September 15, 2003

The Board of County Commissioners of Brevard County, Florida, met in emergency session on September 15, 2003, at 9:07 a.m. in the Government Center Commission Room, Building C, 2725 Judge Fran Jamieson Way, Viera, Florida, to reconsider Resolutions revising Solid Waste rates, fees, and charges. Present were: Chairperson Jackie Colon, Commissioners Ron Pritchard, Nancy Higgs, and Susan Carlson, County Manager Tom Jenkins, and County Attorney Scott Knox. Commissioner Truman Scarborough attended the meeting through the teleconference.

RESOLUTIONS, RE: INCREASING SOLID WASTE COLLECTION RATES AND
CERTIFYING ASSESSMENT ROLL TO THE TAX COLLECTOR

Assistant County Manager Stephen Peffer advised the item before the Board today is a reconsideration of the solid waste collection rates and certification of the non ad valorem assessment roll to the Tax Collector. He stated on May 6, 2003 the Board approved a Contract Extension with Waste Management for residential collection that included a rate increase of about 8.6% for the next fiscal year; and the Agenda Report details the increases contained in the renewed contract and that they would need to have revised collection rates for their residential customers this coming fiscal year. He stated when the Department begins paying Waste Management the new collection rate approved in the Contract effective October 1, 2003, the collection fund’s cash balance will no longer be sufficient to fully cover monthly expenses; and the net effect of continuing the existing collection rate over the next fiscal year is a net loss of $5.45 per billing unit, approximately $580,000 a year. He stated the deficit will have to be made up by the use of collection program cash forward reserve estimated to be about $2.2 million now; the Department uses funds from the program’s cash balance as a reserve to pay for unexpected collection expenses such as storms and hurricanes and to pay the monthly expenses due in the beginning of the fiscal year prior to the revenues coming in; and those revenues are derived off the tax roll and come in when people pay their tax bills, so that usually accrues sometime at the end of the first quarter or beginning of the second quarter. Mr. Peffer advised the latter need is estimated to be $1.7 million for the early part of fiscal year 2003-04, and it will increase each year. He stated the residential rate proposed to the Board on August 26, 2003, which was tabled for consideration to September 9, 2003, was sufficient to cover all collection costs and had a modest surplus of approximately $124,000 to help build the fund’s cash reserves and improve disaster preparedness. He stated staff handed out a pie chart showing how funds from the collection rate are distributed; virtually all of it goes to the franchise collector; the other portions of that are uncontrollable costs to the Department; there is no money going to the Department; and they have no option to cut their overhead because they are pass-through costs to the collection rate with the exception of the reserve, which they are recommending for the purpose of building a cash balance for emergency situations. He stated the reason they are here is to prevent the cash balance from falling below a critical level and requiring the Department to borrow funds to pay for charges that will come due the beginning of the fiscal year and also to have cash balance they can count on if they have an emergency requiring them to spend extra funds for collection of storm debris and other materials. He stated the reason they need this meeting today is because September 15 statutorily is the last day they can certify the collection assessment roll to the Tax Collector so it was necessary to bring it back to the Board today to look at that, if the Board’s desire is to correct the cash flow imbalance and prevent the fund from being depleted over the next several years.

Commissioner Pritchard inquired if there is any other revenue source that is currently available that could offset the $5.45 per year charge the Board is going to have to come up with; with Mr. Peffer responding not to offset it; the collection fund does receive some revenue from recycling; however, what they tried to do in putting together a budget for that fund was to balance the revenues and expenditures so the collection rate the Board is deliberating over today is set out to cover those costs. He stated there is some additional revenue, but it does not offset the needs that are portrayed here; and in order to balance that collection fund and still have the surplus recommended for emergencies they will need every bit of what they have here. Commissioner Pritchard stated staff mentioned they could increase recycling; they are currently looking at other methods of increasing recycling so they can develop revenue streams and hopefully keep additional charges down for the constituents. Mr. Peffer stated they hope to increase the recycling; they cannot project what that might mean in terms of future income changes; and they will have a better handle on it at the end of this fiscal year as they would have had a year to see if that has made any difference. He stated the problem with recycling is the revenues are highly dependent on commodity prices that are paid and they fluctuate significantly from year to year; so it is difficult to make a good projection to the Board on what they can expect to receive from recycling. He inquired what percentage of the overall revenue to the collection fund comes from recycling; with Solid Waste Management Director Euripides Rodriguez responding recycling brings in about 1% or a little less; and they have seen it from $120,000 a year down to $60,000 a year, depending on the market. Mr. Peffer noted it is a small contributor overall. Commissioner Pritchard inquired with the advent of the new recycling committee and its recommendations, does staff see the potential for increasing that revenue stream; with Mr. Rodriguez responding some of it will be increased by increasing the plastics being recycled and also the metals. Mr. Rodriguez stated one of the recommendations was to include metal in the North end of the County for steel cans; that should have a positive impact on the budget because that is a commodity that does not fall below zero; and it is a good contributor to the bottom line. Commissioner Pritchard inquired if any revenue brought in would help to offset the cost the collectors charge; with Mr. Rodriguez responding yes, in the future it will. Commissioner Pritchard stated the Board is looking at $5.45 per billing unit increase or it would go $580,000 in the hole this year; that would come from the $2.2 million reserve; and it could happen again next year and the Board would be in a downward spiral at that point. He stated $5.45 is an annual service fee and not a tax. Mr. Peffer stated that is correct; there will also be additional level of service under the contract provided to the citizens. Mr. Peffer stated currently they have a regulatory compliance issue in that they have to separate appliances that contain refrigerants such as freon; previously they had been collected in a different way; staff has to insure no freon appliances are improperly disposed of; and to maintain that compliance, part of the contract will be specific pick-up of those items as well as waste tires. He stated waste tires were thrown out on the curbside, but they will now be picked up individually; it is a compliance issue; they are not supposed to dispose of tires in the landfill and are supposed to separate them out; and that will make it easier for the collectors to do. Commissioner Pritchard inquired if the increase breaks down to 65 cents a month; with Mr. Peffer responding yes.

Chairperson Colon advised this item is not being brought to the Board at the last minute; it was on the Agenda on August 26, 2003 and tabled to September 9, 2003; it has been going back and forth with the Board; and today staff is trying to see if the Board can make some kind of decision. She stated there is a deadline of September 15 to certify the assessment.

Commissioner Higgs stated when the Board discussed the reserve issue, Mr. Rodriguez indicated $2.2 million is in reserve; and requested an explanation of what that reserve is because it is not a set aside but a cash set aside to pay the hauler in the first two months before revenues come in. Mr. Peffer advised that is correct; it is a cash balance similar to a checking account; deposits are made and checks are used to pay out; and that is what happens in that account. He stated money comes in, not on a regular basis, but it accrues primarily at the end of the first quarter or beginning of the second quarter; however, they continue to make payments out of it throughout the year, so the cash balance fluctuates; and if it goes out at a greater rate, it actually drops down. He stated the term reserve is used to refer to the minimum cash that will be available in that account to pay expenses; there is no separate pot of money set aside such as a savings account, which is designated as a reserve account; and the minimum cash balance varies from month-to-month. He stated what they are recommending to the Board is they do not want to see that go negative where they have to borrow money; they would like to have sufficient money to handle emergency expenses such as storms; and the use of the term reserve is to try and make sure there is always a positive cash balance in the collection account. He stated to secure that, they need to have the requested increase. Commissioner Higgs inquired if staff is compelled by some sort of accounting practice to call it a reserve or could they call it something else and earmark it for October and November to pay the hauler’s contract. Mr. Peffer stated he does not think it is a requirement to use the term reserve; and in fact he would prefer to use another term that would be less confusing. Mr. Rodriguez advised the normal budgetary call is reserve or cash forward; it is not a set aside because they will dip into it and use it as a normal course of business; it is there to carry them for the first two months; so they do use it even though it shows up in the budget as a reserve. He stated the cash is used and then replenished later; and the reserve for storms is just that, a reserve for when they actually need it. Commissioner Higgs stated she understands that and wants to have that available, but she would like to consider some other way of calling the reserve and designate it appropriately because it is not a reserve, it is cash they are planning to spend and not available just to dip into; and reiterated the need to designate those funds differently. Mr. Rodriguez stated they will work with the Budget Office to see if there is another term they can use for that money. Commissioner Higgs inquired if the increase is less than $6.00; with Mr. Peffer responding it is $6.80 per billing unit.

Commissioner Carlson inquired even if the Board passes the increase today, and the County is hit by Isabel because it has not turned yet, where would staff get the reserve funds; with Mr. Peffer responding if they need to, they will borrow the money if they do not have sufficient cash balance in the reserve fund; and the issue is that whoever they borrow from wants to make sure they have sufficient income to pay back the debt. Mr. Jenkins stated if the Board adopts the resolution, they will have sufficient funds. Mr. Peffer stated hopefully they will be increasing the reserve approximately $145,000 by the end of the year; they will not be fixing that reserve amount to the amount they need immediately; it is projected to occur over a number of years; and they would probably borrow it internally from their own funds. Chairperson Colon stated that is nothing new when there is an emergency. Commissioner Carlson stated she does not know what other funds they could borrow from; with Commissioner Higgs responding the disposal fund. Commissioner Carlson stated she does not think they can do that because disposal and collection are two different things; with Commissioner Higgs responding they can borrow it from disposal and pay it back from collections. Commissioner Higgs stated if they were to have a significant hurricane that impacted collections, they would be able to be reimbursed by FEMA, but that does not come forward immediately, so the County would be forced to spend its own funds and be reimbursed by the federal government if a disaster is declared.

Chairperson Colon inquired if Commissioner Scarborough has any questions; with Commissioner Scarborough responding no.

Motion by Commissioner Carlson, seconded by Commissioner Higgs, to adopt Resolution approving the imposition of an annual solid waste collection and recycling program special assessment for all improved residential real property and an annual recycling program special assessment upon owners of improved real property for implementation of the recycling program for all improved real property within the Brevard County Solid Waste Collection and Recycling Program MSBU, and providing for interest against delinquent assessments on improved commercial properties for County fiscal year beginning October 1, 2003.

Commissioner Pritchard stated he would like for the Finance Director to make a comment about this issue. Finance Director Stephen Burdett advised he does not have a problem with having reserves; in fact whether it is the general fund or solid waste fund, it is common that they need cash before taxes actually come in; so that is not unusual. He inquired if there was anything specific Commissioner Pritchard wanted; with Commissioner Pritchard responding no, he just wanted his overall observation of the process.

County Attorney Scott Knox advised the Board needs to rescind its previous action taken at the last meeting.

Motion by Commissioner Carlson, seconded by Commissioner Higgs, to rescind the motion adopting the current year solid waste assessments, rates, fees, and charges made on September 9, 2003. Motion carried and ordered unanimously.

Motion by Commissioner Carlson, seconded by Commissioner Higgs, to adopt Resolution approving the imposition of an annual solid waste collection and recycling program special assessment for all improved residential real property and an annual recycling program special assessment upon owners of improved real property for implementation of the recycling program for all improved real property within the Brevard County Solid Waste Collection and Recycling Program MSBU, and providing for interest against delinquent assessments on improved commercial properties for County fiscal year beginning October 1, 2003; and Resolution ratifying, confirming, and certifying the annual collection and recycling program special assessment roll for the County fiscal year beginning October 1, 2003 and forwarding the sameto the Tax Collector for collection in the same manner as ad valorem taxes are collected. Commissioner Scarborough stated he will vote in the affirmative. Motion carried and ordered unanimously. (See pages for Resolutions Nos. 03-232 and 233.)

Commissioner Higgs stated the Department has shown control of the rates since 1994; it was $99.25 in 1994, and after renegotiating the contract in 1999, the rates were brought down to $96.18; and there have been cost of living increases. She stated assuming they are going to pick up the trash at curbside twice a week, there has been control given to price escalation; and while she wanted to go out to bid, the company and Department have controlled the cost. She stated the increase is what most people pay for a couple of gallons of milk; and the people will be receiving enhanced service and continued good service.

ANNOUNCEMENT

Chairperson Colon advised Palm Bay had a terrible loss; Ron Osborne, one of the gentlemen who runs Bayside Lakes was in an accident and passed away this weekend; and requested a moment of silence and prayer for the Osborne family, Bayside Lakes family, and anyone who was a good friend of Mr. Osborne.

The Board observed a moment of silence and prayer as requested by the Chairperson.

Upon motion and vote, the meeting adjourned at 9:27 a.m.

ATTEST: _________________________________
JACKIE COLON, CHAIRPERSON
BOARD OF COUNTY COMMISSIONERS
BREVARD COUNTY, FLORIDA

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SCOTT ELLIS, CLERK

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