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$30perton,EurekaclaimstheCityisnowresponsibleforthe$45pertongaptocoverthe$75 <br />pertonprocessingfee.Sincetherevenuefromaluminumwouldnotbesufficienttocoverthe <br />gap,theCitywouldhaveowedanadditional$2,407.35inDecember2008.Eurekawaivedthe <br />Decemberprocessingfeeduetotheirerrorontheinvoice. <br />InJanuary,theadditionalprocessingfeewouldhaveadded$1,599totheinvoiceandinFebruary <br />theprocessingfeewouldhaveadded$1,508.SinceEurekahasprovidedtherequiredrecycling <br />services,theundisputedperhouseholdfeehasbeenpaid,whichis$7,552.Theseadditional <br />processingfeeshavenotbeenpaid. <br />Thebudgetedcostofthe2009recyclingprogramis$118,677,whichincludesthecurbside <br />recyclingprogram,twocommunitycleanupevents,andadministrativeexpenses.Thisbudgetis <br />fundedbytheannualrecyclingfee,theSCOREGrant,andanyrevenueshare.For2009,the <br />annualfeeis$32perparticipatinghousehold,theSCOREgrantis$19,866,andtheestimated <br />revenuesharewas$20,530.Thetotalbudgetedrevenuewas$119,404.Duetothedeclining <br />recyclingmarket,therevenuesharewillbeshortin2009.However,inanticipationofapossible <br />decline,therecyclingreservescancompensateforthelossofrevenueshare. <br />Therecyclingbudgetisaself-fundingenterprisefund.Thebudgetdidnotanticipateadditional <br />processingcostsin2009.Ifthisprocessingfeeweretocontinuethroughtheendof2009,the <br />budgetcouldpotentiallybeshortby$20,000to$25,000dependingontherecyclingmarket. <br />Thistranslatestoacostperhouseholdof$3.57-$3.91fromthebudgeted$3.06. <br />Uponreviewingthecontract,staffandtheCityAttorneydonotagreewithEureka's <br />interpretationofthecontract.Asnotedinthereport,staffhasnotauthorizedpaymentofthe <br />"processingfeegap"requestedbyEureka,andwedonotrecommendpayingthe"processingfee <br />gap"onpreviousorfutureinvoices.UsingEureka'sreadingofthecontract,muchoftherisk <br />andunpredictabilityisplacedontheCity.TheCitychoseEurekadespitethelowermonthly <br />pricefromthreeofthefourcompetingproposals.TherisktotheCitywasthepotentialforno <br />revenueshareinanygivenmonth,whichwouldrequiretheCitytopaythefullmonthlyfee. <br />IftheCitydoesnotpaytheprocessingfeethatEurekacontendsispartofthecontract,theydid <br />indicateduringourmeetingonMarch13thattheywouldneedtopursuesection25ofthe <br />contractthatallowsthemtodeclareamaterialeconomicallyunfeasibletocollect(seepage8of <br />Attachment1formoredetailonthisprocess).Iftheypursuethisportionofthecontract, <br />residentswouldnolongerbeabletorecyclepaperanditwouldbeleftbehindinthebins.It <br />wouldbepossibletoreintroducepaperrecyclingifthemarketimprovedinthefuture;however, <br />CityofArdenHills <br />CityCouncilMeetingforMarch30,2009 <br />CC <br />P:\PlanningIRecyclingGarbage12009\033009-Report-EurekaContractDiscussion.doc <br />Page3of4 <br /> <br />