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88 Page 1 08 additional labor cos t of $800,000 to $1,000,000 per year without the prior consultation or approval of the SBWMA. To avoid this awkward situation, SBR created and signed a modified MOU that was consistent with their proposal to the SBWMA and which acknowledged that SBR would accept all employees covered by a CBA at the time of the contract. The Selection Committee found that SBR made an appropriate business decision when they refused to sign the Memorandum of Understanding (MOU) provided by the Teamsters. Environmental ComDliance: The Selection Committee reviewed the inform ation regarding Notices of Violation discovered during the evaluation process. The bulk of violations were related to the permit conditions surrounding the operation of Community Recycling's facility in Sun Valley, California. Thi$ facility has been operated for over 20 years and predates many of the current regulations pertaining to solid waste facilities. While the Selection Committee recognizes that Community Recycling has been slow to correct the operating conditions that have lead to the permit violations that were identified in the Evaluation Com mittee Report, these historical "permit issues" will not be a factor in a contractor's operations of the SBWMA's Shoreway facility. A number of other Notices of Violation were related to "operating practices" that could be improved through better management of the site by Community Recycling. The Selection Committee recognized that in 2008 the company made progress over 2007 in reducing an d correcting the Notices of Vi olation. Given that the S horeway Environmental Center is a very different type of operation tha n Community Recycling and that Potential Industries (the other partner in SBR) has a clean operating history, the Selection Committee is confident that the company under stands and will live up to the high standards required by the SBWMA. In addition, the SBWMA's agreement with the contractor will include provisions to both define and enforce "good housekeeping" practices at Shoreway. The Selection Committee is comfortable that SBR can and will operate the Shoreway facility at the level expected by SBWMA staff and our Member Agencies. ~: SBR's proposal continues to be the lowest cost proposal. The difference between the two cost proposals increased fOllowing a review of the detail provided by SBR regarding their requested cost modifications. After consideration of SBR's cost changes, the difference between Hudson Baylor Corporation (HBC) and SBR is now estimated at $ 1.6 million per year (this cost could be greater if HBC has assumed that the SBWMA will absorb the increased costs that could result from their signing of the MOU with the Teamsters). The Selection Committee concluded that the difference in costs proposed by the two shortlisted firms is significant and is not offset by the consideration of any other elements of the two proposals. SBWMA: Facility Operations Selection Committee Report 3/18/2009 Page 2