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88 Page 114 operation. In interview's, Mr. O'Rullian stated that he "had found the company to be a competent and cooperative operator. . . always responsive to issues raised by the LEA." Mr. O'RuUian cited inaccurate odor complaints that he has received about the composting facility. The compost facility is surrounded by two waste water treatment plants, several dairies, food packing plants, farms, ranches, and stockyards. On each complaint investigation Mr. O'Rullian has determined that the actual source of the odor originated from one of the other nearby sources. Community's partner, Potential Industries, Inc., is permitted as a Recycling Center under local and State of California regulations and, as such, does not require a Solid Waste Facility Permit. The company's 17,000 ton per month single-stream processing operation is located in the City of Los Angeles (Wilmington District ~ LA Harbor). City of Los Angeles references for the facility and the company are positive. Contact information for regulators cited above is provided in Appendix D. 3. Reven ue Guarantee Hudson Bavlor Corporation has offered a $10.1 M annual commodity revenue guarantee. In the face of the unprecedented drop in commodity prices that occurred in 2008/9, and out of concern for HBC's financial ability to unilaterally support their revenue guarantee in the face of poor long-term markets, the SBWMA requested written confirmation of HBC's fiber "floor price". HBC's designated commodity buyer is America Chung Nam, Inc. (ACN), the largest recycled commodity buyer and exporter in America. HBC stated in their proposal that they have specially negotiated floor pricing and marketing arrangements with ACN to support their revenue guarantee. The SBWMA received email correspondence from America Chung Nam's CEO, Peter Wang, that is intended to verify the materials marketing support claimed by HBC in their original proposal. In addition to email correspondence, HBC has provided the SBWMA a copy of a letter from ACN reaffirming the of a long-term purchase agreement between HBC. and ACN. However, claiming a need for confidentiality, the letter submitted to the SBWMA (see Appendix E) has had all the relevant pricing and volume information redacted. In the analyses and evaluations of HBC's Revenue Guarantee, the Evaluation Committee has accepted HBC's cited floor price support at face value. Yet, based upon the document submitted by HBC, the SBWMA cannot be certain of the floor price commitments that HBC has for fiber commodity pricing. HBC has stated that the company will provide a complete copy of the floor price contract jf they are seJected~ South Bav Recvclina has offered an annual revenue guarantee of $7.25M. During negotiations, South Bay proposed to amend their guarantee by inserting an "off~set" mechanism as a means of recapturing revenues from years during which the actual sales revenues fall short of the guaranteed amount. SBWMA rejected the proposed amendment as acknowledged in a letter provided by SBR (see Appendix F). 4. Commodity Price Manioulation Hudson Baylor Corporation has secured price support from the world's largest recycled fiber buyer. South Bay Recycling's partners (Potential Industries) have direct ownership of newsprint and tissue mills. While these features offer tremendous value in commodity marketing to SBWMA, they also present the oppo rtunity for price manipulation. The RFP and Agreement contain language that requires the Contractor to sell all recycled material recovered from the Shoreway MRF at "market price". The market Facility Operations Evaluation Committee Report: 3/18/2009 PageS