I ask my friends a- guitar solo guitar solo Thank you. Special Environmental Quality Committee meeting. Welcome, everyone. And we're going to try to keep this meeting to 2 o'clock. I know we have a press conference that many of us will be at at 2 o'clock, so we want to go ahead and make sure we get this done. If we need to recess in the event we don't get done, we can recess and then come back. Otherwise, if we can get done by 2, I think other people need a break too. So we'll see what we can go for. The first item on our agenda is the committee summary from April 15th. Do I have a motion to approve? A motion and second. Thank you. Any suggestions for deletions, changes, improvements? Okay. All in favor say aye. Aye. Any opposed? Okay. That passes. First up on our agenda is an update on our LexServe collection efforts. All right. Throw them into the fire. Rusty, welcome, sir. Thank you. Good afternoon, everyone. As Chair said, I'm going to give an update on the Lexer of Collections, and at the end we'll leave some time for questions. And, Council Members, you should have received an email a couple weeks ago from Commissioner O'Mara in regards to the efforts. This is essentially the same information, but we're just letting the public know and as well as the rest of the council go through it here publicly. So thank you, Rusty. Sure, absolutely. I want to start out and give a little bit of background on the LexServe project. You see the LexServe building started in September of 2012. It's a combined invoice for sewer, landfill, and the water quality fee. Invoices are sent to customers weekly. We have over 115,000 customers that are billed monthly now. And the combined annual billings for all three funds is more than $65 million now. the next slide is an update on the collection rate and what I have done is taken the rate as of May 2012 when KWC had it and compared it to the May 2014 rate 2012 we had a collection rate of 98.8 percent for all three funds and in 2014 as of May it has dropped three percent down to 95.8 And in terms of dollars, that's about a $1.8 million increase in the bad debt expense. On the accounts receivable side, I want to provide a view of our greater than 90 days AR balance. And as you can see in comparison from 2012 to 2014, our greater than 90 AR balance has increased $4.4 million. Included in that number is some inactive accounts that we're also working on, putting our collections efforts to get that money in as well. The next two slides will give you a breakdown of some of the efforts that my division is making on getting the AR collected, increasing our rates, and driving down our balances. Penalties and interests began on delinquent LexServe bills back in October 2013. Automated phone calls goes out to customers with delinquent bills now. Past due notices are sent to the customers. We have a message that appears on all LexServe bills regarding potential water shutoff, as well as a message on the envelope regarding the potential shutoffs. We do that on all bills so that everybody, even if you are paying your bill, you're still seeing that notice. That way, if you forget, you slip that, hey, you too can be subject to a shutoff in the future. That brings me to the most recent process that we started in late May, and that is the water shutoff procedure for nonpayment. Accounts are chosen based on the highest passed due amount and the oldest delinquency with some exceptions. A 10-day shutoff notice is sent to the customer. After 10 days, a shutoff service order is created with Kentucky American Water for customers that have not paid or made a payment arrangement and down payment. Kentucky American Water will then perform the shutoff, and currently we have someone going along with them from the Irvin County government. I want to emphasize on this piece, after the water shut off, the customer must come into Division of Revenue to complete one or two payment processes to have their water restored. They have to pay a minimum of all outstanding sewer balances using only cash, a money order, credit card, or debit card, or agree to a payment arrangement for the total outstanding bill and sign a promissory note. And they also have to make a 25% down payment as well as the disconnect-reconnect fee. And water service will be restored the same day if payment or payment agreement is completed by 2 o'clock p.m. The last slide that I want to go over is some options that we give out to the active customers within the city. We have several convenient payment options. They can pay online. If they're downtown or want to, they can come down to Division of Revenue and make payments. They can go to several retail locations in the city. we have that list of locations on our website. They can also pay by phone or via bank transfer, and I will talk a little more about the bank transfer in a minute. We also have online billing where a customer can create an account. It's free. They can track their bills online instead of receiving a paper copy or in addition to receiving it. In April of 2014, we finally implemented the opt-out for the paper invoice, which is something that I was very excited to get done. This will allow customers to not receive a paper invoice, And what happens is the night that the invoice is actually generated by our biller, the email will kick out to them and they will get their invoice then. So they can see their invoice a lot quicker instead of waiting through snail mail. Currently, there are over 500 invoices going out this way. And this is a good thing. I want to get up to about $10,000. It is a direct savings for the urban county government as well. And the last point, in my opinion, the most efficient way to pay your bills through the electronic funds transfer program. For those who like doing that or can, I highly encourage it. What happens here is you have an electronic payment on the due date, thus preventing you from ever being late on your bill and worrying about P&I or having to come down here and try to find parking. So I try to encourage a lot of folks to do that. And currently we have 22,000 customers signed up for this program, which is better than 19% of our customer base. And I'll point out the industry average is about 10% to 12%. So we're already doing better than that. And if we can achieve that on the online opt-out invoice program, it will be a really big pickup for our division. With that, that's all the presentation I have. So now we have some questions. If there's any questions, Commissioner Bill and I will take these. Rusty, thank you. And before we open up the questions, going back to your math, you have 115,000 customers you bill. How much, in terms of collections, what's that number? How many are we initiating collections on? How many did we initiate the collections on? Do we have, what's that look like number-wise? Out of the 115,000, how many are delinquent? I don't have the exact number on that. I can get that back for you and take a look at it from that perspective. I was just curious about what it looks like in perspective of out of how many customers, how many are actually delinquent. Some of them are big, so it's not necessarily just a large number of customers. Most customer-wise do pay on time, but there is a problem that we're working on. Okay. I can get that for you, though. Thank you. council members if you have any questions in regards to our elect serve collections please log in first up we have council member henson thank you chair thank you rusty i i did have a question and and it's not much of a uh the collection rate has decreased by three percent that's correct so do you see that as being a trend or that was when we switched from kentucky american to that's the trend we're on because of the efforts were hampered by changes in systems whether it be gcw or kentucky american that could continue to go go slip a little bit more before we're able to get a hold of it and actually move forward because of where the actual balances are in the range of 90 days to 360 days old. As they slip further on, the percent we have to reserve and hit our bad debt goes up from 50% to 100%. And are there agencies that will assist if someone just can't afford to pay? Yes, there is. Adult Services is working with customers they've already actually been in to help take care of some of the folks that have been on the shutoff list. So we recommend some of those services when they call in. If they call in and need help, they can reach out to the ones we offer within the city. Very good. Thank you. There's also faith-based assistance as well, and we know that several churches have been working with people. Okay. Thank you. You're welcome. Next up, we have Council Member Clark. Thank you, Chair. Thank you, Rusty. Just some clarification, if you would, please. talks about the highest past due amount and the oldest delinquency. Is it one or the other or both? It's both combined. We start out, look at the oldest, over 60 days old, and then the highest and work ourselves down. At that point. Yes. Okay, that's what I need to know. Thank you. Anyone else have questions in regards to the presentation? All right, see you none. Rusty, thank you for the help. Councilman Relain. Sorry, I was late to the meeting. I just had one question there. A number of people live in the 12th District that have no water service or sanitary service, but they do have storm drainage fee, and a lot of those people are not happy about that because they say, well, I have water surface drainage and all that. Can you tell me, do you have a lot of people that are in arrears in the 12th that just have that one fee only, or do you know offhand? I don't know offhand. We can look at it and try to get you an answer for that. That's all I have. Thank you very much. Thank you. Thank you, Councilman Lane. Anyone else? All right, sir. Okay. Good job, and appreciate the update. We'll have another one later, hopefully maybe later this fall to see how our production efforts are going. We're tracking it every day and watching it, so yeah, we definitely would like to do that. Okay, thank you. Next up on our agenda, we have the update on the MRF materials recycling facility audit. I thought you were out of that role, but we'll leave you in this role for a little while longer. Yeah, I'm still in this role because basically this is probably the biggest thing that I worked on over the last six months. It has been a team effort among a lot of people, and I'm going to talk a little bit about that. In order to try to keep you to your 2 o'clock goal, some of the slides I will probably cover pretty quickly because they're fairly straightforward, as you've probably seen in your packet. Taking this finding by finding, the first finding of the audit, paraphrased, was to remove the MRF from the Urban Services Fund and establish an enterprise fund based on historical revenues and provide a transparent report that shows that the MRF revenue covers the cost of operation. Actions to date is that this was the recommendation of the Department of Finance, and I concur with that, is that the commodity revenue is not stable. As I looked at this, it's a market fluctuation on what milk jugs and cardboard and those kind of things bring, and it varies depending on when it is. The inventory has no value until it is sold. And so what my understanding has been and continues to be is the MRF was never intended to be a self-funding operation. And then lastly, as Commissioner O'Meara informed us, is that he had consulted with the Government Finance Officers Association at the inception of the MRF and recommended that it not be set up as an enterprise fund. So the actions as it stands right now, and I think as I covered back in February, is that it's an administrative and council decision. You know, myself and Tracy, Barry Prater, who's acting as the operations manager at the facility, risk management, and others, we have focused more on the operational aspects of the audit, and so I'm going to spend more time covering that. Before we move on, like we did in our previous two meetings, we want to take each finding one by one if there's questions on this, so we don't have to come all the way back. Does anyone have a question on finding one? I do. Councilman Lane. the recommendation not to make it a separate enterprise fund from the GFOA, but on the other hand, we're recommending that we do that, and then we're saying we don't have adequate revenue to make it self-funding. It seems like it would not be likely that we could do it as a separate enterprise fund based on that bit of information. Do you have any additional comment on that? That is my understanding. Now, one of the things that I have learned in the six months that I've been involved in this, and I think I talked about this in February, is that I saw that I was going to learn a lot in the next six months, and I have. What I see is a potential of reducing our expenses considerably through efficiencies, some of the things I'm going to talk about here as well, and also increasing our revenue. And one of the later findings you see that we have terminated our agreement or arrangements with the Bluegrass Regional Recycling Corporation, and in doing so, basically we're realizing an increase in revenue of between $100,000 to $150,000 a year. I think there's opportunity in order to be able to address what, by the bullet itself, is somewhat of a shortcoming. And I say that as being a taxpayer, I guess, here as a resident of Fayette County, that I would want to see it being a self-funding operation as well. I think the potential is there, but we're not there right now. Well, just one quick follow-up question, and that will be it. Based on information that I've heard, and I haven't seen the accounting on this. I don't know whether this is totally accurate or not, but that we were receiving $40 a ton to recycle materials for the adjacent counties or to bring it into our MRF. But it might be costing us $100 a ton to do the recycling. So every ton it came in, we might be losing $60 a ton. However, we are selling the inventory, and we're getting some revenue on that. Do we have any study or any analysis on that that's available? Not at this point. Again, is that what is the cost of processing a ton of recycling? I mean, when I got involved in this, and Tracy and Barry Prater and I got really up to our elbows in this, what we found was a lot of inefficiencies. So if I based a decision on whatever number it was that came from February or March, it's wrong. It's too high. So I know that the operational staff has spent a lot of time trying to reduce their operating costs, reduce their overtime costs to where we can arrive at what is the real number for processing recycling. And then characterizing that against the revenue stream, what's on the table right now is $35 a ton is what we have been charging the affiliates. and NBRRC was also taking $7 a ton, process ton, as marketing. So when we take that $7 a process ton of marketing for ourselves, now that number goes to 42. I think my recommendation to this committee would be is that we continue down the process we are and arrive at a true cost per ton of processing and then evaluate that against that revenue. because both the urban county government and the counties in the surrounding areas they will save money because they don't have to put it in the landfill we don't have to play to dump it and haul it a long ways to get it out of fayette county so there is some other savings involved there but this is a very complex financial model and i see bill omarist back there i don't have any more questions but i'd love to have your comment bill thank you councilmember lane what I wanted to show was there's two different recommendations. One is to establish an enterprise fund, which we're saying that we don't support and the reasons why. The second is to provide management reporting to evaluate the program. That is separate from an enterprise fund presentation. We're totally in support of coming up with management reporting in order to find out what we're paying per ton, what the cost is per ton, what the opportunity cost is if we don't recycle it and have to pay for disposal. Those are management reports, and we're working with the commissioner's office to develop those management reports, totally in support of management reporting. I think that's terrific. Thank you. Council Member Henson, on fighting one. Thank you, Chair. Charlie, my questions were going to be similar, is how can we be assured that the MRF is operating efficiently and at least breaks even? I know when it was first brought before council and there was talk of building a new MRF and that the intent was that it was a money-making operation. So what happened? I wasn't part of that discussion about building a new MRF and those type of things. I can only speak to what was over the last six to seven months. You know, basically the operations people have sent me daily stuff. I track daily, you know, over time what our production rate is, what the incoming tonnage is, what the outgoing tonnage is. They also track, you know, the value of those commodities and what our revenue is as compared to our costs. Bill did a better job of saying it than I did. I mean, the transparency of it needs to happen. We need to be able to determine what the cost of processing recycled materials is as it compared to the revenue and make adjustments accordingly. And again, I say that as a taxpayer of this community as much as I do as the former acting commissioner. Commodity prices change. I noticed in some of the analysis I looked at is there are actually our amount of tonnage that we're treating has increased, but the value of those have decreased. It's the supply and demand issues. Too much cardboard, too much aluminum cans and like of those things, and that we will have to adjust to those things accordingly. What I'll talk about in a later slide is about the memorandum of understandings that are in the hands of the affiliates right now. I put those at a short-term type of thing because we're going to have, If we're going to enter into an agreement with affiliates on them sharing in the revenue, we need them to be very short-term so we can react to the market fluctuations as well. But like I said, I can't speak to where we were. I can only speak to where we have been. And I got a better handle on that revenue is we're maximizing revenue and decrease in our expenses to bring those closer together, that this committee, the administration, the council, can then make longer-term decisions about what we want to do in being in the recycling business. Okay. And then I know we had talked before about bringing or accepting products from other counties, recycled materials. So are we continuing to do that? Yes. There are multiple affiliates that bring in stuff from places like Woodford County, Winchester, Jesmond County. There's also some of the private haulers that serve not only those counties, but serve some of Fayette County as well. The way that the thing was set up was that everybody rises and falls together as a group. What I learned in this is that the background on it was that the state was very anxious for Lexington to play somewhat of a lead role in encouraging recycling in some of these smaller communities where their economy of scale wouldn't necessarily allow them to be able to do that sort of thing themselves. And so the situation has grown into that to where some of the surrounding communities, Franklin County, the ones I've already mentioned, now are able to have recycling programs when they probably wouldn't have been viable for them 10 years down the road. But if we're going to rise and fall together, we share the equal burden of the cost associated with rising and falling as well. That's the key. Do they pay us to receive? What they have been doing and what's in the memorandum of understanding is that they pay a $35 a ton processing fee. They also pay a marketing fee, or they had been up until effective July 1. That marketing fee will be going to us and not to BRRC. And so that's deducted from the revenue of the sale of their share of the commodities, depending on what commodity it is. There is a spreadsheet that calculates all these things out. When Barry gave it to me, I'm looking at it, and I'm thinking, that doesn't look all that difficult. And in the course of a Sunday afternoon at my dining room table, I was able to recreate this spreadsheet. And I'm thinking, we're paying $7 a process ton for this. This isn't that hard. And at that point, it was a turning point for me is that working with Bill and Rusty and his group to make sure that revenue accounting was prepared for us to bring that what I called financial fiscal management internal as opposed to paying somebody else to do it, paying a lot, I think. Right. So you think even without a separate enterprise fund, we can properly track to make sure that the facility is operating at least in the black? We should. We have to. We absolutely have to. That's a must. Thank you. All right, Councilman Orlando, number one. We've still got many more to go. Yes. Okay, I just have a quick comment on this. I ardently support recycling. I think it's a great thing. But I don't think that we should be doing recycling for the adjacent counties if they're not paying their fair share. And I'm not saying they're not paying their fair share because we don't really know for sure, but that means we need to get the accounting accurate and then enter into a revised agreement where everybody pays a fair share, and then I think that would be a wonderful plan. I'm sorry. That's all I have. Well, just to respond to that, if I may, is that the MOUs will be coming to you. Obviously, we can't enter into agreements without the council approving it just like you would any other type of agreement. You know, one of the things I was a little bit hesitant to, and obviously this is the council's decision, I was just hesitant to send the affiliates a revised price that was based on an inefficient operation. That if I were in their shoes, you know, how would I feel about that? And so what I have proposed right now is that we continue the status quo, the $35 for processing, the $7 for marketing, while we get our ship righted. I think hopefully in these next slides you will see that that's happening. But then putting a number to that and making that adjustment, yes, sir. I totally agree that that would be fair and equitable to all the parties. and we need to run a better operation before we start raising the prices. Thank you, sir. Okay, number two. Proceed on. Okay. Senior management to oversee and address concerns and manage the facility. You know, this is one that I somewhat deviated from what I said back in February. I said that we needed to have a plant manager. We went through the process of trying to recruit a plant manager. I interviewed several different folks, didn't find somebody that was really jumping out at me. And during the course of looking through that pile of applicants, I saw one person who was already an employee here. And so the more I thought about it and the more I talked to that individual, they made a statement to me that really rang clear, is that, you know, I'm talking about Barry Prater. He's a gentleman that's sitting back in the back here in a blue shirt. He is the commodities marketing manager for the MRF. And he said, I'm the only one in government. If this thing fails, I've got no place else to land. And so it showed me and demonstrated to me that if there's anybody out there that's got some skin in the game, it's Barry Prater. So I put more faith in him. Tracy did as well. And he has done a very, very good job. As you can see there is that we've successfully addressed most of the safety issues associated with risk management. and he's worked hand-in-hand with risk management in correcting those things. He's implemented a preventive maintenance strategy, which was essentially one of the first things I looked for. It wasn't really talked about in the audit, but I looked for that, and it was totally absent, and reduced the outside pile to zero. And we'll talk about the outside pile here in a little bit. But, you know, you can imagine this past winter caused us a lot of service interruptions, just the same as it did for waste management when it was four degrees below zero for a whole week. So, you know, right now what we have is an acting program manager in place, been in place since March, and he, along with Tracy, are the two main folks that I can thank for the accomplishments that we've made to this point. You want to have any questions? Barry, will you raise your hand just so everybody, okay, there you go. Just want to make sure everybody knows who it is. Okay. Thank you, Charlie. Did you want to ask for any questions? There are none. Okay. All right. Finding number three, hire an accountant for the MRF. An accountant should be given the task of implementing all accounting-related recommendations, that the MRF accountant should report administratively to the MRF program manager or the director of waste management. But then separately, though, is that same accountant should report operationally to the director of accounting. Those were the findings. Actions. is that the former division director had started down a path with an external accountant, essentially hired as a contract employee. And we used that for a bit of a time, but as I got further into it, I began to realize that the scope that they were hired on wasn't the scope that I was interested in that was identified by this audit. And so we started transitioning that, in particular after I learned where we were with BRRC and otherwise, it became clear to me is that we need to take this thing inside. And so that's where we have headed since that time with the divisions of accounting and revenue, is that process and reports implemented a track and measure of the four bullets that you had. Because basically now, starting July 1, all of the revenue coming from the mills is going to be coming to accounting, to revenue. It's going to be in a revenue account. It's going to be in PeopleSoft, as it should. They, in turn, will disperse the checks that go out to the various affiliates that we just talked about. They will be working with Barry and the team as far as managing inventory, making sure that things are correctly posted to the right accounting, all of the issues that were identified. Basically, we're taking this inside as opposed to relying on an external accountant that is tasked with trying to communicate urban county government accounting methods when they're not necessarily an urban county government employee because I was finding that to be difficult. Some folks may say, well, you know, I don't like the way we do this or the way we do that. That's the way we do it. And for me, it seemed like the best choice is that we're going to do it the way that we do this with everything else, that it's in PeopleSoft as it is. There's still a lot of work to do on this, but I think it's down the right path of it as far as having the proper accounting, the management of inventory, and all of those items. but it's one that i think we've made progress on but again like i said it's going to require a lot of long-term implementation management okay finding number four i'm going to be really brief on this you guys can read the what the finding was because basically we have there was no no debate on this is that there was a lot of work that needed to be done on this Tracy and Barry led the charge on getting those doors rekeyed and replaced in conjunction with general services. The gate improvements are out for bid right now. One of the things that we found that was holding us up when dealing with the gate issue was a lack of power at the location that we needed it to be. So we had to go through a different aspect to run the service that needs to be there in order to have the gate improvements. I guess unless you stop me, I'll just keep going. Okay, all right. Excessive amounts of overtime. This is one I wanted to spend a lot of time on because I've spent a lot of time on it over the last several months. Investigate reasons for overtime and develop solutions to eliminate excessive use was the finding. Tracy and myself tracked this on a daily and weekly basis since February. we we focused really hard on trying to make sure that the people who were at the Murph were actually working at the Murph Barry had a huge role in that as well we did have some some issues that popped up basically unbeknownst to me that I didn't really understand what was going on but in November that there was a shutdown of the plant to do some retooling and just like in wastewater you don't shut the plant down and stuff stops coming it kept coming and so you had these outside piles that you had to deal with and also in the wintertime is that you know the place is largely not heated and so when it's four degrees you know your production rate goes out the window you have a single stream the first time I visited the site I expected to see what I usually see in water and wastewater plants you know redundant streams to where you shut down one side of the line, you open up the other side, and it keeps going. So I had a clipboard to write down all the places that were pinch points. Well, I got about a quarter of the way through, and I felt like throwing my clipboard away, because there's a bunch of them. Interruptions are unfortunately unavoidable on a single pass-through type of operation. Barry called me one day and said that they had found a bomb on the line. It's amazing what people will throw away. Somebody had an old metal World War I bomb that they decided to put in the recycling. I know, a bomb, B-O-M-B. So obviously the line had to shut down, and we had to have, you know, the emergency crews come out and deal with it. Fortunately, it did not have a fuse in it. Dead animals, you name it, there's all kinds of things. So we have to manage around those. So here's where the overtime has tracked over the last, since February. You see some spikes there in the wintertime because I authorized them to work on Saturdays to get caught up on that outside pile. And Barry pointed out to me by the time we got to April that that wasn't working very well for them. And so they did more overtime during the course of the week and less on Saturdays because he felt like they were more productive to keep running than they were anything else. Yes, sir. The back to the last screen you had there, the column going up on the right-hand side, number zero to 50, what does that represent? That's hours. That's how many hours that would occur in total staff hours for a given day. Oh, this is per diem, 35 hours of overtime per diem? Yeah, per day. Okay. So those spikes you'll see that go up over 35, basically that's the days we're working on a Saturday. And I've got all people in, and basically we're processing on a Saturday. The beauty of what Saturday was is that you had all processing and no incoming, because obviously the trucks aren't rolling on a Saturday. It'll make more sense probably to you when I get to the last two pictures that are not in your thing. But basically, we had a huge mountain of unprocessed material outside the tipping floor for a large part of the winter because of that plant shutdown, along with the other service interruptions that happened because of winter. This is really what I wanted you to see because that graph really demonstrates the one thing about the audit's recommendation. They said that overtime may or may not happen, but somebody needs to be managing it. I've been tracking that every day ever since we were in here with the last committee meeting and this thing. I mean, I watch it like a hawk, and here is the end result. Now, granted, we have a small snapshot or sample, but from the audit, basically, that they were averaging over 400 hours per month. In the last, in the two-month period of April through the end of May, we reduced it down to 157 a month, a 63% reduction in monthly overtime. So I would expect that trend to continue to drop. With the number of people that they have out there and some of the challenges, I don't think that overtime will ever be eliminated. is that roughly the incoming tonnage is roughly about 160 tons a day on the average through the course of a week. They process about 170. So you're running a very narrow range there to start with. And so one bomb or one any other thing, and then you've got a problem. Fortunately, we've got capacity in the tipping floor, and we're able to manage that. But we feel like that the overtime has been gotten under control, and that was the recommendation of the audit. Finding number six, CAO policy number 40 violations were noted about how we're handling checks and be able to secure those. As you can see from those, we act on every one of those. The policy was developed and approved by Rusty's group back in February. We trained everybody on that. There was a safe installed in the program manager's office. I feel like this one is completely in the implementation phase, is that continual testing and training of staff to make sure that we don't deviate from the policies in place are essential to make sure that finding six has been resolved. So, Charlie, are checks opened by a different person? Yes. They are? Okay. Yes, sir. Number seven, issues noted previously by risk management not addressed. A whole lot of safety violations. I can't say enough about the effort that the Division of Risk Management put into this, along with Tracy and Barry. It seems like they were there just about every day, and that we've been able to deal with all of the day-to-day health and safety improvements. 11 actions are incompleted. Three of them are near completion. When I met with Patrick back in April just to see how we were going, it was one of the more positive meetings I've had with how are we doing in a while. He was very, very pleased with how everybody had come together and was doing what needed to be done. And so I can't thank Patrick's group enough for their role in this. We feel like that we're on the right direction with this, and it is also in a maintenance mode. Finding eight, MRF contractors providing outside services need to be monitored for compliance. The MRF manager should be tasked with overseeing those contracts, particularly labor works. We use a temporary labor service. The other part of the finding was that the Department of Law should be contacted about a potential breach of contract because the labor works folks were supposed to be providing an on-site supervisor. I said back in February I didn't feel like that that was necessarily a breach if waste management wasn't requiring the person to show up in the first place. I mean, they were paying the invoices. They obviously knew that they weren't. I think I said to Council Member Myers when he asked me about this is that I wasn't sure that it was all that much of an essential element. Well, I have learned otherwise. I there's one that I misread is that it was very made it clear to me as he needed that on-site supervisor in place and they are now on site on a regular basis managing the labor works folks Barry's done a really nice job of being able to expand some of their role in such a way not at an additional cost to us to where we have more of a maintenance team approach and some of the preventive maintenance that needs to be done while the line is running is being done instead of being in a reactive mode, which has had a significant impact on that overtime issue. That being said is that we are in the process of soliciting a new temporary labor agreement that went to central purchasing back in June or this month. Finding nine, updated contracts needed with BRRC and other affiliates. I've talked a little bit about this already, is that in the past that BRRC, and I didn't know this, they actually had offices at the MRF. They were the original folks who ran the MRF. And that over time, waste management took more and more of the operation over. The audit concluded that we did not have agreements with these. There was no written agreements. that went all the way back from the beginning of time, and that if we continue the relationship with them, that we needed to have contracts in place. Likewise with the affiliates, the Woodford counties, the Winchesters, all of those folks. So I spent a lot of time on this as well. Initially, I had drafted an agreement. Ed Garner and myself had worked on an agreement with Barry's input. We met with BRC in February, but as I started peel on the layers back, it was pretty clear that we could do everything that they were doing and save money. So through a lot of testing and a lot of this and that, working with revenue, we finally reached a point to where a termination letter was sent to BRRC earlier this month, essentially ending our relationship with them, written or written, unwritten, otherwise, and that beginning July 1, all of the financial part of things will be done by us. Apparently, they were being paid for financial and marketing, but Barry's been doing all of the marketing for at least two years. So I didn't see that we really even were getting what we were paying for to start with. When I got into it more so, I found out, I mean, we've already, we've been doing aluminum cans as far as being, receiving the checks from the mills and then dispersing those out to affiliates. So if we were already doing it on aluminum cans, it shouldn't be a big deal to do it for milk jugs and cardboard and all the rest of it. It was just a no-brainer. But I wanted to make sure that we were able to do this right. So we spent a lot of time, like I said, with accounting and with revenue to make sure that we, in fact, could do it right. So the MOAs, the Memorandum of Understandings with the affiliates, were issued on June the 12th. They basically, we gave them until October 1 into an agreement with us for the shared revenue and processing costs associated with that. I mentioned earlier that you will get the opportunity as a council to either approve or disapprove those MOAs, either singularly or as a group at a later date. finding 10 discrepancies in may june 2013 reports from brc for commodities sold no arguments there i think the action is we've terminated that so i think that we can say that we have eliminated that discrepancy issue moving forward the discrepancy that we have to pay attention to obviously is are going to be internal between ourselves and the department of finance And I'm pretty confident that based on how the team has worked together over the last couple of months, that that will not be an issue moving forward. Those MOAs will clearly define what fees that we're charging the affiliates, which was the second part of the finding. Number 11, production reports should be completed. Senior management individuals should be tasked with getting production reports back on schedule, and the individual should monitor the reports to ensure goals are set and met. Honestly, I think this was resolved back in February when we were here in front of the committee before. I think what happened was is that somebody who doesn't work there anymore decided to change it because they wanted it to be in a different format and they just didn't bother to tell anybody. And so you had this situation where you had two different reports floating around. So they went back to the same production report. Again, the director for waste management, myself, Barry, we review these reports ad nauseum, and so I'm pretty comfortable that our production reports are where they need to be. Number 12, additional issues noted in the audit, copy avoided manifests related to BRRC, a copy of manifests voided by us electronic arm installed at the scale all the voided manifests are now logged by the scale operator goldenrod copies retained in the files along with the ship manifest essentially tidying up those two issues regarding the gate the general services staff evaluated that and found that we could not do that without having competitive bidding because it was in excess of $20,000. So we've got that planned for FY15 as far as getting that scale gate set up. Basically, it was to keep drivers from driving off of the scale prematurely before the scale operator was ready. That way, you could affix it to a particular affiliate and get accurate weight. these aren't in your in your thing but I will save these for last because this illustrates some of the things I was talking about that white building in the background is the tipping floor at the Murph this is sometime winter very very early spring essentially we had piles not only on this side of the building but a pile on the other side of the building and the tipping floor was full. That's what it looks like now. There's that same building in the background. Not everything, you know, this is an update on actions that we've made so far regarding the MIRV. Internal audit identified some very, very serious and important issues that needed attention, and I can't thank them enough for their efforts in doing that. I wanted to show you this because though we've still got a lot of work to do on making sure that the things we've done already stay that way and finish the other things we do, I felt like these two pictures spoke to me as I felt like that we were headed in the right direction. So with that, questions? Okay, council members, if anyone has any questions on the complete audit, just log in. First, we have up council member Henson. Thank you, chair. Charlie, thank you for the presentation. It sounds like some good things are being put in place to get a handle on. I did have a question about, since this is a production matter, are there quality and quantity standards that have those been established? the the quality standard is often established by the mills and is where barry may come up here and start tugging at my my jacket but what i have learned from him is is that the mills have a certain standard for quality but sometimes it even fluctuates with the supply and demand is the amount of material that they don't need but they still have to buy goes down, then their expectations for quality goes up because they don't really need it in the first place, so they hold you to a higher standard as opposed to where they need a lot of materials. Okay, get it in here. They do some truing up of the weights when it comes to them. That's the weight that we actually get paid for, not necessarily the weight that we have. But they spend a lot of time working on trying to improve the quality. That's how he has reallocated some of the labor work sorters in order to be able to make sure that we minimize contamination in baled commodities as much as possible. The quantity issue, that was one of the things I was focusing on from my background is that I'm all about flow rate. How much flow are we pushing through something? So I got real fixated on how quickly, you know, how many tons an hour can we process. And we started out at 25 tons an hour, and we weren't cutting it. Barry was able to figure out a way to get it to 30 tons an hour. Now we're cutting it to where we're able to, where we got the number to where roughly an average of 160 tons a week, I mean, a day come in over a five-day week, but we're able to process 170. It's a narrow range, but at least we're on the right side as opposed to the opposite, which had a lot to do with why that pile was out there. But we watch the quantity part of it just because, you know, we've got to be able to process this stuff. We can't have it outside. I was wondering if that had anything to do with the high overtime. if they weren't performing the work, you know, if they were, like, processing it slower? No, I don't think so. I think because the line runs when it runs. The issue was is how often does the line run is that when I first started monitoring it, I would see line run times of four to five hours and then downtime because the stars were clogged up or some belt broke or the baler was down or this and that. And he said, as I got deeper into it, I didn't see that there was a preventive maintenance strategy in place that allowed to minimize those down times as much as possible. And Barry and his team, and I haven't given them a lot of credit because at the end of the day, it's the people at the place who actually do the work, who actually make the improvements. they've come up with ways to be able to take advantage of regular work time to do more of that preventive maintenance. One being buying a better use of our labor works, folks. Number two is Wednesdays are a key day because, like I said, it's a low amount of delivery that day. Only affiliates are bringing in. LFUCG trucks are not running that day unless it's a holiday. And so he's geared that more towards a preventive maintenance day. And he can do that because he's got all the stuff inside the tipping floor inside instead of all laying outside. Thank you. Thank you, Chair. Customer Lane. Yeah, I was going to ask a couple questions about preventive maintenance also. Do you feel the current equipment's in really good shape, or do we need replacement parts or new equipment or faster equipment? Do you have a read on that yet? My view of it is that a lot of it is fairly new. You know, it's an aggressive environment in there. You're running everything that everybody else doesn't want through a bunch of machinery. And so a lot like wastewater, its shelf life isn't as long as what you might hope it to be in a more pristine environment. But I didn't see that there was a big issue with critical failure of equipment. And, you know, we're running on one baler and we're running on one line in a lot of places. The preventive maintenance is critical. The one of the things I've encouraged Barry to look at coming into this fiscal year is trying to utilize more outsourced preventive maintenance, having companies come in and do a more greater overhaul of stuff on a frequent basis and consistent with the manufacturer's recommendations. bring them in on a Saturday or something like that when the line is completely down to try to minimize that. But I think the equipment itself is not so much a problem as much as it is about replacing belts before they fail, lubing things on a frequent basis because dust and dirt is paramount in this place. Do we maintain a certain number of replacement parts on site so if something breaks down we can fix it immediately? rather than have to wait for the part to come in. Yes, they do. I mentioned the STARS, which is this thing that sorts out particular things. He's got an abundance of these things because they seem like they're always wearing out and stuff. Do we have enough? I think that, again, that's one of those things that we look at ongoing. Since he's really just revved up this preventive maintenance thing, I would imagine he and the team will be learning more about potentially other pieces of equipment that they need to keep more readily on hand. The good thing is that there are vendors that are in this market that are able to get us things fairly quickly. I haven't experienced a long lead time really on anything in the six months that I've been involved. Just in closing, this has been one of my hot buttons because I felt like there's potential here to save money for the government, and there's also an environmental benefit. it, and so I've been concerned that, and of course there was the impression previously that we could build a bigger plant and recycle more materials and maybe make a profit on it, but of course, as you said, the commodity prices have declined. But I would just like to compliment the internal audit department and the environmental division for this report, because I feel like this is the most meaningful report I've ever seen on the MRF and you know I really appreciate and I thank you all for a job well done. All right any further questions on the audit? Seeing none, Charlie thank you for all your hard work. How about that? Thank you to Barry and I see our risk management folks back there. Thank you for your involvement in this and jumping in and thank you to Tracy and welcome Commissioner Holmes. I think they left you some opportunity here so this was a much needed exercise and thank you to Mr. Sally and our internal audit department. You've been with us from the beginning on this, so thank you for your expertise and help on this. Next up on our agenda is the monthly financials for information only. Are there any questions for Mr. O'Meara while we're here? Seeing none, our July 8th meeting has been canceled, so we will reconvene in August. Do I have a motion to adjourn? Motion and no second. Do I have a second? Motion and second. All in favor say aye. We're adjourned. Thank you very much. Thank you.