2016-10-25_PWETC_Minutes - Laserfiche WebLink

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scheduled annual report and next year plan from Eureka originally scheduled for tonight's meeting had been postponed. Based on City Council concerns raised at their meeting last night, Environmental Specialist Johnson reviewed historical revenue sharing revenue for the city and reductions from revenue in 2014 of $62,000 to approximately $1,000 in 2015. While 2016 is showing a potential uptick after April, estimated at $7,000 at this point,Mr. Johnson noted the variables seen in that commodity market. Mr. Johnson reviewed existing revenue share provisions in the current three-year contract, expiring the end of 2016, and the proposed plan and floor price provisions in the proposed five-year contract starting in January of 2017. Mr. Johnson addressed current and anticipated markets and risks for the city and Eureka based on contract language and ongoing negotiations. Mr. Johnson noted the City Council's concerns requesting continued negotiations to lower the city's risk while recognizing the impacts for Eureka. For those interested in more detail, Mr. Johnson referred the PWETC to the city website to view last night's City Council meeting for that particular discussion. Member Lenz asked how many more negotiations could be accomplished before the need arose to reissue a new Request for Proposals (RFP). Environmental Specialist Johnson opined those negotiations could remain significant,with the city having until December 31,2016 before the current contract expires;and since Eureka owns the existing carts,it wouldn't prove too problematic if negotiations weren't concluded by then, with an extension possible, even though Eureka would basically have the city at their mercy as to what they could charge for their services at that point. Mr. Johnson expressed assurance with the long-term good working relationship with Eureka; and anticipated a favorable and timely resolution. At the request of Chair Cihacek, Environmental Specialist Johnson confirmed that for 2017 budget purposes, no revenue share had been projected; with the intent going forward to use actual revenue share from the prior year to set customer rates for the following year rather than the current use of projected revenue share in setting those rates. Mr. Ryan noted with the new formula, City Council concerns are if there were no floor structure in the contract,the city may have to pay Eureka, creating a risk for the city if and when commodities markets drop. For instance, in 2015,under current contract language,Eureka had to absorb a loss of$34,000 when the market dropped; and if under the proposed contract, the city would have shared or absorbed the loss and been required to pay Eureka $22,000 instead. At the request of Member Wozniak, Environmental Specialist Johnson reviewed the reserves currently available in the Recycling Fund, and efforts to keep the Fund sustainable rather than continuing to dip into it to make a contract work. Mr. Johnson advised that the intent was instead to have a contract and agreement in place to reduce city risk as much as possible, ideally by building up the reserves Page 9 of 20