Lake Worth to issue Refund to Municipalites

City to vote on $780k in refunds on Regional Sewer charges

The City of Lake Worth Beach, Florida entered into an interlocal wastewater service and wastewater facilities cost sharing agreement in 2013 with the City of Atlantis,Town of Lantana, Town of Manalapan, Town of Palm Beach, Village of Palm Springs, Town of South Palm Beach, Town of Lake Clarke Shores and the Palm Beach State College (“Sub-Regional Participants”).

Pursuant to the cost sharing agreement, at the conclusion of the fiscal year, the City performs a true up of the revenues and expenses of the operations and maintenance accounts of the Sub-Regional Sewer System. Per the agreement, each Sub-Regional Participant, including the City, shall receive a refund if overbilled, or be billed and be responsible for any amount that was under billed.

The Fiscal Year (FY) 2019 - 2020 true up determined a refund is due to the Sub-Regional Participants, including the City, of a total sum of $780,115.67, broken down proportionally as stated below:

City of Atlantis $ 39,965.81
Town of Lantana $ 108,012.48
Town of Manalapan $ 5,984.97
Village of Palm Springs $ 199,171.92
Town of South Palm Beach $ 16,134.62
Town of Lake Clarke Shores $ 39,105.88
Palm Beach State College $ 3,348.30
City of Lake Worth Beach $ 368,391.69

TOTAL: $780,115.67

Worker's family sues for negligence - Lake Worth part of suit

There are a lot of horrible ways to die but falling through a corroded grate and drowning in everyone's waste?

That's what happened to Herminio Padillia Jr. "The suit, filed in Palm Beach Circuit Court Monday, asks for unspecified damages of more than $15,000 and also names as defendants the county, Lake Worth, Riviera Beach and Palm Beach, which participate in running the East Central Regional Water Reclamation Facility at 4375 Easley Dr. in western West Palm Beach, where the 48-year-old father of three died Jan. 17," says The Palm Beach Post

So, Lake Worth is not the only place around that shys away from good maintenance.

ECR Payments

A mistake was made on Resolution 48-2015 so now a new one will be voted in tonight. It just shows how much the commission relies on staff and all information coming from the city to be true and accurate. We already know that numerical mistakes have been made because the city manager has admitted that.

In 2016 the East Central Regional Water Reclamation Facility Debt Payment is not levied in FY 2016. The total we collected in 2015 was $799,308.

On September 1, 2015, the City Commission approved Resolution No. 48-2015 which established the rates and charges for the sub-regional sewer utility based upon the recommendations of the sub-regional board for Fiscal Year 2016. The rates include operations and maintenance charges, rehabilitation and replacement charges and a capital reserve charge to collect funds required for a Palm Beach County shared force main rehabilitation project. The rates are included in this resolution. After adoption, it was found that the rates listed under Lake Clarke Shores and Lake Worth were reversed.  Resolution 54-2015 corrects that error.

Lake Worth Water & Sewer

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Of the cities depicted on this graph, Lake Worth has the 5th highest rate.

The East Central Regional Water Reclamation Facility (ECRWRF) is funded and governed by a board comprised of the representatives of the entities served by that facility:
 City of West Palm Beach
 City of Lake Worth
 City of Riviera Beach
 Town of Palm Beach
 Palm Beach County.

**On to water rates--Where's there a will, there's a way--

Burton and Associates that did the projections says that the five-year rate adjustments proposed by the FY 2015 RSA have been reduced in the FY 2016 RSA because the City was able to secure SRF funding for the 2” water main replacement projects rather than rely on funding from a revenue bond, which had been the assumed strategy in the FY 2015 RSA.

If you recall we were going to spend  $14 million to replace all the 2 inch water pipes if the general obligation bond had passed. The SRF loan offered a 30 year financing with substantially lower interest rates. As a result, total debt service expenses of the system decreased, allowing for a reduction to rate adjustments.

The five-year rate adjustment plan developed in the FY 2016 RSA is as follows:

Water Rate Adjustment
2016--3.50%
2017--3.50%
2018--3.00%
2019--3.00%
2020--3.00%
Avg. Res. Bill (5,000 GAL)
2016--$30.77
2017--$31.86
2018--$32.80
2019--$33.80
2020--$34.81

With an average bill usage of 5,000 GAL, Vice Mayor Maxwell voted against the rates and fees for the Water System saying,

 "This is the "consequence of the financial mess at the beach."

~ Scott Maxwell

Of course, he was all gung ho in getting all the property owners in debt on their ad valorem for 34 years. He also said that the loan term to ourselves for the casino was changed to 17 year from 13. (We buy our water from West Palm Beach at the beach). NO one on the dais corrected these huge mistakes. Perhaps it's easier to ignore gaffes (there are many from a few on the dais) but unfortunately some in the public will believe them.

Lake Worth's Budget and Millage

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By law, we have to publish our proposed budget and our millage rate which is 5.4945.  Both appeared in yesterday's Palm Beach Post. What wasn't mentioned was the MSTU Fire--that is a separate tax of 3.4581 mills for a total of 8.9526 that Lake worth will pay.

Although the millage is the same as last year, taxes will be going up by $582,800 or 9.7% due to the rise in property values.  The final decision on the proposed tax increase and the budget will be made at a public meeting on September 23rd.

The County and the City's projections are below relative to Public Safety--

$667,348,198--COUNTY PROPERTY TAXES
$555,199,475--COUNTY PUBLIC SAFETY COSTS

$6,315,694--LAKE WORTH PROPERTY TAXES
$20,138,441--LAKE WORTH PUBLIC SAFETY COSTS
Look at the difference and calculate the percentage on what we pay for Public Safety compared to what we bring in from ad-valorem.   

Does that seem just a wee bit disproportionate to you? This is one of the main reasons why we have no money to operate our city. Luckily we have our own utility company and from that as well as enterprise funds, we will have an additional $9,138,387. We get selected as one of the top crime cities in the state and rank 42nd in the country--crime is rising right along with costs.

There is a new biosolids improvement project in effect that will affect much of the present plant located near the turnpike in West Palm Beach. The presentation was dated July 14, 2014 but Lake Worth gave its presentation to the public on September 19, well after the election. Lake Worth is a member along with West Palm Beach, Palm Beach, and Palm Beach County. Tipping fees for waste has gone up to $56 per wet ton. The entire project is estimated at a cost of $112,794,000, so far, as designs are not totally complete and costs continue to change. This will be paid off through a five year bond.

We are one of the poorest cities in Palm Beach County and taxes are going up by 9.7% along with water (5%) and sewer (8%) for five years, an overall 40% increase, to pay for the biosolids improvement plant.  In June it was said that the Regional Sewer Fund was adjusted based on the settlement agreement reached with our contracted sub-regional customers in FY 2013. A true-up calculation was completed based on audited FY 13 financial reports.  At that time it was stated that they will only be charged a 1% increase by us. On 9-23, the commission will be voting on the final charge--it is on Consent Agenda.

 And just think, Lake Worth still wanted to grab $63.5 million more.

Setting Lake Worth's Budget for 2014

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Last night's meeting was, for the most part,  simply a formality to establish the millage and the budget for 2013/2014 that is required by law.

• Millage:  5.4945 (same as last year)

• Stormwater special assessment:  $75.60 per ERU (no change from last year)

• Refuse collection special assessment:  $245.76 (no change)

• Rates and charges for Electric:  Reduction in rates of 4.5% for residential and small commercial customers. Mayor Pam Triolo said, "Let's live within our means. We can go back and adjust if we have to."  Vice Mayor Scott Maxwell said, "That's a game change for us."  The Finance Director had a slide showing the comparisons between Lake Worth and FPL mentioning that FPL was just granted a rate increase of 5% beginning in January because of fuel projection costs whereas we do not have to go before a Public Service Commission for rates.

• Rates and charges for water: No increase

• Rates and charges for Local Sewer:  10% decrease

• Rates and charges for sub-regional sewer: $1.563 per 1000 gallons and $1.315 per 1000 gallons for the City of Palm Springs

Finance Director Carr gave a brief presentation to sum up the 6 Budget Workshop meetings stating that the city has 341 employees with 170 working for our utility. Three positions are being eliminated. Factors for Lake Worth 2020 program are in the budget and if passed, will increase water, local sewer and regional sewer charges.  Our non-controllable costs of pensions are:

Fire:  $2.8 million
Police:  $2.9 million
Employees:  $1.1 million

There's a lot of Crap at the Sewer Plant

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Even sewer employees have to deal with another kind of crap--anonymous complaints that can cost you your job.

When there's a lot of money involved in a facility that uses taxpayer funding, you will have politics, you might have corruption and you will have disputes. The Sewage Plant is no exception and not immune. Two top managers, the sewage plant manager and the plant superintendent, were ordered off the job by an anonymous complaint to West Palm Beach and sent home without pay. Prior to that, two others were ordered off the job but later reinstated. Joesph Carlini was promoted last year but recently blamed for the friction. He has been reassigned. Read more...

Back on January 20, 2011, I was part of a tour to the ECR plant located on Haverhill in West Palm Beach where Lake Worth controls 18%. Others on the tour were Commissioners Jo-Ann Golden, Scott Maxwell, Christopher McVoy and Robert Waples of our Planning & Zoning Board. It was an impressive experience as was Mr. Carlini. Photos from the tour

City manager Michael Bornstein is the official representative of the City of Lake Worth. The shares of control are:
Palm Beach County 34%.
West Palm Beach controls 29%
Lake Worth has 18%
Riviera Beach with 11%
Palm Beach has 7%

When it costs someone their job or their reputation, how can anyone be held accountable for an accusation in an anonymous complaint? We don't even allow that for code violations in Lake Worth. Anonymous complaints are just bully personal attacks and should be given no credence. Anonymous complaints should not be accepted by any company or governmental body. By not accepting them, it will lessen the likelihood of frivolous complaints or complaints filed with ill-will or malice or the credibility of the complainant which can and does make a difference.

Tonight's Commission Meeting

On tonight's commission agenda is La Joya Village, (meaning jewel, gem pearl, treasure)  the 55 unit rental complex promoted by the CRA as the greatest thing since sliced bread, that will be built on the railroad tracks at S. F street and 6th Avenue South for poor folks, not like we don't have enough of them.

The project site has a Future Land Use Designation of Mixed Use East, which allows a density of 30 dwelling units per acre. The base density of the Gateway District is 20 dwelling units per acre. Municipal Code gives the City Commission the authority to grant a density bonus of up to 10 dwelling units per acre for projects which incorporate affordable housing units. Now, who would have thought that the P&Z would not recommend this and who would even consider that the city commission will deny it?

And where there is an egregious situation that is devastating to Lake Worth, up pops a silver lining. The city had borrowed $5.1 million to build a master lift station in Bryant Park. We will now pay off the balance of that debt from the Regional Sewer Fund fiasco and use the $3.9 million, saving Lake Worth $200,000 in interest payments through 2016 when the note was due. I guess this includes the re-financing fee. Also, the reduction in cost will allow for local sewer rates to be reduced by 10%-- for example--reducing the residential base rate from $4.21 to $3.789 and the volume rate from $0.393 to$0.354 per 100 gallons up to a maximum of 12,000 gallons.

Under New business E will be a political discussion on Commission Szerdi's request regarding the preparation of a height restriction ordinance which would be consistent with the City’s Land Development Regulations.

The City of Lake Worth's Sub-Regional System Audit

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Last night, Finance Director, Steven Carr was given kudos for doing a wonderful job for Lake Worth.  Even one of the Friends of the Gulfstream, who loves to speak on all subjects great and small, laid compliments upon him.  I like Steve Carr. He was hired by Susan Stanton and it was brought to Stanton's attention that our sub-regional sewer customers owed us over $10 million bucks. We had audit after audit during that period. The City pursued the monies owed. Now there is a complete reversal. What gives?

The City of Lake Worth's Sub-Regional System audit--

What happened?  How did we go from cities owing us millions to us owing them thousands?

Notes to Fiscal Years:
1. City records did not include sufficient information to permit a calculation of over (under)-billings for the 2006-07 fiscal year.

2. Notes A, C, I, J, K, and L under the Types of Deficiencies in City Records, relate to the first half of the 2008-09 fiscal year. Notes A, B, D, F, G, I, J, K, and L relate to the second half of the 2008-09 fiscal year. Over (under)-billing amounts are for the first half of the 2008-09 fiscal year. City records did not include sufficient information to permit a calculation of over (under)-billings for the second half of the 2008-09 fiscal year.

Here is a list of all the "incompetence"--
Notes to Types of Deficiencies in City records:

A. Contracts between the City and System Customers were not sufficiently detailed as to the methodology for determining renewal and replacement costs to be billed to and paid by System Customers.
B. City records did not evidence how Sub-regional System renewal and replacement (R&R) costs were calculated.
C. City records did not evidence why the City used budgeted depreciation as the sole basis for calculating Sub-regional System R&R costs.
D. City records did not evidence what portion of the flow rate billed to System Customers was attributable to the East Central Regional Water Reclamation Facility
(ECRWRF).
E. City records did not evidence whether or not State Revolving Fund (SRF) loan costs were included in ECRWRF flow rate calculations
F. City records did not evidence what portion of the flow rate billed to System Customers was attributable to the Palm Beach County Joint Transmission Facility
(PBCJTF).
G. City records did not evidence how the flow rates stated in a consultant’s rate study were determined.
H. City records did not evidence how the flow rates stated in revenue sufficiency analyses were determined.
I. City records did not evidence the flow rate calculation for the Village of Palm Springs.
J. City records did not always sufficiently demonstrate that Regional Sewer Funds expenditures were recorded in the correct amount and were related to the Sub-regional System.
K. City records did not evidence the basis upon which allocation percentages, used to allocate budgeted salaries of Sub-regional System employees to the City’s local sewer system, were established.
L. City records did not evidence the methodology used to allocate any indirect costs to the Regional Sewer Fund and, as such, did not demonstrate that a systematic and reasonable approach was used to allocate such costs.

Re-locate to Lake Worth - We are poorer than Dirt

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Last night's commission meeting was not too long. None of them are very long since this commission was elected and Michael Bornstein became city manager, which should make everyone wonder what is being decided out-of-the-sunshine.

Essentially we had only three or so citizens speaking last night--you could feel the tension in the air.  Mr. Timm spoke, and I have been agreeing with him on everything lately. Next there was the little woman in the first row who likes to speak on just about everything. She coaches the dais from the front row and even before the meeting told me never to speak to her again, that I was evil.  She denied knowing anything about the banner being re-erected on the Gulfstream. It does have her Pac's disclaimer on it. That special interest side certainly gets things twisted.

The City Commission voted in a new marketing approach:  Come and invest in Lake Worth, the poorest city next to Belle Glade. From the map that was shown, even the nicest neighborhoods will be part of an Enterprise Zone and just as property values are starting to rise...hmmmm. One side of politics is always accusing the other on wanting to keep property values low.  I have never figured out that one or where it made the least bit of sense but they keep using that ridiculous propaganda.. They just voted the opposite of their beliefs last night. Anything for business at the expense of single family and residential neighborhoods. Enterprise Zones are to attract business so I am confused about designating residential family neighborhoods as enterprise zones. Here we are trying so hard to rise from the ashes with a new casino and beach redevelopment, re-doing our golf course to attract tourism,  and they just acted on an enterprise zone telling the world that you don't really want to come here and buy a property as you will be living and eating in the dirt.

The Commission settled with our regional sewer customers. It certainly is curious.  In 2005, it was discovered by our Finance Department that 7 entities owed us money for our failure to bill for Renewal and Replacement charges. According to them at the time, these cities owed us $10,418,237 with Lake Worth customers owing $3+million. It was brought to Susan Stanton's attention soon after she was hired and she wanted to collect. We sued them in 2010. The cities balked because they never got a bill.

The Florida Auditor General became involved and it was determined that the customers of the Sub Regional system (includes Lake Worth) overpaid $4.5 million with the City of Lake Worth customers overpaying $3.8 million of that amount.  How can this be?  Was our Finance Department totally out of whack on its numbers, its billing, its methodology and calculations to advise a city manager that we were owed double digit millions only to learn that we now owe the cities? The Village of Palm Springs is the only city that owes us and it is a measly $52,708. We got into trouble through another bad contract and staff incompetence.

Mr. Timm spoke to the issue and was alarmed that the city was not going to give the money back to Lake Worth customers. Bornstein said, "You are out of line," that the issue has not yet been presented to the commission. Well, there was a big settlement and an agreement to pay our customers with the money coming out of Reserves last night.  Why wasn't there discussion or recommendations on the same thing to Lake Worth customers? Lake Worth customers will probably end up eating dirt.

Lake Worth Commission "plays it safe" on Pelletizer Plant

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I wrote about the East Central Regional Wastewater Treatment Facility back in October that is situated on 360 acres and is located on Haverhill Road, adjacent to the Florida turnpike in West Palm Beach. There are four cities (Palm Beach, West Palm Beach, Riviera Beach and Lake Worth) plus Palm Beach County that oversee this plant that takes our wastewater, treats it and then processes it by removing the pollutants and debris. It is all disinfected before it is discharged.

I arrived at the end of the meeting last night at the point where the Lake Worth commission had already made a motion and were waiting to vote. It was a 4 to 1 decision with Commissioner Christopher McVoy dissenting. His argument was why would the commission vote for the more expensive option. Good Question. Why did it?

ECR's board is issuing bonds totaling $115 million to update its water treatment plant that will include a pelletizer plant that converts sludge into pellets that can be sold and used as fertilizer. By building their own pelletizer plant at a cost of $24 million, the ECR says it will save us $200,000 a year every year for twenty years from what the SWA charges and allow us to have control over costs. Not surprising, the SWA disagrees.

#1: Option to stay with Solid Waste Authority
Capital cost: $13,532,00
Net present operating costs: $56,360,000
Total present worth costs: $69,892,000

#2 Option to have onsite drying facility at the ECR
Capital costs: $24,140,000
Net present operating costs: $41,380,000
Total present worth costs: $65,520,000

Our Commission had plenty of time to get the information it needed to make an informed decision but instead complained about the lack of information. Even future sewage costs could have been explored but weren't. Why not? Once again, the Commission took the easy choice--invest in a capital project and save money and contain future costs or stay with what they had. This will be indicative of how they make their decision on our power provider. They did the same thing on the Greater Bay settlement--played it safe.

The difference is $4.3 million DOLLARS more to stay with SWA and that's what the four Lake Worth commissioners just did--voted to spend more of your money. I will have to listen to the audio to try and determine why they voted the way in which they did. Did they get opinions from the municipalities and why they were leaning the way they were? Did they bother to confer with the other partners to get a feel of it all?

I have to wonder if Lake Worth business owner and West Palm Beach Commissioner Shanon Materio had shared her hesitations/concerns with our majority commission. West Palm Beach had postponed its Monday meeting on this decision. Riviera Beach and Palm Beach were the only municipalities out of five (Palm Beach County, West Palm Beach, Lake Worth, Riviera Beach, and Palm Beach) that wanted to build the new plant.

Lake Worth faulted in Billing procedures to Regional Sewer Customers

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No surprise here--Audit finds Lake Worth had sloppy billing procedures.

When Susan Stanton was hired, she soon found out that we had regional sewer customers that had not paid their bills relative to moving sewage to a regional treatment plant. We were owed in excess of $10 million and an Audit began in March 2011. Prior to Stanton, the city had swept it all under the rug.

The State Audit determined the following:

• Renewal and replacement costs were not always calculated properly

• Debt costs were not always passed through to those cities

• Supporting Documents were not always retained by staff

• Operating and maintenance costs were not always calculated correctly

• Budgets were not given to the cities for six years through September 2011

It is still unclear if we will ever re-capture money owed to the City of Lake Worth because of Staff incompetence or mis-management. Until these issues are resolved, the Sub-Regional fund does not have sufficient revenues to maintain operations--this fund's unrestricted reserves will be totally depleted in less than 2 years and the Lake Worth taxpayer will absorb the cost.

It always simply amazes me, considering we pay great salaries with great benefits that remain 70% of our fixed costs of our entire operating budget, that we get incompetence at this level. If it were not for Susan Stanton, we might never have found out that seven cities owe us $10,418,237, with a portion of that non-collectable because of basic procedures not in place.

P.S. Why didn't we hire Internal Auditor, Robert Marksmeier?