A bad contract the city signed two years ago to process recyclables from Simcoe County is expected to cost the City of Guelph $800,000 this year alone.
The five-year contract to process Simcoe’s blue box materials also lost money last year, although exactly how much it lost those years was never specifically identified, said Guelph Deputy CAO Scott Stewart.
“This is a bad contract we signed, bad for Guelph,” said Stewart following a brief City Council meeting Monday night.
Coun. Christine Billings asked during the meeting how much of a projected $1.2 million loss in the city’s environmental services operations this year was specifically due to the contract with Simcoe.
Stewart said the city and Simcoe are currently in good faith discussions to see if the contract, which has three years remaining, can be changed.
“We are trying to get out of that contract, which is awfully one-sided,” he said.
“We continue to want to have a friend in Simcoe. They could say ‘well, you’ve signed it. See you in three more years Guelph,’ but they’ve been very receptive to ‘is there something we can do together that helps Guelph?
“It’s a good contract from their perspective. If I worked up there (Simcoe) I would say this is a really good contract for Simcoe.”
Stewart was cautious about getting into too many details about how the contract came about for legal reasons.
He agreed that you shouldn’t enter into a contract that is going to lose you money.
“You would hope that whoever did all that would have had a business case and done all that pre-work so that that doesn’t happen,” Stewart said. “You need to be better prepared than Guelph was.”
He said there were some business cases that should have been done that weren’t in regards to things like tonnage, rates, contamination rates and who pays for what.
“It’s a contract that we wouldn’t sign today,” the Deputy CAO said.
The people in charge of solid waste at the time of the contract’s signing are no longer with the city.
He said the first two years of losses were never specifically identified, but were rather rolled into overall department losses.
This year city staff identified how much the contract is costing the city.
That projected $800,000 loss makes up the majority of a projected $1.2 million negative variance in the city’s environmental service portfolio. That's a figure that is lower than was previously projected, due to cost savings and efficiencies the city has put in place during the year to help mitigate the damage.
Overall the city is expected to have a favourable variance of $2.5 million at year’s end on the 2017 budget. Most of that is due to unanticipated taxation revenue.
