8A, Approve Contract with Eureka Recycling

Home Browse Search

6.2.3 Revenue and processing fee formula · Revenue is calculated by multiplying the tons of individual materials by the agreed upon price for that material. Total revenue is then calculated by adding all of the revenue together. Eureka is required to guarantee a minimum price of $O/ton. A price below $O/ton would mean that Eureka is paying someone to take a recyclable material. While this would be a rare occurrence, the City did not want to be responsible for paying prices above and beyond the processing fees and base monthly cost. If prices were to remain below $O/ton, Eureka would have the option of removing that material from the recycling mix since such a state would indicate there is no sustaining market for that material. · Processing fees are calculated based on the tons of material multiplied by the agreed upon processing fee for that material. Total processing fees are calculated by adding all of the processing fees together. · The revenue share split has not changed. If total revenue exceeds the total processing fees, the revenue is split 50/50. If revenue does not exceed the processing fees, the City would now be responsible for paying the gap between the revenue and the processing fee. 25.1 Lack of Adequate Market Demand · The City's goal was to retain the existing mix of recyclable materials; however, removing this section entirely could make it difficult if a market for a particular recyclable were to essentially disappear. With the City covering the renegotiated processing fees in the contract amendment, the recycling mix is protected unless market prices were to fall below $O/ton for a material. Therefore, the section now includes a definition for lack of market demand, which is a situation where the price for a material falls below $O/ton. Eureka must also provide financial information to the City justifying the removal of a material and attempt to find new markets for that material. Since the contract started in March 2008, none of the materials have fallen below a value of $O/ton based on the agreed upon pricing formula. If this situation were to occur, the City would have the option to agree to a cease in collection for the particular material or could pay the additional costs to keep the material in the collection mix. Eureka would be responsible for all effort and costs associated with educating the public on a change to the recycling mix. 25.2 Burdensome Processing Costs for the City · If the processing costs were to become burdensome to the City's budget for any reason, the City could have a material removed from the recycling mix. Eureka could continue to collect the material at their expense if they so choose. The City would be responsible for educating the residents under this circumstance. Metro-inet\ardenhills\Admin\CounciIIAgendas & Packet Information 12009\06-29-09 - Regular Meeting - Eureka Recycling Contract Amendment Page 3 of5