City council was told in April 2014 that staff would look into including a clause in the contract to recycle Michigan waste that would protect the city from a drop in commodity prices.
No contract was ever signed and the eventual agreement never included such a safeguard.
Commodity prices eventually plummeted and in the end the deal that was supposed to generate the city $304,000 in profit last year ended up costing Guelph taxpayers $2.6 million.
It also cost 36 people their jobs.
On April 24, 2014, over four hours into a council meeting, the following exchange took place between former councillor Ian Findlay and former General Manager of Waste Resources Dean Wyman.
Findlay: "This is a three-year contract that you're proposing. Is their any opt-out clause for either party?"
Wyman: "We haven't finalized all the terms of the deal yet, but to protect the city's interest we could include opt-out clauses, specifically if the commodity prices drop significantly where the city no longer is breaking even or making a profit. We could attempt to negotiate that."
Other members of council took strides to make it clear the deal was a money maker for the city.
"We will be ending up with more money at the end of the year? I just want you to confirm that for me," former councillor Todd Dennis asked Wyman.
"Yes, That is correct ... all the expenditures associated with processing this material will be covered by the revenues that we generate. We will be generating a surplus or an annual profit."
Then councillor Karl Wettstein: "We're going to end up with conservatively between $300,000 and $350,000 profit per year?"
Wyman replied "yes."
The recommendation from staff to okay the deal passed by an 8-2 vote, with former councillor Jim Furfaro and current councillor Andy Van Hellemond not voting in favour.
The written report to council that night also clearly states that the city would be signing a contract with Ontario-based broker Recyclable Material Marketing and Michigan-based waste management company Rizzo Environmental Services to process additional recyclable material.
But no contract has ever been signed, something that came to light only recently.
The report recommending the deal was written by Wyman and approved and recommended by Al Horsman, Executive Director, Finance and Enterprise Services and Chief Financial Officer, and Janet Laird, Executive Director Planning, Building, Engineering and Environment.
All three no longer work for the city.
"Solid Waste Resources and Finance Services staff support the proposed contract which will generate an annual estimated surplus, will fully utilize a City asset (Material Recovery Facility) and will generate 36 new local jobs," the report to council stated.
It estimated the city would profit $148,000 for the remainder of 2014 and $304,000 annual thereafter.
The report also told council if they didn't agree to the extended deal with the broker providing 28,000 tonnes of Michigan waste, there was the possibility the city could lose an already existing contract with them for 12,000 tonnes of waste that would cost the city up to $625,000 in revenue in 2014.
Mayor Cam Guthrie stated earlier this week that he understands how the losses happened, but wanted to know about the oversight that led to the losses being as high as they were.
Council was told as late as last December those losses were $500,000.
Guthrie said he wants council support for disciplinary measures when the matter comes before the full meeting of city council on April 25.
