4869-0140-3126.1
SECOND AMENDMENT TO
The Franchise Agreement Between the Town of Atherton and GreenWaste Recovery, LLC for Collection and Processing of Waste, Mixed Compostable Materials, Recyclable Materials and Yard Trimmings
This Second Amendment (“Amendment”) to the Waste, Mixed Compostable Materials, Recyclable Materials and Yard Trimmings Collection and Processing Franchise Agreement (“Franchise Agreement”) dated November 19, 2020, is made and entered into this ___ day of November, 2024 by and between the Town of Atherton, a municipal corporation State of California (“Town”), and GreenWaste Recovery, LLC, a Delaware limited liability company (“GreenWaste”) registered to do business in the State of California. The Town and GreenWaste are collectively referred to as the "Parties."
RECITALS
WHEREAS, the Town and GreenWaste are parties to a franchise agreement for waste services dated November 19, 2020, as amended October 20, 2021 (“Franchise Agreement”); and, WHEREAS, the Agreement specifies the Annual Adjustments to the Franchisee’s Compensation which correlates directly to increases in rates charged by GreenWaste to customers; and,
WHEREAS, when the Town exited the South Bay Waste Management Authority (SBWMA) in favor of entering into a direct waste hauling franchise agreement, the Town was required to reimburse the SBWMA for sunk capital costs as a member of the SBWMA. At the time Town had a Rate Stabilization Fund that was used to offset rate costs to residents and was used to true up costs for service through SBWMA. The Town used its Rate Stabilization Fund to pay its exit costs. However, the Rate Stabilization Fund was not sufficient to pay off the entirety of its exit costs and the Town used General Funds to cover the difference; and, WHEREAS, The Franchise Agreement with GreenWaste stipulated that GreenWaste would reimburse the Town $585,000 for a portion of the withdrawal costs from SBWMA.
GreenWaste remitted this amount in total to the Town by January 1, 2022. In addition, GreenWaste was required to reimburse the Town for its costs related to franchise negotiations in the amount of $175,000. These costs were distributed over the life of the contract. All of these funds have been remitted to the Town and replenished the Town’s Rate Stabilization Fund. The current balance in the Fund is approximately $537,000; and, WHEREAS, the Town and GreenWaste entered into a First Amendment to the Agreement on or around October 20, 2021, in which the Town consented to the change in control of the company to MIP V Waste, LLC.
WHEREAS, On October 1, 2024, GreenWaste provided the Town with a letter explaining their annual Rate Adjustment for 2025, and the Franchise Agreement requires Franchisee’s Base Services Compensation increase of 11% on January 1, 2025; and, WHEREAS, the Town wishes to minimize rate increases to its residents, and thus, wishes to reduce its Franchise Fee so that residents do not receive an 11% increase on January 1, 2025; and,
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WHEREAS, the cost to customers for GreenWaste's services are imposed in an amount less than or equal to the cost necessary to carry out waste services, do not exceed the reasonable cost of providing the services necessary to the activity on which the fees are based because the Town subsidizes those costs, and directly offset GreenWaste's costs in providing waste services.
NOW THEREFORE, the parties agree to amend the Agreement as follows:
1. Recitals. The above recitals are true and correct and incorporated herein fully.
2. Effective Date. This Amendment shall take effect immediately upon the final execution by authorized representatives of the Town and GreenWaste and shall remain in effect for the duration of the Franchise Agreement, unless otherwise amended or terminated by mutual consent of both parties.
3. Definitions. For purposes of this Amendment, the terms set forth in the Agreement shall apply unless otherwise expressly modified herein.
4. Amendments to Agreement:
a. The first sentence of Section 12.5.1 Payments to Town of the Agreement shall be amended as follows: "Franchisee shall, in partial consideration for granting the exclusive franchise granted to Franchisee, remit to Town, within thirty (30) days of the end of each month, a Franchise Fee in the amount of five percent (5%) of Franchisee’s monthly Gross Billings."
b. To support the ratepayer impact of the annual rate adjustments, the Town agrees that this reduction shall remain in effect unless otherwise amended by mutual agreement of the Parties.
5. Annual Rate Evaluation Meeting. The effective Service Rate increase to be paid by ratepayers in 2025 will be six (6%) percent. Beyond 2025, and notwithstanding Section 13.2.2 of the Agreement, the Town and GreenWaste shall convene during the third (3rd) quarter (typically, July) of each calendar year to determine the effective rate increase to be paid by the ratepayers for successive calendar years with the ultimate goal of gradually increasing the effective rate to the amount that will cover actual costs, which may then allow for restoration of the Town's franchise fee back to ten (10%) percent. Both parties shall review the current and projected revenue and assess the necessary rate adjustments to ensure all obligations under the Franchise Agreement are met, with the aforementioned goals in mind.
6. Revenue Shortfall Responsibility. In the event that the rate increase agreed upon during the Annual Rate Evaluation Meeting, as described in Section 5 above, does not generate sufficient revenue to cover the financial obligations under the Franchise Agreement, the Town shall be financially responsible for covering the net difference required to meet such obligations.
7. Documentation and Transparency. The Town and GreenWaste shall document the process and findings of each annual rate evaluation meeting, ensuring transparency and open communication regarding the rate-setting process and any fiscal responsibilities resulting therefrom. Under no circumstances shall rates exceed the reasonable costs of providing the services by GreenWaste, including but not limited to profit margin, environmental and administrative charges, attorney’s fees and costs, reimbursement of costs in any way connected 4869-0140-3126.1
with Rethink Waste (SBWMA) related to the Franchise Agreement or the services and all allowed costs under the Franchise Agreement.
8. Future Changes. The Parties acknowledge that future changes to this Amendment or the Agreement may be desirable to assist the parties with their respective compliance obligations under the SB 1383 Regulations or subsequent amendments thereto or interpretations thereof, or pursuant to the Agreement. The Parties agree to negotiate any such proposed changes in good faith but that any modifications must be in writing and approved by both parties.
The foregoing shall not be deemed to limit either party’s rights or remedies under the Agreement.
9. Miscellaneous. In the event of any conflict between this Amendment and the Agreement, this Amendment shall govern. Section headings in this Amendment are for convenience only and shall not be used in the interpretation of this Amendment. This Amendment may be executed in counterparts and/or by electronic signature (e.g. DocuSign). As used in this Amendment, “including” and its variants mean “including without limitation.” All Parties have been represented by counsel in the preparation and negotiation of this Agreement, and this Agreement shall be construed according to the fair meaning of its language. The rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement. Unless the context clearly requires otherwise: (a) the plural and singular numbers shall each be deemed to include the other; (b) the masculine, feminine, and neuter genders shall each be deemed to include the others; (c) “shall,” “will,” or “agrees” are mandatory, and “may” is permissive; (d) “or” is not exclusive; and (e) “includes” and “including” are not limiting.
10. Severability. If any provision of this Amendment or the application of it to any person or situation is to any extent held invalid or unenforceable, the remainder of this Amendment and the application of such provisions to persons or situations other than those as to which it is held invalid or unenforceable, will not be affected, will continue in full force and effect, and will be enforced to the fullest extent permitted by law.
11. Attorneys' Fees. ln the event that litigation is brought by a party in connection with the Agreement or this Amendment, the prevailing party will be entitled to recover from the opposing party all reasonable costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party in the exercise of any of its rights or remedies under the Agreement or this Amendment or the enforcement of any of the terms, conditions, or provisions of the Agreement or this Amendment.
12. Jurisdiction/Venue. The parties agree that any litigation between the parties concerning or arising out of the Agreement or this Amendment must be filed and maintained exclusively in the Superior Courts of San Mateo County, State of California, or in the United States District Court for the Northern District of California to the fullest extent permissible by law.
Each party consents to service of process in any manner authorized by California law.
13. Waiver. Waiver by the Town or GreenWaste of any breach for violation of any term covenant or condition of the Agreement or this Amendment will not be deemed to be a waiver of any other term, covenant, or condition or any subsequent breach or violation of the same or of any other term, covenant, or condition. The subsequent acceptance by the Town of any fee, tax, or any other monies which may become due from GreenWaste to the Town will not be deemed to be a waiver by the Town of any breach for violation of any term, covenant, or condition of the Agreement or this Amendment.
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14. Legal Effect. Except as expressly modified by this Amendment, all of the terms and conditions of the Agreement shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, this Amendment is entered into as of the date of the last signature, below.
By: _____________________________Date: ____
George Rodericks, City Manager
GREENWASTE RECOVERY,LLC, a limited liability
company
By: ______________________________Date:___
Tracy Adams, Chief Executive Officer
ATTEST:
By: ________________________________
Anthony Suber, City Clerk
APPROVED AS TO FORM:
By: ________________________________
Mona Ebrahimi, City Attorney