Stacking the Deck for the State and the County Mediation?

Even though it might seem it has been relatively quiet between the city and the county for the time being, things are working in the background.  We have heard through the grapevine that the county has notified the state about the city's financial state of emergency.  If this rumor is true, this state statute 218.503 would apply:
 
(1) Local governmental entities,... shall be subject to review and oversight by the Governor,... as appropriate, when any one of the following conditions occurs:
(a) Failure within the same fiscal year in which due to pay short-term loans or failure to make bond debt service or other long-term debt payments when due, as a result of a lack of funds.
(b) Failure to pay uncontested claims from creditors within 90 days after the claim is presented, as a result of a lack of funds.
(c) Failure to transfer at the appropriate time, due to lack of funds:
1. Taxes withheld on the income of employees; or
2. Employer and employee contributions for:
a. Federal social security; or
b. Any pension, retirement, or benefit plan of an employee.
(d) Failure for one pay period to pay, due to lack of funds:
1. Wages and salaries owed to employees; or
2. Retirement benefits owed to former employees.
(e) An unreserved or total fund balance or retained earnings deficit, or unrestricted or total net assets deficit, as reported on the balance sheet or statement of net assets on the general purpose or fund financial statements, for which sufficient resources of the local governmental entity,... as reported on the balance sheet or statement of net assets on the general purpose or fund financial statements, are not available to cover the deficit. Resources available to cover reported deficits include net assets that are not otherwise restricted by federal, state, or local laws, bond covenants, contractual agreements, or other legal constraints. Fixed or capital assets, the disposal of which would impair the ability of a local governmental entity,... to carry out its functions, are not considered resources available to cover reported deficits.

(3) Upon notification that one or more of the conditions in subsection (1) have occurred or will occur if action is not taken to assist the local governmental entity or ... the Governor or his or her designee shall contact the local governmental entity ... to determine what actions have been taken by the local governmental entity ... to resolve or prevent the condition.

With this in mind, the county appears to have made the right move because these conditions surely exist or will in the very near future.  Once the state of emergency is officially declared by the State, then this section of the statute applies:

If state assistance is needed, the local governmental entity ... is considered to be in a state of financial emergency. The Governor ... has the authority to implement measures as set forth in ss. 218.50-218.504 to assist the local governmental entity... in resolving the financial emergency. Such measures may include, but are not limited to:
(a) Requiring approval of the local governmental entity’s budget by the Governor ....
(b) Authorizing a state loan to a local governmental entity and providing for repayment of same.
(c) Prohibiting a local governmental entity ... from issuing bonds, notes, certificates of indebtedness, or any other form of debt until such time as it is no longer subject to this section.
(d) Making such inspections and reviews of records, information, reports, and assets of the local governmental entity.... The appropriate local officials shall cooperate in such inspections and reviews.
(e) Consulting with officials and auditors of the local governmental entity ... and the appropriate state officials regarding any steps necessary to bring the books of account, accounting systems, financial procedures, and reports into compliance with state requirements.
(f) Providing technical assistance to the local governmental entity ...
(g)1. Establishing a financial emergency board to oversee the activities of the local governmental entity .... If a financial emergency board is established for a local governmental entity, the Governor shall appoint board members and select a chair. ...The financial emergency board shall adopt such rules as are necessary for conducting board business. The board may:
a. Make such reviews of records, reports, and assets of the local governmental entity ... as are needed.
b. Consult with officials and auditors of the local governmental entity ... and the appropriate state officials regarding any steps necessary to bring the books of account, accounting systems, financial procedures, and reports of the local governmental entity ... into compliance with state requirements.
c. Review the operations, management, efficiency, productivity, and financing of functions and operations of the local governmental entity ....
2. The recommendations and reports made by the financial emergency board must be submitted to the Governor for local governmental entities ... for appropriate action.
(h) Requiring and approving a plan, to be prepared by officials of the local governmental entity ... in consultation with the appropriate state officials, prescribing actions that will cause the local governmental entity ... to no longer be subject to this section. The plan must include, but need not be limited to:
1. Provision for payment in full of obligations outlined in subsection (1), designated as priority items, that are currently due or will come due.
2. Establishment of priority budgeting or zero-based budgeting in order to eliminate items that are not affordable.
3. The prohibition of a level of operations which can be sustained only with nonrecurring revenues.

Is this why there was such a push for this $43,000 utility study by GAI?  Ms. Block asked if this study would provide a, "5 year pro forma," during the discussions about going forward with the GAI study.  By definition, pro forma accounting is a statement of the company's financial activities while excluding "unusual and nonrecurring transactions" when stating how much money the company actually made.  This may be one of the requirements the state is asking for as part of the plan they need to present to show how the city plans to get out of the hole.

As far as Outsourcing is concerned, obviously the utilities were not being run as efficiently as they could and are the main area of concern causing the financial heartburn for the city.  If the city calls in these so called "experts" to fix all the problems, the state will again be presented with more "facts" to show that the city has a master plan to handle the debt.  On paper, it might look like it is a much better solution, but in reality with fees for each "incident" over $500 cost, things will more than likely add up much quicker than the city anticipates. 

Sources inform us that just over this weekend, sewers were backing up and flooding homes near the intersection of Golden Gate and Damascus.  Under the new contract with Woodard & Curran, how much would this cost the city each incident?  This sounds like it happens quite often in some parts of town.  Woodard & Curran tried to imply that with all the repairs done to the system already, what type of major problems would the city run into?  What could be left to need repair? Obviously, Woodard & Curran did not do a thorough study of Mt. Olive Utility System if the County estimates there is approximately $3-4 Million dollars in repairs needed. 

According to the grapevine, Woodard & Curran were the preferred choice even before the meeting took place to present their proposals at the Monday, November 29th Special City Council Meeting.  This company has worked with both Mr. Cloud and GAI in the past out of Orlando, so how they heard about Polk City is no mystery.  The City Officials gave Woodard & Curran a much warmer reception than the FGUA team.  Even the TV monitors for slide presentations MAGICALLY started working for the Woodard & Curran presentation, when just minutes before they showed nothing but snow for the FGUA presentation.  Rumor has it that Woodard & Curran were so confident they would get the contract that they even approached Mr. Frank Sanderson (the $1,700 week consultant currently working for FGUA) regarding employment with their company a week BEFORE this meeting.

Mr. Cloud surely has been quite involved in running the city lately, proving how incompetent our current Interim City Manager really is.  How much do you think this tab has added up to by now?  That first $10,000 must be running out soon.