1D, Eureka Contract Payment Terms Discussion

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public education and communication may be extremely difficult after more than a decade of education on the importance of recycling paper. Eureka would be responsible for the educational materials, but the City would undoubtedly receive concerns from residents. While this would preserve the revenue share from aluminum, the long-term impacts may not outweigh the loss of paper recycling for residents. In Eureka's March 23, 2009, letter to the City, they proposed a contract amendment to change the revenue share formula (Attachment B). The revised formula essentially eliminates their processing fee but also eliminates the City's ability to collect revenue share in the future. Based on Eureka's reading of the contract, this option removes the unpredictability and risk from the recycling budget and program. It is true that this option would add predictability to the budget and cap expenses at the agreed upon monthly fee. The City has 23 months remaining on this contract. Due to market conditions, it is quite possible that revenue share for paper will not return in 2009 and aluminum will continue to trend downward. Paper has not contributed to revenue share since November, and aluminum has dropped from a contribution of$479 in November to $266 in February (which was applied by Eureka to the costs of processing paper). At those prices, the revenue share contribution per household would have ranged from ten to 20 cents. While staff and the City Attorney continue to disagree with Eureka's reading of the contract, this may be the most viable option to continue the full recycling service that residents are accustomed to and to minimize budget impacts. If the City and Eureka cannot come to a negotiated conclusion on this issue, Eureka would have the option of using arbitration. Staff contacted the four other suburban cities that contract with Eureka: Roseville, Lauderdale, Maplewood, and St. Louis Park. Each city has a different contract with Eureka. Roseville's \ contract addresses processing fees in a different manner and this is not an issue in Roseville. Lauderdale's contract does not include processing fees. St. Louis Park is in a substantially similar situation to Arden Hills, and they have not yet reached a resolution with Eureka. Maplewood's contract payment terms is structured quite differently than Arden Hills and is not a comparable situation. The City Attorney will be in attendance to help answer legal questions about the contract. A. . s and Eureka Recycling for Recycling B. City of Arden Hills City Council Meetingfor March 30,2009 \\Ahdocsl\ah\AHdata\Planning\Recycling & Garbage\2009\033009 - CC Report - Eureka Contract Discussion. doc Page 4 of 4