Special Environmental Quality Committee

Summary

Meeting Overview

The Special Environmental Quality Committee met on June 24, 2014, at 1:00 p.m., with Stinnett presiding. The committee addressed five agenda items during the session, including approval of the April 15, 2014 Committee Summary and Items Referred, along with three informational presentations. The committee took two motions to a vote and heard four public comments during the meeting.

Attendance

Present: Stinnett, Mossotti, Gorton, Akers, Farmer, Scutchfield, Myers, Clarke, Henson, and Lane

Absent: None

Late: Lane

Votes and Decisions

The committee took action on two matters during this meeting.

Approval of the April 15, 2014 Committee Summary 2:31

A motion was made by Clarke and seconded by Scutchfield to approve the April 15, 2014 Committee Summary. The motion passed unanimously with no abstentions.

Removal of the Tree Canopy Survey from the Referral List 2:31

A motion was made by Clarke and seconded by Henson to remove the Tree Canopy Survey from the referral list. The motion passed unanimously with no abstentions.

Budget and Financial Actions

The meeting addressed two financial matters:

LexServe Collections and Bad Debt Expense Amendment

An amendment was approved regarding LexServe collections and bad debt expense in the amount of $1,800,000.

Water Shutoff Procedure Contract

A contract matter was discussed concerning water shutoff procedures for nonpayment with Kentucky American Water.

Public Comment

Four public comments were made during the meeting, addressing concerns about collection rates, affordability, and Materials Recovery Facility (MRF) operations.

Collection Rate and Affordability

Henson raised questions about a 3% drop in LexServe collection rates, asking whether this represents a trend 10:08. Henson also inquired about assistance programs available to customers unable to pay bills. Henson noted that some residents in the 12th District expressed unhappiness about paying storm drainage fees without receiving water or sanitation services.

MRF Financial Performance

Henson asked how the MRF can be assured to operate efficiently and at least break even, noting that the facility was originally intended to be a money-making operation 20:22.

Lane questioned whether the MRF is losing money per ton and suggested that affiliates should pay a fair share of costs 25:59. Lane emphasized the need for accurate accounting before any fee adjustments are made.

MRF Equipment and Maintenance

Lane asked whether current equipment at the MRF is in good condition and whether replacement parts are available on site to prevent delays during equipment breakdowns 52:35.

Appointments

Barry Prater was appointed to the Materials Recycling Facility.

Contested Items

MRF Financial Sustainability and Enterprise Fund Status

Council members were divided on whether the Materials Recovery Facility (MRF) should be established as a separate enterprise fund. The debate centered on the facility's financial viability, given its unstable revenues and lack of self-funding capability. Some members advocated for creating the enterprise fund as a structural change to improve management and accountability. Others countered that transparency and enhanced management reporting would be more appropriate solutions than a formal restructuring. The disagreement reflected broader concerns about how to address the MRF's financial challenges without committing to a permanent structural change that might prove problematic if conditions did not improve.

Fairness of Fees for Adjacent Counties

Council members engaged in a heated discussion regarding whether affiliate counties were paying their fair share of MRF costs. A significant concern was raised about the potential financial exposure: if processing costs exceeded revenue, the facility could lose $60 per ton. This prompted questions about the equity of current fee arrangements and whether adjustments were necessary. However, council members emphasized that any fee modifications should only proceed after accurate accounting and financial analysis were completed. The discussion highlighted the need for reliable data before making decisions that could affect multiple jurisdictions' costs and the facility's financial stability.

April 15, 2014 Committee Summary

2:31

The April 15, 2014 Committee Summary was presented to the committee. Stinnett served as the key speaker for this agenda item.

The summary covered a meeting that was called to order at 11:05 AM. All committee members were present except for Akers and Myers.

The committee voted to approve the summary on a motion by Clarke, with a second by Scutchfield. The approval was unanimous.

LexServe Collections

Rusty O'Mara presented an update on LexServe collections 3:02, reporting on significant changes in collection performance over a two-year period.

Collection Rate Decline

The presentation highlighted a notable decrease in the collection rate, which dropped from 98.8% in 2012 to 95.8% in 2014. This decline resulted in an estimated $1.8 million increase in bad debt.

Collection Efforts and Procedures

O'Mara outlined the various collection methods currently in use, including:

• Automated calls to delinquent accounts
• Past-due notices
• Water shutoff procedures
• Electronic payment options

Committee Discussion

The committee discussed the impact of delinquent accounts and explored available assistance programs that may help address the collection challenges.

Outcome

This agenda item was presented as informational, providing the committee with an overview of LexServe's collection performance and the strategies being employed to address the decline in collection rates.

Materials Recycling Facility Audit Follow Up - Henson

Charlie Henson presented findings and actions taken in response to a Materials Recycling Facility (MRF) audit 12:41. The presentation covered several key decisions and operational improvements implemented by the facility.

Key Decisions and Actions

Henson reported that the facility decided not to establish an enterprise fund, citing unstable commodity revenues as the primary reason. The agreement with Bluegrass Regional Recycling Corporation was terminated as part of the audit follow-up process.

Operational Improvements

The facility implemented internal improvements across multiple areas: - Accounting practices - Overtime management - Safety protocols - Preventive maintenance

Committee Discussion

Barry Prater and Bill O'Mara participated in the discussion, which focused on specific operational concerns. The committee emphasized the need for accurate cost-per-ton analysis to ensure proper financial management and accountability. Additionally, the committee discussed the importance of establishing fair fee structures for affiliates using the facility's services.

Outcome

This agenda item was presented for informational purposes, allowing the committee to review the audit follow-up actions and operational changes at the MRF.

Monthly Financials

O'Mara presented the monthly financials for the period, highlighting several key findings regarding the organization's financial performance.

Revenue and Expenditure Performance

Actual revenues exceeded budgeted revenues during the reporting period. Expenditures were generally maintained below budget levels across most departments and functions.

Budget Amendment Need

O'Mara identified a need for a budget amendment, citing increased bad debt as a primary driver of this requirement. The amendment would be necessary to address this variance from the original budget projections.

Landfill Fund Concerns

A significant issue was raised regarding the Landfill Fund, which experienced negative cash flow. This negative cash flow was attributed to post-closure expenses associated with landfill operations.

Outcome

The presentation was informational in nature, providing the governing body with an overview of current financial conditions and highlighting areas requiring attention through budget adjustments.

Items Referred

During this agenda item, the council addressed the referral list by removing one item. Clarke made a motion to remove the Tree Canopy Survey from the referral list, which was seconded by Henson. The motion passed unanimously.

No other items were discussed during this portion of the meeting.

Outcome: The Tree Canopy Survey was removed from the referral list.