AUGUST 31, 1999

The Lake County Board of County Commissioners met in special session on Tuesday, August 31, 1999, at 9:00 a.m., in the Board of County Commissioner's Meeting Room, Lake County Administration Building, Tavares, Florida. Commissioners present at the meeting were: Welton G. Cadwell, Chairman; Catherine C. Hanson, Vice Chairman; Rhonda H. Gerber; Robert A. Pool; and G. Richard Swartz, Jr. Others present were: Sue Whittle, County Manager; Sanford A. Minkoff, County Attorney; Wendy Taylor, Administrative Supervisor, Board of County Commissioner's Office; and Toni M. Riggs, Deputy Clerk.



Commr. Cadwell stated that, since January, he and staff have met with Ogden Martin to discuss reconstructing the current contract for the incinerator. Under the scenarios discussed, the County still would assume the risk of ownership, with actually no ownership, which would not benefit the County. Commr. Cadwell stated that the County is buying the plant now, and it has none of the benefits of ownership. He would like to present to the Boards some options, with the understanding that the County can remain under the current contract and continue to carry the burden of the contract. He would recommend that the Board move forward and negotiate with Ogden Martin to buy the plant, which he feels gives the Board three major options, as follows: 1) the County will operate the plant, or lease the plant to someone that may want to run it as a regional plant whether or not Lake County is involved with its waste; 2) or bring in a partner, maybe another county, expand the plant, run it as a true regional plant through a partnership with another governmental agency; or 3) look very closely at buying the plant and closing it down. Commr Cadwell felt that, after all of their discussions, these were the best options. He also wants to make sure that, once the Board takes this step in negotiating to buy the plant, it will then follow the Sunshine Law and conduct public hearings, so that everyone understands what is happening with this deal. He stated that this way the residents will have some type of comfort level in what the end result will be. He would also want to set up some kind of procedure where the County could disseminate information to the cities, since they are a large provider of the County's solid waste, in order to get their input through the negotiation process. Commr. Cadwell explained that, through the discussions, and because the Board did not really give him the power to negotiate, in one of Ogden Martin's first scenarios, assuming there is a $64 million debt, there would be a figure of $45 million plus assuming the debt. He

stated that the County does not feel that this is realistic, but that is the figure that Ogden Martin gave to him, and in their talks yesterday, he informed them that he would make that figure public. Commr. Cadwell explained that, at the first few meetings, Ogden Martin wanted to renegotiate the current contract and move some of the debt around, but while there may have been some short term relief, the long term effect would still cost the County more than the current contract. He noted that none of the scenarios saved the County money.

Mr. Sandy Minkoff, County Attorney, explained that there was a lot of resistance initially to even the idea of selling the facility to the County, and he felt that Commr. Cadwell took the position that Ogden Martin would not have a choice, because the County could force the sale, so ultimately, through an eminent domain, the County could force a sale. He stated that the big question will be evaluation.

Commr. Cadwell stated that a lot of things, that would have to be done in a condemnation case, the County would have to do anyway in trying to purchase the plant. He would rather see the County start by trying to purchase the plant, and if not, then look at the other options. He explained that there are some revenue options that the contract provides for the County that it may be able to take advantage of and this would be part of the negotiation. He noted that there is a power purchase agreement with Florida Power and some other things that could generate some funds for the County that would help in the purchase.

Commr. Pool questioned whether Ogden Martin has lived up to every part of its contract.

Mr. Minkoff stated that there are some issues that staff has identified through this same time period, but he really cannot tell the members if they are breaches of contract. He stated that he is not aware of any material breach in the agreement that Ogden has made. He further stated that there may be some areas that, should the County get into a true adversarial relationship, it may want to try and develop some more information to see, if in fact, the County was treated appropriately under the contract. Mr. Minkoff noted that the County has performed on its side of the contract. He stated that the Clerk's Office monitors financially the money coming in and out very closely, and the County has Malcolm Pirnie, Inc. under contract, who actually monitors the operations of the plant. There are some issues having to do with medical waste, or other things, that staff would like to look at closer, but only if they really get adversarial with Ogden Martin.

Commr. Cadwell explained that, if the County chooses to negotiate the deal to buy the plant, there will be some expenses incurred, but they are minuscule compared to the ramifications of the contract. He stated that the County would not pay any more than what it is paying today, if it owned the facility, and there are some scenarios where the taxes would actually be a plus to the County.

Commr. Hanson stated that the scenarios discussed needed to be put together, along with information that would show where the County would be with each one. She questioned whether the County has enough of the records to know what the profit has been during the time the plant has been in operation.

Mr. Minkoff explained that the County does not have enough information on the operations and maintenance costs to be able to determine how much of that is profit and how much is actual costs to them, and that information, at this point, is not available to the County. The County has gotten some estimates of what it might cost to operate the plant, to try and estimate that profit, but they are just estimates.

Commr. Cadwell stated that, in the initial talks, depending on what the County gives Ogden Martin in cash up front, the scenario of closing the plant actually is cheaper than what the County has today, and that is why staff wanted to move forward while they analyze the other choices. He stated that, if the County can operate it in some way and make money, he feels it should do this, but even if the County closes it, it will better off than what it has now.

Commr. Hanson noted that the remaining time frame of the contract is 14 years.

Commr. Pool stated that the Chairman had mentioned potentially partnering with another county and questioned whether he has done any investigation as to which county may or may not be interested in that opportunity.

Commr. Cadwell stated that they had some preliminary talks with Marion County, and they got a letter last week from Citrus County looking for other options, and this would be the ideal thing to do, but the price is so unrealistic with the current contract. One of the scenarios would be bringing in one of those counties as an equal partner. He explained that there may be a market to lease the plant to someone, and they would have the option of taking the County's garbage. He stated that, with the option of the County bringing in a partner, expanding the plant, and operating it, it can hopefully not have any medical waste.

Commr. Gerber stated that the County is not able to investigate or predict the cost of what the ash will cost the County 50 years from now, and she thinks that this is an undo burden that the County is giving to someone else, especially for bringing in garbage from other places. If they want to burn their garbage and then take their ash, that would be one situation, but she could never support expanding that plant and operating it as it does now.

Mr. Minkoff explained that Ogden Martin has 26 plants nationwide, and the basic frame work of a lot of the agreements are the same, even though staff has not reviewed them to determine whether they are better or worse than the Lake County's contract, but each time an issue comes up under the County's agreement, when you finally realize what the contracts says, it is written totally in Ogden Martin's favor and not in the County's favor. He could not imagine that there could be a contract that would be less advantageous to the County than Lake County's contract.

Commr. Swartz stated that ultimately the frame work is not the same, and he does not believe there is a small plant of this size that Ogden Martin is involved in where the penalties are so severe, and then they end up owning the facility. He stated that, in most of the other contracts they have that would be similar to this one, in many of those cases, and probably in most of those cases, the governmental entity owns that facility. He stated that he appreciates the effort that Commr. Cadwell has tried to make, and aside from land use in Lake County, which he views as probably the most important and longest range impact on the County, this is the second most important, and the one that has probably brought the most grief to Lake County. Commr. Swartz explained that, in 1989, he proposed that the Board not honor the contract before the facility was even built, and at that time, it would have cost the County $10 million. The County tried to renegotiate the contract in 1992, and a lot of money was spent on outside consultants. The contract was worse than what it already had and, fortunately, the Board did not approve it. Commr. Swartz stated that the idea of buying the facility is not new, because that was discussed in 1989-90, and Ogden Martin indicated a willingness to sell it then, but the majority of the Board was not interested. He stated that the County could shut down the plant, if the County ended up with ownership of it, although whatever the number of the buyout would be, it might be a worse situation than now. In regards to trying to get another county to come in with Lake County, if there is one out there, it should not be as an equal partner, but it should be the majority partner. Commr. Swartz stated that the one that would have the most potential would be the lease option, even though there may be some downfalls, with Commr. Gerber mentioning one of them, and that would be, if there were an entity that operated that facility, would it also want them to have the ability to landfill the ash, or bypass waste in those occasions. He stated that the thought of buying it and turning the County into a regional dump is somewhat perplexing, but it may be the best economic opportunity. Commr. Swartz stated that he would be willing to look further at these options, and the one he is more and more inclined to do, which may be the only way that the County can remove itself from this abominable contract, is to challenge the contract in court. He stated that this is the other option that he would be more inclined to see the County do, but it does not mean that he would support unilaterally breaking the County's contractual obligations, but simply take the contract, the way it got into the contract, all of those individuals and entities that helped the County get into the contract, and challenge all of that through the courts, but he was not sure whether this would help or hurt the County, if it tried to purchase the plant in the future.

Commr. Hanson felt that the County would have several arguments in court, because she firmly believes that, if the foundation of a contract is found to be illegal, unconstitutional, or invalid, it would weaken the whole contract, if not make it invalid. She explained that all it takes is for the cities to start realizing that they are not going to pay this tipping fee as it goes up, and the County has destroyed the foundation of the financing of the incinerator. The burden of the tipping fees and the costs of the operation would be left completely on the people who live in the unincorporated areas. She feels there are some real issues there, and she questioned whether the County can mediate without breaking the contract.

Mr. Minkoff stated that the County could mediate without breaking the contract, and the only risk that the County would have is the contract has a provision for attorney's fees and costs, so in the event that the County was unsuccessful, the County would pay Ogden Martin's costs.

Commr. Swartz stated that he has always felt very strongly that some of the advise in the reports that put the County into this contract were flawed. He stated that, aside from some adversarial relationship in court with Ogden Martin, he has always felt like the engineers that participated in the studies should have been sued for product liability, because when you go back and look at the reports, there is no relationship to reality in the reports. The County did not have the tonnages that they said it had and the effects that Lake County would encounter with this is just not there in those early reports. He has always felt that this was a position that the Board should have also considered taking, in addition to whether or not there were others who were involved, but Ogden Martin also shares some of that responsibility, because the things that Ogden Martin said over and over again leading through to this contract have proved to be in error. He is very surprised at the acceptance of most of the cities over these years and how they have stayed and continued to deliver solid waste when it has gotten so expensive. He stated that most of the major cities have all initiated such aggressive recycling campaigns and have been able to reduce their costs, or at least hold their costs, at a time when the costs were escalating, and this has had an impact overall on the operation of the facility and tended to throw the costs disproportionately to the unincorporated resident again. He does not believe that he could support that one track by itself, and if he did support it, it would be reluctantly, because he believes it is fraught with errors that the Board cannot even imagine at this time. The other course is risky and it does mean committing legal resources to a challenge that may be on several fronts, and if the Board does consider doing this, it should have some of its legal and engineering consultants look at the recommendations that came from the consulting engineers on this job. There may be some relief that would be there as well.

Commr. Hanson stated that, whichever route the Board chooses to take, she still thinks that the Board will wind up with some activity in court, if it were to purchase, because it is still going to be in the condemnation process. She thinks that this is the first route the Board should consider.

Commr. Pool stated that he likes the Chairman's option of wanting to purchase the plant, and the County owning the plant, which would give them the option of either closing it down, or running the plant not for a profit, but at least to break even. He thinks that the County can close it down and more cost effectively haul its refuge to another area, because the County has already been offered $35 or $40 a ton by Okeechobee, including transportation costs. The County is currently spending $100 a ton, and the $60 difference could actually pay off the debt and never increase the rate one penny. He stated that there are many options, and if it becomes to cost prohibitive, the cities will opt out of the system, and then the County will be faced with charging the County residents more for this particular operation. He noted that Ogden Martin was not a bad company, but it is a bad contract for the County, and the County needs to get out of it.

Commr. Hanson stated that, as another option, it could become a merchant plant on its own, with no ownership of the County.

Mr. Minkoff explained that all of the proposals Commr. Cadwell brought forth, closing it, the County operating it, or bringing in someone else, the numbers that have been run by William Hough & Company, and Malcolm Pirnie Inc., show that these options are less expensive than dealing with the current contract. He noted that they created a very complex spreadsheet, which took into account all of the costs that they could identify, either actual costs, or they came up with reasonable estimates, in order to evaluate all of them, and all three of these proposals were less expensive than current operation.

Commr. Cadwell stated that the only assumptions that were dramatic in the calculations were what would be the dollar figure the County would give Ogden Martin outside of the debt. Everything else is the history of what the County has been doing and the costs associated with the solid waste system now.

Mr. Minkoff noted that there was one major assumption and that was the power contract, because closing it down assumes that you are able to sell that contract back to Florida Power for some amount of money.

Commr. Cadwell explained that any of the assumptions that have been discussed would be in the negotiation process. He did have a problem going to court, because in the event the County loses, it will have less of chance of getting Ogden Martin to have any further discussions with the County.

Commr. Swartz stated that, for the Board to make an informed decision to proceed in that direction, they have to see some of the assumptions and some of the results.

Commr. Hanson stated that the Board has been this route before, and it only gets worse, and if the County does not challenge it, it is not going to get a price it can live with. She stated that it is a valid contract until it is challenged.

Commr. Swartz stated that the Board has not gone this route before, because it has never talked seriously with Ogden Martin about purchasing the plant. He felt that Commr. Cadwell has the advantage right now of having seen some assumptions and projections that suggest that it might be less expensive than the current situation, but the Board members do not have that advantage at this point.

Mr. Minkoff explained that, in the discussions that staff had with Ogden Martin, he was not sure that they do not think it would be counter-productive to have executive sessions, because the cities and the citizens of Lake County are going to have to be able to agree to whatever comes out of those discussions.

Commr. Gerber stated that she has a level of comfort with what is being brought back to the Board, because the Board sent staff to the meeting, and they are coming back with a recommendation.

Commr. Cadwell noted that they had hoped to have negotiations completed by the first of the year, in January.

Mr. Minkoff stated that staff is going to need some outside help, in terms of attorneys, and in the past, they have always hired corporate people who are used to this type of agreement. He stated that, because they are going to be doing valuation issues and eminent domain type issues, it would not be unproductive to also include looking at what the chances would be to file a declaratory action and try to claim that the contract is unenforceable at this point. He stated that there are a lot of parties involved in this agreement including the people who bought $64 million worth of bonds, and it is going to be a lot more difficult to claim that Ogden Martin mislead the County. If anything, the equities are on their side, not on the County's side, because the County participated in it, and it actually endorsed those bonds.

Commr. Pool noted that the Chairman had stated that, as long as there is a waste stream to the plant, the value is there. If, at some point, the County decides not to send its garbage there, for whatever reason, then the value of the plant has to come down. He believes the ownership issue is the only issue, and the County has to step forward and own that plant.

Commr. Swartz stated that, under the concept that Mr. Minkoff just mentioned, he would support going forward with something that leaves the Board with those options and contributes to their knowledge in preparation of whatever course the Board has to take. It would put them in the position, at that point, to take maybe an easy sale with Ogden Martin, maybe condemnation, or failing that, maybe some other course of legal action. If the Board goes forward and continues to look at this issue, based on that outline, he would support moving in this direction.

Commr. Cadwell explained that he and staff were a little limited to what they could do, because the Board did not direct him to negotiate with Ogden Martin, and these were the best options that resulted from the discussions.

Mr. Minkoff stated that, so far, other than the financial advisor and Malcolm Pirnie's costs, staff has done this all themselves, but they do not have the capability to evaluate the cost, and he wanted the Board to understand that discussion is not as expensive as litigation.

Commr. Swartz made a motion, which was seconded by Commr. Pool, to authorize staff to move toward possible purchase of the Ogden Martin facility, and to evaluate, through the use of outside consultants, the possibility of leasing, cooperating with other counties, or perhaps shutting down the plant, and at the same time, evaluating other legal recourse the Board may have should those efforts prove unsuccessful.

Under discussion, it was clarified that the motion incorporates the public discussion of this idea, as the Board moves forward, as suggested by the Chairman, and it incorporates staff bringing outside consultants as needed, with those being brought back to the Board.

The Chairman called for a vote on the motion, which was carried unanimously by a 5-0 vote.

Commr. Cadwell extended his appreciation to Ms. Whittle, Mr. Minkoff, Mr. Don Post, Senior Director, Solid Waste Management Services, Ms. Barbara Lehman, Chief Deputy Clerk, County Finance, Malcolm Pirnie Inc., and William Hough & Company for their help through this process.




Commr. Cadwell noted that the Board members had before them the score sheets for the different categories for determining the County Attorney's and the County Manager's Evaluations for 1999, as well as some of the comments in regards to accomplishments and areas that need improvement He noted that any compensation for the County Attorney and County Manager would take place October 1, and under the new personnel system, the employees will be eligible for a zero to nine percent pay increase, with no cost of living increase. Commr. Cadwell recommended a pay increase of 4% for the County Manager.

Discussion occurred regarding the terms of the contracts for the County Attorney and the County Manager.

Commr. Cadwell stated that he was very pleased with the County Manager and the direction the County is going. He stated that, over the last several years, there have been several issues the Board has had to address, and with her leadership, she was able to provide the Board with what it had requested of her. He stated that he appreciates her service and the job she has done.

Commr. Hanson noted that she has discussed her concerns with the County Manager, and she feels that they can be worked out.

Commr. Pool stated that, as a new member, he has found the County Manager to be very helpful, and she has tried to provide him with any information that he has needed. He stated that their relationship has been a good one, and he appreciates her service.

Commr. Gerber stated that Lake County is in a position in this State that is different than most counties, and it takes a lot of talent and leadership and good people skills, and the County Manager has these things. She stated that she is very pleased with what she is seeing.

Commr. Hanson noted that, in her comments, she felt that the County needed to move forward with the survey of employees to get their feedback to the Board.

On a motion by Commr. Pool, seconded by Commr. Swartz and carried unanimously by a 5-0 vote, the Board approved a 4% increase in salary for Ms. Sue Whittle, County Manager.



Commr. Cadwell stated that he has appreciated the job that Mr. Sandy Minkoff, County Attorney, has done. He stated that there were times of contention when attorneys would step outside of telling the Board what the law says and setting policy, and out of all of his accomplishments, he felt that this was his best one.

Commr. Pool stated that, as a new member, Mr. Minkoff has been very prompt with his responses to his questions, and he appreciates his professionalism, and the way he goes about the duties of his job.

Commr. Gerber addressed the form that was used to evaluate the staff and noted that there were some items that she was very uncomfortable answering.

Commr. Cadwell felt that this particular area, as noted by Commr. Gerber, needed to be reviewed.

Commr. Cadwell recommended a 4% increase merit raise for the County Attorney.

On a motion by Commr. Gerber, seconded by Commr. Pool and carried unanimously by a 5-0 vote, the Board approved a 4% increase in salary for Mr. Sandy Minkoff, County Attorney.

There being no further business to be brought forward to the attention of the Board, the meeting adjourned at 10:15 a.m.