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HomeMy WebLinkAbout2015-027A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF INDIAN RIVER COUNTY, FLORIDA REGARDING THE FLORIDA AUDITOR GENERALS PRELIMINARY AND TENTATIVE AUDIT FINDINGS AND RECOMMENDATIONS CONCERNING THE FLORIDA MUNICIPAL POWER AGENCY (FMPA) AND THE PLANS OF THE CITY OF VERO BEACH IN RESPONSE TO THAT AUDIT REPORT. 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 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 a full audit of the FMPA and released its preliminary and tentative audit findings and recommendations on January 21, 2015 (the "Audit Report"); and WHEREAS, the Audit Report found that FMPA's "[fluel 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 call meeting on January 29, 2015, the County 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 WHEREAS, at its special call meeting on January 29, 2015, the City voted to encourage FMPA to hire a consultant to protect against these abuses occurring in the future; and WHEREAS, the County applauds the City for trying to ensure that FMPA does not repeat mistakes in the future, but also believes that the City should hold FMPA accountable for its mistakes that have already occurred, and which have caused economic harm to the City's electric utility customers; and WHEREAS, the County believes that FMPA's intransigence and mismanagement are primary causes of the electric rate problems that confront all of our residents, and the City will never be able to solve those problems without holding FMPA accountable; NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Indian River County, Florida that: Section 1. The County adopts as true and correct the recitals stated above and incorporates same by reference as part of this Resolution. Section 2. The County encourages the City to meet as soon as possible with the FMPA as part of the City's obligations under the Interim Mediation Agreement to try to resolve the Lawsuit by working with FMPA "to effectuate the sale of the City's electric utility system to FPL." As part of that meeting the County encourages the City to: a. Demand that the FMPA do an immediate market appraisal by an independent expert of all assets and liabilities associated with the City of Vero Beach and its contractual arrangements with FMPA; and b. Discuss with FMPA the findings in the Audit Report including, but not limited to, FMPA's hedging and swap losses; and RESOLUTION NO. 2015-027 c. Request that FMPA end its opposition to the sale of the City's electric utility system to FPL, and take whatever action is necessary to allow that sale to move forward. Section 3. The County encourages the City to also: a. Request the Florida Auditor General and the Joint Legislative Auditing Committee and any other appropriate committee of the Florida Legislature to use any funds necessary to: 1. Determine the fair market value of the FMPA generation assets; 2. Determine the fair market value of the FMPA as a whole; 3. Prepare 3 years of pro forma financial statements based upon GASB financial procedures, including balance sheets, profit and loss statements and cash flow statements; 4. Review the Purvis, Gray & Company audits to determine what was stated with respect to the internal controls and policies; and 5. Include FMEA in the pro formas to be performed. b. Request legislative hearings on FMPA's activities; and c. Engage in the statewide dialogue with members of FMPA and other interested entities; and d. Support an amendment to Florida Statutes which would give PSC jurisdiction over FMPA and amendments which would subject FMPA to other laws applicable to local governments, including municipalities that do not currently apply to the FMPA. Section 4. The County Attorney, or his designee, shall hand deliver on this day a certified copy of the Resolution to the City Council requesting that the City consider the Resolution at its meeting on February 17, 2015; and mail a copy to the Florida Auditor General and the Joint Legislative Auditing Committee. The resolution was moved for adoption by Commissioner Solari, and the motion was seconded by Commissioner Zorc, and, upon being put to a vote, the vote was as follows: RESOLUTION NO. 2015-027 Chairman Wesley S. Davis Aye Vice Chairman Bob Solari Aye Commissioner Joseph E. Flescher Aye Commissioner Tim Zorc Aye Commissioner Peter D. O'Bryan Aye The Chairman thereupon declared the resolution duly passed and adopted this 17th day of February, 2015. ATTEST: Jeffrey R. Smith, Clerk of Court and Comptroller By: I O Deputy Clerk BOARD OF COUNTY COMMISSIONERS INDIAN RIVER COUNTY, FLORIDA B � 74 Wesley S. Davis, Chairman 0 APPROVED AS TO FORM AND LEGAL SUFFICIENCY BY-- Y'N EN.OLD COUNTY ATTORNEY