1 SECOND AMENDMENT FRANCHISE AGREEMENT FOR COLLECTION, DISPOSAL, AND
PROCESSING OF SOLID WASTE, RECYCLABLES, AND COMPOSTABLE MATERIALS AND RELATED ACTIVITIES PURSUANT TO CHAPTER 8.08 OF THE
COTATI MUNICIPAL CODE
This Second Amendment to Franchise Agreement for Collection, Disposal, and Processing of Solid Waste, Recyclables, and Compostable Materials and Related Activities Pursuant to Chapter
8.08 of the Cotati Municipal Code (this “Amendment”) is entered into as of _________, 2026 between the City of Cotati (“City”) and Recology Sonoma Marin (“Recology”).
WHEREAS, City and Recology are parties to a Franchise Agreement for Collection, Disposal, and Processing of Solid Waste, Recyclables, and Compostable Materials and Related Activities Pursuant to Chapter 8.08 of the Cotati Municipal Code, dated April 10, 2013 (such agreement as amended, the “Agreement” or “Franchise Agreement”);
WHEREAS, the parties wish to extend the term of the agreement and modify the methodology to adjust Maximum Rates;
WHEREAS, over the next year, the parties intend to continue discussions regarding additional mutually agreed modifications to the Franchise Agreement; NOW, THEREFORE, the parties agree as follows:
1. Effective Date. This Amendment shall take effect _________, 2026.
2. Term Extension. This Amendment extends the Franchise term. The parties hereby agree to a ten (10) year term extension to the Franchise Agreement, continuing through June 30, 2038.
To that end, Section 1.32 (“Franchise term”) of the Franchise Agreement, and the first paragraph of Section 3.2 (“Term”) of the Franchise Agreement, are each hereby amended to replace “2028” with “2038.”
3. Maximum Rates. Section 6 of the Franchise Agreement is hereby replaced in its entirety with the following:
“SECTION 6 — MAXIMUM RATES
6.1 Customer Rate
Upon this Franchise Agreement taking effect and until Maximum Rates are adjusted in accordance with this Agreement, the Maximum Rates that the Contractor may impose on customers for performance of Franchise services shall be as specified in Exhibit D. Whenever Maximum Rates are adjusted in accordance with this Agreement, Exhibit D shall be deemed automatically updated to reflect such adjustment. Charges Contractor may impose on Customers may equal, but not exceed the rates specified in Exhibit D. The rate categories specified in Exhibit D are the only categories of charges Contractor may impose on customers, and the proceeds from charges imposed by Contractor are the sole compensation Contractor is permitted to receive for performance of Franchise services. If one or more Customers request a service for which there is no rate in Exhibit D, the City Manager may approve a rate for the service in writing. 2 6.2 Adjustments to Contractor’s Maximum Rates
6.2.1 The then effective Maximum Rates shall automatically be increased June 1, 2026, January 1, 2027, January 1, 2028, January 1, 2029, and January 1, 2030 as follows:
Effective Date of Adjustment to
Maximum Rates
Percentage Increase to Each
Maximum Rate
June 1, 2026 Pre-negotiated; rates effective June 1,
2026 are set forth on Exhibit D
January 1, 2027 Eight (8) Percent
January 1, 2028 Seven (7) Percent
January 1, 2029 Six (6) Percent
January 1, 2030 Six (6) Percent
6.2.2 Beginning January 1, 2031, the then applicable Maximum Rates shall be adjusted automatically as follows:
No later than October 1, 2030 and each October 1 of each year thereafter during the Term, Contractor shall submit a written application to the City setting forth the calculation of the adjustment in Contractor’s Maximum Rates pursuant to this Section 6.2.2 to become effective the subsequent January 1. City shall review the application for accuracy by December 1 of each year.
The adjustment in rates which shall take effect on each January 1 thereafter shall be a percentage applied to each category of rates in effect for the year ending on the preceding December 31. The adjustment in Maximum Rates shall be the aggregate of the two adjustments set forth below:
(1) The Collection Element of each rate shall be adjusted by one hundred percent (100%) of the annual change in the Consumer Price Index, All items in San Francisco-Oakland-Hayward, CA, all urban consumers, not seasonally adjusted, Series ID: CUURS49BSA0, published by the U.S. Department of Labor, Bureau of Labor Statistics, hereinafter referred to as CPI, measured for the previous twelve (12) months ending June of each year, plus an additional one percent (1%) applied as a percentage collection component of the current monthly. For example, if the annual change in the Consumer Price Index is 3%, the Collection Element shall be increased by 4%. Notwithstanding the foregoing, the annual change under this paragraph shall not exceed five percent (5%).
(2) The Disposal Element of each rate shall be adjusted by the percentage change in the per ton tip fee at the Approved Disposal Facility between the prior preceding calendar year ending April 30 and the preceding calendar year ending April 30 as applied to disposal element of the current rate.
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Beginning in 2031, maximum Rates for special charges or any other rates where there is no separate Collection Element and Disposal Element shall be adjusted by one hundred percent (100%) of the annual change in CPI, plus one percent (1%), not to exceed the total rate adjustment of five percent (5%).
6.3 Extraordinary Adjustments
Contractor and City acknowledge that there may be infrequent extraordinary events which, although they do not prevent either party from performing, and thus do not implicate the force majeure provisions hereof, nevertheless increase the cost of providing services above the adjustments to Maximum Rates set forth in Sections 6.1 and 6.2. The obligation of the parties in such event is to act reasonably and in good faith towards each other in arriving at an appropriate adjustment in rates in accordance with the terms of this Agreement.
Accordingly, at its option, Contractor may apply to the City for an extraordinary rate adjustment should an event or circumstance arise which materially increases Contractor’s costs of performing this Agreement in excess of the rate adjustment resulting from the application of Section 6.1 or 6.2. An extraordinary adjustment in rates will be deemed justified if there is a change in law or other major changes that materially increase on-going operational costs that are unexpected and outside of the Contractor’s control. However, changes in labor costs due to collective bargaining agreement negotiations or equipment purchases (other than those resulting from a change in law) do not qualify as justification for an extraordinary adjustment.
If an extraordinary adjustment is found to be justified, Contractor will be entitled to an equitable adjustment of the rates as a result of the extraordinary event, however no adjustment will be effective until after approval by the City Council as set forth below.
Extraordinary rate adjustments shall only be effective after approval by the City Council. Contractor applications for extraordinary rate adjustments are limited to two (2) during the initial Agreement term (ending June 30, 2038). Except as provided herein, any such change approved by the City shall not be implemented until January 1 of the following year unless a different timeframe is approved by the City Council. Applications for extraordinary rate adjustments are due a minimum of six months prior to requested effectiveness date. City and Contractor will cooperate in good faith and use reasonable efforts to review and process Contractor’s applications and submit them to the City Council (assuming they are sufficiently justified according to the terms of this Agreement) within such sixmonth period.
For each request brought pursuant to this section, Contractor must prepare a schedule documenting the extraordinary costs. Such request must be prepared in a form acceptable to City with support for assumptions made by Contractor in preparing the estimate. City may request from Contractor further information, as it deems necessary to fully evaluate the request and make its determination. City is entitled to a reimbursement of its costs in reviewing a request for an extraordinary 4 adjustment, which shall be subject to a not-to-exceed amount agreed upon in advance and recoverable by Contractor as part of the extraordinary adjustment.
City will review Contractor’s request and, in City’s reasonable judgment, make the final determination as to whether an adjustment will be made, and, if an adjustment is permitted, the appropriate amount of the adjustment, all of which shall be consistent with the terms of this Agreement.
Assuming that Contractor provides sufficient justification for the extraordinary rate adjustment according to the terms of this Agreement, the amount of the adjustment shall be sufficient to cover Contractor’s reasonable increased costs resulting from the extraordinary event, plus profit calculated in accordance with the subsequent paragraph, from the time of the extraordinary event began to affect Contractor’s costs to the end of the Agreement term.
The Parties stipulate that a fair and reasonable profit calculation shall apply in the event of an Extraordinary Adjustment pursuant to this section. The rates following an Extraordinary Adjustment application are established to allow the Contractor to realize (but not to guarantee) a fair and reasonable profit from its operations (net of franchise and other fees, in accordance with the Agreement) within the franchise area. Profit shall be the result of taking the sum of the actual necessary and reasonable costs of providing service to the franchise area, subtracting the fees paid by Contractor pursuant to Article 7, dividing the result by 0.90, and subtracting from the quotient the actual necessary and reasonable costs of providing service to the franchise area, less the fees set forth in Article 7. For example: if the actual necessary and reasonable costs of providing service to the franchise area is $950,000 and Article 7 fees are $50,000, then the profit equals, ($950,000- $50,000)/0.90] - ($950,000-$50,000) = $100,000. The Contractor's actual, necessary and reasonable costs of providing service to the franchise area include the actual, necessary and reasonable costs incurred by the Contractor in providing services which the Contractor is obligated hereunder to provide at no cost to its customers.”
4. Maximum Rates. Exhibit D of the Agreement is hereby replaced with Exhibit D attached hereto.
5. Deletion of Detailed Rate Review Methodology. Exhibit L of the Agreement (Detailed Rate Review Methodology) is hereby deleted in its entirety.
6. 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.” [Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, this Amendment is entered into as of the date first written above.
City of Cotati
By:
Name:
Title:
Date:____________________________
APPROVED AS TO FORM:
________________________________
City Attorney
ATTEST:
________________________________
City Clerk
Recology Sonoma Marin
By:
Name: Salvatore M. Coniglio
Title: Chief Executive Officer
Date:____________________________
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Exhibit D
MAXIMUM RATES EFFECTIVE JUNE 1, 2026
[To be provided.]