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Manteca’s recyclables now worth nothing for city coffers

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POSTED January 1, 2009 11:23 p.m.

Dramatically dropping prices for recycled materials is costing Manteca $125,000 over the course of a year.
Forward Inc. — the firm that takes co-mingled recyclables collected by the City of Manteca — had been paying $27.50 per ton.

Prices for recyclables across the board have been plunging. That prompted Forward Inc. to approach the City of Manteca and ask for an adjustment in their contract first signed on Nov. 1, 2007. The firm wanted Manteca to pay it $15 per ton instead of paying the city $27.50 per ton.

Deputy Director of Public Works Jim Stone did research and determined Forward Inc. could take the recyclables for nothing and still be able to financially operate. City Attorney John Brinton advised staff that taking the contract from one that the city received payment to one that it paid Forward was such a drastic change it would require re-completing the contract.

The city countered to Forward Inc. that the best they could do was reduce the price they paid the city to zero but that the contract would have to be redone if they required the city to pay. Forward Inc. accepted the counter offer with the condition that the city shortens the term.

Stone, in a memo to the City Council, noted that since the market for recyclable materials is so volatile that it seemed reasonable and prudent to revisit the pricing every 90 days instead of annually until prices stabilize.

The solid waste collection account is an enterprise fund that means it is independent of the general fund with operations covered by monthly users fees.

There was $125,000 budgeted into the current budget for revenue from Forward for recyclables.

So far this fiscal year, there is $63,600.65 in the account. An additional $30,000 is expected from November and December payments that haven’t been received yet. That means the city expects to have $93,600 in the account. The contract to zero payment would be retroactive to Jan. 1, 2009.

That means there will be a $3,400 shortfall in the account for the current budget year ending June 30. The overall solid waste enterprise fund is expected to bring in $8,438,000 this fiscal year. Staff doesn’t expect the loss of revenue from Forward Inc. will have a significant impact on the fund.

The City Council is meeting on Tuesday at 7 p.m. at the Civic Center, 1001 W. Center St. It is the first regular meeting taking place on a Tuesday after the City Council changed the regular meeting date from the first and third Monday to the first and third Tuesday. It was done to give the City Council more time to prepare for council meetings after staff reports are issued.

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