AgdaPkt 2020-10-26 Joint SA PFA - Laserfiche WebLink

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6.C. - Page 52 of 57 MEMORANDUM Page 2 of 4 financial obligations attributable to the Town at the date of withdrawal. This memorandum summarizes our findings. Findings General Debts and liabilities for members of the JPA fall into three categories of expenses: Collection Expenses which are governed by the individual franchise agreements between Recology and the individual member agencies of the JPA. South Bayshore Recycling Center (Shorewavl Expense - Shoreway is operated by South Bay Recycling, LLC [SBR] on behalf of the SBWMA and receives the materials collected by Recology as well as 3`d party materials delivered directly to the facility. Shoreway charges a per ton/yard rate for all materials collected to cover its costs of operation. The operating agreement for the facility is between the SBWMA and SBR. SBWMA Expense -- Each fiscal year an operating budget is approved by the Board of the JPA which includes budgeted expenses (e.g., disposal expense, franchise fees paid to the City of San Carlos, debt service, SBWMA program budget, administrative, insurance etc.) and revenues (e.g., tip fees, grants, etc.) The approved compensation for SBR is bundled with all other SBWMA operating budget expenses to establish the Shoreway tip fee. As previously stated, we understand the SBWMA has engaged KNN to determine the financial impact to the Town related to the 58WMA's Revenue Bonds. Therefore, we are not including any potential liability from the Town's withdrawal related to the Revenue Bonds. Based on our review, of potential financial obligations of the Town, as a result of its request to withdraw, we have broken our comments into the three categories as shown above. Limitations Our review included the review of financial information provided by the SBWMA. Itis based on aur interpretation of various agreements (JPA agreement, SBR agreement and the member agency agreement with Recology). We are not providing legal advice and suggest the SBWMA's legal counsel review and comment on this document. Recology Related Costs/ Obligations For the collection rights and responsibilities as outlined in the current agreement between the Town and Recology, Recology is entitled to bill and collect rates established through resolution by the Town. Each year, (with the exception of the final year of the agreement), there is a revenue reconciliation to reconcile net revenues billed for the year with Recology's approved compensation. Should there be any excess revenue or a shortfall of revenue in the final year no obligation or rebate will occur. SBWMA BOD PACKET 08/20/2020 AGENDA ITEM: 5A ATTACHMENT 5 - p2 83