Finance Highlights 2009 0324 - Laserfiche WebLink

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3/24/2009 Special Rate Request For Alameda County Industries a ~~~'r ~~ ~~~ °~~ c+ ~ ~ °a '~ c b~' r~ r Finance Committee Presentation Tuesday, March 24, 2009 Background • Existing contract expires on February l , 2010 with an option to extend through January 31, 2020. • ACI notified the City of their intent io renew the contract • last August (as required in ~` ' Section 3.3 of the Agreement) • The City completed a performance review and financial audit of ACI on January 31, 2009 ~' F Recent Developments • On January 28, 2009 ACI requested to discontinue collection and processing of recyclable fiber material due to the catastrophic collapse of worldwide markets for these materials in 2008 • Request made per section 4.6 of Franchise Agreement which allows ACI to file the petition "if it becomes unfeasible or financially impractical to continue collection" t r~.r ~=~f~T'. ACI's Financial Situation ACI indicates the following: • It is losing money due to two factors: • Recyclable market collapse • Labor costs continue to outpace CPI • ACI is unable to meet financial covenants and lender is caking action • Owners have had to put $1 million into the company fo keep ACI solvent Through the end of this fiscal year • ACI is unable to continue collecting and processing mixed paper under the current rate ,, ~ structure ~~~` Non-Collection Impacts • City can accept the request to discontinue collection of mixed paper • Residents would no longer be able to put paper into their recycling containers • Potentially 10,000 tons of mixed paper would be landfilled annually • Residents would have to increase their garbage cart size (at an increased cost) to accommodate the extra material ii t x~ Rate Increase Proposal • Refuse and recycling rates need to be increased to resolve the financial effects of the decline in the fiber materials market and the increase in labor costs • To meet bank covenants, ACI requires a 10 % rate increase effective July 1, 2009 ,?~y 1