For nearly thirty years, Broward’s garbage disposal was a marriage of convenience between cities and the County government. Residents in 26 of the 31 municipalities have paid hundreds of millions of dollars to build and operate facilities for the disposal of solid waste, which the County gave away to the private contract operator. Thankfully, there are still assets remaining. In fact, there are tens of millions in real property and tens of millions in cash accumulated. The agreement that formed this marriage of convenience is expiring July 2nd. But, the County has decided it doesn’t want to divide the “marital” assets in accordance with the “pre-nuptial agreement”. Like so many marriages that end up on the rocks, looks like this one is headed for the courts. At stake is over $100 million in cash and property.
How We Got Here
Over the past 25 years, garbage disposal for 26 municipalities has been handled through an Inter-local Agreement (“ILA”) creating the Resource Recovery System (“RRS”), a name coined likely because of the plan to burn waste to create electricity in order to recover value. All municipalities in the 1980s liked the idea of joining together in this marriage of convenience to handle waste, except Dania Beach, Hallandale, Parkland, Pembroke Pines, and Pompano Beach. The RRS is presided over by the Resource Recovery Board (“RRB”), made up by designated representatives from municipalities and a representative from the County. However, the “marriage” agreement expired on July 2, 2013. Then, the County Commission takes over as the governing board and the existing Board and System are abolished. The Resource Board is supposed to, by the terms of the agreement, distribute the net assets of the Recovery System – such as cash and the value of land, landfills and physical assets owned by the resource system. Each contract municipality is supposed to get a pro rata distribution on July 2, 2013. Some say the market value is potentially much higher than the $100,000,000 accounting value on the books. For many cities, there are millions of dollars at stake. Let’s be clear: the County’s own Attorney gave an opinion that the assets belong to the Resource System. Translation: There is no dispute, the 26 contract municipalities have a pro rata beneficial ownership interest in those assets!
Auditor Says County Not Cooperating
In order to get some answers on the true financial picture, the Resource Board brought in the City of Fort Lauderdale auditor. The interim audit report, as well as Resource Board discussions, raised some very real concerns: understatement of assets, overstatement of liabilities, potential misallocation of expenses and liabilities, and potentially inappropriate transfer of funds to the County. Equally troubling, the City of Fort Lauderdale Auditor says the County is frustrating his attempts to get a clearer picture of the financials, won’t answer questions directly and won’t allow him to meet with the County’s External Auditor. Every request for information is treated like a formal public record request.
County Takes Pre-Emptive Strikes
Nonetheless, the Resource Board voted to distribute the cash assets, obtain a valuation of the real property for distribution purposes and audit the closing finances. However, the County refused to comply with that vote and didn’t wait for July 3rd to take more action. One contentious issue involves dollars set aside for the closure of landfill sites… which some say still have 30 years of useful life remaining. Along the way, residents in the contract cities have been contributing millions to a reserve fund for closure costs predicated appropriate accrual accounting for our use through July 2, 2013. Unilaterally, the County recently took another $9,000,000 of distributable cash from the System to pump up even more the County reserve closure fund. Then, the County put a deed restriction on the assets, something the RRB voted against recently so as not lower the potential value of some of the assets. This “divorce” is about to become very public.
Cities To Take Action
Sometimes you need an impartial referee in a divorce … or when a business is dissolving. With the July 2nd date fast approaching and the County taking preemptive actions contrary to the RRB decisions, Sunrise, Weston and Hollywood have voted to file a lawsuit, if necessary, to protect their share of the assets and the right to a full accounting. Other cities are lining up next week to join the litigation. Some in the County government have already warned the County Commission might, in retaliation, withdraw support for the County’s E-911 Consolidation funding plan. Hard to imagine anyone would tie these two issues together or jeopardize the most important public safety improvement in decades. Maybe that’s politics. But, obtaining a true accounting and distributing net assets pursuant to an agreement should not turn into a nasty “divorce” full of threats and retaliation, nor is this about politics – it is about enforcing a business agreement. Cities should stand together to protect the assets and seek what they are entitled to receive – nothing more, nothing less. (Michael Ryan is the mayor of Sunrise. He was elected in August, 2010 and re-elected in 2012.)