UPDATE: On Oct. 17, the Ann Arbor City Council voted to reimburse ReCommunity $426,328 for the cost of a new baler it bought to use in the city's material recovery facility, as reported by MLive. The purchase was made shortly before Ann Arbor terminated its recycling contract with ReCommunity and has been a point of contention in the resulting legal fight.

This brings the total reimbursement to $542,835, following a $116,507 reimbursement in July — and it's technically still short by almost $40,000 according to costs cited in July. Ann Arbor and ReCommunity have been filing legal responses back and forth this fall, though no resolution has been reached. Waste Management continues to run the facility on a temporary basis.

Dive Brief:

• Recycling company ReCommunity has filed a complaint against Ann Arbor, MI in federal court for the termination of its contract to operate the city's material recovery facility (MRF) earlier this month.
• In its filing, the company claims that Ann Arbor "breached its contract, broke promises relied upon by ReCommunity, and unjustly enriched themselves at ReCommunity’s expense through wrongful actions to escape a contract they believed was no longer financially advantageous."
• The company says it is still owed more than $180,000 by the city per the terms of their contract. The city's responsibility for the cost of a new baler, estimated at $582,535, is also in question.

Dive Insight:

While Ann Arbor had expressed some misgivings with ReCommunity, its decision to terminate the 26-year contract—which was in its 20th year—was abrupt. The recent downturn in commodity prices had put a strain on their relationship, though ReCommunity claims it was willing to renegotiate the contract.

Per the terms of their contract, the city and the company shared profits when revenues were more than the MRF's operating expenses. ReCommunity says this arrangement earned the city more than $3 million since 2011. In turn, the city was supposed to reimburse ReCommunity if sales revenues were less than the cost of MRF operations. 

The company claims that when City Council members learned recycling costs could increase to $1 million last spring they started looking for a way out. They also said that the city began conducting more inspections looking for reasons to shut the facility down. According to ReCommunity, the city issued a termination letter on the same day that the new baler was fully operational, which led to 64 employees being laid off.

On Wednesday, City Attorney Stephen Postema told a reporter from MLive that he hadn't read the complaint yet and had no comment.