County’s ‘Current Events’ report

The following is the complete text of the statement read by La Paz County Administrator Dan Field on behalf of the Board of Supervisors.

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Before going into any details about last week, clearly La Paz County currently owes the 2007 Judgment, attorney’s fees, and interest awarded to Yakima Composting. This cannot be denied, the jury of our peers found the County responsible and their decision has been upheld by the Court of Appeals and effectively by the Arizona Supreme Court denying review. In November 2009 we came close to settlement and I still believe we can get the Judgment behind us.

The challenge is how do we resolve the Judgment and put it behind us. Frankly, if the Board had $12.8 Million we would be hard pressed to not pay the Judgment. Unfortunately, we do not have anywhere that amount. The County at this point has about $3 Million of which all but approximately $100,000 is restricted by federal, state, and contractual obligations for specified uses.

Of the very small amount remaining these funds are devoted to maintaining “essential services” such as the Assessor, Recorder, Treasurer, Board, Finance, etc., which are offices necessary in the functioning and operation of a County government as an arm of the State.

Does that mean it is impossible to settle the Judgment? The answer is no, but it makes it very difficult. Especially when the Board must not only comply with State mandates, but also, forecast the future impacts in an unknown, extraordinary economy and tumultuous political climate.

For Yakima’s attorneys to put forth that nothing has been in the works for the last three years is untrue. The accurate facts are that this Board has been attempting to settle this matter several times. Although it appears from the outside that the matter has had no attention this is not true! Everyday the Board and I need to deal with the fact that we have the Yakima Judgment hanging over the County’s heads. We live it, day in and day out.

(To read on, click through.)

As an example of working on the subject, with the help of a local retired businessman, we believed we had a settlement in late October, early November of 2009. In fact, this Board paid Yakima one-half million dollars as good faith to enter a settlement where the primary terms were negotiated. Unfortunately, once the $500,000 was paid, Yakima began to adjust the material terms of the settlement. In the later part of December 2009, Supervisor Drum and myself attended negotiation meetings with Yakima in Phoenix to again attempt to work out the details.

In order to pay the Judgment debt it was necessary for the County to borrow funds through bonding to build a pelletizing facility. Basically, the County would be once again in business with Yakima. Of course, bonding if issued, requires the County to not only be able to make payments of principal and interest, but also, requires current financials and audits in order to get the best interest rates.

During the last part of November 2009 and the first week of December 2009 the Arizona Governor released her budget showing that approximately $700,000 of discretionary State funds given to La Paz County was to be totally eliminated. The Arizona Legislature followed suit. The County had no ability to pay the debt on the bonds, if we decided to enter the revised settlement. Moreover, the County had no ability to pay $27,500 of month payments to Yakima awaiting the building of the facility.

As a result of the settlement failing, the Board allowed the appeal to continue. While the appeal was going through the process, we were continued working towards an anticipated future resolution by completing the County financial statements and audits in preparation of settlement in order to determine our fiscal condition. We’ve been in discussions through our County Supervisors Association’s lobbyist with the State of Arizona for possible State solutions. We’ve been in discussions with our legislative panel for any potential legislative fix to pay the Judgment. We have reviewed, as a backup alternative, the process for filing a Chapter 9 Bankruptcy if all else failed.

In the year that followed the Board encountered a “perfect storm”, between the State Legislature’s sweeping, reducing, and pillaging of County revenues; to a county-wide flooding emergency in January of 2010; and the general reduction in the economy overall affecting revenues. Clearly, this Board has been concerned about the Judgment. Surely, the $500,000 given by the County Board in good faith evidences their concern to resolve the matter and that this Board has not ignored Yakima. With the external uncontrollable forces that have happened over the last year the Judgment is yet another financial burden on a budget where there is currently very little wiggle-room.

What we did discover was that any future partnership relationship would not work and only result in future litigation down the road. We need a clean break from this situation.

Even before the November, 2009 failed settlement we had been in discussions with Yakima. In early May, 2009, I contacted Jim Willett on behalf of this current Board of Supervisors and he met with each Board member separately and discussed the issues. At the time, Mr. Willett did not want to be in the waste business and suggested that settlement would be best achieved by creating new biosolids business opportunities; we agreed. However, the same concerns were raised associated with the location of the landfill and the trucking routes of biosolids that would continue to greatly impact areas of our County, such as Quartzsite.

Thereafter, in June of 2009, I met with Jim Willett and his partner to discuss other alternatives for settlement. At the meeting I gave them the most current audits of the County. The audits were the most current available; however, were several years in arrears. Upon taking office the current Board discovered that the County’s financial statements and audits were not being completed since 2004.

The completion of the financial statements and audits were imperative in order to determine the fiscal condition of the County. It was at this meeting that Yakima indicated several options of conveyance of County enterprise departments and back tax property. None of the items would satisfy the Judgment completely to be included in settlement, such as the conveyance of the Golf Course, the convey of the County Parks, the conveyance of Ted’s Truckstop in Quartzsite a tax delinquent property held in trust by the County for the State of Arizona, etc. However, due to federal and state obligations none of these suggestions would be available legally.

The conveying of the landfill has been a topic raised by Yakima. Again, State law requires the County to provide landfill services to its residents in perpetuity. Even if we contracted for services nothing would ensure that those services would continue indefinitely, and therefore, would require other alternatives such as the development of a new landfill, which is not only costly but difficult to properly site. Moreover, we would lose what little control we would have as to what types of waste were being dumped. The landfill is already licensed to accept several different forms of special waste. In addition, the proposed Yakima deal for the landfill was that the entire landfill of 640 acres would be conveyed, including 480 acres patented through BLM for government purposes only. The most concerning matter of conveying the landfill besides the increased transport of wastes through local communities is that the proposal included that the Judgment would stay in place until payment of the entire Judgment was paid.

Finally, what occurred last week in our County was very unfortunate and costly. As most of you now know, many lives of innocent employees and families were needlessly impacted by the filing and service of Writs of Garnishment in the amount of $12.8 Million on bank accounts held by the County Treasurer.

What was disheartening was that instead of impounding and holding solely La Paz County funds controlled by the Board of Supervisors; Yakima held hostage all funds that the County Treasurer holds as the fiduciary agent for all Special Taxing Districts including the School, Fire, Sanitary, Irrigation Districts, etc. Yakima’s attorneys were trying to take $12.8 Million owed under the Yakima Judgment from every special district entity in La Paz County. The Judge decided that “as a matter of law” Yakima could not lawfully garnish the County Treasurer’s accounts and quashed the writs of garnishment citing a 1937 Arizona case.

I always try to find a silver lining in every cloud. Although there was no need to give the Board of Supervisors a wakeup call; the action had the affect of finally waking up the State of Arizona that La Paz County has a problem that affects the State’s departments as well.