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08-23-2005 CSMCREEK SIDE SOILS ADVISORY COMMITTEE MINUTES August 23, 2006, 4:15 p.m. Members Present: Bill Arndt, Robert Anderson, Randy DeVries, Doug Johnson, and Gary Plotz Members Absent: Marion Filk, Brandon Fraser and Casey Stotts Others Present: Cam Rucks, Financial Consultant; Ken Merrill, Finance Director; Jeff Meehan, Sales & Marketing' Cook, Mayor; and Andy Kosek, Creekside lead operator Approval of Minutes from May 17, 2006 Motion by DeVries, second by Plotz, with Anderson abstaining, to approve the minutes as presented. Motion carried. 2. Financial overview for first half of year Ken Merrill provided financial statements for May, June and July of 2006. Year -to -date Creekside is at a net loss of ($127,908.83). This includes both the general operation and Minneapolis contract. Ken Merrill also shared graphics illustrating various statistics, such as bags sold & produced, including FOB. Gary Plotz noted that a graphic showing unfilled sales is due to one private -label account. In that instance, the order was filled based on the purchase order placed last Fall, however the account holder has not had a need for as much product as ordered. Gary Plotz and Jeff Meehan stated that this excess product can be held over until next year. Jeff Meehan will convey this to the account holder. Gary Plotz stated he will provide Jeff Meehan with a list of customers that have unfilled sales. Gary Plotz also mentioned that the sales projections for 2007 should be decreased from $1.5 million to $12 million. This is based on the fact that over the last two years, sales have remained flat. Jeff Meehan attributes this to carry over of inventory and in increase in Creekside's prices. Ken Merrill also provided a graphic breaking down a comparison from 2005 to 2006 of bags sold, bags manufactured, employee hours and contract hours. Employee hours and contract hours were drastically reduced. 3. Update on PeachTree software Cam Rucks stated that since he has come on board as a consultant to Creekside, the focus has been placed on "microdata" — or data that encaptures all of the costs entailed in producing a product. As part of this process, a software typically used in manufacturing settings was implemented. Through this software, all labor costs are tracked through work tickets and a true value to the product can be applied. It was noted that labor costs have reduced, but material costs have increased drastically. 4. Update on 2007 pricing Jeff Meehan explained that the 2006 market prices have increased approximately 5 %. Meehan has learned that for the 2007 season, market increases could range from 0 — 5 %. A competitor, Country Stone, has facilities in three surrounding states and is opening a facility in Lakeville, MN. They will now be offering a full line of products similar to Creekside's economy -type products. Meehan has learned that Country Stone is approximately 25% below Creekside's prices on a SplenderGro -type product. Other Creekside products will be visible at tradeshows and Meehan feels comfortable with that current pricing. However, he does feel that the SplenderGro line is in jeopardy. Gary Plotz asked Meehan's thoughts on economizing the quality of the SplenderGro line. Plotz noted that he had visited a competitor's plant, Waupaca. The General Manager of Waupaca informed Plotz that they do not compost their product, but basically scrape off topsoil and sell it (thus the quality being very low -end). Plotz stated that a strategic plan needs to be put in place to economize the SplenderGro line, such as "changing the recipe" so it doesn't have as high of a quality that it does now, which drives up the current price. Jeff Meehan agreed with this. Jeff Meehan talked about the market in general and how different retail competitors price against each other. Mayor Cook asked Jeff Meehan what opportunities are available for the SplenderGro products. Meehan stated that there are other retailers that Creekside could tap into if the product is priced right. Jeff Meehan stated that Creekside is currently in jeopardy of losing the United Hardware account due to current pricing on some products. 5. Update on MPCA inspection and permit renewal Doug Johnson noted that an unscheduled MPCA inspection occurred at the site on August 2, 2006. All areas were in compliance other than the areas of surface water drainage and an operator facility inspection schedule. On the date of the inspection there was some drainage issues due to a heavy rain. The site will correct this by hauling in additional gravel. In addition, Johnson has now established a monthly site inspection schedule that will be conducted by him or the lead operator. General discussion was held regarding plastic issues. Doug Johnson stated that Cenex has offered to pay for half the cost of a chainlink fence if Creekside should wish to put one on the northeast site. 6. Update on McLeod County Conditional Use Permit for Spruce Ridge Johnson stated that McLeod County inspected that site at Spruce Ridge. Any rust concerns that were addressed initially were taken care of by information from an expert at the University of Minnesota. This site is currently full to capacity and the product has now broken down as timely as it usually does to the excessive heat this summer. Discussion of hours of operation No discussion. Discussion of collection of Minneapolis material Because Spruce Ridge is full, some of the material from the Minneapolis contract may have to come to the Creekside site for debagging and processing. Johnson is close to securing another location, but if that falls through, he does not have another option. If the Minneapolis material is brought to Creekside, the area that debagging will occur will have a 10 ft. fence surrounding it and will occur on the north end of the site. This material could begin to be delivered September 5, 2006. 9. Miscellaneous Robert Anderson asked if trees will be planted on the berm yet this fall. Doug Johnson stated that the cost was too high at last check ($350 /tree). His intention was to have 25 trees planted. He has been informed by other City employees that a fall special may be offered this fall with prices near $50 /tree. If this special does not take fruition, Johnson said he will order 50 trees to plant in the Spring. With no other business to discuss, the meeting adjourned at 6:00 p.m.