02/10/2015 (2) - Laserfiche WebLink

Home Browse Search

RESOLUTION NO. 15-01 A RESOLUTION OF THE TOWN OF INDIAN RIVER SHORES, FLORIDA REGARDING THE FLORIDA AUDITOR GENERAL'S OPERATIONAL AUDIT OF THE FLORIDA MUNICIPAL POWER AGENCY (FMPA) AND THE PLANS OF THE CITY OF VERO BEACH IN RESPONSE TO THAT AUDIT DRAFT Whereas, the Town of Indian River Shores ("Town"), the City of Vero Beach ("City"), and Indian River County ( the "County") are participating in a state -mandated mediation process under Chapter 164, Florida Statutes, to resolve issues associated with a complaint of the Town of Indian River Shores ("Town") against. the City of Vero Beach ("City"), Case No. 312014 CA 000748, pending but presently in abeyance in the Circuit Court in and for Indian River County, Florida (the "Lawsuit"); and Whereas, as part of that state -mandated mediation process the Town, the City, and the County have entered into an Interim Mediation Agreement, which provides among other things that the Town will continue to abate the Lawsuit until the March 2, 2015, so that the Parties can further evaluate options that would resolve the conflicts between them; and Whereas, under the Interim Mediation Agreement the City has agreed to continue to work with "the Florida Municipal Power Agency ("FMPA"), bond trustees and others to effectuate the sale of the City's electric utility system to FPL"; and Whereas, the Florida Auditor General has conducted an operational audit of the FMPA and released its preliminary audit findings on January 21, 2015 (the "Audit Report"); and Whereas, the Audit Report found that FMPA's "fuel hedging practices were not consistent with industry practices" and, as a result of those practices, "the FMPA incurred net total losses of $247.6 million related to fuel hedging activities over the past 12 fiscal years"; and Whereas, the Audit Report found that FMPA entered into a series of pay -fixed interest rate swaps with notional amounts of $700 million associated with the financing of a power plant project in Taylor County Florida that was never built (the "Taylor Swaps"); and Whereas, the Audit Report found: FMPA's decision to enter into the Taylor Swaps "represents risk-taking in excess of industry practice"; the "swaps were not employed consistent with industry practices"; the swaps are likely to result in "significant termination fees"; and in October of 2014 the swaps had a value of "negative $108 Million"; and Whereas, based on discussions at the City's special meeting on January 29, 2015, the Town believes that the value of the Taylor Swaps has dropped significantly since October 2014, and the swaps currently have an approximate value of negative $150 Million: and Whereas, the Audit Report also raises serious concerns about other aspects of FMPA's business practices, including its investment strategies, procurement protocols, professional services contracts, salary and benefit policies, and entertainment budgets; and Whereas, a significant share of the hedging losses, swap termination fees, and other operational costs incurred by FMPA are passed on to the customers of the City's electric utility and other FMPA member utilities, and are a major driver of the electric rate problems facing the citizens of our communities: and Page I of 2 300