8A, Approve Contract with Eureka Recycling

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Proposed Contract Amendment Chan!!es The proposed contract amendment would completely replace sections 6 and 25 of the existing contract (Attachment A). Section 6 addresses the payment terms and processing fees. The contract amendment includes additional materials in the revenue share formula and a structure processing fee. Section 25 addresses what occurs if market demand ceases for a particular material or if the processing fees become burdensome to the City. To help facilitate the review, the primary changes are outlined as follows: Section 6.1 Monthly Price per Residential Dwelling Unit · The existing contract includes provisions for an annual .increase to the price per residential dwelling unit based on the CPI for the Upper Midwest as determined by the Federal Reserve Bank of Minneapolis. The revised contract caps the annual increase to three percent or the CPI, whichever is less. The monthly price per residential dwelling unit increased from $2.95 in 2008 to $3.06 in 2009, which was a 3.7 percent change. 6.2.1 Material Sales Revenue Share and Processing Fees · The existing contract includes revenue share for only aluminum and paper. The contract amendment would extend that to include glass, steel, and three types of plastic. Paper has also been disaggregated into its four components. The additional materials were added so that the actual costs and revenue of each material could be tracked more accurately. Under the existing contract, the City does not receive revenue from these additional materials but does pay higher processing fees for aluminum and paper to cover the processing costs of these other materials. · The price per ton for aluminum in the existing contract is based on the American Metal Market (AMM). Eureka is requesting that this be changed to the actual price paid to Eureka in the local market. The AMM is based on Chicago prices, though Eureka is paid based on the local market. Based on a review of the local market prices since March 2008, the local market price is slightly less but there is not a significant difference. 6.2.2 Processing fees · The processing fee for all paper types has been reduced from $75/ton to $60/ton. · The processing fee for aluminum has been reduced from $150/ton to $90/ton. · The processing fee for glass, steel, and plastic have been set at $90/ton. · Residual materials, which are non-recyclable materials, are not subject to any costs or processing fees. The contract amendment specifically states a $0 cost to discourage Eureka from picking up unrecyclable materials and to focus on education. Metro-in et\ ardenh ills \Admin \ Council/Agendas & Packet Information /2009\06-29-09 - Regular Meeting - Eureka Recycling Contract Amendment Page 2 of5