed to replace the County's costs to all damaged or destroyed equipment that was not covered by insurance; agreed to pay the bonds, interest, and all costs; and agreed to accept the pass-through cost of the contract, why, at the end of paying the bonds off, the County did not own the plant. He stated that was the question then, and is the question now, and feels that it is the major issue that should be negotiated. He stated that, if, in the extreme, the option is to walk away from the bond issue and default, Ogden Martin, or NRG, or whoever owns the incinerator (whoever signed the Letter of Credit) is still obligated to pay off the bonds. He stated that the County needs to realistically, from an economic standpoint, reevaluate and analyze the contract and compare it with all the other 20 odd contracts that Ogden Martin has with other counties, and see where the differences are. He stated that they need to ask why an automatic escalator has been built into the contract that is tied to the Consumer Price Index, when garbage has nothing to do with the Consumer Price Index, and that they need to question why the County is giving them electrical revenues. He stated that there are many questions in the contract that are negotiable, and that Ogden Martin has said many times, in good faith, privately and

publicly, that they are willing to do just that. He stated that the Board needs to sit down, with some representatives from the cities, and do said negotiations.

Mr. Dan Eastwood, a resident of Tavares, appeared before the Board, representing the Lake County Tax League, and distributed a letter from them (for the record), regarding the incinerator issue. He stated that the cities have made their position very clear, and noted that the concerns of the Tax League are stated in the letter which he presented. He briefly discussed the cumulative cash flow of the contract, noting that, by the year 1996, Ogden Martin will have gotten back their $10 million in equity, as well as $27,949,000.00 over that. He stated that the figures he gave have nothing to do with processing garbage, they are pure profits, tax benefits, and cash flow, which total to $117,000,000.00. He then noted that the County has to send them another $37 million, in order for them to pay their taxes. He stated that the Tax League feels these kinds of profits are unconscionable, noting that this county has an average income, per family, of approximately $20,000.00 or less. He stated that he did not feel the Board, nor the cities, should mandate an institution that is now a private enterprise to become a public utility, because if they do, they are going to force the taxpayers of Lake County to pay for the profits he alluded to earlier. He then referred to several portions of the report given by Mr. Patterson and discussed same with the Board. He stated that the taxpayers of the County are liable for every mistake - every consultant's mistake, every EPA change, everything that happens, therefore, urged the Board not to make the taxpayers pay for a mistake that the County made, by approving mandatory collection. He stated that, if the Board puts in mandatory collection and non ad-valorem assessments, in the opinion of the Taxpayers League, the Board is inviting the Public Service Commission to get involved and scrutinize the formulas used in their return on investments.

Ms. Beverly Williamson, a resident of Tavares, appeared before the Board stating that she and a lot of other people are concerned about what their garbage fees are going to be next year, and in following years, if this is approved.

Mr. August Strachousky, a local resident appeared before the Board and distributed a letter (for the record) from him to the Board, regarding the incinerator issue, and what it is costing the County. He stated that the County must stop procrastinating and do something about the incinerator. He stated that the County must rescind and cancel the law requiring that trash and garbage be retained in Lake County and that the cities of Lake County should be able to take their trash and garbage anywhere that they desire, at the lowest cost they can find for the taxpayer, not to the incinerator. He stated that the County must vote to cancel the contract with Ogden Martin, citing the laws of eminent domain, if they must. He stated they must bankrupt the incinerator, as the taxpayers can no longer pay the bill.

Mr. Scott Mackin, President of Ogden Martin Systems, appeared before the Board and responded to some comments which were made by Mr. Smoak and Mr. Eastwood. He stated that he could not respond to PFM's analysis of the purchase option at the present time, due to the fact that he and his staff have not discussed that issue. He requested a copy of the letter which was distributed to the Board from the Lake County Taxpayers League, noting that his firm will respond to it. He stated that, regarding the ownership of the facility, there are a number of issues that need to be looked at, one being whether or not Ogden Martin continues to operate the facility, versus what PFM seemed to assume, which is almost an eminent domain situation, due to the fact that they are not looking at selling the facility or stepping out of it.

Mr. Mackin stated that they have done facilities where they own them and do not own them, the difference in this case being the $10 million in equity. He stated that if there was a way for them to reverse it and have the County continue ownership, with Ogden

Martin continuing to operate the facility, and keep everybody relatively whole, they would look at it. He stated that they have not focused on this, due to the fact that they feel it would be fairly detailed, in terms of the financing arrangements that have gone into place, and the tax benefits that have been taken. He stated that he wholeheartedly agreed with Mr. Smoak, in that whoever sits down, on behalf of the County, and discusses this project with Ogden Martin, ought to read all of the other agreements, as well as the public documents, their competitors' agreements, all the landfill operators' agreements, all the composting operators' agreements, and recycling agreements, so that they can compare things in a knowledgeable manner, as opposed to just taking one little piece and focusing on it.

Mr. Mackin stated that it should be known that the PFM report expressly is not a matter of projections of actual costs, at which time he referred to Page 15, of Volume I, which he discussed. He stated that what PFM is trying to do is set out a basis for an apples-to-apples comparison. He stated that the assessment figures given in the report by PFM may not be the right ones, and noted that the costs that they are laying out are a system wide cost, for recycling, composting, and landfilling of non-processibles in a waste-to-energy facility. He discussed what factors drove up the tipping fees, or assessments, and discussed the fixed rate on the bonds. He stated that a fixed rate on the bonds needs to be considered strongly, as the interest rates on the market today are at a ten year low. He stated that, at present, the debt service is variable, so the County is subject to increases that will occur in the market. He stated that, to fix the debt service, will step up the system wide tipping fees, noting that it would add in excess of $2 million per year, in the year that it happens. He stated that the tipping fees will go down over time, after fixing the debt, so it is something that needs to be considered very strongly. But, when they consider that, the County needs to consider a number of other things that should be done the year that it fixes the debt.

He stated that a fixed rate will enhance the credit, which will bring down the debt service, which is a large component of the overall costs.

Mr. Mackin discussed various cost savings measures that the County could take regarding the incinerator, such as how assessments could be lowered and save the County $450,000-475,000.00. He stated that he is not clear if the tonnage figures given by PFM are correct. He stated that Ogden Martin is ready to discuss all the issues mentioned this date, as well as any other issues that the County may want to discuss, in an appropriate setting, and suggested strongly that the Board follow Mr. Smoak's recommendation to do so. He suggested that the Board appoint someone, or a team, to sit down with Ogden Martin and arrive at a game plan to reduce costs in the best overall way. He stated they feel that the 1993 tipping fee is overstated because of the number of tons that could impact the debt service, noting that he feels a lot has to be done to bring that number down. He stated that, even if the Board assumes that only 102,000 tons were delivered to the facility in 1993, they think that the tipping number, just for the waste-to-energy project, could be reduced to less than $60 per ton, and if the tonnage figures were higher (which they feel is more likely) that figure would be closer to $50 per ton. He stated that it might be better to talk about assessments, because it is the overall costs to the County that matters, not the per ton figure. He stated that he felt if the measures that he discussed previously were employed, PFM's stated assessment numbers could be reduced in excess of $30 per household, in 1993.

Commr. Swartz questioned Mr. Mackin regarding the fact that he had stated that Ogden Martin would provide the County with all the agreements from existing facilities, in order to help the County compare its agreement to other Ogden Martin facilities, and questioned whether they would also provide to the County agreements between Ogden Martin projects (or the parent company of whoever they are with) and the predecessor (NRG), noting that the County

does not have those available for review. He questioned whether they would also make available to the County, and the cities, all those agreements which the County is at least indirectly, if not directly, involved with, to which Mr. Mackin replied that the predecessor to the incinerator project has received from them, in the original documents, confidentiality restrictions.

Commr. Swartz stated that Mr. Mackin almost, if not specifically, confirmed his suspicion that the one responsible for the 40% share of the shortfall payment is Mr. Mackin's predecessor, Mr. David Sokol, and/or his company. He then referred to a letter from Mr. Sokol, dated November 4, 1988, to both National Westminster and the Board of County Commissioners (which he read into the Minutes), dealing with the remote occurrence that there might be a shortage in tonnage, because of cities doing such things as recycling and composting, which was briefly discussed.

Mr. Mackin stated that he has not had a chance to review said letter, but that he would look at it and respond, in writing.

At this time, Commr. Gregg commended PFM on their report, stating that he felt it was an excellent one, and one that tells the truth. Regarding the projections, he stated that a comment was made that the County is not generating 115,000 tons of processible waste, however, in checking with Mr. Findell, Executive Director of Environmental Services, approximately three weeks ago, found that the County is processing approximately 114,000 tons annually, so the projection is pretty close in that regard. He felt that the increase through the mandatory collection is questionable, as he does not see that kind of increase. He stated that the difference is so great between mandatory and voluntary collection, that he did not see any sense to nickel and dime it to death - that the County needs to do what they should have done two years ago, which is to form a negotiating team, sit down with Ogden Martin, and try to renegotiate the contract.

Commr. Gregg discussed the matter of equity, and various things that come into play, which falls on the backs of the

taxpayers of Lake County. He stated that he feels the cities do have to subsidize, to a certain extent, whether the County goes to mandatory assessments for collection and disposal, or just for disposal only, or whether they negotiate some other means of making up for that equity, and that it has to be addressed during the meeting with the cities. He stated that the Board's job is to see that everybody in Lake County pays their fair share of solid waste disposal, no matter what means are used to dispose of it. He felt the Board should negotiate with outside counties, due to some misrepresentations which were stated in some local newspapers that this County might be trashing this plan. He stated that, due to those statements, other counties did not want to stick their neck out and negotiate with this county, when we may not have any way to dispose of their future waste, which is costing the taxpayers of Lake County $500-600,000.00 annually in lost revenues, that is going to have to be paid for in tipping fees.

Commr. Gregg stated that the County needs to get on the ball and appoint a negotiating team, noting that the cities should have some representation on that team, since they are carrying a large portion of the solid waste disposal expense in the County, but that they need to keep the team at a workable number (he felt no more than 5 members). He stated he also felt that support staff should be able to attend; however, they should limit the number of members that would actually be voting and participating in the negotiating process, to which Commr. Bakich concurred.

Commr. Swartz stated that he agreed with Commr. Gregg in that the Board needs to sit down and try to renegotiate with Ogden Martin, however, disagreed with what should be negotiated. He stated that he felt the tipping fees should be comparable with surrounding counties and, if that cannot be accomplished, then feels that the Board should say to Ogden Martin that this deal just does not work for the County, and that they should take it and try to make it work for them.

Commr. Bakich interjected that he disagreed with what Commr. Swartz stated, and suggested what he felt the Board should do.

Commr. Hanson stated that she agreed with Commr. Swartz, in that the bottom line is the cost of the tipping fees, in comparison to the adjacent counties, and that she felt this needs to be the Board's major goal, and then they need to look at the other scenarios that the negotiating team would work on. She stated that today was the first time that she has heard the cities say that they would go along with mandatory special assessments inside the city limits, which she noted makes a big difference in the decisions that this Board needs to make. She stated that she wished the Board had known this when they held the meeting at the Ag Center. She felt the Board needed to work quickly in order to take advantage of the interest rates.

Commr. Bailey commented, concerning the statements made by the other commissioners, and stated how he felt the negotiating team should be handled.

Further discussion occurred, at which time Commr. Gregg referred to several newspaper and magazine articles pertaining to composting and recycling. One article discussed a composting plant in Dade County that was supposed to solve all that county's problems, however, their County Commission shut it down approximately two months ago, as it is no longer functioning. He then referred to an article about recycling, and what it costs a county in Minnesota to operate. He stated that one of the goals this Board needs to set for the negotiating team is to come back with a reduced tipping fee, but also to take into account not just waste-to-energy, but the whole process - what blend of services can offer the County the best price per ton.

Commr. Swartz stated that he felt it was time this Board decided what is in the best interest of the citizens of Lake County and go for it, noting that he feels the County can operate the incinerator, the landfill, recycle, and compost, but when they add

it all up, it needs to be a comparable charge - one that the County can live with.

Commr. Gregg stated that he found it morally disgusting that this County would totally ignore a binding contract, made by a previous Board of County Commissioners, and default on it, and that he did not want any part of it.

A brief discussion occurred regarding this matter, at which time various members of the Board stated their opinions regarding same.

Discussion occurred regarding the negotiating team, how many members it should comprise, and who the various members of the Board felt should be on it; however, no action was taken at this time.

There being no further business to be brought to the attention of the Board, the meeting adjourned at 12:15 p.m.