Host agreement reached, but fiscal court won’t get the funds image

Dan Sills, owner of WastePath Sanitary Landfill, signs the host agreement after negotiations were finalized this morning with the Marshall County Fiscal Court and the Marshall County Refuse/109 Board. Standing just behind him, Marshall County Judge-Executive Kevin Neal and seated just across from Sills is Refuse/109 Board Chairman Danny Newton, who also signed the document this morning. Also pictured are Don Copeland and Charlie Edwards, members of the Refuse/109 Board.

RACHEL KELLER COLLINS/The Tribune-Courier

After an hour of negotiations between the Marshall County Fiscal Court, Marshall County Refuse/109 Board and WastePath Sanitary Landfill, all three parties finally reached an agreement today on the two final sticking points Judge-Executive Kevin Neal talked about extensively during last week’s fiscal court meeting. But in a surprise after the agreement was signed and the refuse board’s regular meeting continued, a consultant for the board stated the funds Neal and Commissioner Justin Lamb battled to keep at the highest rate possible wouldn’t benefit the county or its roads at all—Kentucky Revised Statute mandates the entirety of those funds will be turned over to the refuse district for its purposes of waste management.

Grant County Solid Waste Director/Coordinator/Enforcement Officer Bryan Miles, who has served as advisor to the refuse district since the host agreement process began in March 2018, presented the board with what he called “a final gift,” KRS 109.140. He also presented a statement from attorney Tom Fitzgerald with the Kentucky Resources Council who he said is the waste management expert in the state which states the statute is “straight-forward.”

“All income from taxes, service charges or sales of from any other source that is generated from the operation of the waste district has to be transferred to the district for its use in carrying out its functions,” the statement reads. “It is mandatory, and there are no exceptions. So if a taxing district imposes a property levy or other tax such as in 109.056, or negotiates a host agreement that provides revenue to the district, it has to be used for that purpose and can’t be withheld or diverted.”

The host agreement itself was signed by all three parties involved; the fiscal court members conceded the argument about the inclusion of section 3.03 which stated all waste from the county had to be exclusively delivered to Waste Path’s landfill. During today’s meeting, the board explained their five-year waste management plan, which is mandated by the state, requires a backup landfill for times when the primary landfill was unable to accept waste. The section in question was left out of the final agreement.

The second sticking point was the host fee based on 5.25% of gross receipts, which is the number on which the landfill and the refuse board agreed, but Neal and Lamb refused to agree to anything less than 6.25 percent, which Neal said was the top number allowed by statute.

The board members noted the landfill was already increasing its fees from 2% to 5.25% with the new agreement and Sills spoke at length explaining that if the fee went higher than 5.25%, he would no longer be able to keep competitive pricing with surrounding waste disposal facilities and the loss in business would result in dollars lost for the county as well.

Spraggs said because he and Collins are daily in the business of negotiations, they understand that not every side gets everything they want so he offered a compromise of 5.75% fee. But the vote died when Lamb and Neal both voted against.

Neal again stated his stance about needing more funds for roads and his unwillingness to “leave money on the table.” Lamb said he had 47 class one roads (which is the lowest rating assigned by the Marshall County Roads Dept.) which is why he also “can’t leave money on the table.”

Sills said after the Aug. 10 fiscal court meeting when Neal and Lamb shut down attempts to move forward with the agreement and today’s meeting was scheduled, he looked at invoices for July and Aug., floated the numbers out over 12 months and the difference between 5.25% and 6.25% was $10,000, not $30,000 as Neal had stated.

Refuse board member and former chairman Marvin Stokes asked Lamb if he was willing to risk losing $180,000, which is approximately what they were missing out on during the elongated negotiation period, for $5,000 which is the difference with the compromise laid out by Spraggs.

Collins said he saw the risk of losing clients to the point where the county ended up shooting themselves in the foot over 1% and noted the increase from 2% to 5.25% was substantial and he was comfortable with that number.

Neal made a motion for 6.25% and Spraggs offered a second. Neal, Spraggs and Lamb voted in favor but Collins voted in opposition.

After asking Sills numerous times if he was okay with the measure, the refuse board voted in favor of changing the fee to 6.25%. Sills said he would accept it as long as all parties signed before leaving the building, which was done.

It was after most of the fiscal court members, with the exception of Spraggs, and Neal’s employees left the building when Miles explained the funds Neal and Lamb fought so hard to keep and refused to negotiate weren’t available for the county to utilize in the general fund—which means the fiscal court can’t hold onto those funds for the roads.

KRS 109.140 reads in full, “All funds derived from taxes, service charges, sales or other income resulting from the operation of a waste management district shall if collected or held by another person be paid to and expended by the district to carry out its duties, functions and responsibilities.”

Late this afternoon, Marshall County Attorney Jason Darnall issued the following written statement to The Tribune-Courier on behalf of himself and Denny Null, attorney representing the refuse board:

"On September 10, 2019, AFTER the Marshall County Fiscal Court adjourned from the Refuse Board meeting and AFTER all but one member of the court left the meeting, Bryan Miles read an email sent to him by attorney Tom Fitzgerald purportedly related to the collection of fees associated with the Host Agreement.   In Miles' opinion, that email stated that any host fees due the county under the Host Agreement would have to be turned over to the Refuse Board. However, in reviewing the full exchange wherein Miles requested the opinion, Fitzgerald wasn’t provided any background context, and was simply asked to interpret KRS 109.056 in a vacuum. By its plain meaning, KRS 109.056 refers to income generating activities of a refuse board. However, a host fee, negotiated by and between a fiscal court and a solid waste disposal provider, is separate and apart from what is contemplated in KRS 109.056. The host fee in the Host Agreement executed by the parties is akin to a license fee in KRS 68.178, which specifically allows revenue collected by the county to be used for various enumerated purposes, including road maintenance."

Darnall said he has spoken with Null and it's the understanding of both attorneys the board fully intends to comply with the host agreement and neither are aware of any intent or desire of the refuse board to block the county from collecting or using the fees.