SG 583140 Time-line for FDEP reimbursement DSC grant and SRF loan funding - A Case Study
Abstract
The time line analysis shows the City, in need of finance, in pursuit of a DSC grant and loan
funding to refresh its sanitary sewer collection system. The needs for the funding given in the
application with respect to water quality in Kings Bay and health hazard have both since been
determined to be false in course of the analysis. The FDEP, nevertheless, approved the application
at its face value to provide the funds to be applied in public right of way areas of the City and of
particular unincorporated areas of the County according to the approved plan.
The agreement between the City and the FDEP as the administrator of the combined grant and loan
funds provide for $12million to pay for 100% of expansion and construction costs for the approved "Project"
(See Footnote). Eighty five percent of the funding was by a Disadvantaged Small Community Grant
together with fifteen percent with respect to an associated long term low interest loan to allow
charges to freeholders to be spread over the long term. Sewer collection lines laid upon County
areas were effectively free of charge to the County.
Notwithstanding that the grant/loan funding agreement was full and sufficient unto itself, almost
nine years after being notified of the funding award with work up to that date confined to City
limits, an Interlocal Agreement (ILA) was negotiated between the governing entities of the County
and the City. What was declared to be factual basis for the grant/loan arrangement and accepted by
both parties was false.
The consequences of the ILA were to compel the freeholders affected by it, without their prior
knowledge, to enrich the City unjustly with excessive fees and restrict the use of their own
properties without cause.
Among the several anomalies observed during the course of the research were included: assessing
vacant lots as if they were built upon, treating an elective surcharge as if it were a direct cost,
demanding that freeholders pay the City for expansion and construction costs when the public funding
arrangements existed to compensate the City fully for those same costs, compulsory replacement of
freeholders' septic systems paid for and installed as approved and permitted by the County
without compensation whilst neglecting to source grant funds available to the county to reduce such
financial burdens, failing to provide apportionment of payable loan costs over the time period of
the loans as intended by FDEP at commensurately low rate of interest, introducing assessments for
service for which no need nor benefit exists, the County exceeding the essential premises of the
State Attorney General's advisory opinion, AGO 90-75, as would appear to be the case.
FOOTNOTE: Subsection 1.01(8) to the original Disadvantaged Small Community Grant Agreement
SG583140, dated 2 October, 2000, was deleted and replaced as follows by its Amendment 2, in June,
2006:
"Project" shall mean the works financed by this Grant and Associated Loan WW58316S. It
consists of furnishing all labor, materials, and equipment to construct the collection and
transmission facilities project in accordance with the plans and specifications accepted by the
department ...[25 words omitted for convenience]... Approval of this Project is provided by
Florida Categorical Exclusion Notification, dated November 15, 2002.
Analysis Summary
Process
This Foundation, following a City Council meeting on 13 June, 2011, was requested by a group of
egregiously distressed property owners to conduct research and ascertain the facts leading to the
assessments they had received from the County. (Dozens of County residents had appealed to the
City Council against the City's sewer assessment charges to no avail - they had no vote in the
City's game!)
Extensive documentary evidence has been assembled, an open meeting with property owners has been
held, discussions have taken place with individual property owners, and both verbally and in writing
with staff of the County and the City, and at state and local levels, with FDEP, FDOH and the
Governor's Office, and also with the regional EPA office. A time line analysis has been
undertaken.
Introduction
Degrading the water quality in the river system began with the advent of the City of Crystal
River, as chain drag lines and dredging destroyed wetland forests that had cleansed the waters to
give the river its name.
The City's Sewage Treatment Plant (STP) was installed in 1926. Decades later in 1991, FDER
discovered an illegally dredged connection from it to a stream which had been continuously draining
its treated but toxic effluent into Kings Bay. The City complied with a state Consent Order in May,
1992, to stop the discharge into the stream. (How long sediment and biota of the stream and the Bay
suffered the pollution and would retain or incubate the toxicity is unknown.)
In September, 2008, the consensus among Citrus County commissioners was to work together with the
Crystal River City Council to negotiate a new InterLocal Agreement (ILA) to supply sewer service to
areas of Citrus County, replacing an unworkable ILA drafted in 1997.
Funding Sources
DSC grant: On 22 July, 1999, the City applied to FDEP for a grant to complete the conversion of
septic systems in the City to the sewer system and to extend the system on the public right of way
into some unincorporated areas of the County.
On 29 June, 2000, the City was awarded a Disadvantaged Small Communities (DSC) grant as "an
85/15 percent match". The 85% grant amount was $10,900,000.00, (a total of $12million including
the matching and contingency amounts).
The DSC Grant Agreement (SG583140), dated 2 October, 2000, provided for an optional Associated
Loan to assist financing of Construction Related Costs. The City availed itself of that Associated
Loan (WW58316S) which was executed by FDEP on 8 November, 2004. Thus funding with public money 100%
of the authorized Project costs from that date.
The funding of 100% of project costs with public money for each segment of work in the County's
unincorporated areas uses the procedure of Principal Forgiveness Loans (PFLs) .
A PFL is authorized by FDEP to cover 100% of estimated costs of a segment of work. The City would
keep 85% of the agreed final total costs actually incurred by the City (the part forgiven). The
remaining 15% of those agreed costs does have to be repaid in 40 half yearly installments of the
loan repayable over 20 years at a per annum interest rate of 2.52%. Of course, adjustments are made
to account for over or under estimation of the PFL quantum. (Note that assessing property owners for
their part of the 15% means that what was originally to be found by the City as match for the DSC
grant is paid by the County property owners instead.)
(Note that FDEP has confirmed by e-mail dated 7/22/2011, that the long term low interest
Associated Loan was to reduce burden upon property owners assessed to repay their part of the 15%
sum over the long term as opposed to a lump sum up front. FDEP also suggest that the County would
qualify and could apply for a Community Development Block Grant (CDBG) to pay the connection charges
which is a specified purpose for a CDBG - which was the objective of our petition to the
Commissioners submitted on 27 July, 2011.)
The Florida Categorical Exclusion Notification (FCEN) dated November 15, 2002, had declared that, "The
proposed project is a collection system to eliminate failing or marginally operational septic tanks."
Note: The supporting documentation, described in it as a "general study", dated, 8/22/2002,
describing the process avers, "Under proper site conditions, conventional on-site sewage
systems are capable of nearly complete removal of biodegradable organics, suspended solids, and
fecal coliforms (Florida HRS and Ayres Associates, 1993). Particular failing or marginally operating
septic tank installations were never determined but only that on average some installations fail to
operate to design standards with age and poor maintenance.
Bond Issues: The City's Water and Sewer Bond issue, Series 1992, was replaced by their
Ordinance 02-O-01 with a 2002 Bond issue with effect 28 January, 2002, which omitted a clause
restricting sewer service only within the City limits.
In addition, the Section 11.16 in the Article XIV Miscellaneous Provisions of the Bond ordinance
provided for any funds received from state or federal sources to be deposited by the City as Issuer
into a choice of specified Bond operating accounts. Thus ensuring that the public money paid to
reimburse the the Project costs (otherwise payable from the Bond proceeds) would replenish the Bond
accounts, even to excess.
County and City Joint Meeting - 31 March, 2009
The joint meeting was convened, inter alia to discuss three combined issues:
B1. Interlocal Agreement for Utility Services,
B2. proposed extension of sewer service into unincorporated areas of the County adjacent to
Plantation Resort, and,
B3. proposed annexation of Crystal River Airport into the City of Crystal River.
Issues that were discussed according to the minutes, which were beyond the scope of the approved
plan to which the public money could be applied included:
- The supply of reclaimed water to the Progress Energy Complex, and,
- "Over time, sewer systems will go all the way to Ft. Island Beach."
The following issues were not recorded in the minutes as having been addressed :
- The provision of 100% funding of agreed Project costs and expenses with public money.
- The Florida Categorical Exclusion Notification (FCEN) dated November 15, 2002.
Note that the minutes faithfully record the words of a City spokesperson, "Christmas has
come early!".
InterLocal Agreement
The Interlocal Agreement (ILA), between the County and the City government entities, negotiated
by staff, was entered into by the parties on 11 August, 2009.
Facts upon which the ILA are alleged to have been based have been determined to be false. (Letter
to the County, 19 October, 2011)
It is now not clear which septic systems in the County areas were determined to be failing or
marginally operational at the time the application for state funding was made and would have
required to have been replaced with the expanded sewer system.
The property owners' egregiousness stems from insufficient due diligence having been
exercised on their behalf during the ILA negotiations; their concerted pleas to the City Council on
13 June, 2011, were simply ignored as the ILA had been a fait accompli since August, 2009.
The elective Expansion Fees of $3,425.00, enrich the City by $1,452,200.00, when all costs of
system expansion to their service area are to be paid in full from public money.
Research has shown that the quantum of such fees reflect legacy amounts based upon the City's
former provision of sewage, plus water, police, fire and garbage collection services, which do not
apply to the County properties.
Municipal Service Benefit Unit (MSBU)
The County set up the Municipal Service Benefit Unit (MSBU) using the Ordinance 2010-04, to
enforce its commitments to the City under the provisions of the ILA.
The County had relied upon an Attorney General Butterworth opinion (contained in AGO 96-09) which
ignored a previous opinion by Butterworth in (AGO 90-75) pointing to conditions precedent for an
MSBU which are not qualities of the Ordinance 2010-04, conditions of being essential and financially
beneficial to the property.
Conclusion
Absent of its two major premises (community health/welfare and OFW water quality) the ILA is seen
simply as a way to enforce transfer of money from a group of County property owners to benefit the
City.
Causing unnecessary financial stress, and hardship to those property owners impacted by the sewer
expansion project by another government entity, and denying County residents recourse or vote in
protest is unconscionable.
The abrogation by the County of its jurisdictional authority, conveyed to it by F.S. 381.00655(2)(a),
in favor of the City by the terms of the ILA, and the fact that no public hearing was considered
necessary in spite of restricting how the property owners may use their property, is unworthy of
this Board of County Commissioners.
Research reveals misinformation aired before the commissioners concerning, for example,:
-
the proportion of system expansion costs to be reimbursed from public resources, (as above),
-
the false "determination" of health reasons to eliminate septic systems, (as above),
-
falsely concluding that eliminating target septic systems would improve water quality of the OFW,
(ignoring the science of Jones and Upchurch, 1994, and Hammett, 1996,)
-
the City's assertion that "septic systems do not work" flies in the face of the
science, (Onsite Wastewater Treatment Manual, and Florida HRS/ Ayres Associates 1993),
-
unjust enrichment (permitted by the ILA and enforced by the MSBU),
-
state Attorney General Opinion would favor mandatory connection, although AGO conditions
precedent may well have precluded setting up any MSBU. (e-mail to the County 10/24/2011).
Recommendations
The County must take back its jurisdictional authority from the City of Crystal River without
delay and amend the ILA and the MSBU enforcement of it:
-
Avoid punishing property owners impacted by the ILA by the charging of unwarranted Expansion Fees,
administrative overhead, and connection costs.
-
Concentrate upon the FDEP agreed plan to expand sewer service only into the planned designated
areas.
-
Ensure the awarded public money is used solely for its authorized purpose.
-
Seek a CDBG to cover connection charges payable by affected County property owners.
|
