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6.C. - Page 44 of 57 Town of Atherton — SBWMA IPA Withdrawal Analysis JUNE 26, 2020 Scenario 4 Scenario 4 combines Scenario 2 and 3. We believe that the premises of scenarios 2 and 3 are reasonable and should be considered in any calculation of the Town's buy-out cost and are not inconsistent with the JPA Agreement language. By any projection, the Town's share of the solid waste generated in the service area will decrease overtime. As part of our analysis, we were unable to find any local or regional projections that would create a material change to this approach, but we welcome any other projection information that you may be aware of. As stated above, in regard to the most recent bond issuances, we believe the Town should not pay a share of debt service on the new money, Series B component of the 2019 Bonds as that would result in double counting given those funds will remain in possession of the JPA after the Town's departure. As you are aware, the Town voted no to the last issuance and has continually claimed that there is little to no benefit to these improvements for the Town. As the IPA Agreement is silent on this issue, we feel that it should not pay for any additional funds from which it will receive no benefit or will be controlled by the JPA. When these adjustments are done, the total cash required to meet the Town's obligation is reduced from $2.259 million to $904,000, before accounting for amounts overpaid in prior years. Scenario 5 Finally, this scenario assumes that the Town would pay a declining percentage share of debt service in the future (3.25% to 1.5%) due to growth in other sectors throughout the JPA service area (See Scenario 2 above) Additionally, it includes the deduction described in Scenario 3 where the Town pays onlythe 2019A bond costs. Additionally, this scenario excludes those costs associated with multifamily and commercial bond proceeds back to 2010 in which the Town has consistently claimed should not be apportioned to it as there is no benefit gained and leaves your small town subsidizing the other members diversion efforts in these sectors. We do not object to the related costs included in the rates but do not believe the Town should have to pay again upon withdrawal. As the methodology in the JPA is not clear, we believe that this adjustment is not unreasonable. When these three adjustments are made, the total cash required to meet the Town's obligation is reduced from $2.259 million to $502,000, before accounting for amounts overpaid in prior years. Summary Should the Town proceed with withdrawal from the JPA, we concur that the JPA agreement is vague as to the methodology to be used to calculate any funds due the JPA by the Town. We believe that the Town has contributed a greater share of revenue than justified by its overall share of expenses since formation of the IPA and that those prior contributions should be considered. As shown in the summary table, just taking that fact into account back to 2010 along with our two methodological adjustments shows that the Town not only does not owe the IPA funds but is due a payment. If desired, we would be happy to meet and walk JPA staff through our analysis and discuss the different scenarios. Because the JPA agreement does not specifically define a method for calculating any funds due the JPA upon withdrawal, and that our approaches yield outcomes that are approximately $2.2 million apart, we understand that the final amount will largely be subject to negotiation based on a justifiable and supported approach. Further, should the Town proceed with withdrawal from the JPA, the Town will be switching to a new franchised collector and may incur unforeseen costs to the rate payers in order to ensure a successful transition and the recycling reserve funds, less any amount paid back to the JPA could be used to buffer any initial rate impacts or unforeseen costs of the transition. Therefore, it is very important that the buy-out costs be kept as low as possible. N H H G `% i 0 E, PAGE 3 75