Pacifica City Council
October 10, 2022

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MUTUAL RELEASE AND SETTLEMENT AGREEMENT
The parties to this Mutual Release and Settlement Agreement (“Agreement”) are The City of Pacifica, (the “City”), Sierra Mountain Construction, Inc. (“SMCI”), Walter C. Smith Company, Inc. (“W.C. Smith”), Blocka Construction, Inc. (“Blocka”), Travelers Property Casualty Company of America (“Travelers”), Scottsdale Insurance Company (“Scottsdale”), Hartford Fire Insurance Company (“Hartford”), and First Specialty Insurance Corporation (“First Specialty”) which are collectively referred to as the “Parties” and individually as a “Party.” This Agreement is entered into by and between the Parties as of March 21, 2022 (the “Effective Date”).

A. SMCI supplied and furnished certain labor, equipment and materials to and performed certain work for the City in connection with a work of improvement known as the Wet Weather Equalization Basin project located in Pacifica, CA (the “Project”) pursuant to a written contract between SMCI and the City (the “Contract”). The City was the owner of the Project.

SMCI was the direct contractor for the Project.

B. SMCI subcontracted certain portions of the work for the Project to W.C. Smith.

Specifically, and without limitation, W.C. Smith installed a pipeline from the EQ Basin to Arguello Blvd. at the Project and conducted certain boring operations pursuant to a written agreement or agreements (“W.C. Smith Subcontract”).

C. SMCI subcontracted the electrical work for the Project to Blocka pursuant to a written agreement or agreements (“Blocka Subcontract”).

D. Disputes arose during the Project concerning, among other things, the plans and specifications for pipeline work, delays, claims by SCMI and some of its subcontractors for extra work and costs, and conformity of the construction work performed by SMCI and its subcontractors, including W.C. Smith and Blocka, to the plans and specifications. Additionally, certain equipment that was furnished and installed as part of the Project suffered damage in December 2019 after water entered conduits; that damage was repaired by SMCI.

E. Additionally, disputes arose with the City and certain property owners regarding claims that the construction work had caused damage to existing property and improvements, principally along or adjacent to Balboa Way. The City issued a demand in connection with this alleged damage as well as certain aspects of the construction work that the City asserted was nonconforming.

F. The City awarded a contract to have another contractor replace certain infrastructure (which had not been within the scope of the Project) and to perform work to address or remedy the items it had asserted were nonconformities in the construction work in connection with the Project as well as conditions or damage for which the City asserted SMCI and some of its subcontractors were responsible.

G. One owner of a property filed a lawsuit claiming damage arising out of the Project, Susan Lee, Trustee of the Godsoe Family Trust v. City of Pacifica, et al., San Mateo County Superior Court Case No. 20-CIV-01739 (the “Lee Lawsuit”). That lawsuit was settled by insurance carriers providing a defense to SMCI.

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H. W.C. Smith commenced a legal action relating to the Project known as Walter C.

Smith Company, Inc. v. Sierra Mountain Construction, Inc., et al., pending as Case No. 20-CIV02356 in San Mateo County Superior Court (the “W.C. Smith Action”). SMCI filed a crosscomplaint and answer in the W.C. Smith Action; among other things, SMCI alleged that W.C.

Smith was responsible for some of the claims being asserted by the City and that SMCI was entitled to a defense from W.C. Smith; among other things, W. C. Smith alleged that SMCI breached the W. C. Smith Subcontract and made a claim on the SMCI Payment Bond filed with the City pursuant to the Contract. For purposes of this Agreement, the “W.C. Smith Action” includes all causes of action and claims asserted therein, including SMCI’s cross-complaint; the parties to the W.C. Smith Action each deny the allegations asserted against them in that proceeding.

I. Blocka commenced a legal action relating to the Project known as Blocka Construction, Inc. v. Sierra Mountain Construction, Inc., et al., pending as Case No. 21-CIV00083 in San Mateo County Superior Court (the “Blocka Action”). SMCI filed a cross-complaint and answer in the Blocka Action; among other things, in its cross-complaint, SMCI alleged that Blocka was responsible for some of the claims being asserted by the City and that SMCI was entitled to a defense from Blocka. For purposes of this Agreement, the “Blocka Action” includes all causes of action and claims asserted therein, including SMCI’s cross-complaint; the parties to the Blocka Action each deny the allegations asserted against them in that proceeding.

J. SMCI tendered the claims asserted by the City to liability insurance carriers, including its own primary liability insurance carriers, Travelers and First Specialty, and as an additional insured, to the insurers of W.C. Smith and Blocka.

K. SMCI submitted a claim to the builder’s risk carrier for the Project, XL Specialty Insurance Company (“XL Catlin”), which has not yet been resolved.

L. Travelers commenced a lawsuit against First Specialty and SMCI regarding coverage issues relating to the Project, Travelers Property Casualty Company of America v. First Specialty Insurance Company, et al., U.S. District Court, Northern District of California, Case No. 4:21-cv08350-YGR (the “Travelers Action”).

M. Since February 2020, the City and SMCI have been engaged in private mediation in connection with Project; over time, the mediation process also came to include Travelers, First Specialty, W.C. Smith and Blocka. Any claims or disputes between the City, on the one hand, and SMCI and Hartford, on the other, were resolved informally and by mutual agreement in accordance with the provisions of the Contract.

N. SMCI and Malcolm Drilling Company, Inc. (“Malcolm Drilling”) have entered into separate settlement agreements relating to certain claimsin connection with the Project and Malcolm Drilling’s action relating to the Project known as Malcolm Drilling Company, Inc. v. Sierra Mountain Construction, Inc., Civil Action No. 20-CIV-05344 in San Mateo County Superior Court, and related cross-claims (the “Malcolm Action”).

O. With the assistance of the mediator, the Parties have reached a settlement of their disputes, which they wish to memorialize herein.

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Terms of Agreement
NOW, THEREFORE, for good and valuable consideration, the Parties agree as follows:

1. Incorporation of Recitals. The Recitals set forth above are expressly incorporated into the Agreement as if fully set forth herein.

2. Payments. In consideration for the full and timely performance of each of the terms and conditions of this Agreement, payment in the amount of Three Million Eight Hundred Fifty Thousand and 00/100 Dollars ($3,850,000.00) shall be funded as follows:
a. City of Pacifica: Two Million Dollars and No Cents ($2,000,000.00); b. SMCI: One Million Dollars and No Cents ($1,000,000.00), to be funded equally by Travelers and First Specialty;
c. Blocka: One Hundred Thousand Dollars and No Cents ($100,000.00), to be funded by its insurance carrier, Hartford; and
d. W.C. Smith: Seven Hundred Fifty Thousand Dollars and No Cents ($750,000.00), to be funded by its insurance carrier, Scottsdale.

Each Party’s obligation to make the payments listed in this Paragraph 2 is several and not joint. Each Party shall be responsible to pay only their contribution to the settlement as set forth in this Agreement and shall not be responsible for any other Party’s settlement contribution. The payments listed above for the City ($2,000,000.00) shall be made by the City itself and not by and through its insurance carriers.

All payments shall be made within thirty (30) days of execution of this Agreement by the Parties. Payments shall be made by check, with a reference identifying the Party on whose behalf each payment is made, payable to “Kahana & Feld LLP Client Trust Account,” Tax I.D. No. 82- 1481763, and sent to SMCI’s counsel, Alexander R. Moore, Kahana & Feld LLP, 2603 Main Street, Suite 350, Irvine, CA 92614.

3. Settlement Recipients: Upon receipt by counsel for SMCI of all the payments referenced in Paragraph 2 of this Agreement, counsel for SMCI shall distribute such funds within ten (10) days to the following Parties, as follows:
a. SMCI: Two Million Nine Hundred Eighty Thousand Dollars and No Cents ($2,980,000.00). From this amount, SMCI is responsible for a $436,882.50 settlement payment to Malcolm Drilling per a separate settlement agreement); b. Blocka: Three Hundred Thousand Dollars and No Cents ($300,000.00); and c. W.C. Smith: Five Hundred Seventy Thousand Dollars and No Cents ($570,000.00).

SMCI, Blocka, and W.C. Smith shall be collectively referred to as “Payees.”

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4. Conditions to Payment of Settlement Funds. The payment of the settlement funds to the Payees are subject to the following express conditions precedent, which include the performance of all obligations expressed elsewhere in this Agreement:
a. Execution of this Agreement by all Parties;
b. Approval of the terms of this settlement by the City’s governing body; and c. The Travelers Action being dismissed with prejudice, with each party to bear its own fees and costs.

5. Extension of Time to Completion and Waiver of Liquidated Damages. The City agrees that the time for completion is extended through the actual completion of the Contract, and that no liquidated damages are owed by SMCI on the Contract. Accordingly, based on the City’s determination of the nature of the delays in completion of the Contract and the Parties’ agreement with regard to the same, to the extent that the City may previously have asserted that liquidated damages or other damages for delays were owed or have withheld amounts on that basis, the City withdraws and waives nunc pro tunc those assertions as well as any claims for liquidated damages or delay damages. SMCI likewise withdraws and waives any claims for costs or losses associated with delay.

6. Warranties; Balboa-related Claims and EQ Basin Conditions. Except as provided herein, any warranty periods are deemed to have commenced on December 5, 2019. The City represents and warrants it is not currently aware of any warranty items. Additionally, the City waives any all claims, liabilities, demands, losses, expenses, causes of action, damages, interest, attorney’s fees, expert or other litigation expenses, costs, and/or penalties (whether known or unknown, existing or not yet existing, accrued or unaccrued, legal or equitable, actual or potential, and hereinafter referred to as “Claims”) directly or indirectly relating to or arising from (a) work performed at or under Balboa Way related to the Project and/or performed by the City’s separate contractor and its subcontractors, including, without limitation, warranty claims, indemnity claims, unknown claims, future claims, and/or latent deficiencies (“Balboa-related Claims.”) and/or (b) water intrusion into the EQ Basin, which condition is the subject of a separate settlement involving Malcolm Drilling (hereinafter, “EQ Basin Water Intrusion Conditions.”) Further, the City agrees to defend, indemnify, and hold SMCI and its subcontractors, including W.C. Smith and Block harmless from third party claims directly or indirectly relating to or arising from work performed at or under Balboa Way related to the Project and/or performed by the City’s separate contractor and its subcontractors. In furtherance of this Paragraph, there shall be no warranty obligations owed by SMCI, Blocka, or W.C. Smith to the City with regard to work performed by or to the extent altered by any thirdparty contractors hired by the City and/or such contractor’s subcontractors and/or vendors, of any tier; and the City shall have no causes of action against SMCI, Blocka, or W.C. Smith, and any of their sureties, and insurers with regard to work performed by or to the extent altered by any thirdparty contractors hired by the City and/or such contractor’s subcontractors and/or vendors, of any tier.

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7. Releases.
a. Release by the City. Except as expressly provided in Paragraph 8, City, on behalf of itself, its heirs, executors, administrators and assigns, hereby releases and forever discharges SMCI, and SMCI’s sureties (including Hartford Fire Insurance Company), W.C. Smith, Blocka, and each of their respective past, present and future employees, attorneys, insurers, sureties, agents, representatives, partners, officers, directors, members, managers, and stockholders, from any and all Claims, whether known or unknown, asserted or unasserted, suspected or unsuspected, arising out of, in any way connected with or resulting from the Project or the Contract. For avoidance of doubt, the releases by the City do not release the matters specifically reserved in Paragraph 8, such as unknown latent deficiencies other than those expressly released in Paragraph 6.
b. Release by SMCI. Except as provided in Paragraph 8, SMCI on behalf of itself and its sureties (including Hartford Fire Insurance Company), hereby releases and forever discharges the City, Blocka, and W.C. Smith and their respective past, present and future employees, attorneys, insurers, sureties, agents, representatives, partners, officers, directors, members, managers, and stockholders, from any and all Claims, whether known or unknown, asserted or unasserted, suspected or unsuspected, arising out of, in any way connected with or resulting from the Project, the Contract, the W.C. Smith Subcontract, and/or the Blocka Subcontract.
c. Release by Blocka. Except as provided in Paragraph 8, Blocka on behalf of itself and its subcontractors and suppliers of every tier hereby releases and forever discharges the City, SMCI, and W.C. Smith and their respective past, present and future employees, attorneys, insurers, sureties, agents, representatives, partners, officers, directors, members, managers, and stockholders, from any and all Claims, whether known or unknown, asserted or unasserted, suspected or unsuspected, arising out of, in any way connected with or resulting from the Project, the Contract, the W.C. Smith Subcontract, and/or the Blocka Subcontract.
d. Release by W.C. Smith. Except as provided in Paragraph 8, W.C. Smith on behalf of itself and its subcontractors and suppliers of every tier hereby releases and forever discharges the City, SMCI, and Blocka, and their respective past, present and future employees, attorneys, insurers, sureties, agents, representatives, partners, officers, directors, members, managers, and stockholders, from any and all Claims, whether known or unknown, asserted or unasserted, suspected or unsuspected, arising out of, in any way connected with or resulting from the Project, the W.C. Smith Subcontract, and/or the Blocka Subcontract.

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e. Specific Release of Carriers by Parties. Except as provided in Paragraph 8, the City, SMCI, Blocka and W.C. Smith agree to waive and release any claims demands, causes of action, obligations, damages, liabilities fees, costs, and expenses of any kind or nature, whether known or unknown, whether fixed or contingent, whether based in contract, tort, equity, contribution, equitable contribution, subrogation, equitable subrogation, negligence, bad faith, insurance coverage, claim handling, or any statutory, contractual, extracontractual, or common law cause of action of any sort, or other legal or equitable theory of recovery against Scottsdale, Travelers, First Specialty, and Hartford which in any way arise out of or relate to in any manner whatsoever including, but not limited to, claims of failure to defend and indemnify, the claims or matters released herein, the Lee Lawsuit, the W.C. Smith Action, the Blocka Action, and the Malcolm Action.
f. Full and Final Releases. Subject to Paragraph 8, the releases set forth in this Paragraph 7 are full and final releases applying to all losses, including but not limited to liabilities, damages, costs, expenses, and attorneys' fees, incurred by the Parties, arising out of or in any way connected with the abovedescribed matters.

8. Exceptions to Releases. Notwithstanding any provisions of this Agreement, including Paragraph 7, the following Claims, rights, and obligations are in no way released, waived, impaired, compromised or otherwise are affected by this Agreement:
a. Claims, rights or obligations in connection with and/or otherwise preserved under this Agreement, including without limitation, the payment obligations under this Agreement by the City, Travelers, First Specialty, Hartford in its capacity as a liability insurer, and Scottsdale.
b. Any unexpired written warranty obligations, subject to any waivers or limitations set forth herein, including those set forth in Paragraph 6. c. Right and claims for indemnity, contribution, negligence, or breach of contract or warranty with respect to any Claim by a third party to the extent and provided that the third party asserts or seeks relief consisting of or based upon:
i. Personal or bodily injuries in any way related to the Project; provided however, that Balboa-related Claims and EQ Basin Conditions shall be subject to the provisions, waivers, and limitations of Paragraph 6. ii. Property damage in any way related to the Project; provided however, that Balboa-related Claims and EQ Basin Conditions shall be subject to the provisions, waivers, and limitations of Paragraph 6. iii. Claims asserted by workers, trust funds, apprenticeship programs or governmental agencies (whether correctly or incorrectly) seeking penalties, wages, benefit or apprenticeship payments, trust fund contributions, damages, forfeitures, injunctive or other relief.

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iv. Claims by any lower tier subcontractors, workers, trust funds, unions, apprenticeship programs, vendors, or taxing authorities seeking to recover for amounts that SMCI, W.C. Smith, Blocka, or any of their respective lower tier subcontractors or vendors did not pay. d. Claims, rights, and obligations in connection with latent deficiencies in any work, labor, equipment, or materials furnished by or through SMCI, W.C.

Smith, or Blocka, not known and/or which reasonably could not have been discovered prior to the execution of this Agreement, where latent deficiency has the same meaning as in Section 337.15 of the Code of Civil Procedure, except for those areas of Balboa Ave. subject to Paragraph 6. e. Claims against Travelers, First Specialty, Hartford in its capacity as a liability insurer, and Scottsdale, for defense and indemnification in connection with matters and claims not released herein. f. Claims against XL Catlin in connection with the Project. g. Claims, rights, and obligations arising out a different construction project.

The exceptions set forth above shall not constitute evidence that any Claims or matters within the scope of the exceptions actually exist.

9. Section 1542 Waiver. As to those matters that are expressly released herein, but subject to the exceptions in Paragraph 8, the Parties hereby waive all rights under California Civil Code Section 1542 and any similar right under any similar federal, state or local statute, rule or regulation. Section 1542 provides as follows:

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

The Parties to this Agreement expressly consent that, notwithstanding section 1542 of the California Civil Code, this Agreement shall be given full and final effect according to each and all of its express terms and conditions, including those related to unknown and unsuspected claims, demands, and causes of action. The Parties acknowledge and agree that this waiver is an essential and material term of this Agreement, and without such waiver, they would not have entered into this Agreement.

10. Covenant Not to Sue. Each Party covenants not to sue on any Claim released by this Agreement. This Agreement may be pleaded as a full and complete defense to, and may be used as the basis for, any injunction against any action, suit or other proceeding that may be instituted or prosecuted in breach of this Agreement.

11. Further Actions. Upon payment of the Settlement Funds to the Payees, SMCI, W.C.

Smith, and Blocka shall promptly cause the W.C. Smith Action and the Blocka Action to be dismissed with prejudice, with each Party to bear its own costs and fees. SMCI, W.C. Smith, and Blocka also agree, upon request, to furnish California Civil Code statutory conditional and

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unconditional waivers and releases upon final payment and/or releases of stop payment notices (as applicable). SMCI will also promptly cause the Malcolm Action to be dismissed with prejudice, with each Party to bear its own costs and fees.

12. Dismissal of Travelers Action. Upon execution of this Agreement, Travelers, First Specialty, and SCMI shall take reasonable actions to cause the Travelers’ Action to be dismissed with prejudice, with each party to bear its own costs and fees.

13. Liability Insurer Obligations and Releases. Upon execution of this Agreement and payment of the settlement sums, Travelers, First Specialty, Hartford as a liability carrier, and Scottsdale’s obligations in connection with the matters settled herein shall cease.

Travelers, First Specialty, Hartford as a liability carrier, Scottsdale, and SMIC agree to waive and release any claims demands, causes of action, obligations, damages, liabilities fees, costs, and expenses of any kind or nature, whether known or unknown, whether fixed or contingent, whether based in contract, tort, statute, or other legal or equitable theory of recovery which in any way arise out of or relate to the following: 1) fees, costs, expense and monies incurred for the defense and settlement of the claims released herein (including without limitation, under Buss v. Superior Court, 16 Cal. 4th 35 (1997), Blue Ridge Ins. Co. v. Jacobson, 25 Cal. 4th 489 (2001), and/or Hartford Cas.

Ins. Co. v. J.R. Marketing, L.L.C., 61 Cal. 4th 988 (2015) and/or other applicable caselaw) 2) claims for breach of the implied covenant of good faith and fair dealing that relate to the SMCI’s claim for coverage for the claims released herein, including any claim for recovery of punitive damages as well as recovery of attorney’s fees and costs incurred in prosecuting such a claim under Brandt v.

Superior Court (1985) 37 Cal.3d 813; and 3) any and all claims, counterclaims, demands, or causes of action in law or equity that were asserted, or could have been asserted, by the parties, arising out of, connected with or are incidental to, or relating in any manner whatsoever to the claims released herein or in the Travelers Action. The releases contained in this Paragraph do not apply to deductible reimbursement, claims related to handling of deductibles or Self-Insured Retentions, or reinsurance claims of Travelers, First Specialty, Hartford as a liability carrier, and Scottsdale.

Travelers, First Specialty, Hartford as a liability carrier, and Scottsdale further agree to waive any subrogation, contribution, and/or indemnity rights they may have against each other arising out of or relating to the defense and settlement of the matters released herein.

Notwithstanding the foregoing, Hartford specifically reserves and retains its contribution and subrogation rights against XL Catlin to the extent such rights exist.

14. No Admission of Liability. Liability for the matters included in this Agreement is disputed and this Agreement shall not be construed as an admission thereof. The Parties stipulate that this Agreement and settlement have been entered into in good faith, at arm’s length, without collusion, and are the product of the negotiation. This Agreement involves the settlement and compromise of disputed claims and does not constitute an admission of liability, fault, negligence, or breach of obligations by the Parties.

15. XL Catlin. XL Catlin is not an intended beneficiary and is not released by this Agreement.

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16. Binding Agreement. This Agreement is binding upon all of the Parties, as well as their past and present subsidiaries, parents, divisions, affiliates, partners, successors, assigns, officers, directors, agents, servants, employees, attorneys, representatives, and beneficiaries.

17. Attorney’s Fees. Each party to this Agreement is to bear its own costs and attorney’s fees in connection with the matters that are the subject of this Agreement.

18. Authority. Each Party warrants that it has authority to enter into this Agreement.

Each person executing this Agreement on behalf of a Party represents and warrants that he or she has authority to do so.

19. Interpretation and Authorship. The Parties agree that this Agreement reflects the joint drafting efforts of all Parties. In the event any dispute, disagreement or controversy arises regarding this Agreement, the Parties shall be considered joint authors and no provision shall be interpreted against any party because of authorship. The Parties also acknowledge and agree that they were fully informed as to the meaning and intent of this Agreement and had the opportunity to seek advice of counsel in that regard. Additionally, the Parties hereby waive the provisions of California Civil Code section 1654, which provides:

In cases of uncertainty not removed by the preceding rules, the language of a contract shall be interpreted most strongly against the party who caused the uncertainty to exist.

20. Applicable Law. This Agreement is governed by the laws of the State of California, without regard to choice of law principles, statutes, or laws.

21. Enforcement. This Agreement is enforceable pursuant to California Code of Civil Procedure Section 664.6 or any other means available under applicable law. The Parties agree that the San Mateo County Superior Court shall retain jurisdiction, notwithstanding that a dismissal may have been filed, to enforce the terms of this Agreement against each or every Party to this Agreement. The Parties agree to submit a stipulation and proposed order to the Court to retain jurisdiction in accordance with California Code of Civil Procedure section 664.6. The Parties agree that this Agreement is admissible and may be disclosed in connection with motions or applications to the Court pursuant to California Code of Civil Procedure Section 664.6 or any other procedure to enforce the terms of this Agreement, notwithstanding any mediation privilege, including the privilege under Section 1119 et seq. of the Evidence Code.

22. Time is of the Essence. Time is of the essence with respect to each provision of this Agreement.

23. Modification. This Agreement may be modified only by a contract in writing executed by all Parties.

24. Savings. In the event that any portion of the final settlement agreement, when signed, shall be found void or voidable by a court of competent jurisdiction, such portion shall be stricken and the Agreement reformed to approximate, as closely as the law permits, the intent of the stricken portion or portions.

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25. Final Agreement. This Agreement contains the entire agreement between the Parties with respect to the subject matter of this Agreement and is intended as a final expression of the Parties’ agreement with respect to such matters.

26. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one document. A copy of the Agreement signed by a Party, and transmitted by facsimile, email, or other electronic means, shall be deemed enforceable as an original.

WHEREFORE the Parties enter into this Agreement as of the Effective Date.

Dated: July ___, 2022 CITY OF PACIFICA
By_______________________________
Its:_______________________________
Dated: July ___, 2022 SIERRA MOUNTAIN CONSTRUCTION, INC.

By_______________________________
Its:_______________________________
Dated: July ___, 2022 WALTER C. SMITH COMPANY, INC.

By_______________________________
Its:_______________________________

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C:\Users\SW85369\Desktop\7.13.22 Mutual Release and Settlement (00262923x9F7BE).docx Dated: July 25, 2022 HARTFORD FIRE INSURANCE COMPANY
By ______
Its: 7/25/2022______________________
Dated: July ___, 2022 SCOTTSDALE INSURANCE COMPANY
By_______________________________
Its:_______________________________

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By_______________________________
Its:_______________________________
Dated: July ___, 2022 BLOCKA CONSTRUCTION, INC.

By_______________________________
Its:_______________________________
Dated: July 14, 2022 TRAVELERS PROPERTY CASUALTY COMPANY By_______________________________
Its:_______________________________
Dated: July ___, 2022 FIRST SPECIALTY INSURANCE CORPORATION By_______________________________
Its:_______________________________

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Dated: July ___, 2022 BLOCKA CONSTRUCTION, INC.

By_______________________________
Its:_______________________________
Dated: July ___, 2022 TRAVELERS PROPERTY CASUALTY COMPANY By_______________________________
Its:_______________________________
Dated: July ___, 2022 FIRST SPECIALTY INSURANCE CORPORATION By_______________________________
Its:_______________________________
By_______________________________
Its:_______________________________
Dated: July ___, 2022 HARTFORD FIRE INSURANCE COMPANY
Claims Expert, V.P.
14 Claims Expert, V.P.

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Attachment: Attachment A: Settlement Agreement (5156 : Resolution Approving Settlement Agreement - SMCI re: EQ Basin) Dated: July _ , 2022
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By ____________________ _
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SCOTTSDALE INSURANCE COMPANY
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By __________ 01'00' _
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CITY OF PACIFICA

COUNCIL AGENDA SUMMARY REPORT
10/10/2022
1 SUBJECT:

Resolution Approving a Second Amendment to the Franchise Agreement with Recology of the Coast to extend the Term an additional ten years, with an option to extend an additional five years, approve the rate schedule set by Recology for single family residential and commercial rates for 2023, revise City fees to comply with applicable law, and other various amendments; and Finding approval of the Second Amendment exempt under the California Environmental Quality Act; and Authorizing the City Manager to execute the Second Amendment.

RECOMMENDED ACTION:

Move to adopt a Resolution:
1) Approving a Second Amendment to the Franchise Agreement with Recology of the Coast to extend the Term an additional ten years, with an option to extend an additional five years, approve the rate schedule set by Recology for single family residential and commercial rates for 2023, revise City fees to comply with applicable law, and other various amendments; and
2) Finding approval of the Second Amendment exempt under the California Environmental Quality Act; and
3) Authorizing the City Manager to execute the Second Amendment.

STAFF CONTACT:

Lisa Petersen, Director of Public Works
(650) 730-4948
[email protected]
BACKGROUND/DISCUSSION:

In February 2010, the City of Pacifica entered into a franchise agreement with Recology of the Coast (“Recology”) for Recyclable Materials, Organic Materials, and Solid Waste Collection Services. The City and Recology executed a First Amended Franchise Agreement on March 11, 2013 (“Agreement”), which is attached as Attachment 1.

On October 24, 2016 the City Council adopted Resolution No. 67-2016, extending the term of the Agreement for an additional five years until December 31, 2022.

The Agreement generally grants Recology the exclusive right and franchise to collect the following materials in the City service area:

1. Solid waste generated at residential premises, commercial premises and City facilities;

2. Targeted recyclable materials generated at residential premises and City facilities;

3. Organic materials generated at residential premises, commercial premises and City facilities; and
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October 10, 2022

4. Construction and demolition debris generated at residential premises, commercial premises and City
facilities.

The Agreement also generally grants Recology a non-exclusive right and franchise to collect the following materials in the Service Area:
• Targeted recyclable materials generated at commercial premises; and • Major appliances and specialty recyclable or reusable materials generated at residential premises and commercial premises.

ANALYSIS:

As the Agreement is set to expire on December 31, 2022, staff considered various options relating to the procurement of waste hauling services. Recology has been satisfactorily meeting the City’s requirements since 2010 and has extensive knowledge of the City’s needs and has formed important relationships within the community in order to perform their waste hauling services. Additionally, Recology has the correct equipment to provide the City collection services. Finally, Recology and City staff work very closely together on a variety of day-to-day issues that arise as well as more complex issues relating to compliance with state laws, such as SB 1383. Although the City could solicit requests for proposals from other hauling companies, the City Manager and Public Works Director are recommending instead that the City extend the current Agreement with Recology given the limited number of vendors that provide the level of service and equipment that Recology provides to the City and the potential cost increases from changing vendors.

Proposed Second Amendment Terms
The Second Amendment would, among other things, extend the term of the Agreement to allow Recology to continue to provide their services for an additional ten years with an option for renewal for an additional five years. The proposed Second Amendment is attached as Attachment 2.

Other key revisions in the proposed Second Amendment are as follows:

1. SB 1383- On November 22, 2021, the City Council introduced an Ordinance Article 7, “Mandatory Organics Waste Disposal” to Chapter 5 within Title 6 of the Pacifica Municipal Code pertaining to Mandatory Organic Waste Disposal Reduction in Compliance with Senate Bill 1383. The Ordinance includes State of California required changes related to organic waste disposal. In addition to many of these changes requiring additional staff work and cost on the City’s part, a number of these changes also require additional work from Recology in areas related to the diversion program implementation, public outreach, commercial support and data entry and reporting.

2. Fuel - The cost of fuel has been changing rapidly and has impacted the cost of running the waste collection trucks. The Second Amendment includes an updated fuel reconciliation process that will allow reconciliation related to yearly fuel cost fluctuation at the end of the year.

3. Franchise and Service Fees -A recent California Supreme Court ruling (Zolly v. City of Oakland) on this issue has altered the legal requirements and restrictions on Franchise and Service Fees that can be charged in connection with a solid waste franchise, thus necessitating a review of the fees in the Agreement. Recology has paid fees since 9 Packet Pg. 169
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entering into the Agreement with the City in 2010, of approximately $910,000/year. The City previously imposed a fee for AB 939 to compensate the City for its costs incurred to reduce waste, a fee for Frontierland Park is to maintain the cap over the landfill, and a fee for the value of the exclusive nature of the solid waste franchise.

As a result of the recent Zolly decision, the City will no longer charge a fee for the value of the exclusive franchise for hauling services. Instead, the fees will be limited to the City’s actual costs to provide services related to the Franchise and/or the reasonable value of City property used for the Franchise. The Amendment provides for the following Franchise and Service Fees in the proposed amendments to Section

10.01 of the Agreement:
a. Franchise Fee. The exclusive franchise that has been granted through the Agreement is intended to allow Recology the use of City property to provide collection services. The fee does not exceed the fair market value of City property used by Recology and allows Recology to access for ingress and egress of the north eastern portion of the City yard at 2212 Beach Boulevard with access off of Palmetto Avenue for a total area of 40,000 square feet and the right to place Containers in public streets, sidewalks, and right-of-ways.
b. Franchise Administrative Services Fee. This fee is equal to the City’s costs of providing services related to this Agreement and Recology’s collection services for a total of $183,790 annually.
c. Frontierland Park Remediation Fee. The City has an ongoing obligation to remediate Frontierland Park for matters related to the closed landfill site at that location. Remediation efforts focus on minimizing or resolving health, safety and public nuisance problems that may adversely affect the quality of life for citizens of the City. The remediation fee also provides funding for improvements to Frontierland Park facilities. The Frontierland Park remediation fee monies are used by the City to fund the remediation efforts. Recology shall pay to City a Frontierland Park remediation fee in the amount of $6,250 per month, which totals $75,000 annually.

The Frontierland Park remediation fee does not exceed the City’s annual costs to remediate Frontierland Park.
d. AB 939 Fee. The Act (AB 939) requires the City to plan, implement and monitor programs that will reduce the amount of Solid Waste Disposed by residents and businesses and report annually to the State. Programs include recycling and organics programs, public education and outreach efforts, franchise monitoring, etc.

The AB 939 fee is used to fund these mandated efforts. Contractor shall pay to City an AB 939 fee in the amount of $2,500 per month, which totals $30,000 annually. The AB 939 fee does not exceed the City’s costs to comply with AB 939. e. City Vehicle Impact Fee. Recology is to pay the City a refuse vehicle impact fee of $421,210 annually to compensate the City for the additional expenses it incurs to repair and address the damage to the City's public streets caused by Recology's vehicles while performing collection services. In order to better analyze the impacts to the City streets by refuse vehicles, staff retained consultant, NCE Engineering Consultants to conduct a pavement study
(<https://www.cityofpacifica.org/home/showdocument?id=13129&t=63800646359758 8293>). The pavement study demonstrates that the vehicle impact fee does not exceed the City’s costs to address the impacts of solid waste vehicles on City streets.

In order to determine the City costs to provide services related to the Franchise and the reasonable value of City property used for the Franchise, staff prepared an 9 Packet Pg. 170
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analysis, which is included as Attachment 3. After this analysis, the new Franchise Fee and Service Fees are proposed to remain at $910,000.

5. Labor Projections - Methods of obtaining a baseline for wages, pension, and health care costs were identified and are included in the Amendment.

6. Recycling Processing Costs - Economic changes related to the ability to sell recycled materials have changed the net cost/revenue to process recyclables. The Agreement addresses impacts related to these changes.

7. Hours of Operation - At the start of the Covid pandemic, the City allowed changes to the hours of collection for commercial and residential trash for safety reasons.

The hours were changed from 5:00 a.m. for commercial and 6:00 a.m. for residential to 4:30 a.m. for commercial and 5:00 a.m. for residential. The City has received minimal complaints related to the change in pick-up time and Recology has seen safety benefits to staff in allowing collection operation during hours with no traffic congestion. Additionally, Recology has observed lower costs in fuel due to less truck idling and less overtime from operators who are stuck in traffic. Also, Recology has stated that with return to work residents would like to have their trash collection earlier to allow trash cans to be brought in and prevent their home from looking unoccupied. For these reasons, staff is recommending permanently changing the collection times in the Proposed Amendment be as follows:
• Commercial - 4:30 a.m. to 7:00 p.m., Monday through Friday and 6:00 a.m. to 5:00 p.m. on weekends, exclusive of Holidays;
• Residential (single family and multi-family dwellings) -5:00 a.m. to 6:00 p.m., Monday through Friday, exclusive of Holidays;
• Commercial Exception (commercial premises 100 feet or less from residential premises) - 5:00 a.m. to 7:00 p.m., Monday through Saturday.

These permanent revisions to the collection times will require a slight amendment to the City’s noise ordinance provisions for solid waste collection found at Pacifica Municipal Code section 5-10.03(p).

8. On-Call Curbside Collection - This service will be increased from twice a year for each single-family dwelling residence to three times per year for bulky item collection.

9. 2023 Rate and Future Rate Adjustments- The proposed Second Amendment would also include the 2023 Rate Schedule for Single Family Residential and Commercial rates, which is attached as Attachment N to the Second Amendment.

The Second Amendment would also revise the Annual Rate Application Process identified in the Agreement to clarify that Recology ultimately sets the rate charged to the ratepayers. For future rate adjustments, the City will review and approve Recology’s application for annual rate increase to confirm accuracy and consistency with the Rate Adjustment procedures specified in the Agreement, Section 11 and the Attachment K.

The City Council would review and approve the identified maximum rates, which is 6%, to confirm that the adjustments are consistent with the maximum rate allowed to be charged to the ratepayers. Given that the City does not set, establish or impose the rates charged to the ratepayers, the City is not obligated to follow the procedures for establishing or increasing a proposed assessment under Proposition 218 (Article XIII D of the California Constitution). The City has for many years provided public notice to ratepayers of a rate adjustment and an opportunity to protest the adjustment in accordance with the procedures identified in the terms 9 Packet Pg. 171
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of the settlement agreement in Emde v. City of Pacifica. Those procedural requirements under the settlement agreement have expired and thus the City is no longer required to follow that process. Thus, City staff is recommending that the City no longer follow the Proposition 218 hearing process for rate adjustments as the City is not legally obligated to do so and the process itself is time consuming, costly and would be confusing for the public since the City does not set or impose the rates.

The City Manager recommends that the Council approve the Second Amendment to the Franchise Agreement with Recology. The approval of the Second Amendment would make various revisions to the Agreement, including extending the term an additional ten years, with an option for renewal for an additional five years, approve the rate schedule set by Recology for the 2023 Rates and revise the City fees, among other changes.

ALTERNATIVES:

Council may choose not to approve the Second Amendment to the Agreement or may require additional changes to the Second Amendment. Any further changes to the Second Amendment would need to be confirmed by Recology and the parties would need to execute the Second Amendment prior to December 31, 2022.

CEQA:

The approval of the Second Amendment to the Agreement would be exempt under the California Environmental Quality Act ("CEQA") Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility approval and execution of the Second Amendment would cause a significant effect on the environment. The Second Amendment to the Agreement will not change the operation of solid waste collection services provided to the City.

FISCAL IMPACT:

The City would continue to collect $910,000 as part of the Franchise Agreement Amendment negotiations that will be adjusted yearly for CPI.

ORIGINATED BY:

Public Works
ATTACHMENT LIST:

Attachment 1- Franchise Agreement (PDF)
Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (PDF)
Attachment 3 - City Cost analysis (PDF)
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RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PACIFICA APPROVING A

SECOND AMENDMENT TO THE FRANCHISE AGREEMENT WITH RECOLOGY OF THE

COAST TO EXTEND THE TERM AN ADDITIONAL TEN YEARS, WITH AN OPTION TO

EXTEND AN ADDITIONAL FIVE YEARS, APPROVE THE RATE SCHEDULE SET BY RECOLOGY FOR SINGLE FAMILY RESIDENTIAL AND COMMERCIAL RATES FOR 2023,

REVISE CITY FEES TO COMPLY WITH APPLICABLE LAW AND OTHER VARIOUS AMENDMENTS; FINDING APPROVAL OF THE SECOND AMENDMENT EXEMPT FROM

THE CALIFORNIA ENVIRONMENTAL QUALITY ACT AND AUTHORIZING THE CITY

MANAGER TO EXECUTE THE SECOND AMENDMENT
________________________________________________________________________ WHEREAS, the City is responsible for the protection of the public health and safety of the residents and businesses of the City and solid waste handling services must be provided in a manner consistent with the exercise of City's duty to protect the public health and safety; and WHEREAS, in February 2010, the City of Pacifica entered into a franchise agreement with Recology of the Coast (“Recology”) for Recyclable Materials, Organic Materials, and Solid Waste Collection Services; and
WHEREAS, the City and Recology executed a First Amended Franchise Agreement on March 11, 2013 (“Agreement”); and
WHEREAS, on October 24, 2016, the City Council adopted Resolution No. 67-2016 extending the term of the Agreement for an additional five years until December 31, 2022; and WHEREAS, the City requires additional services related to Senate Bill 1383 and mandatory organic waste disposal; and
WHEREAS, Recology has the demonstrated experience, responsibility and qualifications to provide consistent recyclable, organic and solid waste collection services throughout the City in a safe and responsible manner and has been satisfactorily meeting the City’s requirements since 2010; and
WHEREAS, Recology has extensive knowledge of the City’s needs and has formed important relationships within the community in order to perform their waste hauling services and has the correct equipment to provide the City collection services; and

WHEREAS, to the extent that this amendment results in the imposition of any fees, rates, or charges for services or facilities in connection with the City’s solid waste system, those charges are adopted pursuant to California Health and Safety Code section 5471; and WHEREAS, the City Council of the City of Pacifica considered the City Manager’s recommendation to approve the Second Amendment to the Agreement between the City of Pacifica and Recology on October 10, 2022 and determined it is in the best interest of the public health, safety and well-being to enter into a Second Amendment to the Agreement with Recology, without competitive bidding, to extend the Agreement so that Recology can continue to be responsible for the collection, transportation and recycling or disposal of solid waste. 9 Packet Pg. 173
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NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Pacifica as follows:

1. The above recitals are true and correct and material to this Resolution.

2. In making its determination, the City Council relied upon and hereby incorporates by reference all correspondence, staff reports, and other related materials submitted to the Council for consideration of the Second Amendment.

3. The approval of the Second Amendment to the Agreement would be exempt under the California Environmental Quality Act ("CEQA") Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility approval and execution of the Second Amendment would cause a significant effect on the environment. The Second Amendment to the Agreement will not change the operation of solid waste collection services provided to the City.

4. The City Council hereby approves the Second Amendment to the Agreement with Recology, in the form attached hereto as Exhibit A and all Attachments attached thereto.

5. The City Manager is hereby authorized to execute the Second Amendment, in the form attached hereto as Exhibit A, with minor revisions that may be approved by the City Manager and the City Attorney, and to execute any other necessary documents to effectuate the terms of the Second Amendment to the Agreement.
• • • • •
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Pacifica, California, held on held on the 10th day of October 2022, by the following vote:

AYES, Councilmembers:

NOES, Councilmembers:

ABSENT, Councilmembers:

ABSTAIN, Councilmembers:
____________________________
Mary Bier, Mayor
ATTEST: APPROVED AS TO FORM:
___________________________ __________________________
Sarah Coffey, City Clerk Michelle Kenyon, City Attorney 9 Packet Pg. 174
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EXHIBIT A
9 Packet Pg. 175

FIRST AMENDED FRANCHISE AGREEMENT

BETWEEN

THE CITY OF PACIFICA
AND

RECOLOGY OF THE COAST
FOR

RECYCLABLE MATERIALS,

ORGANIC MATERIALS, AND SOLID WASTE

COLLECTION SERVICES
* * *
March___, 2013

FINAL AGREEMENT

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TABLE OF CONTENTS
RECITALS ............................................................................................................................. 1 ARTICLE 1 DEFINITIONS.....................................................................................................3

1.01 Definitions................................................................................................................... 3

1.02 Statutory Definitions ................................................................................................... 3 ARTICLE 2 REPRESENTATION AND WARRANTIES OF CONTRACTOR ..........................4

2.01 Corporate Status ........................................................................................................ 4

2.02 Corporate Authorization.............................................................................................. 4

2.03 Agreement Duly Executed .......................................................................................... 4

2.04 No Conflict with Applicable Law or Other Documents................................................. 4

2.05 No Litigation ............................................................................................................... 4

2.06 Financial Condition ..................................................................................................... 4

2.07 Ability to Perform ........................................................................................................ 5

2.08 Contractor’s Investigation ........................................................................................... 5

2.09 Statements and Information in Acquisition Documents............................................... 5 ARTICLE 3 TERM OF AGREEMENT ....................................................................................6

3.01 Effective Date............................................................................................................. 6

3.02 Term........................................................................................................................... 6

3.03 Extension of Term ...................................................................................................... 6

3.04 Conditions to Effectiveness of Agreement .................................................................. 6 ARTICLE 4 SCOPE OF AGREEMENT..................................................................................8

4.01 Scope of Agreement................................................................................................... 8

4.02 Limitations on Scope .................................................................................................. 8 ARTICLE 5 COLLECTION SERVICES................................................................................10

5.01 General .....................................................................................................................10

5.02 Solid Waste Collection...............................................................................................10

5.03 Targeted Recyclable Materials Collection..................................................................13

5.04 Organic Materials Collection......................................................................................17

5.05 Residential On-Call Curbside Bulky Item Collection Service......................................19

5.06 City Facility Annual On-Call Bulky Item Collection Service ........................................20

5.07 Reserved...................................................................................................................21

5.08 Collection for Large Venues and Events....................................................................21

5.09 Abandoned Waste Cleanup Collection Service..........................................................22

5.10 Coats for Kids Program .............................................................................................22

5.11 Compost Give-Away..................................................................................................23

5.12 Fee for Service On-Call Bulky Item Collection ...........................................................23

5.13 Tree Maintenance......................................................................................................24

5.14 Drop-Off Facility ........................................................................................................24 ARTICLE 6 TRANSPORTATION, PROCESSING, AND DISPOSAL...................................25

6.01 Designated Facilities .................................................................................................25

6.02 Transportation of Collected Materials ........................................................................27

6.03 Recyclable Materials Processing ...............................................................................27

6.04 Organic Materials Processing....................................................................................28

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6.05 Processing of Other Materials ...................................................................................29

6.06 Solid Waste Disposal.................................................................................................29

6.07 Contractor Methods of Controlling Contamination .....................................................30 ARTICLE 7 OTHER SERVICES ..........................................................................................32

7.01 Customer Billing ........................................................................................................32

7.02 Customer Service......................................................................................................34

7.03 Public Education and Promotion................................................................................37

7.04 Commercial Recycling Program Promotion ...............................................................39

7.05 Multi-Family Recycling Promotion..............................................................................41

7.06 Emergency Services and Contingency Plan ..............................................................42

7.07 Annual Route Assessment ........................................................................................43

7.08 Waste Generation and Characterization Studies .......................................................43

7.09 Carbon Footprint Measuring ......................................................................................43 ARTICLE 8 REQUIREMENTS FOR OPERATIONS, EQUIPMENT, AND PERSONNEL.........44

8.01 Collection Hours and Schedules................................................................................44

8.02 Collection Standards .................................................................................................45

8.03 Vehicles.....................................................................................................................48

8.04 Reserved...................................................................................................................50

8.05 Containers.................................................................................................................50

8.06 Personnel ..................................................................................................................53

8.07 Hazardous Waste Inspection and Handling...............................................................55

8.08 Communication and Cooperation with City ................................................................56

8.09 Reserved...................................................................................................................57

8.10 Buy-Recycled Policy..................................................................................................57

8.11 Title to Solid Waste, Recyclables, and organics ........................................................57 ARTICLE 9 RECORD KEEPING AND REPORTING...........................................................58

9.01 General .....................................................................................................................58

9.02 General Record Keeping Provisions..........................................................................58

9.03 Record Keeping Requirements..................................................................................59

9.04 General Reporting Requirements ..............................................................................61

9.05 Monthly Reports ........................................................................................................63

9.06 Quarterly reports .......................................................................................................64

9.07 Annual Reports..........................................................................................................65

9.08 Required Specific Reporting ......................................................................................67

9.09 Upon-Request Reporting...........................................................................................67 ARTICLE 10 PAYMENT BY CONTRACTOR OF FRANCHISE AND REGULATORY FEES.69

10.01 Franchise and Regulatory Fees.............................................................................69

10.02 Time and Method of Payment................................................................................69

10.03 Adjustments to Fees; Additional Fees....................................................................70 ARTICLE 11 CONTRACTOR’S COMPENSATION AND RATES ..........................................71

11.01 Overview................................................................................................................71

11.02 Rate-Setting Process.............................................................................................71

11.03 Annual Rate Application Process...........................................................................73

11.04 Special Rate Review..............................................................................................75

11.05 Notice of Rate Adjustments ...................................................................................78

11.06 Failure or Delay in Adjusting Rates........................................................................78

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11.07 Potential Rate Constraints .....................................................................................79

11.08 Sharing of Revenue from Sale of Recyclables.......................................................79 ARTICLE 12 CITY RIGHT TO USE EQUIPMENT AND FACILITIES.....................................80

12.01 Purpose .................................................................................................................80

12.02 Conditions Authorizing City’s Right to Use of Facilities and Equipment .................80

12.03 Notice to Contractor...............................................................................................80

12.04 Rights and Responsibilities of Parties....................................................................80

12.05 Duration of City’s Right to Possession and Use of Vehicles/Equipment.................81

12.06 General..................................................................................................................81 ARTICLE 13 INDEMNITY, INSURANCE, BOND, GUARANTY .............................................82

13.01 Indemnification ......................................................................................................82

13.02 Insurance...............................................................................................................82

13.03 Faithful Performance Bond ....................................................................................85

13.04 Alternative Security................................................................................................85

13.05 Hazardous Waste Indemnification .........................................................................85

13.06 California Integrated Waste Management Act Indemnification...............................86

13.07 Guaranty................................................................................................................86 ARTICLE 14 DEFAULT AND REMEDIES .............................................................................87

14.01 Events of Default ...................................................................................................87

14.02 Right to Suspend or Terminate Upon Default. .......................................................88

14.03 Injunctive Relief .....................................................................................................88

14.04 Right to Perform; Use of Contractor Property ........................................................89

14.05 Damages ...............................................................................................................89

14.06 City’s Remedies Cumulative ..................................................................................89

14.07 Liquidated Damages..............................................................................................89

14.08 City Default............................................................................................................90

14.09 Excuse from Performance .....................................................................................90

14.10 Assurance of Performance ....................................................................................91 ARTICLE 15 OTHER AGREEMENTS OF THE PARTIES .....................................................92

15.01 Relationship of Parties...........................................................................................92

15.02 Compliance with Law.............................................................................................92

15.03 Assignment............................................................................................................92

15.04 Subcontracting.......................................................................................................93

15.05 Transactions with Affiliates ....................................................................................94

15.06 Reserved ...............................................................................................................94

15.07 No Warranty by City ..............................................................................................94

15.08 Condemnation .......................................................................................................94

15.09 Notice ....................................................................................................................95

15.10 Representatives of the Parties...............................................................................95

15.11 Duty of Contractor Not to Discriminate...................................................................96

15.12 Right of City to Make Changes in Services and Service Levels .............................96

15.13 Transition to Next Service Provider........................................................................96

15.14 Reports as Public Records ....................................................................................97

15.15 Confidentiality of Contractor Records ....................................................................97

15.16 Dispute Resolution.................................................................................................97 ARTICLE 16 MISCELLANEOUS PROVISIONS....................................................................98

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16.01 Governing Law ......................................................................................................98

16.02 Jurisdiction.............................................................................................................98

16.03 Binding on Successors ..........................................................................................98

16.04 Parties in Interest...................................................................................................98

16.05 Waiver ...................................................................................................................98

16.06 Attachments...........................................................................................................98

16.07 Entire Agreement; Relationship to Prior Agreement ..............................................98

16.08 Section Headings...................................................................................................98

16.09 Interpretation .........................................................................................................98

16.10 Amendment ...........................................................................................................98

16.11 Severability ............................................................................................................99

16.12 Costs and Attorneys’ Fees.....................................................................................99

16.13 No Damages for Invalidation of Agreement ...........................................................99

16.14 References to Laws...............................................................................................99

16.15 Indemnity Against Challenges to Agreement .........................................................99 Attachments
A Definitions
B City Facilities
C City-Sponsored Events
D Container Specifications
E [Reserved]
F Performance Bond
G Guaranty
H Delinquent Payments
I [Reserved]
J Liquidated Damages
K Rate-Setting Methodology
L Implementation Plan
M [Reserved]
N Rate Schedule
O Contractor’s Personnel
P Pro Forma and Rate Setting Examples
Q Form of Notice For Proposed Rate Adjustments

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1 FIRST AMENDED FRANCHISE AGREEMENT
2 FOR
3 RECYCLABLE MATERIALS, ORGANIC MATERIALS, AND SOLID WASTE 4 COLLECTION SERVICES
5 THIS AGREEMENT is made as of this _____ day of ______________, 2013, by and 6 between the CITY OF PACIFICA, a California municipal corporation (“City”), and RECOLOGY 7 OF THE COAST, a California corporation (“Contractor”). 8 RECITALS
9 1. The State of California has, through enactment of the California Integrated 10 Waste Management Act of 1989 (“Act”), determined each of the following:
11 A. That management of solid waste is a shared responsibility of the State 12 and local governments.
13 B. That local governments may grant franchises to private entities to provide 14 adequate solid waste handling services.
15 C. That the amount of solid waste generated in California, coupled with 16 diminishing landfill space, potential adverse environmental impacts from 17 landfilling solid waste, and the need to conserve natural resources have 18 created an urgent need for State and local agencies to enact and 19 implement an aggressive integrated waste management program. 20 2. The State of California, through the Act, has directed the California Integrated 21 Waste Management Board and all local agencies to maximize the use of feasible 22 waste reduction, recycling and composting options in order to reduce the amount 23 of solid waste that must be disposed of in landfills. 24 3. City previously entered into that certain Agreement for Collection and Disposal of 25 Solid Waste and Recycling Program Services dated as of July 15, 1997 (such 26 agreement, as amended, the “Prior Contract”) with Coastside Scavanger 27 Company, a California corporation (“Previous Contractor”). Contractor and 28 Previous Contractor entered into an agreement by which Contractor acquired 29 Previous Contractor (the “Acquisition”). Contractor and City entered into 30 Franchise Agreement Between the City of Pacifica and Recology of the Coast 31 for Recyclable Materials, Organic Materials, and Solid Waste Collection 32 Services, the effective date of which was February 9, 2010 (“Original 33 Agreement”). City agreed to consent to the Acquisition on the condition that 34 Contractor provide services on the terms set forth in the Original Agreement, 35 which superseded the Prior Contract in its entirety. City and Contractor now 36 desire to amend the Original Agreement to better reflect the understandings and 37 obligations between the Parties by way of entering into this First Amended 38 Franchise Agreement (hereinafter referred to as “Agreement”). 39 4. As a further condition to City’s consent to the Acquisition, City and Previous 40 Contractor entered into an Agreement Assigning Franchise Status and 41 Terminating and Releasing Rights and Claims Under Franchise Agreement 42 dated as of February 8, 2010 (the “Termination Agreement”), which, among 43 other things, terminated the Prior Contract and released Previous Contractor and 44 City from any obligations related thereto. The outstanding portion of the Rate 45 adjustment previously agreed between City and Previous Contractor, to provide 46 for the recapture by City and its residents of certain amounts relating to Previous

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47 Contractor’s disposal of green waste and allocation of costs to its Affiliate, Sea 48 Coast Disposal Company, was reflected in the Original Agreement in the form of 49 an equivalent Rate adjustment in Rate Years One and Two. 50 5. On the Commencement Date of the Original Agreement, Contractor commenced 51 performing Collection services in the same manner as the Previous Contractor, 52 but phased in and fully implemented certain new Collection services that would 53 improve Customer convenience through provision of wheeled Carts for Single54 Family residents, and enhance Residential and Commercial diversion through 55 Collection of Single-Stream Recyclables and Collection of Organic Materials. 56 6. It was further contemplated that (i) Rates from the Commencement Date through 57 July 31, 2010 would be the Rates in effect as of the Commencement Date, which 58 were set forth in Attachment N of the Original Agreement, (ii) a Rate adjustment 59 would take effect on August 1, 2010 to reflect the cumulative effect of changes in 60 the consumer price index, landfill Disposal fees, and County regulatory fees over 61 the three years since August 1, 2007, and would be in the amount of 5%, as set 62 forth in Attachment N of the Original Agreement; (iii) a further Rate adjustment 63 would take effect on March 1, 2011, to reflect costs for the Collection services 64 implemented as of September 1, 2010, which would be negotiated between the 65 Parties (subject to certain limitations as more fully set forth in the Original 66 Agreement) based on cost and operational data derived from Contractor’s 67 provision of services under the Original Agreement during the initial months after 68 the Commencement Date; and (iv) thereafter, Rates would be adjusted annually 69 each January 1 according to the cost-based or index-based adjustment 70 mechanisms set forth herein. The Rate adjustment contemplated by clause (ii) 71 above occurred as planned. The Rate adjustment contemplated by clause (iii) 72 above, which the Parties determined was in the amount of 8%, was delayed and 73 took effect as of June 1, 2011. As a result of the delay in implementing that 74 adjustment, the parties have agreed to adjust the Rates for Rate Year Three as 75 described in Section 11.02.C hereof.
76 7. City has independently evaluated Contractor and the terms on which Contractor 77 proposes to provide Solid Waste handling services including Collection of 78 Recyclable and Organic Materials, as set forth in this Agreement, and has 79 determined that such terms are in the best interests of City, its residents and 80 businesses, taking into account the qualifications and experience of Contractor 81 and the cost of providing such services.
82 8. Contractor has participated in the development of this Agreement and is ready, 83 willing and able to perform the services which the Agreement requires. 84 NOW, THEREFORE, in consideration of the mutual promises contained in this 85 Agreement, and for other good and valuable consideration, City and Contractor agree 86 as follows:

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87 ARTICLE 1 DEFINITIONS
88 1.01 DEFINITIONS
89 Unless the context otherwise requires, capitalized terms used in this Agreement shall 90 have the meanings set forth in the definitions contained in Attachment A. 91 1.02 STATUTORY DEFINITIONS
92 Unless a term is otherwise defined in this Agreement, terms used in this Agreement 93 shall have the same meaning as the definitions of those terms contained in the Act. In 94 the event of a conflict between the definition of a term in the Act and in this Agreement, 95 the definition in the Agreement shall prevail.

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96 ARTICLE 2 REPRESENTATION AND WARRANTIES OF CONTRACTOR 97 Contractor represents and warrants, as of the date of this Agreement, the following:
98 2.01 CORPORATE STATUS
99 Contractor is a corporation, duly organized, validly existing and in good standing under 100 the laws of the State of California, and is qualified to do business in the State of 101 California.
102 2.02 CORPORATE AUTHORIZATION
103 Contractor has the authority to enter into and perform its obligations under this 104 Agreement. The directors (and shareholders if necessary) of Contractor have taken all 105 actions required by law, the articles of incorporation and bylaws or otherwise to 106 authorize the execution of this Agreement.
107 2.03 AGREEMENT DULY EXECUTED
108 The persons signing this Agreement on behalf of Contractor have been authorized to do 109 so and this Agreement constitutes a legal, valid and binding obligation of Contractor. 110 2.04 NO CONFLICT WITH APPLICABLE LAW OR OTHER DOCUMENTS 111 Neither the execution and delivery by Contractor of this Agreement, nor the performance 112 by Contractor of its obligations hereunder (i) conflicts with, violates or will result in a 113 violation of any existing Applicable Law; or (ii) conflicts with, violates or will result in a 114 breach or default under any term or condition of any existing judgment, order or decree 115 of any court, administrative agency or other governmental authority, or of any existing 116 contract or instrument to which Contractor is a party or by which Contractor is bound. 117 2.05 NO LITIGATION
118 There is no action, suit, proceeding, or investigation at law or in equity, before or by any 119 court or governmental entity, pending or threatened against Contractor, or otherwise 120 affecting Contractor, wherein an unfavorable decision, ruling, or finding, in any single 121 case or in the aggregate, would (a) materially adversely affect Contractor’s performance 122 hereunder, (b) adversely affect the validity or enforceability of this Agreement, or (c) 123 have a material adverse effect on the financial condition of Contractor or the entity 124 providing the guaranty of Contractor's performance. 125 2.06 FINANCIAL CONDITION
126 Contractor has made available to City information on its financial condition. Contractor 127 recognizes that City has relied on this information in evaluating the sufficiency of 128 Contractor’s financial resources to perform this Agreement. To the best of Contractor’s 129 knowledge, this information is complete and accurate, does not contain any material 130 misstatement of fact and does not omit any fact necessary to prevent the information 131 provided from being materially misleading.

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132 2.07 ABILITY TO PERFORM
133 Contractor has the expertise and professional and technical capability to perform all of 134 its obligations under this Agreement.
135 2.08 CONTRACTOR’S INVESTIGATION
136 Contractor has made an independent investigation and analysis, the results of which are 137 satisfactory to Contractor, of the conditions and circumstances surrounding the 138 Agreement, its content and preparation, and the work to be performed by Contractor 139 under the Agreement. The Agreement accurately and fairly represents the intentions of 140 Contractor, and Contractor enters into this Agreement on the basis of that independent 141 investigation and analysis.
142 2.09 STATEMENTS AND INFORMATION IN ACQUISITION DOCUMENTS 143 The information provided by Contractor to City in connection with City’s evaluation of the 144 Acquisition does not contain any untrue statement of a material fact nor omit to state a 145 material fact necessary in order to make the statements made, in light of the 146 circumstances in which they were made, not misleading.

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147 ARTICLE 3 TERM OF AGREEMENT
148 3.01 EFFECTIVE DATE
149 The Effective Date of this Agreement shall be March 12, 2013. 150 3.02 TERM
151 The Term of this Agreement shall be approximately five (5) years beginning on the 152 Effective Date and ending at midnight on December 31, 2017 (“Initial Term”), unless 153 earlier terminated, or extended as provided in Section 3.03. Contractor’s obligation to 154 Collect Solid Waste, Targeted Recyclable Materials and Organic Materials began on 155 February 9, 2010 (the “Commencement Date”) at 12:01 a.m. and shall continue for the 156 remainder of the Term. The “Transition Period” shall begin on the Commencement 157 Date and end on September 1, 2010 (the “Transition Date”), at 12:01 a.m., with 158 Contractor beginning to phase in the new Collection services described in Article 5 not 159 later than August 1, 2010, with full implementation to be completed by September 1, 160 2010.
161 3.03 EXTENSION OF TERM
162 City has the sole option to extend the Term of this Agreement for an additional period of 163 five (5) years (“Extension Term”). If City wishes to extend this Agreement, it shall 164 provide written notice to Contractor no less than one (1) year prior to the end of the 165 Term.
166 3.04 CONDITIONS TO EFFECTIVENESS OF AGREEMENT
167 A. Obligation of City to Perform. The obligation of City to perform under this 168 Agreement is subject to satisfaction, on or before the Effective Date, of each of the 169 conditions set out below, each of which may be waived in whole or in part by City:
170 1. Accuracy of Representations. The representations and warranties made 171 by Contractor in Article 2 shall be true and correct on and as of the 172 Effective Date.
173 2. Absence of Litigation. There shall be no litigation pending on the 174 Effective Date in any court challenging the execution of this Agreement or 175 seeking to restrain or enjoin its performance.
176 3. Effectiveness of City’s Approval. The approval of this Agreement by City 177 shall have become effective, pursuant to California law, on or before the 178 Effective Date.
179 4. Performance Bond. Contractor shall have provided a performance bond 180 meeting the requirements of Section 13.03.
181 B. Obligation of Contractor to Perform. The obligation of Contractor to perform 182 under this Agreement is subject to the satisfaction, on or before the Effective Date, 183 of the conditions set forth below, each of which may be waived in whole or in part 184 by Contractor.

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185 1. Absence of Litigation. There shall be no litigation pending on the 186 Effective Date in any court challenging the execution of this Agreement, 187 or seeking to enjoin its performance.
188 2. Effectiveness of City's Approval. The approval of this Agreement by City 189 shall have become effective, pursuant to California law. 190 C. Notice. If either Party wishes to assert that a condition for its benefit has not been 191 satisfied and has not been waived, it must deliver written notice to that effect to the 192 other party on or before the Effective Date. If no such notice is received, the 193 Agreement will become effective on the Effective Date. 194 D. Good Faith. Each Party is obligated to perform in good faith the actions, if any, 195 which this Agreement requires it to perform before the Effective Date and to 196 cooperate towards the satisfaction of the conditions set forth above.

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197 ARTICLE 4 SCOPE OF AGREEMENT
198 4.01 SCOPE OF AGREEMENT
199 A. Through this Agreement, City grants to Contractor the exclusive right and franchise, 200 except as provided in subsection B and in Section 4.02, to Collect the following 201 materials in the Service Area:
202 1. Solid Waste generated at Residential Premises, Commercial Premises and City 203 Facilities;
204 2. Targeted Recyclable Materials generated at Residential Premises and City 205 Facilities;
206 3. Organic Materials generated at Residential Premises, Commercial Premises and 207 City Facilities; and
208 4. Construction and Demolition Debris generated at Residential Premises, 209 Commercial Premises and City Facilities.
210 B. Through this Agreement, City grants to Contractor a non-exclusive right and 211 franchise to Collect the following materials in the Service Area:
212 1. Targeted Recyclable Materials generated at Commercial Premises; and 213 2. Major Appliances and Specialty Recyclable or Reusable Materials generated at 214 Residential Premises and Commercial Premises.
215 4.02 LIMITATIONS ON SCOPE
216 City may permit the Collection, Recycling or Disposal of any of the following materials by 217 Persons other than Contractor without seeking or securing any approval from 218 Contractor:
219 A. Solid Waste, Targeted Recyclable Materials, and Organic Materials that are 220 transported personally by the Owner or Occupant of the Premises at which they are 221 generated (or by his or her employees) to a processing or Disposal facility; 222 B. Targeted Recyclable Materials and Organic Materials donated by the Generator to 223 youth, civic, or charitable organizations;
224 C. Recyclable beverage containers delivered by the Generator to a certified recycling 225 center for Recycling under the California Beverage Container Recycling Litter 226 Reduction Act, Section 14500 et seq. California Public Resources Code. 227 D. Animal waste and remains from slaughterhouse or butcher shops; grease waste; 228 and used cooking oil;
229 E. By-products of sewage treatment including sludge, sludge ash, grit, and 230 screenings;
231 F. Hazardous Waste, Household Hazardous Waste, and Infectious Waste; 232 G. E-Scrap and Universal Waste;
233 H. Composted Organic Materials;
234 I. Materials generated by State facilities (including public schools), provided that the 235 Generator has arranged for Collection by other Persons or by the Contractor 236 through a separate agreement;

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237 J. The incidental removal of Solid Waste when the primary service performed is either 238 of the following:
239 1. Landscaping, gardening, weed or refuse abatement, yard clean-up, or 240 grading of a lot; or
241 2. Construction, remodeling, or demolition of a building or structure, provided 242 that
243 a. The collection, including loading, removal, and transportation of Solid 244 Waste from the premises, is performed on an infrequent and occasional 245 basis by the Person performing the construction, remodeling, or 246 demolition or a subcontractor of such Person (provided that such 247 subcontractor is engaged to perform the construction, remodeling, or 248 demolition and not as a Solid Waste hauler), and,
249 b. The Person performing the construction, remodeling, or demolition, its 250 subcontractors, and their respective Affiliates are not engaged in the 251 business of providing solid waste or recycling services. 252 K. Removal of Solid Waste, Construction and Demolition Debris, Recyclable Materials, 253 and other debris following a major accident, disruption, or natural calamity. 254 L. Other Persons shall maintain the right to Collect Specialty Recyclables, to accept 255 donated Recyclable Materials, and to pay the service recipient for Recyclable 256 Materials in a manner consistent with provisions of the City’s Municipal Code.

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257 ARTICLE 5 COLLECTION SERVICES
258 5.01 GENERAL
259 The work to be performed and services to be provided by Contractor includes the 260 furnishing of all labor, supervision, equipment, materials, supplies, and all other items 261 necessary to perform the work and provide the services described, at the times and in 262 the manner required by this Agreement. The enumeration of, and specification of 263 requirements for, particular items of labor, supervision, equipment, materials or supplies 264 shall not relieve Contractor of the duty to furnish all others, as may be required, whether 265 enumerated elsewhere in the Agreement or not.
266 Contractor shall perform the work and provide the services pursuant to this Agreement 267 in a thorough and professional manner so that the residents and businesses within the 268 City are provided reliable, courteous, and high-quality service at all times. The 269 enumeration of, and specification of requirements for, particular aspects of service 270 quality shall not relieve Contractor of the duty of accomplishing all other aspects in the 271 manner provided in this Article, whether such other aspects are enumerated elsewhere 272 in the Agreement or not.
273 Contractor ordered equipment, hired employees, obtained permits and licenses, initiated 274 public education, and all of the steps necessary to implement an orderly transition as 275 specified in the Implementation Plan (Attachment L) have been completed. 276 5.02 SOLID WASTE COLLECTION
277 Contractor acknowledges that the City is committed to diverting materials from Disposal 278 through the implementation of source reduction, reuse, Recycling, and composting 279 programs and that the City may, at some time in the future, implement, in accordance 280 with Section 15.12, new programs that may impact the overall quantity or composition of 281 Solid Waste to be Collected by Contractor.
282 A. Single-Family Dwelling (SFD). Contractor shall Collect Solid Waste from SFD 283 once per week. Contractor shall Collect Solid Waste from Contractor-provided 284 Carts. Contractor shall provide each SFD Customer receiving Solid Waste 285 Collection service with Customer’s choice of one (1) 20-gallon, 32-gallon, 48-gallon, 286 or 64-gallon Cart. Carts shall be provided at no additional cost to Customers above 287 the applicable Rate for monthly Collection service specified in Attachment N. 288 Contractor shall provide unscheduled Collection service within one (1) Business 289 Day of Customer’s request and shall be entitled to bill Customer an amount not 290 greater than the Rate therefor specified in Attachment N. 291 Contractor shall Collect Carts Curbside unless: (i) the Occupant is provided a 292 Special Handling Service exemption; or, (ii) the Customer has requested Backyard 293 Collection Service and has agreed to pay Contractor a rate consistent with the Rate 294 specified in Attachment N. In such case, Contractor shall Collect Carts from and 295 return Carts to the alternative service location (such as the side yard or backyard) 296 specified by the Customer.
297 The Contractor shall make reasonable accommodations with regard to provision 298 and servicing of Containers (e.g., Container size and type, placement of Containers 299 for Collection, etc.) at no additional cost to Customers who meet the City’s Special 300 Handling criteria. Contractor will notify all Residential Customers annually of the 301 Special Handling and Backyard Collection Service options and submit, for approval,

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302 a draft notification to City thirty (30) days prior to anticipated distribution to 303 Customers. New service recipients shall be notified upon signing up for service of 304 the Special Handling and Backyard Collection Service options. Customers desiring 305 Special Handling Service will be required to submit an application, in a form 306 approved by City. Contractor shall review applications to determine whether the 307 Customer meets City’s eligibility criteria and shall provide a written response within 308 five (5) Business Days after receipt of the application. Unless otherwise directed by 309 City, Customers are eligible if they provide (i) evidence of their “handicap status” by 310 the California Department of Motor Vehicles or (ii) other evidence that no Occupant 311 of the Residential Premises is physically able to place Carts Curbside for Collection. 312 B. Multi-Family Dwellings (MFDs). Contractor shall Collect Solid Waste from Multi313 Family Dwellings as frequently as subscribed for by the Customer, but not less than 314 once per week. Contractor shall provide unscheduled Collection service within one 315 (1) Business Day of Customer’s request and shall be entitled to bill Customer as 316 specified in Attachment N. Customers must subscribe to a minimum service level 317 of three (3) times per week Collection in order to be eligible for Collection on 318 Saturday and/or Sunday. Contractor shall allow Multi-Family Dwelling Customers to 319 use Carts or Bins for Solid Waste Collection that are shared by the Occupants of 320 the Premises. Contractor shall provide one (1) or more Cart(s) or Bin(s) to such 321 Customers as requested by Customer, provided that no less than ninety-six (96) 322 gallons of Container capacity are provided for every three (3) dwelling units in the 323 Multi-Family Residential Complex.
324 Contractor shall not charge a distance fee to service Containers provided to MFD 325 Customers that are three (3) cubic yards or less in capacity or wheeled Containers, 326 provided they are stored in enclosures or on private or public property within fifty 327 (50) feet of access by Contractor’s collection vehicle, and provided that access to 328 the Containers is paved and the slope is less than seven percent (7%). City will 329 make the final determination on the slope of the access if a dispute arises between 330 Customer and Contractor. Contractor shall be entitled to bill MFD Customers for 331 distance charges as specified in Attachment N for providing Collection service to 332 Containers that do not meet the foregoing criteria. 333 Contractor shall not charge an additional fee to service Containers that are four (4) 334 cubic yards or larger in capacity, or do not have wheels, provided they are stored in 335 a location that is accessible by Contractor’s collection vehicle. Contractor may 336 charge an additional fee to service Containers that do not meet the foregoing 337 criteria, and shall cooperate with the Customer to designate a collection location 338 that is reasonably convenient to both the Customer and Contractor. 339 Contractor shall give special consideration when determining the Collection location 340 for Multi-Family Residential complexes to ensure that the flow of traffic is not 341 impeded and that it does not result in aesthetic degradation of an area. The 342 designated Collection location, if disputed by Customer or Contractor, shall be 343 determined by the City. Additionally, if in the City’s opinion the location of an 344 existing Collection location is inappropriate, City may require the Customer or 345 Contractor to relocate the Collection Containers.
346 C. Commercial Premises. Contractor shall Collect Solid Waste from Commercial 347 Premises as frequently as subscribed for by the Customer, but not less than once 348 per week. Contractor shall provide unscheduled Collection service within one (1) 349 Business Day of Customer’s request and shall be entitled to bill Customer as 350 specified in Attachment N. Customers must subscribe to a minimum service level

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351 of three (3) times per week Collection in order to be eligible for Collection on 352 Saturday and/or Sunday.
353 Contractor shall not charge a distance fee to service Containers provided to 354 Commercial Customers that are three (3) cubic yards or less in capacity or wheeled 355 Containers, provided they are stored in enclosures or on private or public property 356 within fifty (50) feet of access by Contractor’s collection vehicle, and provided that 357 access to the Containers is paved and the slope is less than seven percent (7%). 358 City will make the final determination on the slope of the access if a dispute arises 359 between Customer and Contractor. Contractor shall be entitled to bill Commercial 360 Customers for distance charges as specified in Attachment N for providing 361 Collection service to Containers that do not meet the foregoing criteria. 362 Contractor shall not charge an additional fee to service Containers that are four (4) 363 cubic yards or larger in capacity, or do not have wheels, provided they are stored in 364 a location that is accessible by Contractor’s collection vehicle. Contractor may 365 charge an additional fee to service Containers that do not meet the foregoing 366 criteria, and shall cooperate with the Customer to designate a collection location 367 that is reasonably convenient to both the Customer and Contractor. 368 Specifically, the Contractor shall offer the following Collection service 369 methodologies to Commercial Customers:
370 1. Individual Cart or Bin Service. Contractor shall allow each Commercial 371 Premise to use Carts or Bins for Solid Waste Collection in accordance with the 372 service options set forth on Attachment N.
373 2. Centralized Cart or Bin Service. Contractor shall allow each Commercial 374 Premises to use Carts or Bins for Solid Waste Collection that are shared by the 375 Occupants of two (2) or more adjacent Commercial Premises. In such case, 376 Contractor shall provide one or more Carts or Bins as subscribed for by the 377 Customer(s), provided that no less than ninety-six (96) gallons of Container 378 capacity is provided for every three (3) Commercial Premises. 379 3. Drop Boxes and Compactors. Contractor shall allow a Commercial Customer 380 to use a Drop Box or Compactor for Solid Waste Collection to meet the 381 Customer’s Disposal needs. In such case, Contractor shall provide the 382 Customer with a choice of Container capacities ranging from ten (10) to forty 383 (40) cubic yards (or similar sizes), and shall be entitled to charge the Customer 384 an amount not exceeding the Rate specified in Attachment N. Contractor shall 385 offer Commercial Customers the option to purchase or lease Compactors for 386 Solid Waste through either the Contractor or an outside vendor. Regular 387 maintenance of Compactors shall be provided by Contractor (or outside 388 vendor) as frequently as needed to keep the Compactors in good working 389 order and functioning at high compaction levels.
390 D. City Facilities. Contractor shall Collect Solid Waste from the City Facilities set 391 forth on Attachment B as frequently as scheduled by the City, but not less than 392 once per week, at no charge to City. The service levels for such City Facilities as of 393 the Commencement Date are set forth on Attachment B. City must subscribe to a 394 minimum service level of three (3) times per week Collection in order to be eligible 395 for Collection on Saturday and/or Sunday. Specifically, the Contractor shall offer 396 the following Collection service methodologies to such City Facilities:
397 1. Individual Cart or Bin Service. Contractor shall allow each City Facility to use 398 Carts, Bins, Compactors, or Drop Boxes for Solid Waste Collection in

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399 accordance with the service options available to Commercial Customers set 400 forth on Attachment N.
401 2. Centralized Cart or Bin Service. Contractor shall allow each City Facility to use 402 Carts or Bins for Solid Waste Collection that are shared by the Occupants of 403 two (2) or more adjacent City Facilities. In such case, Contractor shall provide 404 one or more Carts or Bins as requested by the City provided that no less than 405 ninety-six (96) gallons of Container capacity is provided for every three (3) City 406 Facilities.
407 3. Compactors. Contractor shall offer City the option to purchase or lease 408 Compactors for Solid Waste through either the Contractor or an outside 409 vendor. Regular maintenance of Compactors shall be provided by Contractor 410 (or outside vendor) as frequently as needed to keep the Compactors in good 411 working order and functioning at high compaction levels. 412 4. Public Litter Receptacles. Contractor shall Collect Solid Waste from public 413 litter receptacles located on streets, parking lots, and parks (if accessible for 414 Curbside Collection) at the locations set forth on Attachment B. Contractor 415 shall also Collect Solid Waste that is contained in bags or boxes and placed 416 adjacent to such public litter receptacles. These Collections will be made 417 between one (1) and six (6) Days per week, as determined by City. City shall 418 be responsible for providing and maintaining all such public litter receptacles. 419 Contractor is responsible for notifying City if a public litter receptacle is 420 inoperable within twenty-four (24) hours of observing or being notified of the 421 defect. City shall annually be allowed to increase the number of public litter 422 receptacles provided Collection service by an additional five percent (5%) of 423 the total number of receptacles in service as of January 1 of each Rate Year at 424 no additional cost. The allocation of additional public litter receptacles placed 425 in service will accrue from year to year for the Term. 426 5. Grit and Screenings. Contractor shall Collect grit and screenings from the 427 City’s sewage treatment plant and pump stations and Dispose of the materials. 428 6. Containers. Contractor will provide the City with the Collection services 429 described above at the service locations, service levels, and frequencies 430 identified in Attachment B. Contractor shall provide and maintain Collection 431 Containers for the City’s use, with the exception of public litter receptacles, 432 which shall be provided and maintained by the City. Contractor will offer the 433 type and size of Collection Containers that Contractor provides Commercial 434 Customers pursuant to Section 5.02.C.
435 7. Tracking City Tonnage. Contractor may integrate Collection of Solid Waste, 436 Targeted Recyclable Materials, and Organic Materials from City Facilities with 437 other Collection services in the Service Area, provided that Contractor 438 attributes estimated Tonnage Collected from City Facilities separately from 439 other Customers upon the City’s request.
440 5.03 TARGETED RECYCLABLE MATERIALS COLLECTION
441 Contractor shall Collect Targeted Recyclable Materials from Customers that have 442 segregated the Targeted Recyclable Materials from Solid Waste and placed these 443 materials in the Recyclable Materials Collection Container for Collection by Contractor. 444 In accordance with Section 15.12, the City may direct that Contractor modify its scope of 445 service to include Collection of additional types of Recyclable Materials beyond those

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446 materials defined as Targeted Recyclable Materials in Attachment A. Subject to 447 Contractor receiving any additional compensation to which Contractor is entitled under 448 Section 15.12, such Recyclable Materials shall thereafter be considered Targeted 449 Recyclable Materials.
450 A. Single-Family Dwellings.
451 1. General. Contractor shall Collect Targeted Recyclable Materials from SFD 452 Customers receiving Solid Waste Collection service, on the same day that 453 Solid Waste Collection is provided. Contractor shall Collect Single-Stream 454 Targeted Recyclable Materials from Contractor-provided Recyclable Materials 455 Carts every other week. Contractor shall provide each SFD Customer 456 receiving Solid Waste Collection service with one (1) 96-gallon Recyclable 457 Materials Cart at no additional cost. At Customer’s request, Contractor shall 458 provide a 32-gallon (as provided in Section 8.05.B) or 64-gallon Cart for 459 Recyclables Collection as an alternative to the 96-gallon Cart. SFD 460 Customers may subscribe for service levels with additional Recyclable 461 Materials Carts at rates not exceeding the Rates set forth on Attachment N. 462 Contractor shall Collect Carts Curbside unless the Customer is provided 463 Special Handling or Backyard Collection Service. In such case, Contractor 464 shall Collect Carts from and return Carts to the alternative service location 465 (such as the side yard or backyard) specified by the Customer. 466 2. Used Motor Oil and Used Motor Oil Filters. Contractor shall Collect Used 467 Motor Oil and Used Motor Oil Filters placed at the Collection location by 468 Customer for Collection in Contractor-provided or Contractor-approved 469 containers. Contractor shall not be required to Collect more than two (2) 470 gallons of Used Motor Oil per Customer per Collection. Contractor shall 471 provide up to two (2) one-gallon translucent plastic Used Oil jugs with screw472 on tops for Used Motor Oil Collection and up to two (2) six (6) mil plastic zip473 close type bags for Used Motor Oil Filter Collection to SFD Customers, upon 474 Customer’s request, within five (5) Business Days of such request, at no 475 additional cost to Customer. Information in English and Spanish, regarding 476 the Used Motor Oil and Used Motor Oil Filter Collection program and 477 instructions for the use and set out of the these materials shall be provided 478 with the Used Motor Oil jugs and Used Motor Oil Filter bags. Diversion of 479 Used Motor Oil shall be calculated with a conversion factor of one (1) gallon of 480 Used Motor Oil equaling seven (7) pounds.
481 3. Household Batteries and Cell Phones. Contractor shall Collect from SFD 482 Premises Household Batteries and Cell Phones placed on top of the 483 Recyclable Materials Cart in Contractor-provided or Customer-provided clear 484 zip-close or tie-close plastic bags clearly marked “Used Batteries and Cell 485 Phones.” Contractor shall empty the bag at the point of Collection and leave it 486 to be reused by the Customer by placing it inside the Cart handle. Customers 487 will be notified to place all Household Batteries in a clear zip-close plastic bag; 488 tape the contacts of button cell batteries; and wrap Cell Phones in paper (for 489 protection) prior to placing in the plastic bag. While Customers will be 490 encouraged to follow the participation parameters, Contractor shall be required 491 to Collect if Customers do not follow these instructions. 492 B. Multi-Family Residential Premises
493 1. General. Multi-Family Dwelling Customers that subscribe to Solid Waste 494 Collection service shall be entitled to weekly Collection of Single-Stream

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495 Targeted Recyclable Materials at no additional charge. As part of such 496 service, Contractor shall provide the Multi-Family Dwelling Customer with one 497 or more Carts or Bins for Targeted Recyclable Materials, as requested by the 498 Multi-Family Dwelling Customer and commensurate with such Customer’s 499 needs, provided that Contractor shall provide at least twenty (20) gallons per 500 week of Container capacity for each Multi-Family Dwelling. Carts and Bins 501 may be shared by the Occupants of Multi-Family Residential Complexes. 502 Contractor shall provide extra Carts for use in the mail, utility or similar room of 503 Multi-Family Residential Complexes if requested by the Customer. Contractor 504 shall Collect Targeted Recyclable Materials at the designated location agreed 505 upon by Contractor and Customer. The designated Collection location, if 506 disputed by Customer or Contractor, shall be determined by the City. 507 2. Household Battery and Cell Phone Collection.
508 a. Multi-Family Residential Complexes with individual Recycling Carts 509 for each dwelling unit. Contractor shall Collect Household Batteries 510 and Cell Phones placed on top of the Recyclable Materials Cart in 511 Contractor-provided or Customer-provided clear zip-close or tie512 close plastic bags clearly marked “Used Batteries and Cell Phones.” 513 Customers will be notified to place all Household Batteries in a clear 514 zip-close plastic bag; tape the contacts of button cell batteries; and 515 wrap cell phones in paper (for protection) prior to placing in the 516 plastic bag. While Customers will be encouraged to follow the 517 participation parameters, Contractor shall be required to Collect the 518 Household Batteries and Cell Phones if Customers do not follow 519 these instructions.
520 b. Multi-Family Residential Complexes with shared or centrally stored 521 Recycling Carts or Bins. Contractor shall provide one (1) or more 522 centrally located Containers for the accumulation of Household 523 Batteries and Cell Phones. The number and location of the 524 Containers and the frequency of Collection shall be mutually agreed 525 to between the Contractor and the Owner or manager of the 526 complex. In the event the Owner or property manager requests that 527 the materials be Collected on an on-call basis, Contractor shall 528 provide that service at no additional cost.
529 3. Personal Recycling Tote-Bag Distribution. Upon receipt of a request for 530 Recycling Tote-Bags from a Multi-Family Dwelling Customer or Occupant, 531 Contractor shall: (i) deliver the Recycling Tote-Bags within five (5) Business 532 Days to the property Owner, property manager or Occupant who requested 533 the Recycling Tote-Bags; and (ii) prior to complying with (i), contact the 534 property Owner or property manager directly by phone or in person to 535 determine if additional Recycling Tote-Bags are needed and/or if they are 536 interested in a site assessment of the property.
537
538 C. Commercial Premises
539 1. General. Commercial Customers that subscribe to Solid Waste Collection 540 service shall be entitled to weekly Collection of Targeted Recyclable Materials 541 at no additional charge. Such service shall be either Single-Stream or Source 542 Separated Collection, as selected by the Commercial Customer. As part of

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543 such service, Contractor shall provide the Commercial Customer with one or 544 more Carts, Bins, or Drop Boxes for Targeted Recyclable Materials from among 545 the options specified in Section 8.05.C, as requested by the Commercial 546 Customer and commensurate with such Customer’s needs. Contractor shall 547 Collect Targeted Recyclable Materials at the designated location agreed upon 548 by Contractor and Customer. The designated Collection location, if disputed by 549 Customer or Contractor, shall be determined by the City. 550 2. Theft Prevention. In order to minimize the impact or occurrence of illegal 551 dumping and theft of Recyclable Materials, Contractor will offer Commercial 552 Customers locks for enclosures used to store Targeted Recyclable Materials 553 Containers, and lockable Bins for Targeted Recyclable Materials, for an 554 additional charge as specified in Attachment N. Contractor shall ensure that 555 such enclosures or Bins are locked after providing Collection service to them. 556 Only Contractor, City, and the participating Customers will be provided with a 557 key to such locks or Bins.
558 3. Centralized Cart or Bin service. Contractor shall allow Commercial Customers 559 to use Carts or Bins for Targeted Recyclable Materials Collection that are 560 shared by the Occupants of two (2) or more adjacent Commercial Premises. In 561 such case, Contractor shall provide one (1) or more Carts or Bins to such 562 Premises as subscribed for by the Customer(s).
563 4. Drop Boxes and Compactors. Contractor shall allow Commercial Customers to 564 use Drop Boxes or Compactors for Targeted Recyclable Materials, at the 565 additional cost as set forth on Attachment N. Contractor shall offer Commercial 566 Customers the option to purchase or lease Compactors for Recyclable Materials 567 through Contractor or an outside vendor. Regular maintenance of Compactors 568 shall be provided by Contractor (or outside vendor) as frequently as needed to 569 keep the Compactors in good working order and functioning at high compaction 570 levels.
571 D. City Facilities
572 1. General. The City Facilities listed in Attachment B that subscribe to Solid 573 Waste Collection service shall be entitled to Collection of Targeted Recyclable 574 Materials at no charge to the City at the frequency that prevents accumulation 575 of Recyclables which would otherwise limit the use of the Containers and/or 576 cause overflowing of Containers. Such service shall be either Single-Stream or 577 Source Separated Collection, as selected by City. As part of such service, 578 Contractor shall provide the City Facility with one or more Carts or Bins for 579 Targeted Recyclable Materials from among the options available to 580 Commercial Customers as specified in Section 8.05.C, as requested by the 581 City and commensurate with such City Facility’s needs. Contractor shall 582 Collect Targeted Recyclable Materials at the designated location agreed upon 583 by Contractor and City. Collection services described in this Section 5.03.D 584 shall be provided at no cost to the City.
585 2. Centralized Cart or Bin service. Contractor shall allow City Facilities to use 586 Carts or Bins for Targeted Recyclable Materials Collection that are shared by 587 the Occupants of two (2) or more adjacent City Facilities. In such case, 588 Contractor shall provide one (1) or more Carts or Bins to such Premises as 589 requested by City.

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590 3. Drop Boxes and Compactors. Contractor shall allow City Facilities to use Drop 591 Boxes or Compactors for Targeted Recyclable Materials. Contractor shall offer 592 City the option to purchase or lease Compactors for Recyclable Materials 593 through Contractor or an outside vendor. Regular maintenance of Compactors 594 shall be provided by Contractor (or outside vendor) as frequently as needed to 595 keep the Compactors in good working order and functioning at high compaction 596 levels.
597 4. Public Recycling Receptacles. Contractor shall Collect Recyclable Materials 598 from public recycling receptacles located on streets, parking lots, and parks (if 599 accessible for Curbside Collection) at the locations set forth on Attachment B. 600 Contractor shall also Collect Recyclable Materials that are contained in bags or 601 boxes and placed adjacent to such public recycling receptacles. These 602 Collections will be made between one (1) and six (6) Days per week, as 603 determined by City. City shall be responsible for providing and maintaining all 604 such public recycling receptacles. Contractor is responsible for notifying City if 605 a public recycling receptacle is inoperable within twenty-four (24) hours of 606 observing or being notified of the defect. If materials placed in or adjacent to 607 such public recycling receptacles contain more than an incidental amount of 608 Contamination, Contractor may collect such materials as Solid Waste rather 609 than as Recyclable Materials.
610 5.04 ORGANIC MATERIALS COLLECTION
611 A. Single-Family Dwelling. Contractor shall Collect Organic Materials or Plant 612 Materials from SFD Customers receiving Solid Waste Collection service, on the 613 same day that Solid Waste Collection is provided. Contractor shall Collect Organic 614 Materials from Contractor-provided Organic Materials Carts weekly. Contractor 615 shall provide each SFD Customer receiving Solid Waste Collection service with one 616 (1) 64-gallon Organic Materials Cart at no additional cost to the Customer. At 617 Customer’s request, Contractor shall provide a 32-gallon (as provided in Section 618 8.05.B) or 96-gallon Cart for Organic Materials Collection as an alternative to the 619 64-gallon Cart. SFD Customers may subscribe for service levels with additional 620 Organic Materials Carts at rates not exceeding the Rates set forth on Attachment 621 N. Contractor shall Collect Carts Curbside unless the Customer is provided Special 622 Handling or Backyard Collection Service. In such case, Contractor shall Collect 623 Carts from and return Carts to the alternative service location (such as the side 624 yard or backyard) specified by the Customer.
625 B. Multi-Family Premises. Multi-Family Customers shall have the option of 626 voluntarily subscribing to Organic Materials or Plant Materials Collection services 627 and shall pay Contractor for such service at rates not exceeding the Rates set forth 628 on Attachment N. Contractor shall Collect Organic Materials or Plant Materials from 629 Multi-Family Premises that have subscribed to Organic Materials or Plant Materials 630 Collection service as frequently as scheduled by the Customer, but not less than 631 once per week. Contractor shall offer to Multi-Family Customers Container options 632 similar to those offered for Multi-Family Solid Waste Collection pursuant to Section 633 5.02.B.
634 C. Commercial Premises. Commercial Customers shall have the option of voluntarily 635 subscribing to Organic Materials or Plant Materials Collection services and shall pay 636 Contractor for such service at the Rates set forth on Attachment N. Contractor 637 shall Collect Organic Materials or Plant Materials from Commercial Premises that

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638 have subscribed to Organic Materials or Plant Materials Collection service as 639 frequently as scheduled by the Customer, but not less than once per week. 640 Contractor shall offer to Commercial Customers Container options similar to those 641 offered for Commercial Solid Waste Collection pursuant to Section 5.02.C. 642 D. City Facilities. City Facilities set forth on Attachment B shall have the option of 643 voluntarily subscribing to Organic Materials or Plant Materials Collection services. 644 Contractor shall Collect Organic Materials or Plant Materials from City Facilities that 645 have subscribed to Organic Materials or Plant Materials Collection service as 646 frequently as scheduled by City, but not less than once per week. Contractor shall 647 offer to City Facilities Container options similar to those offered for Commercial 648 Solid Waste Collection pursuant to Section 5.02.C. Collection services shall be 649 provided at no cost to the City.
650 E. Holiday Tree Collection. Contractor shall annually Collect Holiday Trees from 651 Residential Premises from December 26 through January 31. Contractor shall 652 provide this service on the regularly scheduled Organic Materials Collection Day. 653 Contractor will be required to Collect trees or pieces of trees, which are eight feet 654 (8’) or less in length, void of tinsel, lights, ornaments, other decorations, and metal 655 or plastic stands (although flocked trees are acceptable) and are placed adjacent to 656 an Organic Materials Cart. Contractor shall make accommodations and provide 657 Collection service for Customers who are unable to cut trees into lengths of eight 658 feet (8’) or less at no additional cost to the Customer or City. After January 31, 659 Contractor will be required to Collect trees placed inside an Organic Materials Cart. 660 These Collection parameters apply to both Special Handling and Backyard 661 Collection Service.
662 Contractor shall deliver a Bin or Drop Box for Holiday Tree Collection to Multi663 Family Residential Complexes upon request of the Owner or property manager. 664 Contractor shall provide this Collection service annually commencing December 26 665 and shall continue to provide this service as long as requests are submitted to 666 Contractor (but no later than January 31), at no additional cost to Customer(s) or 667 City. The location for delivery of the Bin or Drop Box shall be agreed upon by the 668 Owner or property manager, and Contractor shall remove the Bin or Drop Box, or 669 Collect the trees loose, on the date requested by the Owner or property manager 670 (but no later than January 31). If the use of a Bin or Drop Box is not feasible, 671 Contractor shall Collect the uncontainerized Holiday Trees from one (1) or more 672 designated consolidation locations (e.g., adjacent to a Solid Waste enclosure) at 673 each Multi-Family Residential Complex as determined by the Owner or property 674 manager. Contractor shall be required to Collect all trees or pieces of trees, which 675 are eight feet (8’) or less in length, void of tinsel, lights, ornaments, other 676 decorations, and metal or plastic stands (although flocked trees are acceptable) 677 and are placed in the Bin or Drop Box or at the agreed upon location. Contractor 678 shall make accommodations and provide Collection service for Customers who are 679 unable to cut trees into lengths of eight feet (8’) or less at no additional cost to the 680 Customer or City.
681 Prior to December of each year, Contractor shall notify all Multi-Family Dwelling 682 Customers of this program and explain the limitations to the program, the dates of 683 service, and any materials preparation or participation requirements, including the 684 option to order a Bin or Drop Box, or Collect the trees loose from designated 685 Collection locations. To encourage participation in this program, Contractor shall 686 not charge Customers an additional fee for this service.

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687 5.05 RESIDENTIAL ON-CALL CURBSIDE BULKY ITEM COLLECTION SERVICE 688 A. General. Contractor shall provide two (2) separate On-Call Curbside Bulky Item 689 Collection Service events to each Single-Family Dwelling Residential Premise 690 annually upon Owner or Occupant’s request. Contractor will schedule the On-Call 691 Bulky Item Collection Service events on the regularly scheduled Solid Waste 692 Collection Day for Single-Family Dwellings, no more than ten (10) Business Days 693 after the Owner or Occupant’s request.
694 Contractor will allow the scheduling of On-Call Bulky Item Collection Service events 695 from January 1 through December 31 of each Rate Year. Contractor may provide 696 additional On-Call Bulky Item Collection Service events for a Customer beyond two 697 (2) per Rate Year, and shall be entitled to bill Customer as specified in Attachment 698 N. Contractor is required to notify Customer if they have already received the 699 annually allocated two (2) Collection events within one (1) Business Day of 700 Customer request. If Contractor fails to notify Customer that they have received 701 the annually allocated two (2) Collection events, Contractor shall provide the service 702 and is not entitled to additional Contractor’s Compensation from Customer or City 703 for the third or subsequent On-Call Bulky Item Collection Service event. 704 B. Accepted Materials. Contractor shall accept only the following materials at On705 Call Curbside Bulky Item Collection Service events:
706 1. Major Appliances – One (1) large appliance per event (e.g., washing machine, 707 clothes dryer, refrigerator, freezer).
708 2. Bulky Items – One (1) large Bulky Item per event (e.g., reusable furniture, 709 mattresses, four tires).
710 3. E-Scrap – One (1) item per event (e.g., a computer, computer monitor or 711 television).
712 Contractor shall reject: commercial-sized refrigerators or freezers; Construction and 713 Demolition Debris; Hazardous Waste; or Infectious Waste. Contractor may reject 714 any individual item that weighs more than two-hundred (200) pounds (excluding 715 Major Appliances) unless Customer has paid, or has agreed in advance to pay, an 716 additional fee for service.
717 C. Recycling and Reuse. Contractor shall Collect materials in a manner that 718 maximizes reuse, Recycling, composting, and diversion of materials from Disposal. 719 Contractor shall make reasonable efforts to ensure that diversion goals are met or 720 exceeded. Disposal of materials shall be the Contractor’s last option. At a 721 minimum, Contractor shall divert from Disposal: cardboard, E-Scrap, useable 722 furniture, Major Appliances, mattresses, and other reusable or Recyclable 723 Materials.
724 D. Handling Major Appliances, Universal Waste, and E-Scrap. Major Appliances, 725 Universal Waste, and E-Scrap shall be reused, Recycled or Disposed by Contractor 726 in accordance with requirements of Applicable Law and in accordance with the 727 State of California Department of Toxic Substances Control and California 728 Integrated Waste Management Board regulations. Any changes to such 729 regulations made after the Effective Date shall be addressed as though they are a 730 Change in Law in accordance with Section 11.04.
731 E. Collection and Processing Methods. A Route Supervisor will visit each On-Call 732 Bulky Item Collection location on the morning of the scheduled Collection Day to 733 evaluate the material being placed at Curbside for Collection, and to verify that its

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734 Collection has been assigned to the proper Collection vehicle. All materials that 735 can be handled by the SFD Single-Stream Recycling, Organic Materials, or Solid 736 Waste route Collection vehicle will be assigned to one of these vehicles for 737 Collection, with the goal of maximizing diversion. All Collection of Bulky Items will 738 be assigned for Collection by a flatbed truck, and the driver will segregate items 739 Collected according to their suitability for: (1) reuse or Recycling, and (2) Disposal, 740 prior to their transport for processing. Any remaining items will be Collected by a 741 dispatched rear-loader truck. Contractor shall utilize these procedures and vehicles 742 in a manner that provides the maximum diversion of the material Collected from the 743 On-Call Bulky Item Collection Service event.
744 5.06 CITY FACILITY ANNUAL ON-CALL BULKY ITEM COLLECTION SERVICE 745 A. General.
746 Contractor shall provide all City Facilities listed on Attachment B an Annual On-Call 747 Bulky Item Collection service event. The On-Call Bulky Item Collection Service 748 provisions set forth in Section 5.05 shall apply to the On-Call Bulky Item Collection 749 Service provided to such City Facilities with the following exceptions for frequency 750 and service level/acceptable materials.
751 B. Frequency of Service.
752 Contractor shall provide this service to each City Facility once per Rate Year at no 753 charge to the City. Unused On-Call Bulky Item Collection Service events may not 754 be carried over if not used during a Rate Year.
755 C. Service Level/Accepted Materials.
756 City Facilities may place for Collection, Solid Waste, Recyclable Materials, and/or 757 Organic Materials with the following allowances:
758 1. Solid Waste – Contractor shall provide a six (6) cubic yard or smaller Bin upon 759 request.
760 2. Recyclable Materials, Organic Materials – Up to two (2) cubic yards of 761 materials per event, provided that such materials, except as set forth below 762 have been bagged, boxed, bundled, or containerized by the Customer. 763 3. Major Appliances – One (1) large appliance per event (e.g., washing machine, 764 clothes dryer, refrigerator, freezer).
765 4. Bulky Items – One (1) large Bulky Item per event (e.g., reusable furniture, 766 mattresses, four tires).
767 5. E-Scrap – One (1) item per event (e.g., a computer, computer monitor or 768 television).
769 Contractor shall reject: liquids or sludge; dirt, rock, concrete or asphalt; materials 770 which exceed five (5) feet in length; commercial-sized refrigerators or freezers; 771 Construction and Demolition Debris; Hazardous Waste; or, Infectious Waste. 772 Contractor may reject any individual item that weighs more than two-hundred (200) 773 pounds (excluding Major Appliances) unless Customer has paid, or has agreed in 774 advance to pay an additional fee for service, and Contractor may reject un775 containerized Discarded Materials with the exception of Major Appliances, Bulky 776 Items, E-Scrap and large pieces of Organic Material such as tree limbs and 777 dimensional lumber.

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778 5.07 RESERVED
779 5.08 COLLECTION FOR LARGE VENUES AND EVENTS
780 Contractor shall provide Collection services, upon request, to any Venue and Event 781 within Service Area. Specifically, Contractor shall provide, at a minimum, Solid Waste 782 and Targeted Recyclable Materials Collection services, and shall also provide Organic 783 Materials Collection services if one (1) cubic yard or more of Organic Material is 784 generated per day at the Venue or Event. Contractor shall provide Collection as 785 frequently as requested by the City or the Event organizer. Contractor shall provide an 786 adequate number and type of Collection Container(s) for the Venue or Event and shall 787 coordinate its Collection services with City or Event organizer. Containers shall be 788 appropriately labeled to collect Solid Waste, Recyclable Materials or Organic Material. 789 Upon request of the City or the Event organizer, Contractor shall provide an adequate 790 number of its employee(s) for each Event to ensure all Solid Waste, Recyclable 791 Materials and Organic Materials Collection locations (i.e., Containers that are placed on792 site for use by event patrons) are kept clean and uncontaminated; to empty or exchange 793 Containers as the need arises; and to respond to overages or spills. 794 Within ten (10) Business Days of Contractor receiving a request to supply an Event with 795 Solid Waste, Targeted Recyclable Materials, Organic Materials Collection services, the 796 Contractor will either meet with or schedule a meeting with the Event organizer to 797 discuss the Event’s parameters, including location, number of people attending, type of 798 Event, type of food being provided, and other related issues. Once parameters of the 799 Event are determined, proper Containers will be provided by Contractor, with emphasis 800 on Recycling and diversion of the materials generated. 801 Contractor shall also supply and staff an information booth at each Venue and Event, 802 upon request from City. In addition, Contractor shall prepare and distribute information 803 to the public at Venues and Events describing the Collection options available at the 804 Venue or Event and promoting Recycling programs in the City, upon request from City. 805 All information prepared for distribution to Venues and Events shall be approved by City 806 prior to distribution. The Contractor shall report the Tonnage of material Collected at 807 each Venue and Event to the City and, upon City request, to the Event organizer. 808 For Venues and Events which are required to comply with the Large Venues and Events 809 Recycling Law, codified at Public Resources Code Section 42648 et seq., Contractor 810 shall assist the Venue or Event organizer in preparing a Recycling plan and reporting all 811 information required by those provisions of the law. Contractor shall be required to 812 provide, at a minimum, the following information for each Venue or Event:
813 1. List of qualifying large Venues and Events in Service Area. 814 2. Physical and mailing address.
815 3. Contact name, address, phone number and email address. 816 4. Type of Venue or Event (e.g., museum, concert, sporting event). 817 5. Status of the Venue or Event written waste diversion/Recycling plan. 818 6. A description of the extent in which the plan has been implemented. 819 7. Service level provided (i.e., Solid Waste, Recyclable Materials and Organic 820 Materials).
821 8. Tons disposed and diverted, by material type.

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822 9. Description of the scope and types of diversion programs provided. 823 10. Other information required by law.
824 Contractor shall provide the Collection services required by this Section to City825 sponsored Events for up to twelve (12) Event days per year, at no charge to the City or 826 the Event organizer. For any additional Event days of service provided to City827 sponsored Events, Contractor may charge City at the Rates specified in Attachment N 828 for comparable On-Call Commercial Solid Waste and Organic Materials Collection 829 Service. Contractor shall initially provide services to the City-sponsored events set forth 830 on Attachment C. City may revise such attachment from time to time upon reasonable 831 prior notice to Contractor. No later than ten (10) Business Days following a City832 sponsored event identified in Attachment C, Contractor shall report to the City the 833 Tonnage Collected by material type and the outreach efforts related to diversion, 834 recycling, and composting.
835 For Venues and Events other than City-sponsored Events, Contractor may charge the 836 Venue or Event organizer a Rate consistent with the Rates specified in Attachment N for 837 comparable On-Call Commercial Solid Waste and Organic Materials Collection Service. 838 Recyclable Materials Collection service shall be provided at no additional cost to Events 839 that subscribe to Solid Waste or Organic Materials Collection service. 840 5.09 ABANDONED WASTE CLEANUP COLLECTION SERVICE
841 Contractor shall provide abandoned waste cleanup collection service within one (1) 842 Business Day of being notified by City, Customer, or Contractor’s vehicle drivers and 843 route supervisors of the occurrence of abandoned waste or illegal dumping, at no 844 additional cost to City. If a report of abandoned waste or illegal dumping is received by 845 Contractor from a party other than City, Contractor shall notify City of the reported 846 location within one (1) Business Day and shall notify City of the estimated or actual time 847 Contractor Collected the material or will Collect the material. This service shall require 848 Contractor to Collect all abandoned or illegally dumped Solid Waste, Recyclable 849 Materials and Organic Materials. This service does not include Collection of litter or litter 850 abatement activities.
851 For abandoned Recyclable Materials, Organic Materials, and Solid Waste, Contractor 852 shall dispatch its regular route drivers to provide Collection service. For Bulky Items, 853 Contractor shall dispatch a flatbed truck to provide Collection service. For other items 854 including, but not limited to, Hazardous Waste, Household Hazardous Waste and 855 Sharps, Contractor shall promptly notify City.
856 All abandoned or illegally dumped materials Collected by Contractor shall be transported 857 for processing, with the exception of scrap metal, and all related diversion statistics will 858 be included in the appropriate reports to the City for all materials collected. Contractor 859 shall be allowed to transport scrap metal directly to a licensed scrap metal recycler. 860 Contractor shall, to the greatest extent possible, deliver all reusable non-metal 861 abandoned waste items to organizations such as Society of St. Vincent de Paul and 862 Goodwill Industries, or other organizations as directed by City. 863 5.10 COATS FOR KIDS PROGRAM
864 If requested by City, Contractor shall implement a “Coats for Kids Program” annually at 865 no additional cost to City or Customers. The program shall consist of Contractor’s 866 drivers Collecting coats from Customers on their route over a one (1) to two (2) week

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867 period during the fall, as well as from Collection Containers placed by Contractor in 868 various public locations specified by City, such as libraries, City Hall and businesses. 869 The coats collected through this program will be sorted and laundered by Contractor, 870 and arrangements made by Contractor for distribution to a local non-profit organization, 871 such as the Family Services Agency. Prior to the implementation of the program, 872 Contractor shall present a detailed program plan to City for review and approval. All 873 related diversion statistics will be included in the appropriate reports to the City. 874 5.11 COMPOST GIVE-AWAY
875 Contractor will coordinate with the City to host “Bring Your Own Bucket” (BYOB) 876 giveaway of compost to residents. The BYOB compost giveaway will provide residents 877 with free compost to enrich their gardens while also educating residents on the benefits 878 of home composting. In addition, Contractor representatives will be on hand to 879 distribute recycling guides and other educational material promoting waste reduction 880 and recycling. Contractor is required to deliver to City thirty (30) cubic yards of compost 881 annually in one (1) or two (2) deliveries at no additional cost. City shall provide 882 Contractor ten (10) Business Days notice to deliver additional compost to City. 883 Contractor shall provide compost for such events at no cost for City pick-up at the 884 Designated Transfer Facility, or for a price that is limited to the cost incurred by the 885 Contractor to transport such material to the location specified by the City. 886 5.12 FEE FOR SERVICE ON-CALL BULKY ITEM COLLECTION
887 In addition to collections provided under Section 5.05 and Section 5.06, Contractor shall 888 Collect Bulky Items from Single-Family, Multi-Family, and Commercial Customers and 889 City Facilities and shall charge Customers a Rate consistent with the Rate provided in 890 Attachment N. Contractor will schedule fee for service On-Call Bulky Item Collection 891 service on the Customer’s regularly scheduled Collection Day or a Business Day 892 scheduled by Contractor, no more than ten (10) Business Days after Customer’s 893 request. The fee for service On-Call Bulky Item Collection Service shall be limited to 894 Collection of Bulky Items, Major Appliances, and E-Scrap. 895 When a Commercial Customer calls to request and schedule the collection of Bulky 896 Items, Contractor shall ask the caller to describe the items to be collected, and will 897 provide the caller with an estimate of the cost to provide the service, consistent with 898 Rates provided in Attachment N.
899 If Contractor determines that the volume of the described items can be accommodated 900 in a single load on a flatbed boom truck equipped with a hydraulic-lift tailgate, Contractor 901 shall instruct the caller to set out the items for pickup on the next regular Solid Waste 902 Collection Day at a location where Solid Waste Collection occurs for the Customer, or at 903 an alternative nearby location that avoids interference with regular Solid Waste, 904 Recyclable Materials, or Organic Materials Collection service. 905 If Contractor determines the volume of the described items cannot be accommodated in 906 a single load on a flatbed boom truck, Contractor shall if required schedule a site visit 907 and meet with the Customer within five (5) Business Days to: (1) develop a plan for the 908 most effective mode and location for Collection service, and (2) schedule the Collection 909 service event.

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910 5.13 TREE MAINTENANCE
911 Beginning on the Effective Date and for the duration of this Agreement, Contractor shall 912 pay City $27,280 annually (prorated for partial years) to partially cover the cost of City’s 913 tree maintenance services. This amount will be increased each year by the Annual 914 Percentage Change in CPI-U. The amounts payable by Contractor under this section 915 shall not be recoverable through the Rates. Contractor shall pay to City the amount due 916 for each calendar year on or before July 31st of such year. 917 5.14 DROP-OFF FACILITY
918 A. General. Contractor shall operate a facility in City accepting the drop-off of the 919 materials listed in subsection B below from residents of City, provided that such 920 materials were generated at Residential Premises and not as a result of 921 Commercial activity. If such materials are Recyclable Materials or Organic 922 Materials, Contractor shall handle them as such; otherwise, Contractor shall 923 dispose of them as Solid Waste or handle them as Hazardous Waste, as the case 924 may be. The facility’s hours of operation will be 8:00 a.m. to 4:00 p.m. Monday 925 through Saturday. Contractor may establish limits on the volume and weight of 926 materials that a resident may deliver to the drop-off facility that are consistent with 927 the amount of waste normally generated at Residential Premises, provided that any 928 limit on volume of material not be less than one (1) cubic yard per resident. 929 B. Acceptable Materials. Residents of City may deliver and Contractor shall accept 930 at the drop-off facility the following types of materials: motor oil, automotive 931 batteries, latex paints, brake fluid, anti-freeze, gasoline and diesel fuel, mattresses, 932 furniture, Major Appliances, unpainted and untreated wood only (not including plant 933 materials), mixed plastics, and miscellaneous metals (white metal goods, etc.), 934 Bulky Items, Targeted Recyclable Materials, tires (i.e., four (4) per Customer, 935 removed from rims, no commercial tires), Universal Waste (excluding sharps), 936 empty aerosol cans, and E-Scrap. Contractor shall be allowed to reject: liquids or 937 sludge (not otherwise listed as acceptable materials); Construction and Demolition 938 Debris; cement; dirt; asphalt; concrete; Plant Materials; Hazardous Waste; 939 Infectious Waste; Contaminated Targeted Recyclable Materials; and Organic 940 Materials.
941

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942 ARTICLE 6 TRANSPORTATION, PROCESSING, AND DISPOSAL
943 6.01 DESIGNATED FACILITIES
944 A. General. Contractor reserves the right to select the Designated Disposal Facility, 945 and may change the Designated Disposal Facility at any time upon written notice to 946 City, provided that the tipping fee at the Designated Disposal Facility selected by 947 Contractor does not exceed the gate rate at Ox Mountain Sanitary Landfill in effect 948 at the time of the change. In its selection and use of such facility, Contractor shall 949 comply with all applicable federal, state, and local environmental laws and 950 regulations binding on Contractor. If the Contractor-initiated change in such a 951 Designated Facility results in increased costs, Contractor will not be entitled to 952 additional compensation, except pursuant to the applicable provisions of Section 953 11.04 (if any). If the Contractor-initiated change in such a Designated Facility 954 results in decreased costs, Contractor will reduce rates commensurately. The 955 other Designated Facilities shall be selected by Contractor and approved by the 956 City in writing, as provided in Section 6.01.G, and subject to Section 6.01.H. As of 957 the Effective Date, the Designated Facilities specified in Attachment A are 958 approved by the City. Contractor agrees to transport and deliver all Solid Waste, 959 Targeted Recyclable Materials, and Organic Materials it Collects in the City to the 960 appropriate Designated Facilities. Contractor shall pay all costs associated with the 961 transfer, transporting, Disposal, processing, composting and marketing (as 962 applicable) of such materials.
963 B. Capacity. For each Designated Facility owned and operated by the Contractor or 964 an Affiliate of Contractor, Contractor shall ensure that sufficient capacity exists 965 throughout the Term at such Designated Facility to receive Tonnage Collected 966 pursuant to this Agreement. For each other Designated Facility, Contractor shall 967 use reasonable efforts to ensure that sufficient capacity exists throughout the Term 968 at such Designated Facility to receive Tonnage Collected pursuant to this 969 Agreement. Contractor shall provide the City, upon request, with documentation 970 demonstrating Contractor’s compliance with the foregoing. 971 C. Residue Disposal. Unless marketed for use or used for beneficial purposes that 972 qualify as diversion pursuant to the Act (including alternative landfill cover, if 973 suitable), all residue from the processing of Recyclable Materials and Organic 974 Materials shall be Disposed of by Contractor, the operator of the Designated 975 Recycling Facility, or the operator of the Designated Composting Facility, and shall 976 be accounted for as Disposal Tonnage at a permitted Disposal site. 977 D. Facilities Located in the City. Any facilities in the City used by Contractor for the 978 purposes of fulfilling its obligations under this Agreement will be subject to the 979 City’s permit review process.
980 E. Permits. For so long as a Designated Facility is owned and operated by the 981 Contractor or an Affiliate of Contractor, Contractor shall ensure that such 982 Designated Facility possesses such valid permits as are required to be held by 983 such Designated Facility for it to fulfill the functions contemplated by this 984 Agreement. In all other cases, Contractor shall use reasonable efforts to ensure 985 that each Designated Facility possesses throughout the Term such valid permits as 986 are required to be held by such Designated Facility for it to fulfill the functions 987 contemplated by this Agreement. Contractor shall provide the City, upon request, 988 with documentation demonstrating Contractor’s compliance with the foregoing. For 989 each Designated Facility not owned or operated by an Affiliate of Contractor,

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990 Contractor shall verify the validity of such Designated Facility’s permits by 991 contacting the appropriate permitting authorities at least once annually. Each Party 992 shall notify the other Party if it becomes aware of any violation of law or permit 993 condition by any Designated Facility that could reasonably be expected to have a 994 material effect on such Designated Facility’s ability to fulfill the functions 995 contemplated by this Agreement.
996 F. Emergency or Unforeseen Facility Closure. If Contractor is unable to use a 997 Designated Facility due to an event of Force Majeure or sudden unforeseen 998 closure of the Designated Facility, Contractor may use an alternative facility 999 provided that the Contractor provides verbal and written notice to the City and 1000 receives written approval from the City at least twenty-four (24) hours prior to the 1001 use of an alternative facility. Contractor’s written notice shall include a description 1002 of the reasons that use of the Designated Facility is not feasible and the period of 1003 time Contractor proposes to use the alternative facility. Contractor shall not be 1004 entitled to additional compensation to cover any increased costs arising from use of 1005 an alternative facility, except pursuant to the applicable provisions of Section 11.04 1006 (if any).
1007 G. Contractor Right to Change Designated Facilities. Contractor may change its 1008 selection of the Designated Processing Facility or Designated Composting Facility 1009 described in Attachment A following City’s written approval. Sixty (60) calendar 1010 days prior to use of such an alternative facility, Contractor shall request written 1011 approval from the City and obtain the City’s written approval in the form of a City 1012 Council approved amendment to the Agreement no later than ten (10) calendar 1013 days prior to use of the facility. City Manager may provide temporary approval to 1014 Contractor for use of such an alternative facility if Council approval of an 1015 amendment does not occur within the timeframe specified above. Upon receipt of 1016 City Council approval, the alternative facility shall be deemed a “Designated 1017 Processing Facility” or “Designated Composting Facility” for purposes of this 1018 Agreement, as the case may be. If the Contractor-initiated change in such a 1019 Designated Facility results in increased costs, Contractor will not be entitled to 1020 additional compensation, except pursuant to the applicable provisions of Section 1021 11.04 (if any). If the Contractor-initiated change in such a Designated Facility 1022 results in decreased costs, Contractor will reduce Rates commensurately. 1023 H. City Right to Change Designated Facilities. City reserves the right to enter into 1024 agreements for Recyclables Processing, and/or Organics Processing Services. If 1025 City wishes to change the Designated Processing Facility or Designated 1026 Composting Facility to a location other than the one described in Attachment A, 1027 City shall give Contractor ninety (90) days prior written notice of such change, and 1028 Contractor shall be entitled to reasonable additional compensation to cover 1029 increased costs incurred by Contractor as a result of such change (and if such 1030 change results in a decrease in Contractor’s costs, its compensation shall be 1031 subject to a reasonable decrease). Such increase or decrease in compensation 1032 shall be effected by means of a special Rate adjustment pursuant to Section 11.04. 1033 If Organics processing service is arranged by the City, the Organics processing 1034 costs will be handled as a Pass-Through cost; and, the costs for Recyclables 1035 Materials transfer station and transport services will no longer be handled as Pass1036 Through Costs by including these costs in the calculation of Total Annual Costs 1037 when conducting Rate adjustments in accordance with Attachment K. Accordingly, 1038 City may not change a Designated Facility within eighteen (18) months of the end 1039 of the term of this Agreement (including any extension term).

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1040 I. Weight Records. Contractor shall maintain accurate records of the quantities of 1041 Solid Waste, Recyclable Materials, and Organic Materials transported to the 1042 Designated Facilities and will cooperate with City in any audits or investigations of 1043 such quantities.
1044 J. Cooperation with Facility. Contractor shall observe and comply with all 1045 regulations in effect at the Designated Facilities with respect to delivery of Solid 1046 Waste, Recyclable Materials, and Organic Materials, including directions to unload 1047 Collection vehicles in designated areas, accommodating operations and 1048 maintenance activities, and complying with Hazardous Waste exclusion programs. 1049 K. Compliance with Applicable Law. Contractor warrants throughout the Term that 1050 the Designated Facilities that are owned and operated by Contractor or an Affiliate 1051 are respectively authorized and permitted to accept Solid Waste, Recyclable 1052 Materials, or Organic Materials (as applicable) in accordance with Applicable Law 1053 and are in material compliance with Applicable Law. 1054 6.02 TRANSPORTATION OF COLLECTED MATERIALS
1055 A. Solid Waste. Contractor shall transport and deliver all Solid Waste Collected 1056 under this Agreement to the Designated Disposal Facility or the Designated 1057 Transfer Facility, unless otherwise agreed in writing by City. Contractor shall 1058 transport Solid Waste to the Designated Disposal Facility or the Designated 1059 Transfer Facility using Contractor’s Collection vehicles. 1060 B. Recyclable Materials and Organic Materials. Contractor shall transport and 1061 deliver all Targeted Recyclable Materials and Organic Materials Collected under 1062 this Agreement to the Designated Transfer Facility, unless otherwise agreed in 1063 writing by City. Contractor shall transport the materials to the Designated Transfer 1064 Facility using Contractor’s Collection vehicles.
1065 C. Transfer Operations. At the Designated Transfer Facility, Contractor will unload 1066 the Solid Waste, Targeted Recyclable Materials or Organic Materials, as the case 1067 may be, from its Collection vehicles and the facility operator will transfer the 1068 materials into large-capacity transfer vehicles. The Contractor or its Affiliate will 1069 then haul the materials to the Designated Disposal Facility, Designated Processing 1070 Facility or Designated Composting Facility, as the case may be. If the Contractor 1071 plans to change its transport method, Contractor shall obtain written approval from 1072 the City prior to making the change; pay all costs; and shall not be reimbursed for 1073 any additional costs. The City shall approve the transport method, and the duration 1074 the transport method is expected to remain in use. 1075 6.03 RECYCLABLE MATERIALS PROCESSING
1076 A. Residue. Contractor shall use reasonable efforts to ensure an average monthly 1077 Targeted Recyclable Materials residue level of twenty percent (20%) or less, where 1078 the residue level shall be calculated as one hundred (100) multiplied by the monthly 1079 Tonnage of processing residue requiring Disposal, divided by the total monthly 1080 Tonnage of Targeted Recyclable Materials Collected (e.g., the incoming Tons 1081 received by the Designated Processing Facility).
1082 B. Marketing. Contractor or the operator of the Designated Processing Facility shall 1083 be responsible for marketing Recyclable Materials that Contractor Collects in the 1084 City, including materials Collected during on-call clean-up and on-call Bulky Item/E9.a Packet Pg. 207 Attachment: Attachment 1- Franchise Agreement (5154 : Second Amendment to Recology of the Coast Franchise Agreement) Franchise Agreement with Recology of the Coast Page 28
1085 Waste pick-up events. Contractor shall use reasonable efforts to ensure that 1086 Recyclable Materials are sold at no less than the then-applicable fair market value, 1087 taking into account transportation and marketing costs and other relevant factors. 1088 Upon request, Contractor shall provide City with documentation demonstrating that 1089 all Recyclable Materials Contractor Collects in the City are marketed for Recycling 1090 or reuse in such a manner that materials shall be considered as diverted in 1091 accordance with the State regulations established by the Act. Contractor shall not 1092 knowingly allow Recyclable Materials to be transported to a domestic or foreign 1093 location if Solid Waste Disposal of such material is its intended use. 1094 6.04 ORGANIC MATERIALS PROCESSING
1095 A. Residue. Contractor shall use reasonable efforts to ensure an average monthly 1096 Organic Materials residue level of ten percent (10%) or less, where the residue level 1097 shall be calculated as one hundred (100) multiplied by the monthly Tonnage of 1098 processing residue requiring Disposal, divided by the total monthly Tonnage of 1099 Organic Materials Collected (e.g., the incoming Tons received by the Designated 1100 Composting Facility).
1101 B. Processing Standards. For so long as the Designated Composting Facility is 1102 owned and operated by an Affiliate of Contractor, Contractor shall ensure that the 1103 following processing standards are met by the Designated Composting Facility:
1104 1. Pre-processing activities shall include, at a minimum, the inspection for and 1105 removal of Hazardous Waste.
1106 2. Composting shall be accomplished by the use of recognized composting 1107 methods, which have been demonstrated to be able to consistently produce 1108 stable, mature Compost Product that is suitable for general purpose use. 1109 3. Post-composting processing activities shall include screening to remove 1110 plastics and other contaminants from the Compost Product. 1111 4. The Designated Composting Facility owner and/or operator shall cooperate 1112 with the City or its agent(s), if the City wants to collect data, perform field 1113 work, and/or evaluate and monitor program results related to Organic 1114 Materials Collected in the City by the Contractor. 1115 5. The Organic Materials processing and composting activities shall maintain an 1116 average monthly residue level less than ten percent (10%), where the 1117 residue level shall be calculated as one hundred (100) multiplied by the 1118 monthly Tonnage of processing residue requiring Disposal, divided by the 1119 total monthly Tonnage of Organic Materials Collected. 1120 C. Marketing. Contractor or the operator of the Designated Composting Facility shall 1121 market the resulting Compost Product to agricultural growers or other interested 1122 parties. Materials (other than residue) shall be used for compost, mulch, or soil 1123 amendment and none shall be deposited for Disposal or used as alternative landfill 1124 cover. Upon request, Contractor shall provide City with documentation 1125 demonstrating that all Organic Materials Contractor Collects in the City are 1126 marketed for use as Compost Products in such a manner that materials shall be 1127 considered as diverted in accordance with the State regulations established by the 1128 Act. Contractor shall not knowingly allow Organic Materials to be transported to a 1129 domestic or foreign location if Solid Waste Disposal of such material is its intended 1130 use.

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1131 D. Product Use by City. Contractor shall offer Compost Products to the City at no 1132 cost for City pick-up at the Designated Transfer Facility or for a price that is limited 1133 to the cost incurred by the Contractor to transport such material to the location 1134 specified by the City. If the City elects to obtain finished Compost Products, the 1135 Contractor will collaborate with the City to organize and schedule up to two (2) 1136 neighborhood compost “give-aways” (such as spring garden festivals) during the 1137 year.
1138 6.05 PROCESSING OF OTHER MATERIALS
1139 Upon request by City, the Contractor shall be responsible for, or shall arrange for, 1140 processing, Recycling, and/or reuse of Bulky Items, Major Appliances, and Specialty 1141 Recyclable or Reusable Materials Collected pursuant to this Agreement, to the extent 1142 reasonable.
1143 6.06 SOLID WASTE DISPOSAL
1144 A. Disposal Requirements. Contractor shall use reasonable efforts to enter into an 1145 agreement with the operator of the Designated Disposal Facility to ensure that 1146 sufficient capacity exists throughout the Term at the Designated Disposal Facility to 1147 Dispose of Tonnage Collected pursuant to this Agreement. The rates payable by 1148 Contractor for Disposal pursuant to such agreement shall be approved by City 1149 before such agreement is entered into (it being understood that such rates will 1150 increase over time based on market changes). Contractor shall use reasonable 1151 efforts to include substantially the following provisions in such agreement:
1152 “Disposal facility operator shall provide:
1153 1. Operation, management, and maintenance of the refuse fill areas 1154 including, but not limited, to the receipt, placement, burying, and 1155 compaction of Solid Waste in the refuse fill areas; stockpiling, placement 1156 and compaction (if necessary) of daily cover, alternative daily cover, 1157 intermediate cover, and final cover; management of fill operations with 1158 regard to fill sequencing, side slopes configuration, and working face 1159 location and configuration;
1160 2. Provision, operation, and maintenance of all equipment, rolling stock, and 1161 supplies necessary for operations, closure, post-closure, and 1162 environmental monitoring;
1163 3. Provision and operation of tippers for the purposes of unloading collection 1164 or transfer vehicle trailers;
1165 4. Proper management of dust, odors, litter, vectors, and other potential 1166 nuisances;
1167 5. Operation, maintenance, and management of leachate and landfill gas 1168 management systems, groundwater monitoring and management 1169 systems, storm water drainage and control systems, treatment facilities, 1170 buildings, on-site roadways, utilities, and any other required facility 1171 elements.”
1172 “Disposal facility operator shall safely manage the Designated Disposal Facility 1173 in full regulatory compliance with Applicable Law not only during the normal 1174 Disposal Site operating period but also during the landfill closure and post9.a Packet Pg. 209 Attachment: Attachment 1- Franchise Agreement (5154 : Second Amendment to Recology of the Coast Franchise Agreement) Franchise Agreement with Recology of the Coast Page 30
1175 closure periods. Disposal facility operator is solely responsible for: (i) the 1176 appropriate closure and post-closure activities of the landfill; and, (ii) the 1177 establishment and funding of sufficient reserve funds to meet its obligations 1178 required by Applicable Law for the purposes of providing funds for the payment 1179 of costs of closure of the landfill (or any cell within the landfill) or post-closure 1180 activities relating to the landfill. Without limitation, in no event shall the City be 1181 responsible for paying any deficiencies in such required reserves. In addition, 1182 the City shall have no responsibility to make any payments in the event that 1183 actual closure and post-closure costs relating to the landfill exceed the 1184 amounts upon which the Contractor’s Disposal rate was based and the amount 1185 reserved by the Contractor for such purposes.”
1186 B. Affiliate’s Provision of Disposal Services. If Contractor arranges Disposal 1187 services through an Affiliate, the Disposal facility operator requirements set forth in 1188 subsection A above shall apply to the Affiliate.
1189 6.07 CONTRACTOR METHODS OF CONTROLLING CONTAMINATION 1190 Contractor shall assist in controlling Contamination levels by helping to educate 1191 Customers on acceptable and non-acceptable materials, by monitoring the contents of 1192 Collection Containers and by refusing to Collect Containers of Targeted Recyclable 1193 Materials, Plant Materials and Organic Materials that appear to include more than 1194 minimal Contamination. Drivers that dismount from Collection vehicles in order to empty 1195 Containers shall lift the Container lid and observe the contents. If Contamination 1196 appears to include more than minimal Contamination, the driver will not empty the 1197 Container, but will instead affix a “non-collection notice.” The non-collection notice shall 1198 (i) inform the Customer of the reason(s) for non-collection, (ii) include the date and time 1199 the notice was left, and (iii) describe the premium charge to Customer for Contractor to 1200 return and Collect the Container after Customer removes the contamination. The driver 1201 will document the non-collection event and a customer service representative will update 1202 the Customer’s computerized account record to note the event. Upon request from 1203 Customer, Contractor shall Collect Carts that received non-collection notices within one 1204 (1) Business Day of Customer’s request if the request is made at least two (2) Business 1205 Days prior to the regularly scheduled Collection day. Contractor shall be entitled to 1206 compensation for the extra Collection service event based on the Rates specified in 1207 Attachment N only if Contractor notifies Customer of the premium charge for this service 1208 at the time the request is made by Customer.
1209 Drivers providing automated collection service shall observe, via the hopper video 1210 camera and monitor system, the contents of the Cart as it is being emptied into the 1211 vehicle. If the driver observes more than a minimal amount of Contamination, the driver 1212 shall affix a “courtesy notice” to the emptied Cart. The courtesy notice shall (i) inform 1213 the Customer of the observed presence of unacceptable levels of Contamination, (ii) 1214 include the date and time the notice was left, (iii) describe the premium charge to 1215 Customer for Contractor to return and Collect contaminated Containers after Customer 1216 removes the contamination. The next day on which that Customer is to receive service, 1217 the driver shall dismount the Collection vehicle, lift the lid of the Cart and visually inspect 1218 the contents. If the driver determines that the Cart again contains excess 1219 Contamination, the Cart will not be collected. Instead, the driver will record the non1220 collection event in the on-board computer system and shall affix a non-collection notice 1221 to the Cart.

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1222 If a driver observes Hazardous Waste in an uncollected Container, the driver shall 1223 record that observation in the on-board computer system and also inform the route 1224 supervisor. The route supervisor shall investigate and initiate applicable action within 1225 one (1) Business Day.
1226 Whenever a Container at a Commercial or a Multi-Family Dwelling complex is not 1227 collected, Contractor shall contact the Customer on the scheduled Collection Day by 1228 telephone to explain why the Container was not collected. Whenever a Container is not 1229 Collected because of excess Contamination, a customer representative will contact the 1230 Customer to discuss, and encourage the Customer to adopt, proper materials1231 preparation and separation procedures.

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1232 ARTICLE 7 OTHER SERVICES
1233 7.01 CUSTOMER BILLING
1234 A. Billing. Contractor shall be solely responsible for preparation and mailing of Bills 1235 for services provided by Contractor and for collection of Customer payments. 1236 1. Frequency. Contractor shall Bill Single-Family Customers bi-monthly in 1237 amounts equal to the Rate for service for a two (2) month period unless the 1238 City requests a more frequent Billing interval in which case the Contractor shall 1239 be entitled to a reasonable adjustment in its compensation related to the 1240 additional costs for the City-directed change in billing frequency. Contractor 1241 shall issue Single-Family Residential Bills, one (1) month in advance and one 1242 (1) month in arrears, such that one-half (1/2) of SFD Customers are Billed 1243 each month. Contractor shall bill Multi-Family Dwelling and Commercial 1244 Customers monthly in advance in the amount equal to Customers’ subscribed 1245 Rate for service for a one (1) month period. Contractor shall bill Commercial 1246 Customers for Drop Box and Compactor service offered pursuant to Section 1247 5.02.C.3 and 5.03.C.4, or in arrears after final calculation of disposal costs, but 1248 may require such Customers to make a deposit in advance based on the 1249 anticipated final cost.
1250 2. Payment Methods. Contractor shall make arrangements to allow its 1251 Customers to pay bills through the following means: check, cash, credit card, 1252 Internet payment service, or automatic withdrawal from bank account. 1253 Contractor shall provide at least one drop-off location in the City where 1254 Customers may deposit their payments.
1255 3. Automated Billing and Payment. In an effort to reduce paper waste, Contractor 1256 shall make available to all Customers an automated Billing and payment 1257 system. This system should be website-based and allow Customers to view 1258 and pay Bills through Contractor’s website. Through the Contractor’s website, 1259 Customers may request to cease paper Billing and receive all bills through e1260 mail and/or Contractor’s website. Contractor will ensure that the electronic 1261 Billing and payment website conforms to industry-standard practices for 1262 electronic commerce security. However, Contractor must ensure that these 1263 Customers are compiled in a list to ensure that Billing inserts are mailed 1264 directly.
1265 4. Bill Format. Contractor shall Bill Customers using a Bill format (i.e., post- card 1266 Billing format or conventional envelope/insert) approved by the City, if 1267 Customer does not opt-out by requesting use of the automated Billing and 1268 payment system. Contractor shall promote the website-based Billing and 1269 payment system on all paper Bills sent to Customers. City shall have the right 1270 to revise the Billing format (e.g., size, font, frequency, etc.) and to itemize 1271 certain charges and to review the Billing procedures. Contractor’s 1272 Compensation shall be adjusted for any cost increases that result from the 1273 City-directed change to the Billing format.
1274 5. Records. Contractor shall maintain, for inspection by the City, copies of 1275 Customer Billings and receipts, in chronological order, for a period of five (5) 1276 years after the date of service. To the extent practicable, Contractor shall 1277 maintain those records in electronic format. City staff or representatives shall 1278 be given access to such records upon one (1) Business Day notice. City shall

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1279 be allowed to access and review Contractor’s Billing systems on an 1280 appointment basis and such access shall not be unreasonably withheld by 1281 Contractor.
1282 6. Rates. Rates shall be established pursuant to this Agreement, and shall be 1283 calculated as described in Article 11 and Attachment K. Contractor shall Bill 1284 and collect from Customers rates for services performed not exceeding the 1285 Rates established in accordance with this Agreement. 1286 7. Service Stops. Contractor shall allow Customers to suspend service and 1287 Billings when the Premises are unoccupied so long as Customers have made 1288 clear to the satisfaction of the City that they intend to recommence service. 1289 Nothing contained herein shall be deemed to preclude Customers from self1290 hauling pursuant to Section 4.02 of this Agreement. Single-Family Residential 1291 Customers may suspend service for a minimum of one (1) Service Day on a 1292 maximum of three (3) occasions each Rate Year. Commercial Customers may 1293 suspend service for a minimum of two (2) Service Days on a maximum of six 1294 (6) occasions each Rate Year. Multi-Family Customers may not suspend 1295 service without prior written approval from City. The Billings for both 1296 Residential and Commercial Customers shall be prorated by Contractor in 1297 accordance with Customer’s requests to suspend service. 1298 8. Lifeline Rates. Contractor agrees to impose a reduced Rate for Customers 1299 that subscribe to twenty (20) gallon Cart service and qualify under PG&E 1300 guidelines for low income “lifeline” discounts. Contractor shall be responsible 1301 for verifying Customers’ eligibility on an annual basis for the lifeline Rate by 1302 reviewing PG&E documentation of Customers’ lifeline eligibility. Contractor 1303 shall charge each Customer that qualifies for the lifeline discount, the lifeline 1304 Rates specified on Attachment N.
1305 B. Delinquent Payment. Customers shall be considered delinquent, and delinquent 1306 payments shall be handled, as set forth in Attachment H. City shall have no 1307 involvement in collection of any payments, including bad debt collection, and shall 1308 not assist with bad debt collection through a lien process. 1309 C. Local Office. Contractor shall maintain a local office in the City of Pacifica for 1310 acceptance of in-person payment of bills. At the local office, Contractor shall 1311 accept as payment personal checks, money orders, cashiers checks, and credit 1312 cards. The local office shall be open for business from 7:30 a.m. until 4:30 p.m. 1313 Monday through Friday, exclusive of Holidays.
1314 D. Review of Billings. Contractor shall periodically review its Billings to Customers, 1315 issued pursuant to Section 7.01.A. The purpose of the review is to determine that 1316 the amount which Contractor is Billing each Customer is correct in terms of the 1317 level of service (i.e., frequency of Collection, size of Container, location of 1318 Container) being provided to such Customer by Contractor. Contractor shall review 1319 Customer accounts not less than once every three (3) calendar years for each 1320 Commercial, Multi-Family Dwelling and SFD Customer, unless City shall direct 1321 Contractor to do so more frequently. Contractor shall submit to City a written report 1322 of the status of its review annually no later than forty-five (45) Days after the end of 1323 each calendar year. The intent of this Section is for City to receive reports on an 1324 annual basis for one-third (1/3) of all Customer accounts, and for all Customer 1325 accounts to be reviewed every third year of the Agreement. The scope of the 1326 review and the reviewer's work plan shall be submitted to City for approval no later 1327 than six (6) months before the submission of the first report.

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1328 E. City Billing Review. Contractor acknowledges that City may perform, or cause to 1329 be performed, Billing reviews periodically. Contractor agrees to participate and 1330 cooperate with City and its agents to accomplish these reviews and conduct any 1331 data collection and report preparation that may be requested. The intent of this 1332 review is to assure that Billings accurately reflect services and costs through 1333 periodic reviews.
1334 F. Privacy of Customer Information. Contractor shall not distribute or sell 1335 Customer, Owner, or Occupant information such as names, addresses, and 1336 telephone numbers to other Persons with the exception of distribution to the City, or 1337 its agents for reporting and contract compliance purposes and distribution to 1338 Contractor’s Billing agent (if Contractor uses a Related Party Entity or 1339 Subcontractor for Billing purposes).
1340 7.02 CUSTOMER SERVICE
1341 Contractor is responsible for ensuring that all staff and Customer Service 1342 representatives (CSR) maintain a professional and courteous demeanor when in contact 1343 with City, and the public. Contractor shall be responsible for all employee interactions 1344 with Customers, and City staff. Contractor is required to ensure that its Customers are 1345 consistently treated courteously and are presented with timely, responsive and thorough 1346 solutions to problems and requests for information. Contractor shall meet monthly to 1347 discuss compliance with the Customer Service standards described herein if requested 1348 by City.
1349 A. Local Office
1350 Contractor shall operate a local office at 2305 Palmetto Avenue, Pacifica. Office 1351 hours shall be at a minimum, from 7:30 a.m. to 4:30 p.m., Monday through Friday, 1352 exclusive of Holidays. Contractor shall be responsible for ensuring that a qualified 1353 representative is available at the local office during office hours to communicate 1354 with the public and accept Bill payments from Customers. The local office and 1355 customer service telephone number(s) shall either be a local or toll free call. 1356 Contractor's telephone system shall adequately handle the volume of calls typically 1357 experienced on the busiest days. Contractor shall have a company representative, 1358 an answering service, or voice-mail system available for calls received during non1359 business hours and Holidays. 1360 Contractor shall employ sufficient customer service staff and management 1361 practices to ensure that the Average Speed of Answer is equal to or less than thirty 1362 (30) seconds and the maximum Hold Time is ninety (90) seconds or less. 1363 Contractor will be required to track all informational requests so that appropriate 1364 public outreach materials can be designed to target commonly asked questions. 1365 Contractor shall be responsible for promoting use of the Contractor’s website for 1366 scheduling of On-Call Collection Service events and obtaining answers related to 1367 common informational requests through: (i) public education and promotion 1368 materials; and (ii) a recorded message Customers will hear while on-hold with the 1369 customer service department.
1370 Contractor shall maintain and publicize an e-mail address whereby Customers can 1371 communicate with the Contractor’s customer service staff. Contractor shall monitor 1372 the email at least once per Business Day, and ensure that a twenty-four (24) hour 1373 response time is maintained.

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1374 B. Customer Service Call Center and Staffing
1375 Contractor is required to operate a Customer service call center that will serve as 1376 the primary telephone point of contact and information for all services. The 1377 Customer service call center hotline is required to be staffed live during regular 1378 business hours (i.e., Monday through Friday 7:30 a.m. to 4:30 p.m.) by employing a 1379 minimum of two (2) full-time customer service representatives. In addition, the 1380 Customer service call center will offer contracting with a service to provide bilingual 1381 capacity for other languages including Spanish, Cantonese, Mandarin, and 1382 Vietnamese. Contractor shall provide immediate access to interpreters for over 1383 one-hundred and seventy-five (175) languages through the use of Language Line 1384 service, or a similar service.
1385 C. Website
1386 Contractor shall maintain and publicize an up-to-date website whereby Customers 1387 can conduct business with Contractor. Contractor is required to update the website 1388 monthly, and more frequently if necessary. At a minimum, the website shall:
1389 1. Allow Customers to view and pay Bills issued by Contractor, as required in 1390 Section 7.01;
1391 2. Allow Customers to schedule services including On-Call Collection service 1392 events, On-Call Bulky Item Collections, extra Collections, service changes, 1393 temporary Drop Box service, service terminations, and service stops; 1394 3. Provide answers to frequently asked questions Including: proper Container set1395 out instructions; list of acceptable Recyclable and Organic Materials; Collection 1396 Days (in response to Customer input of service address); Billing issues, 1397 customer service telephone and e-mail contact information; and the 1398 Designated Facilities’ hours, directions, and acceptable materials (or links to 1399 the same);
1400 4. Provide complete list of Rates for all Customers; 1401 5. Allow Customers to file Complaints and receive from Contractor e-mail 1402 responses to Complaints;
1403 6. Provide a link to enable Customers to email Contractor; and 1404 7. Maintain and produce visitor logs and reporting Including website and 1405 individual page visitation, number of web-based Bill payments per month, 1406 number of website-submitted Complaints per month, and individual and 1407 summary Customer Complaint and resolution reporting. 1408 D. Customer Information System Requirements
1409 Contractor is required to use a Customer information system with software 1410 applications capable of documenting all correspondence and conversations, 1411 pertaining to the services specified herein, between Contractor, Customers, 1412 Occupants, City. The system shall include, at a minimum, the following data fields:
1413 1. Date and time of Customer correspondence or contact with Contractor (e.g., 1414 phone call, email)
1415 2. Date and time response was provided
1416 3. Date and time resolution was provided
1417 4. Customer’s name and contact information (multiple phone numbers and email 1418 addresses)

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1419 5. Account address
1420 6. Service address
1421 7. Occupant address
1422 8. Service location information including:
1423 a. Number of units
1424 b. Number, size and type of Solid Waste, Organic Materials, and Targeted 1425 Recyclable Materials Containers
1426 c. Collection Service Day
1427 d. Route number
1428 e. Backyard service status
1429 f. Special Handling Service status
1430 g. Bulky Item Collection history (e.g., number of annual services 1431 performed, date requested, date provided)
1432 9. Service issue, Complaint or Inquiry
1433 10. Time frame stipulated for Contractor to resolve issue 1434 11. Description of Contractor’s resolution of service issue or Complaint, or 1435 response to Inquiry
1436 12. Date and time that Contractor’s resolution took place 1437 13. CSR or Contractor’s employee identification code of employee inputting the 1438 Complaint or inquiry
1439 14. CSR or Contractor’s employee identification code of employee inputting the 1440 resolution
1441 The system shall be capable of:
1442 1. Providing real-time access to complete Customer contact history from the 1443 commencement of service;
1444 2. Providing City the capacity to submit work orders (e.g., specifying the Inquiry, 1445 Complaint or request for service) electronically directly to Contractor using 1446 Contractor’s web-based software.
1447 3. Documenting non-Collection events including problem description and 1448 resolution;
1449 4. Tracking non-Collection events necessary to fulfill the requirements in Section 1450 8.02(F); and
1451 5. Fulfilling Customer service reporting requirements as specified in Article 9. 1452 E. Monthly Meetings with City. If requested, Contractor shall meet monthly with City 1453 to discuss compliance with the Customer service standards specified in this Section 1454 7.02,
1455 F. Quality Assurance Program. Each month Contractor’s customer service 1456 representatives will contact by telephone a minimum of twenty (20) Customers 1457 within the City to inquire about their satisfaction with Contractor’s Collection 1458 services. The Customers contacted will be randomly selected. Customer service 1459 representatives shall ask about (i) Customers’ satisfaction with Solid Waste and 1460 Recyclable Materials Collection services, (ii) the number of Collection Containers 1461 the Customer has and the frequency of collections, in order to ensure that the 1462 Customer has subscribed to the appropriate level of Collection service, and (iii)

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1463 Customer’s suggestions for opportunities to improve service. The quality 1464 assurance program reporting requirements are specified in subsection 9.05.F. 1465 G. Preprogrammed Call Transfer. Upon request by the City, Contractor shall 1466 maintain the ability to provide preprogrammed call transfer service to City. With 1467 this communications feature in place, when a Customer calls Contractor about an 1468 issue or concern that pertains to City but is not related to Collection services 1469 provided by Contractor, Contractor shall immediately transfer the phone call to the 1470 offices of City through a dedicated telephone line designated by City. The call 1471 transfer shall be seamless, and appear to the Customer as if Contractor were 1472 transferring the call internally.
1473 H. Customer Service Operations Plan. Contractor shall annually submit its 1474 Customer service operations plan. The Customer service operations plan shall 1475 describe how Contractor uses its Recology customer relationship management 1476 system to share information between Customers, drivers, customer service 1477 representatives, managers, and City staff. The plan will provide details on how 1478 Contractor detects and records information on each Customer pickup, real-time 1479 transmission of service extras, blocked cars, safety notes, and exceptions to 1480 service.
1481 I. Customer Satisfaction Survey. The City may conduct a Customer satisfaction 1482 survey at any time during the Term of the Agreement. 1483 7.03 PUBLIC EDUCATION AND PROMOTION
1484 A. General. Contractor and City agree that all public education activities will be a 1485 collaborative effort between the City and Contractor. Contractor shall be 1486 responsible for ensuring that its Customers consistently receive a high level of 1487 service and responsiveness. Contractor acknowledges and agrees that education 1488 and public awareness are critical and essential elements of any effort to achieve 1489 diversion. Contractor shall educate Residential and Commercial Customers on the 1490 following: (i) the benefits of source reduction, reuse, Recycling, and Composting 1491 and related program opportunities; (ii) proper handling of Hazardous Waste; (iii) 1492 specific services offered by the Contractor; and (iv) Rates for Collection services. 1493 The public education program shall include distribution of public education materials 1494 at the commencement of the Agreement; when Collection services are changed 1495 during the Term; and when new Collection services are implemented during the 1496 Term. In addition, the public education program shall include on-going education 1497 activities throughout the Term. Educational materials that Contractor must pay for, 1498 produce and distribute shall include, but not be limited to, those listed in Section 1499 7.03 (D).
1500 B. Annual Public Education Plan. On or before October 30 of each Rate Year, 1501 Contractor shall submit to City a draft public education plan outlining its proposed 1502 public education activities for the coming Rate Year. City shall provide any 1503 comments on the plan by November 15. Contractor shall revise the plan and 1504 submit the final plan to City by November 30. Contractor’s public education 1505 manager shall be available to meet and confer with City regarding the plan. The 1506 plan shall list each public education piece or activity (e.g., newsletters, Bill inserts, 1507 flyers, newspaper advertisements, website enhancements, etc.) to be prepared, the 1508 purpose of the piece, the key subject(s) to be covered, and the anticipated date of 1509 issuance. In addition, the plan shall list all Events the Contractor plans to attend

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1510 and the public education it intends to provide (e.g., exhibit at Earth Day Event, 1511 Chamber of Commerce meetings, etc.). During the Rate Year, Contractor shall 1512 complete all elements and tasks specified in the annual public education plan in 1513 accordance with the schedule presented in the plan. 1514 C. Content and Production Requirements. Contractor shall coordinate with City 1515 regarding preparation of public education materials and shall provide City with an 1516 opportunity to comment on such materials before they are put into use. All public 1517 education materials shall be printed on paper containing the highest levels of 1518 recycled-content material reasonably practical. All public education materials shall 1519 be provided in both English and Spanish.
1520 D. Contractor and City Responsibilities
1521 Contractor shall take primary responsibility for implementation of the public 1522 education and outreach campaign that will be used to announce changes in 1523 collection services. Contractor will fund the new services kick-off public education 1524 campaign. Development of the public education and promotion strategy and 1525 implementation schedule will be a collaborative process among Contractor, and 1526 City.
1527 The Contractor’s responsibilities with regard to public education and promotion 1528 activities shall include, but not be limited to, the following:
1529 1. Provision of public education to SFD, MFD, Commercial and City Facility 1530 Customers with a broad focus on waste prevention, reuse, and Recycling. 1531 2. Preparation and distribution of a bi-annual newsletter for all SFD and MFD 1532 Occupants.
1533 3. Preparation and distribution of Multi-Family Dwelling toolkits for MFD complex 1534 Owners and managers.
1535 4. Preparation and provision of outreach materials to schools. 1536 5. Development and maintenance of Contractor’s website. 1537 6. Production of decals for Used Motor Oil jugs.
1538 7. Distribute public education and promotion materials during roll-out of the new 1539 Collection services program. This will entail distributing program literature and 1540 other promotional items with delivery of the Carts to all Customers at inception 1541 of the new program.
1542 8. Actively collaborate with City on the public education strategy and development 1543 of materials to support roll-out of new Collection services. 1544 9. Distribute public education and promotion materials to new Customers during 1545 the Term.
1546 10. Provide public education door hangers, posters and other promotional 1547 materials to Multi-Family Dwelling Customers at inception of new services and 1548 during the Term.
1549 11. Produce and deliver non-collection notices.
1550 12. Produce and affix Targeted Recyclable Materials, Organic Materials and Solid 1551 Waste cart hangers to corresponding Carts.
1552 13. Affix Used Motor Oil Recycling decals to jugs. 1553 14. Staff a booth at local public events and distribute promotional and educational 1554 materials.

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1555 15. Conduct presentations at community meetings, service clubs, senior centers 1556 and neighborhood associations.
1557 16. Contractor’s outreach and education material will place a strong emphasis on 1558 Recycling and reuse, encouraging Customers to take advantage of donation 1559 opportunities offered by local non-profit organizations such as the Society of 1560 St. Vincent de Paul, Goodwill Industries, and the Salvation Army. In addition, 1561 Contractor will promote other resources for reuse, such as the Freecycle NetworkTM 1562 an online resource for the free and local exchange of goods, the 1563 Resource Area for Teachers (RAFT), local schools, and other community 1564 organizations that are in need of reusable goods.
1565 17. Upon request by City, Contractor shall promote its services to Customers using 1566 City’s email distribution list or an email distribution list authorized by City. 1567 E. Meeting Requirements
1568 Upon request from City, the public education coordinator is required to meet 1569 quarterly, and more frequently if necessary, with City to review public education and 1570 promotion activities.
1571 F. Reporting Requirements
1572 Contractor is required to prepare monthly and annual public education activity 1573 status reports. The annual reports will in part summarize the prior twelve (12) 1574 months and also contain adjustments to current and ongoing event calendars. 1575 G. Service Notice
1576 Contractor shall periodically prepare and distribute to each Customer a notice listing 1577 Contractor's Rates for standard Collection services, Rates for other services, 1578 annual Holiday schedule, and a general summary of services required under this 1579 Agreement to be provided Customers and optional services which may be furnished 1580 by Contractor. City shall be provided an opportunity to comment on such notice 1581 prior to distribution.
1582 H. Staffing
1583 At a minimum, Contractor shall provide a half-time (0.5) person dedicated to 1584 managing public education and outreach activities and providing technical 1585 assistance to Multi-Family and Commercial Customers including on-site 1586 assessments.
1587 7.04 COMMERCIAL RECYCLING PROGRAM PROMOTION
1588 A. Reserved.
1589 B. Signs and Placards. Contractor shall be responsible for preparing, distributing, 1590 and (subject to the consent of the Customer) posting signs at Commercial 1591 Collection Premises that promote Targeted Recyclable Materials and Organic 1592 Materials Collection services, describe the program requirements, and identify 1593 allowable and prohibited types of materials for Collection. At a minimum, the signs 1594 or placards shall be durable and weather resistant and affixed in the Container 1595 areas. Upon request from Customer, Contractor shall provide signs and Container 1596 labeling in a second language such as, but not limited to, Spanish. Within ten (10) 1597 Business Days of a Customer’s request, Contractor shall provide extra signs for

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1598 use in areas such as employee training areas, break rooms, kitchens, and janitorial 1599 areas at Commercial Premises.
1600 C. Community Events. At the direction of City, Contractor shall participate in and 1601 promote diversion techniques at community events and local activities. The events 1602 requiring Contractor assistance are not limited to the list of City-sponsored Events 1603 contained in Attachment C. Participation includes providing educational and public 1604 outreach information and promotional giveaways in an effort to promote the City’s 1605 waste reduction and Recycling program goals.
1606 D. Notification to Commercial Customers. Immediately upon request from a new or 1607 current Customer for new or changes in service, Contractor shall notify Customer 1608 by phone or email of the Targeted Recyclable Materials and Organic Materials 1609 Collection services offered by Contractor. Such notification shall be provided in 1610 English and/or Spanish and shall be provided prior to finalizing a Customer’s 1611 request for a subscription to new service(s).
1612 E. Targeted Commercial Recycling Promotion. For all Commercial Generators, 1613 Contractor shall provide technical assistance as needed or requested and visual 1614 on-site Collection Container assessments. Contractor shall document the site 1615 assessments, the date of the assessment, the Person contacted, the Solid Waste, 1616 Targeted Recyclable Materials, and Organic Materials service levels at the time of 1617 the assessment, and recommended changes to service level(s). Contractor shall 1618 submit results of site assessments as part of its Quarterly Report, or upon request, 1619 provide copies of assessment data and recommendations for individual site 1620 assessments.
1621 F. Enclosure Specifications. Contractor shall work with the City to develop standard 1622 specifications for Collection Container enclosures at Multi-Family Residential 1623 Complexes and Commercial Premises to ensure that Container enclosures have 1624 adequate space and suitable configuration to allow the Contractor to safely and 1625 efficiently service the Containers. The enclosure specifications shall require 1626 provision of adequate space for Solid Waste, Targeted Recyclable Materials, and 1627 Organic Materials Collection Containers.
1628 G. Plan Review. Contractor shall review plans for land use or property developments, 1629 upon request of the City, to assess the adequacy of Container enclosure space 1630 allowances for Solid Waste, Recyclable Materials, and Organic Materials Collection 1631 Containers and the accessibility of Containers by Collection vehicles. The 1632 Contractor’s review shall be completed by the Contractor’s operations manager or 1633 route supervisor within ten (10) Business Days of request by City and receipt of the 1634 project design drawings. If site conditions warrant, the Contractor shall conduct a 1635 site visit of the proposed property to complete its evaluation. The Contractor’s 1636 review shall be summarized in a letter report that states acceptability of the 1637 proposed enclosure arrangements or notes specific changes that are required to 1638 comply with the enclosure specification. The letter report shall be signed by the 1639 Person that conducted the review on behalf of the Contractor. This review shall 1640 include, but not be limited to:
1641 1. Adequacy of the Container enclosure space to store Containers for the 1642 anticipated volume of Solid Waste, Targeted Recyclable Materials, and 1643 Organic Materials generated by a development of the size and purpose 1644 contemplated;

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1645 2. Adequacy of Container enclosure space to store Containers for Solid Waste, 1646 Targeted Recyclable Materials, and Organic Materials in a fashion that allows 1647 for the greatest possible diversion of materials; and, 1648 3. Adequacy and accessibility of the Container enclosure space for Contractor to 1649 safely and efficiently service all Containers in the contemplated service 1650 locations taking into account the dimensions of the enclosure space, the 1651 access road dimensions, parking arrangements, pedestrian traffic, change in 1652 elevation, other site considerations, and Collection vehicle capabilities. 1653 H. Reserved.
1654 I. Mandatory Commercial Recycling Assistance to City. In the event City adopts 1655 a policy or strategy to encourage or require Recycling by Commercial and Multi1656 Family Dwelling Customers, Contractor shall assist City with implementing the 1657 policy or strategy. Contractor shall be required to provide City with prompt 1658 notification of Customers that do not comply with the policy or strategy based on 1659 the observations of Contractor’s employees. Contractor shall assist the City with 1660 collecting related data from Commercial and Multi-Family Dwelling Customers and 1661 facilitating outreach and education programs focusing on encouraging participation 1662 by these Customers in the mandatory Recycling policy or strategy. Upon request 1663 from City, Contractor shall modify its protocol regarding use of non-collection 1664 notices pursuant to subsection 8.02.F to include Solid Waste Containers, in order to 1665 assist with implementing City’s mandatory Commercial Recycling policy or strategy. 1666 7.05 MULTI-FAMILY RECYCLING PROMOTION
1667 A. Multi-Family Dwelling Promotion. Contractor shall provide adequate staff to 1668 work directly with Owners or property managers of Multi-Family Residential 1669 Complexes to implement the Single-Stream Targeted Recyclable Materials 1670 Collection services and to assess Customer service needs at least annually for 1671 each Multi-Family Residential Complex. The Contractor’s implementation activities 1672 shall include, but not be limited to, the following tasks for each Multi-Family 1673 Residential Complex that subscribes to Single-Stream Targeted Recyclable 1674 Materials Collection services:
1675 1. Site Assessments. Contractor shall meet in person with Owner or property 1676 manager to explain the Single-Stream Targeted Recyclable Materials 1677 Collection program and conduct an on-site assessment of Multi-Family 1678 Residential Complexes containing twenty (20) or more Residential units to 1679 determine the appropriate number and type of Solid Waste and Recyclable 1680 Materials Containers and the frequency of Collection. Contractor shall provide 1681 Containers for Single-Stream or Source Separated Targeted Recyclable 1682 Materials such as newspaper, cardboard, mixed paper, glass, aluminum, etc. 1683 depending on the needs of the Multi-Family Residential Complex. If practical, 1684 Contractor shall locate the Solid Waste and Recyclable Materials Containers in 1685 the same area so tenants carry materials to one location. Contractor shall also 1686 offer Recyclable Materials Carts for use in the mail area of the Premises. The 1687 site assessment shall be conducted by Contractor when Targeted Recyclable 1688 Materials Collection services are initially provided at a Multi-Family Residential 1689 Complex, and once every three (3) years thereafter. Contractor shall submit 1690 results of site assessments as part of its Quarterly Report.

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1691 2. Service Level Adjustments. Within five (5) Business Days of completing the 1692 site assessment or receiving a request from a Customer, Contractor shall 1693 adjust the Customer’s service level by providing any Solid Waste or Recyclable 1694 Materials Containers needed for change in service, removing unneeded 1695 Containers, and revising the billing system to reflect the monthly Rate for the 1696 new service level. At the time new Containers are delivered or existing 1697 Containers are removed, the Contractor shall confirm that all Containers are 1698 properly labeled and shall provide public education signage for the Container 1699 areas and extra signs for public and common areas such as mail and laundry 1700 rooms, etc.
1701 3. Preparation and Distribution of Public Education Materials. Contractor shall 1702 provide Owner or property manager with education materials which describe 1703 the requirements of the Recyclable Materials Collection program, including 1704 flyers and door hangers for distribution to tenants, signage for common areas 1705 such as mail rooms and laundry rooms, and move-in kits for new tenants. 1706 B. Notification to Multi-Family Dwelling Customers. Upon request from a new or 1707 current Customer for new or changes in service, Contractor shall notify the 1708 Customer by mail of the Targeted Recyclable Materials and Organic Materials 1709 Collection services offered by Contractor. Such notification shall be provided in 1710 English and/or Spanish.
1711 C. Signs and Placards. Contractor shall be responsible for preparing, distributing, 1712 and (subject to the consent of the Customer) posting signs and placards at Multi1713 Family Dwelling Premises that promote Targeted Recyclable Materials and Organic 1714 Materials Collection services, describe the program requirements, and identify 1715 allowable and prohibited types of materials for Collection. At a minimum, these 1716 signs shall be durable, weather resistant and posted in the Container areas. Upon 1717 request of the Customer, Contractor shall provide signage and Container labeling in 1718 a second language such as, but not limited to, Spanish. Within ten (10) Business 1719 Days of a Customer’s request, Contractor shall provide extra signage for use in 1720 areas such as laundry and mail rooms at Multi-Family Residential Complexes. 1721 D. Plan Review. Contractor shall review plans for land use or property developments, 1722 upon request of the City, to assess the adequacy of Container enclosure space 1723 allowances for Solid Waste, Recyclable Materials, and Organic Materials Collection 1724 Containers and the accessibility of Containers by Collection vehicles as described 1725 in Section 7.04.G.
1726 7.06 EMERGENCY SERVICES AND CONTINGENCY PLAN
1727 A. Emergency Services. Contractor shall provide emergency services at the City’s 1728 request in the event of major accidents, disruptions, or natural calamities. 1729 Emergency services may include, but are not limited to: assistance handling, 1730 salvaging, processing, composting, or Recycling materials; or Disposing of Solid 1731 Waste following a major accident, disruption, or natural calamity. Contractor shall 1732 be capable of providing emergency services within twenty-four (24) hours of 1733 notification by the City or as soon thereafter as is reasonably practical in light of the 1734 circumstances. Contractor’s Compensation will be adjusted to reflect emergency 1735 services which exceed Contractor’s obligations in accordance with Article 11 and 1736 Attachment K. If Contractor cannot provide the requested emergency services, the 1737 City shall have the right to temporarily: (i) take possession of the Contractor’s 1738 equipment for the purposes of providing emergency services in accordance with

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1739 Article 12; and, (ii) arrange for other parties to provide assistance handling, 1740 salvaging, processing, composting, Recycling, or Disposing of Solid Waste, 1741 Construction and Demolition Debris, Recyclable Materials, and other debris. 1742 B. Contingency Plan. Contractor shall submit to City four (4) months after the 1743 Effective Date, a written contingency plan demonstrating Contractor’s 1744 arrangements to provide vehicles and personnel and to maintain uninterrupted 1745 service during mechanical breakdowns, and in case of natural disaster or other 1746 emergency, including the events described in Section 14.09, provided, however, 1747 that the fact that Contractor has a contingency plan shall not limit Contractor’s right 1748 to be excused from performance pursuant to Section 14.09. 1749 7.07 ANNUAL ROUTE ASSESSMENT
1750 Contractor shall conduct a route assessment of the Service Area each Rate Year. This 1751 comprehensive route assessment shall require Contractor to assess all of its Solid 1752 Waste, Targeted Recyclable Materials and Organic Materials Collection Customers over 1753 a one (1) week period during the same month each year for the Term. The assessment 1754 is intended to annually confirm and update Contractor’s data related to Customer 1755 accounts, service levels and operations, including, but not limited to: (i) number of 1756 Accounts; (ii) Customer address; (iii) number and type of Containers at each Account; 1757 and (iv) Collection frequency of each Container at each Account; (v) Bin and Cart lifts; 1758 (vi) Drop Box pulls; (vii) service stops; (viii) route hours per year; and (ix) tonnage 1759 Collected. All service level information related to lifts and pulls will be derived in part 1760 from Contractor’s database management system. All route labor hours shall be based 1761 on total route hours for routes exclusive to the City, Montara, and Granada and Tonnage 1762 information shall be based on actual tons Collected. For routes that service more than 1763 one jurisdiction, the Tonnage Collected on these routes and total route hours shall be 1764 allocated to the respective jurisdiction based on the type and number of accounts and 1765 service levels attributable to each jurisdiction.
1766 7.08 WASTE GENERATION AND CHARACTERIZATION STUDIES 1767 Contractor acknowledges that the City may perform Solid Waste generation and 1768 characterization studies periodically, at its own cost and expense, to determine the 1769 composition and contamination levels of Collected materials. Contractor agrees to 1770 participate and cooperate with the City and its agents in such studies, at no cost to 1771 Contractor and without disruption to Contractor’s activities. 1772 Upon City’s reasonable request, Contractor shall conduct visual audits of materials 1773 Collection from Multi-Family Dwelling, Commercial, and City Cart and Bin service 1774 accounts. The manner of conducting the visual audits shall be agreed upon by the 1775 Parties at the time of request. The visual audits shall be reasonable in scope, and shall 1776 be limited to ten percent (10%) of the total number of accounts for each Service Sector 1777 each year.
1778 7.09 CARBON FOOTPRINT MEASURING
1779 Contractor shall develop and submit to City an annual climate action report. Contractor 1780 shall annually file its emissions data with the California Climate Action Registry (CCAR). 1781 The annual climate action report shall be submitted with Contractor’s annual report. This 1782 report shall include: information on Contractor’s emissions data filed with CCAR; a 1783 description of Contractor’s carbon footprint; and, a description of Contractor’s activities 1784 both planned and implemented to reduce its carbon footprint.

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1785 ARTICLE 8 REQUIREMENTS FOR OPERATIONS, EQUIPMENT, AND 1786 PERSONNEL
1787 8.01 COLLECTION HOURS AND SCHEDULES
1788 A. Hours of Collection
1789 1. Residential. Residential Solid Waste, Targeted Recyclable Materials, and 1790 Organic Materials (including all such services provided to SFD and Multi-Family 1791 Dwelling Premises) shall be Collected on weekdays (i.e., Monday through 1792 Friday) between 6:00 a.m. and 6:00 p.m. exclusive of Holidays. 1793 2. Commercial. Commercial and City Facilities Solid Waste, Targeted Recyclable 1794 Materials, and Organic Materials shall be Collected on weekdays (i.e., Monday 1795 through Friday) between 5:00 a.m. and 7:00 p.m. and weekends (i.e., Saturday 1796 and Sunday) between 6:00 a.m. and 5:00 p.m., exclusive of Holidays. The City 1797 may restrict or require modifications to hours for Collection from Commercial 1798 Premises and City Facilities to resolve noise Complaints, and, in such case, 1799 the City Manager may restrict the allowable operating hours. 1800 3. Commercial Exception. Collection from Commercial Premises that are one - 1801 hundred (100) feet or less from Residential Premises shall only occur between 1802 the hours of 6:00 a.m. and 6:00 p.m., Monday through Saturday and all such 1803 operations shall be in accordance with permissions provided to Contractor by 1804 City. The City may restrict or require modifications to hours for Collection from 1805 Commercial Premises and City Facilities to resolve noise Complaints, and, in 1806 such case, the City Manager may restrict the allowable operating hours. 1807 4. Exception. In the event of an unforeseen circumstance, the Contractor may 1808 Collect materials from Residential Premises, Commercial Premises, or City 1809 Facilities that are one hundred (100) feet or less from Residential Premises 1810 between the hours of 5:00 a.m. and 7:00 p.m., Monday through Saturday, upon 1811 prior written approval from the City Manager.
1812 5. Local Noise Ordinance. If a City ordinance regulating noise limits the hours of 1813 Collection more restrictively than the preceding subsections, the terms of the 1814 ordinance shall govern.
1815 B. Route Schedules. Routes over which Contractor’s vehicles travel to affect the 1816 Collection and transport of Solid Waste, Targeted Recyclable Materials, and 1817 Organic Materials shall be selected to minimize damage to City and private streets, 1818 and minimize inconvenience and disturbance to the public. The route schedules 1819 and routing maps shall be subject to the approval of City prior to Commencement of 1820 services. Contractor shall use due care to obey all traffic laws and prevent 1821 materials being transported from being spilled or scattered during transport. 1822 Contractor shall be prepared to review its operations plan outlining the Collection 1823 routes, intervals of Collection and Collection times for all materials Collected under 1824 this Agreement with the City or its representatives at least annually. More frequent 1825 reviews may be required if operations are not satisfactory based on documented 1826 observations or reports or Complaints. If the plan is determined to inadequately 1827 address the unsatisfactory performance as documented by observations and 1828 Complaints, the City may direct Contractor to revise the plan incorporating any 1829 changes into a revised plan and review said revised plan with the City within thirty 1830 (30) Days of the initial meeting with the City.

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1831 C. Contingency Plan. Contractor submitted to City ninety (90) Days prior to 1832 Commencement Date, a written contingency plan demonstrating Contractor's 1833 arrangements to provide vehicles and personnel and to maintain uninterrupted 1834 service during breakdowns, and in case of natural disaster or other emergency, 1835 including the events described in Section 14.09.
1836 8.02 COLLECTION STANDARDS
1837 A. Implementation of Services. The Contractor’s implementation of the services 1838 required by this Agreement shall occur in a smooth and seamless manner so that 1839 Customers and/or Generators do not experience disruption in Collection services. 1840 Contractor shall be responsible for managing implementation of new Collection 1841 services and other related services.
1842 B. Servicing Containers and Missed Pick-Ups
1843 1. General. Contractor shall Collect the contents and return each Container to 1844 the location where the Occupant properly placed the Container for Collection. 1845 Contractor shall place the Containers upright with lids properly closed and 1846 secured. Contractor shall use due care when handling Containers. Contractor 1847 shall not throw, roughly handle, damage, or break Containers. 1848 Upon Customer request, Contractor shall provide special services including:
1849 unlocking and locking Containers; accessing locked Container enclosures 1850 (e.g., with a key or combination lock); and pulling or pushing Containers to the 1851 Collection vehicle. Contractor shall provide the special services described in 1852 this paragraph upon request from Customer and Contractor shall be entitled to 1853 bill Customer at Rates specified in Attachment N.
1854 2. Missed Pick-Ups. When notified of a missed pick-up, Contractor shall Collect 1855 the Solid Waste, Targeted Recyclable Materials, or Organic Materials on the 1856 day the notice is received, if possible, and in all cases shall Collect the missed 1857 pick-up by 6:00 p.m. of the next Business Day following receipt of the missed 1858 pick-up notification.
1859 C. New Customers and Change in Service Levels. Contractor shall deliver 1860 Containers and initiate Collection services for a new Customer within five (5) 1861 Business Days of the Customer’s request for service. If an existing Customer 1862 requests a change in the number or size of their Solid Waste, Recyclable Materials, 1863 or Organic Materials Containers and/or frequency of Collection, the Contractor shall 1864 deliver additional Containers and/or remove Containers and shall initiate changes in 1865 the Collection services within five (5) Business Days of the Customer’s request for a 1866 change in service.
1867 D. Separate Collection of Materials and Allocation of City Materials. Contractor 1868 shall separately Collect and segregate Solid Waste, Targeted Recyclable Materials, 1869 and Organic Materials from each other and shall keep them segregated during 1870 transportation and delivery to Designated Facilities. Solid Waste, Targeted 1871 Recyclable Materials, and Organic Materials Collected in the City, which are 1872 combined with materials Collected from other jurisdictions, shall be allocated by 1873 Contractor to the City’s Collection program based on volume or Tonnage using a 1874 method approved by the City. Contractor shall not collect materials from within City 1875 in the same Collection vehicles used to provide Collection service to jurisdictions 1876 other than Granada and Montara, unless provided written approval by City.

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1877 E. Setout Instructions to Customer. Contractor shall instruct Customers as to any 1878 preparation of Solid Waste, Targeted Recyclable Materials, or Organic Materials 1879 and the proper placement of Containers. If Customers are not adhering to 1880 Contractor’s instructions, Contractor may notify such Customers in writing. In 1881 cases of extreme or repeated failure to comply with such instructions, Contractor 1882 may cease providing Targeted Recyclable Materials or Organic Materials service to 1883 such Customers, provided that Contractor has left an adequate number of non1884 collection notices on the Container, as determined by the City, indicating the reason 1885 for refusing to Collect the material. If Contractor ceases providing Collection 1886 service pursuant to the preceding sentence, Contractor shall notify the Customer in 1887 writing of the steps the Customer must take to recommence Collection service. 1888 F. Non-Collection Notices. Contractor may choose not to Collect materials for the 1889 following reasons: (i) Targeted Recyclable Materials or Organic Materials contain 1890 more than a minimal amount of Contamination; (ii) materials contain Hazardous 1891 Waste; (iii) the loaded weight of a Container exceeds the maximum load limit 1892 specified by the Container manufacturer and specified in Attachment D; (iv) subject 1893 to Section 8.02.G, materials are not placed in Containers; (v) subject to Section 1894 8.02.G, the volume of materials placed in a Container exceeds the volume of the 1895 Container with the lid closed; (vi) access to Containers or the materials therein is 1896 blocked; (vii) Containers are not set out Curbside or, in the case of Commercial, 1897 Multi-Family, Backyard or Special Handling service, are not accessible to 1898 Contractor at the agreed-upon location; or (viii) Containers or materials are set out 1899 in violation of the City code. In such case, Contractor shall issue non-collection 1900 notices stating the reason(s) the materials were not Collected. The non-collection 1901 notice shall be affixed prominently onto the Container (if accessible to Contractor) 1902 to ensure that it is not inadvertently removed due to weather conditions. The non1903 collection notices must be protected from rain, if precipitation is present or 1904 forecasted, by placing the notice in a clear plastic bag prior to affixing to Container. 1905 Contractor shall document the use of non-collection notices by recording the date 1906 and time of issuance, address of service recipient, reason(s) for issuance, name of 1907 employee who issued the notice, and truck and route numbers. The notice shall 1908 conform to the requirements specified in Section 8.02.F, be at least two inches by 1909 six inches (2” x 6”) in size and shall be approved by the City. The non-collection 1910 notices must identify the steps the Generator must take to recommence Collection 1911 service. In the event a Container is not collected due to excessive Contamination 1912 and Customer does not take the necessary steps to recommence Collection 1913 service, Customer shall be assessed a fee approved by City for Collection of the 1914 Container as Solid Waste by Contractor. This additional fee charged to Customer 1915 may include: (i) a return trip charge and (ii) an extra Solid Waste Collection charge. 1916 Contractor shall report monthly to City any non-collection notices issued. 1917 Contractor shall take direction from the City with regard to termination or 1918 reinstatement of service to a service recipient due to numerous non-collection 1919 notices issued to the same Customer.
1920 G. Collection of Excess Materials (Overages). Contractor shall direct its employees 1921 to Collect an Overage on two (2) occasions each Rate Year at no additional cost to 1922 Customer. Contractor must provide a notice to Customer documenting the 1923 Overage in order to count the Overage Collection towards the allocated two (2) per 1924 Rate Year for each Customer. Customers that place an Overage for Collection for 1925 a third and subsequent events, may be assessed an Overage fee by Contractor if 1926 Contractor documents said Overage with a photograph and sends the Customer a

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1927 letter within two (2) Business Days notifying them of the Overage Collected. The 1928 Overage fee billed by Contractor to Customer for a third and subsequent Overage 1929 event is specified in Attachment N. Contractor shall provide Customers the 1930 opportunity to subscribe to Overage Collection service. 1931 H. Care of Private Property. Contractor shall not damage private property. 1932 Contractor shall ensure that its employees: (i) close all gates opened in making 1933 Collections, unless otherwise directed by the Customer, (ii) do not cross 1934 landscaped areas, and (iii) do not climb or jump over hedges and fences. 1935 Contractor shall endeavor to resolve all claims regarding damage to private 1936 property as soon as reasonably practicable following receipt thereof, made by 1937 Owners or Occupants of property served by Contractor, for damages to property 1938 including, but not limited to, Containers. In the event such damage shall have been 1939 caused by the negligence or intentional acts of Contractor, its officers, agents, or 1940 employees, Contractor shall promptly repair or replace such damaged property. 1941 The provisions of this Section 8.02.H shall not be deemed a limitation upon any 1942 other provisions of this Agreement, or any rights or remedies which may accrue to 1943 City by reason of Contractor’s acts or omissions to act hereunder. Contractor is 1944 required to repair damage and/or resolve claims regarding damage to property 1945 within thirty (30) Days of receipt of the Complaint. 1946 I. Litter Abatement
1947 1. Minimization of Spills. If any Solid Waste, Targeted Recyclable Materials, or 1948 Organic Materials are spilled or scattered during Collection or transportation 1949 operations, the Contractor shall promptly clean up all spilled and scattered 1950 materials. Contractor shall use due care to prevent vehicle oil, vehicle fuel, or 1951 other liquids from being spilled during Collection or transportation operations 1952 including maintenance of the Collection vehicles to minimize and correct any 1953 leaks. Contractor shall ensure that all liquid spills or leaked liquids fluids are 1954 cleaned up promptly on the same day that they occur. With respect to spillage 1955 or scattering of hydraulic fluid, vehicle oil, vehicle fuel or similar fluids, 1956 “cleaning” means application of absorbents to mitigate the effects of the spill, 1957 and does not include removing (or being responsible for the cost of removing) 1958 any stain that may remain after such absorbents have been applied. 1959 Contractor shall not transfer loads from one vehicle to another on any public 1960 street, unless it is necessary to do so because of mechanical failure, 1961 emergency (e.g., combustion of material in the vehicle), accidental damage to 1962 a vehicle, or unless approved by the City.
1963 2. Clean-Up. During Collection operations, the Contractor shall clean-up litter in 1964 the immediate vicinity of any Container storage area (including the areas 1965 where Containers are delivered for Collection) if Contractor’s actions are the 1966 cause of the litter. Each Collection vehicle shall be equipped with protective 1967 gloves, a broom, and shovel at all times for cleaning up litter. Absorbent 1968 material shall be carried on each Collection vehicle at all times and used by 1969 Contractor for cleaning up liquid spills. The Contractor shall document and 1970 discuss instances of repeated spillage not caused by it with the Customer 1971 where spillage occurs, and Contractor shall report such instances to City. If 1972 the Contractor has attempted to have a Customer stop creating spillage but is 1973 unsuccessful, the City will attempt to rectify such situation with the Customer. 1974 Contractor shall coordinate with City regarding City street cleaning activities to 1975 minimize litter.

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1976 3. Covering of Loads. Contractor shall cover all open Drop Boxes with a City1977 approved cover, at the Collection location before transporting them. 1978 J. Noise. All Collection operations shall be conducted as quietly as possible and shall 1979 conform to applicable federal, State, County, and City noise level regulations. 1980 Contractor shall promptly resolve any Complaints of noise to the satisfaction of the 1981 City.
1982 K. Route Books and Route Maps. For each Collection route, Contractor shall 1983 maintain a route book and route map that documents each Customer on the route, 1984 their service address, service level, and the order in which Customers shall be 1985 serviced (e.g., the order in which routes shall be driven). Contractor shall distribute 1986 new route books and route maps to its Collection vehicle drivers as frequently as 1987 necessary; and each driver shall note differences in the service levels shown in the 1988 route book, adding and subtracting Customers and service levels, as necessary. 1989 Route supervisors shall periodically check the routes to ensure that drivers are 1990 providing service in accordance with their route books. Contractor shall provide 1991 City with route books and maps within ten (10) Business Days of request. 1992 L. Change in Collection Schedule. Contractor shall notify City a minimum of sixty 1993 (60) Business Days prior to a change in the Residential Collection schedule and 1994 shall request approval of Contractor’s notice to Residential Customers thirty (30) 1995 Business Days prior to a change in Service Day, unless this requirement is waived 1996 in writing by City. Contractor shall notify Owners and Occupants of Residential 1997 Premises not later than ten (10) Business Days prior to any change in Residential 1998 Collection operations which results in a change in the day on which Solid Waste, 1999 Targeted Recyclable Materials, and Organic Materials Collection occurs. 2000 Contractor shall not permit any Customer to go more than five (5) Business Days 2001 without service in connection with a Collection schedule change. 2002 8.03 VEHICLES
2003 A. General. Contractor shall provide a fleet of Collection vehicles sufficient in number 2004 and capacity to efficiently perform the work required by the Agreement in strict 2005 accordance with its terms. Contractor initially utilized the Collection vehicles in use 2006 in City, which Contractor acquired from the Previous Contractor, or other Collection 2007 vehicles provided by Contractor. On or before the Transition Date, Contractor 2008 acquired additional Collection vehicles and put such vehicles into service in 2009 performing Collection operations for the remainder of the Term. Contractor shall 2010 maintain sufficient back-up vehicles for each type of Collection vehicle used (e.g., 2011 side loader, front loader, and roll-off vehicles) to respond to mechanical 2012 breakdowns, Complaints, and emergencies. Contractor shall maintain a spare ratio 2013 of ten percent (10%) for all Collection vehicles.
2014 B. General Vehicle Specifications
2015 1. All vehicles used by Contractor in providing Solid Waste, Targeted Recyclable 2016 Material, and Organic Material Collection services shall be registered with the 2017 California Department of Motor Vehicles.
2018 2. All Collection vehicles shall have leak-proof bodies designed to prevent 2019 leakage, spillage and/or overflow and shall be designed so that Collected 2020 materials are not visible.

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2021 3. All vehicles shall comply with California Environmental Protection City (EPA) 2022 noise emission regulations and California Air Resources Board air quality 2023 regulations and other applicable pollution control regulations. 2024 4. Contractor shall be required to operate an adequate number of Collection 2025 vehicles that shall be capable of servicing hard-to-service areas. 2026 5. All Collection vehicles shall be equipped with a broom, shovel, absorbent 2027 materials, and other approved cleanup devices and materials for emergencies, 2028 or any spillage or leaks that may occur.
2029 C. Vehicle Identification. Contractor's name, local telephone number, and a unique 2030 vehicle identification number designated by Contractor for each vehicle shall be 2031 prominently displayed on all four (4) sides of the vehicles, in letters and numbers 2032 with a maximum five (5) digit sequence, that are no less than two and one-half (2.5) 2033 inches in height. Vehicles shall be clearly labeled to indicate the materials 2034 Collected by that vehicle, specifically; “Solid Waste,” “Recyclables,” or “Organic 2035 Materials”.
2036 D. Inventory. Contractor shall upon request furnish the City a written inventory of all 2037 vehicles used in providing service. The inventory shall list all vehicles by 2038 manufacturer, identification number, date of acquisition, type, capacity, decibel 2039 rating, average weight of load, and average loaded axle weights. 2040 E. Cleaning and Maintenance
2041 1. General. Contractor shall maintain all of its properties, vehicles, facilities, and 2042 equipment used in providing service under this Agreement in a good, safe, 2043 neat, clean, and operable condition at all times.
2044 2. Cleaning. Vehicles used in the Collection of Solid Waste, Targeted Recyclable 2045 Materials, and Organic Materials shall be thoroughly washed, and thoroughly 2046 steam cleaned weekly so as to present a clean appearance. City may inspect 2047 vehicles at any time to determine compliance with this Agreement. Contractor 2048 shall also make vehicles available to the San Mateo County Health Department 2049 for inspection, at any frequency it requests.
2050 3. Repainting or Refurbishing. Contractor shall repaint or refurbish to the 2051 satisfaction of the City all vehicles used in the Collection of Solid Waste, 2052 Targeted Recyclable Materials and Organic Materials within thirty (30) 2053 Business Days notice from City, if City reasonably determines that their 2054 appearance warrants painting. The cost for City-directed repainting shall be 2055 incurred by Contractor.
2056 4. Maintenance. Contractor shall inspect each vehicle daily to ensure that all 2057 equipment is operating properly. Vehicles which are not operating properly 2058 shall be removed from service until repaired and operating properly. 2059 Contractor shall perform all scheduled maintenance functions in accordance 2060 with the manufacturer's specifications and schedule or in accordance with 2061 California Highway Patrol standards, whichever are more stringent. Contractor 2062 shall keep accurate records of all vehicle maintenance, recorded according to 2063 date and mileage and shall make such records available to City upon request. 2064 Hydraulic oil, engine oil, and other spills from Collection vehicles in the Service 2065 Area are a concern to the City. Contractor shall include as part of maintenance 2066 activities a process for tracking the number and nature of automotive spills 2067 (type of fluid, amount lost, failure point) and diagnosing the cause of those

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2068 spills. Based on the results of the process, Contractor shall implement 2069 appropriate corrective actions to address issues that are contributing factors to 2070 vehicle spills (e.g., revise specifications for specific part failures, revise 2071 preventative maintenance schedule to address timing of failures), so that each 2072 occurrence is controlled and minimized.
2073 5. Repair. Contractor shall repair, or arrange for the repair of, all of its vehicles 2074 and equipment for which repairs are needed because of accident, breakdown, 2075 hydraulic oil or engine oil leaks, or any other cause so as to maintain all 2076 equipment in a safe and operable condition. If an item of repair is covered by 2077 a warranty, Contractor shall obtain warranty performance. Contractor shall 2078 maintain accurate records of repair, which shall include the date and mileage, 2079 nature of repair and the verification by signature of a maintenance supervisor 2080 that the repair has been properly performed.
2081 6. Storage. Contractor shall arrange to store all vehicles and other equipment in 2082 safe and secure location(s) in accordance with all applicable zoning 2083 regulations.
2084 F. Operation. Vehicles shall be operated in compliance with federal, State and local 2085 laws and regulations including, but not limited to, the California Vehicle Code, the 2086 regulations of the California Air Resources Board (CARB) Waste Collection Vehicle 2087 Regulations as established in the California Code of Regulations Title 13 Section 2088 2700 et seq. and all applicable safety and local ordinances. Annually, Contractor 2089 shall provide the City with documentation of such compliance for each vehicle. For 2090 example, with regard to CARB regulations, such documentation shall demonstrate, 2091 at a minimum, the vehicle number, make, model, year, control technology used or 2092 planned, and the year that the control technology was applied or is planned to be 2093 applied. Contractor shall not load vehicles in excess of the manufacturer's 2094 recommendations or limitations imposed by federal, State, or local weight 2095 restrictions on vehicles or roads.
2096 Contractor equipment used for Solid Waste, Targeted Recyclable Materials, and 2097 Organic Materials services shall be registered with the California Department of 2098 Motor Vehicles. Equipment shall comply with US EPA noise emission regulations, 2099 currently codified at 40 CFR Part 205 and other applicable noise control 2100 regulations, and shall incorporate noise control features throughout the entire 2101 vehicle.
2102 Annually, Contractor shall have each Collection vehicle weighed to determine the 2103 unloaded weight (“tare weight”) and the total loaded weight of the vehicle. Upon a 2104 major repair that could affect the Collection vehicle tare weight, Contractor shall 2105 have the Collection vehicle re-weighed to establish a new tare weight. Contractor 2106 shall track and make adjustments to routes to eliminate ongoing over-weights 2107 associated with individual routes.
2108 8.04 RESERVED
2109 8.05 CONTAINERS
2110 A. General. As part of its obligations under this Agreement, Contractor shall provide 2111 all Carts, Bins, Compactors, and Drop Boxes to all Customers, commensurate with 2112 the service level subscribed for by such Customer (or selected by City, in the case 2113 of service to City Facilities set forth on Attachment B).

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2114 B. New SFD Carts. Contractor shall acquire and distribute to Single-Family 2115 Customers new Carts for Solid Waste, Recyclable Materials and Organic Materials 2116 Collection services that meet the specifications set forth in this Section 8.05 and 2117 Attachment D (Container Specifications). Single-Family Customers will receive a 2118 96-gallon Recyclable Materials Cart, a 64-gallon Organic Materials Cart, and a Solid 2119 Waste Cart in the size corresponding to the Customer’s existing service level or as 2120 specifically requested and subscribed for by the Customer. Contractor shall make 2121 available Solid Waste Carts with the following capacities: 20, 32, 48, and 64 2122 gallons. At Customer’s request, Contractor shall provide Customer with a 2123 Recyclables Materials Cart of 32- or 64-gallon capacity rather than the standard 2124 issue 96-gallon Cart, or an Organic Materials Cart of 32- or 96-gallon capacity 2125 rather than the standard issue 64-gallon Cart. At Contractor’s option as a means for 2126 reducing Cart inventory requirements, Contractor may provide Customers 2127 requesting a 32-gallon Cart for Recyclables or Organic Materials Collection with a 2128 Solid Waste Cart for such purposes provided that Contractor adheres stickers to 2129 such Cart to cover Solid Waste information and to label such Cart for Recycling or 2130 Organic Materials use. Prior to distribution of Carts to Single-Family Customers, 2131 Contractor shall mail a notice to each Customer indicating the size of Carts that the 2132 Customer will receive, unless the Customer responds to the notice (i.e., by mail, 2133 email, phone or website form) within a given period and subscribes to service level 2134 with different size Carts.
2135 C. Commercial and Multi-Family Containers. Contractor shall offer Commercial and 2136 Multi-Family Customers a range of Cart, Bin, Drop Box, and Compactor sizes for 2137 Collection as follows:
2138 1. Carts with capacities of 20, 32, 64, and 96 gallons. 2139 2. Bins with capacities of 1, 2, 3, 4, 6, and 7 cubic yards. 2140 3. Drop Boxes and Compactors with capacities ranging from 10 to 40 cubic yards. 2141 D. Container Specifications. Contractor-provided Containers shall be designed and 2142 constructed to be watertight and prevent the leakage of liquids, and shall be in the 2143 sizes and colors specified in Attachment D. All Contractor-provided Carts shall be 2144 manufactured by injection or rotational molding methods; contain post-consumer 2145 content; and meet the Cart design and performance requirements provided in 2146 Attachment D. Carts provided to Customers by Contractor shall have a useful life 2147 of ten (10) years as evidenced by a manufacturer’s warranty or other 2148 documentation acceptable to the City. All Contractor-provided Containers with a 2149 capacity of one (1) cubic yard or more shall meet applicable federal, State, and 2150 local regulations for Bin safety and shall be covered with attached lids. 2151 E. Container Labeling. Contractor shall label each Contractor-provided Cart with 2152 white, hot-stamped lettering, and in-mold or heavy duty vinyl adhesive labels with 2153 graphics, illustrations or artwork that clearly conveys the type of materials (e.g., 2154 Solid Waste, Recyclable Materials, Organic Materials) to be placed in the Cart for 2155 Collection. The labeling shall be positioned on each Cart so it is visible to the 2156 Customer and Collection vehicle drivers on the front side and top. The labeling 2157 shall be durable and weather resistant to outdoor conditions and have a minimum 2158 ten (10) year lifetime. Containers other than Carts shall be labeled to indicate the 2159 type of materials (e.g., Solid Waste, Recyclable Materials, Organic Materials) to be 2160 placed in the Container for Collection.

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2161 F. Cleaning and Painting. All Containers shall be maintained in a safe, serviceable, 2162 and functional condition. Contractor shall be responsible for steam cleaning and 2163 repainting all Containers as set forth in this Section 8.05.F to present an 2164 aesthetically pleasing clean appearance and to ensure that Containers are safely 2165 maintained and operationally sound.
2166 Contractor shall repaint all Containers, except Carts, that are used as of the 2167 Commencement Date (or exchange existing Containers with new Containers) within 2168 eighteen (18) months of the Commencement Date, and thereafter on an as needed 2169 basis.
2170 Upon Customer’s request, Contractor shall steam clean all Solid Waste and 2171 Recyclable Materials Containers (or exchange existing Containers with clean 2172 Containers) twice annually, except Carts provided to Residential Premises, which 2173 Contractor is not obligated to clean or exchange.
2174 Upon Customer’s request, Contractor shall clean all Organic Materials Containers 2175 (or exchange existing Containers with clean Containers) quarterly, except Carts 2176 provided to Residential Premises, which Contractor is not obligated to clean or 2177 exchange.
2178 Contractor shall offer additional cleaning (or clean Container exchange) to 2179 Customers requesting such service and shall be entitled to bill Customers for such 2180 cleaning (or Container exchange) as specified in Attachment N. 2181 Contractor shall be responsible for cleaning Containers at no additional charge to 2182 Customer to ensure that nuisance or public health concerns associated with vectors 2183 are addressed within two (2) Business Days after receipt of notification of said 2184 condition.
2185 If any Bin is impacted by graffiti, Contractor shall remedy the situation within five (5) 2186 Business Days of being notified.
2187 G. Repair and Replacement. Contractor shall repair or replace all Containers 2188 damaged by Collection operations (e.g., vehicle apparatus interface) within five (5) 2189 Business Days of being notified by Customer or observing the damaged Container. 2190 If the repair or replacement cannot be completed within five (5) Business Days, the 2191 Contractor shall notify Customer and provide a Container of the same size or larger 2192 until the original Container can be replaced.
2193 At no additional cost, Contractor shall replace Customer Carts that have been 2194 stolen, lost, damaged or destroyed within five (5) Business Days. Contractor shall 2195 allow Customer to exchange Containers for a Container of a different size at no 2196 additional cost (other than the cost of the new service level) and shall replace 2197 Containers within five (5) Business Days of Customer request. 2198 H. Rights to Containers Upon Termination. As between City and Contractor, all 2199 Containers (Including those acquired by Contractor from Previous Contractor) shall 2200 be and remain the sole property of Contractor, unless acquired by City pursuant to 2201 this Section 8.05.H. All Containers purchased or leased and put into service by 2202 Contractor at Customers’ Premises shall be offered by Contractor for purchase by 2203 City upon the expiration or earlier termination of this Agreement, at their net book 2204 value at such time. At its sole discretion, City may elect to exercise or not to

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2205 exercise its rights under this subsection. If City does not exercise such rights by 2206 providing Contractor written notice of the same before the expiration or earlier 2207 termination of this Agreement, such Containers shall remain the property of the 2208 Contractor, and Contractor shall be responsible for removing all Containers in 2209 service from Premises within fifteen (15) Business Days after such expiration or 2210 termination.
2211 8.06 PERSONNEL
2212 A. General. Contractor shall furnish such qualified drivers, mechanical, supervisory, 2213 customer service, clerical and other personnel as may be necessary to provide the 2214 services required by this Agreement in a safe, thorough, professional and efficient 2215 manner and shall provide, at a minimum, the number and type of personnel listed in 2216 Attachment O. All personnel furnished by Contractor shall be subject to the 2217 “relationship of parties” provisions of Section 15.01. 2218 B. Employees of Previous Contractor. Contractor offered employment, in 2219 accordance with the seniority lists in effect at Previous Contractor, to (i) employees 2220 in the driver, helper, mechanic/welder, and recycling/yard worker classifications, 2221 (ii) who were employed (including employees out on workers compensation or 2222 disability) by Previous Contractor for at least 120 consecutive days as of 2223 immediately prior to the Commencement Date and (iii) who satisfied Contractor’s 2224 customary pre-employment requirements and were fully capable of performing work 2225 in their regular classification on the Commencement Date. 2226 For a period of one (1) year after the Commencement Date, any employee of 2227 Previous Contractor not hired by Contractor on the Commencement Date because 2228 such employee was temporarily disabled, that provided medical certification 2229 demonstrating that such employee was able to return to active duty in such 2230 employee’s regular classification, was returned by Contractor to active duty 2231 (provided that such employee satisfied Contractor’s customary pre-employment 2232 requirements and was fully capable of performing work in such employee’s regular 2233 classification) and displaced the least senior employee in such employee’s regular 2234 classification. For a period of one (1) year after the Commencement Date, 2235 Contractor did not hire any individual from any other source for work within the 2236 above stated work classifications, until all displaced workers holding seniority under 2237 Previous Contractor were offered employment.
2238 Notwithstanding the foregoing, nothing in this Section 8.06.B required Contractor to 2239 employ more persons than it deemed were needed to perform the services required 2240 to be performed by Contractor under this Agreement. This Section 8.06.B did not 2241 apply to supervisors, management, office clerical workers or guards, nor did it apply 2242 to non-represented employees.
2243 C. Approval of Management. Contractor recognizes the importance of establishing a 2244 successful relationship between its management and City. Before extending an 2245 offer of employment for the position of general manager, both initially and 2246 throughout the Term, Contractor shall provide the City with the description of the 2247 proposed position, an opportunity to review and comment upon the position 2248 description, the background, experience and qualifications of each candidate being 2249 considered for the position, and an opportunity to meet with each candidate. 2250 Contractor shall give thoughtful consideration to the City’s comments on the 2251 descriptions of the proposed position and each candidate, but shall have the

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2252 ultimate right and unrestricted discretion to make employment decisions in its best 2253 business judgment.
2254 If the City is dissatisfied with the performance of the management personnel, the 2255 City shall contact the general manager to discuss the employee’s performance. If 2256 the City is dissatisfied with the general manager, the City shall contact the group 2257 manager to discuss the general manager’s performance. 2258 Contractor shall advise the affected management employee of any complaints 2259 made by the City regarding the employee’s performance. The Parties shall meet 2260 and confer in good faith to address the City’s concerns, and shall endeavor in good 2261 faith to agree on a corrective course of action to be implemented immediately. 2262 Contractor agrees to consider in good faith any requests by the City to transfer or 2263 re-assign a management employee should the City maintain in good faith that it can 2264 no longer work constructively with said employee; however, Contractor retains the 2265 ultimate right and unrestricted discretion to make employment decisions in its best 2266 business judgment.
2267 D. Provision of Field Supervision. Contractor shall designate qualified employees 2268 as supervisors of field operations. The field supervisor shall devote their time in the 2269 field supervising, managing, and monitoring Collection operations for reliability, 2270 quality, efficiency, safety, and for responding to Complaints. The number of field 2271 supervisors is specified in Attachment O.
2272 E. Driver Qualifications. All drivers shall be trained and qualified in the operation of 2273 Collection vehicles, and must have in effect a valid license, of the appropriate class, 2274 issued by the California Department of Motor Vehicles. Contractor shall use the 2275 Class II California Department of Motor Vehicles employer “Pull Notice Program” to 2276 monitor its drivers for safety.
2277 F. Customer Service Representative Training. Customer service representatives 2278 shall be trained on specific City service requirements. A City information sheet 2279 shall be provided to each customer service representative for easy reference of City 2280 requirements and general Customer needs. Contractor shall provide the 2281 information sheet, training agenda, and associated documentation within five (5) 2282 Business Days of request from City.
2283 G. Safety Training. Contractor shall provide suitable operational and safety training 2284 for all of its employees who operate Collection vehicles or equipment or who are 2285 otherwise directly involved in such Collection. Contractor shall train its employees 2286 involved in Collection to identify, and not to Collect, Hazardous Waste or Infectious 2287 Waste. Upon the City’s request, Contractor shall provide a copy of its safety policy 2288 and safety training program, the name of its safety officer, and the frequency of its 2289 trainings.
2290 H. No Gratuities. Contractor shall not permit its employees to demand or solicit, 2291 directly or indirectly, any additional compensation or gratuity from members of the 2292 public for Collection services or accept gratuities or compensation in exchange for 2293 additional collection services.
2294 I. Employee Conduct and Courtesy. Contractor shall use its best efforts to ensure 2295 that its personnel are competent and qualified and serve the public in a courteous, 2296 helpful, and impartial manner. Contractor shall use its best efforts to assure that all 2297 employees present a neat appearance and conduct themselves in a courteous 2298 manner. Contractor shall regularly train its employees in Customer courtesy, shall 2299 prohibit the use of loud or profane language, and shall instruct Collection

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2300 employees to perform the work as quietly as possible. If any employee is found not 2301 to be courteous or not to be performing services in the manner required by this 2302 Agreement, Contractor shall take all appropriate corrective measures. 2303 Contractor shall adopt policies and procedures consistent with State and federal 2304 law that ensure a sober and drug-free workplace. This includes strictly prohibiting 2305 unlawful manufacture, distribution, possession, or use of any controlled substance 2306 in the workplace, regardless of whether the employee is on duty at the time. 2307 Further, the policies and procedures shall prohibit an employee from operating 2308 either City or Contractor equipment and vehicles (whether on or off duty) while 2309 under the influence of alcohol or drugs. The purpose of these policies and 2310 procedures is to ensure workplace safety, productivity, efficiency, and the quality of 2311 Contractor’s service to Customers.
2312 J. Uniforms. While performing services under this Agreement, all Contractor’s 2313 employees performing field service shall be dressed in clean uniforms and shall 2314 wear visible identification that include the employee’s name and/or employee 2315 number, and Contractor’s name. Uniform type, style, colors, and any modifications 2316 may be subject to approval by the City.
2317 8.07 HAZARDOUS WASTE INSPECTION AND HANDLING
2318 A. Inspection Program and Training. Contractor is required to inspect Solid Waste, 2319 Targeted Recyclable Materials, Organic Materials, and other materials put out for 2320 Collection and may reject Solid Waste, Targeted Recyclable Materials, Organic 2321 Materials, and other materials observed to be contaminated with Hazardous Waste 2322 and not Collect Hazardous Waste put out with Solid Waste, Targeted Recyclable 2323 Materials, and Organic Materials. Contractor shall develop a load inspection 2324 program that includes the following components: (i) personnel and training; (ii) load 2325 checking activities; (iii) management of wastes; and (iv) record keeping and 2326 emergency procedures.
2327 Contractor’s load checking personnel, including its Collection vehicle drivers, shall 2328 be trained in: (i) the effects of Hazardous Waste on human health and the 2329 environment; (ii) identification of prohibited materials; and (iii) emergency 2330 notification and response procedures. Collection vehicle drivers shall inspect 2331 Containers before Collection when practical.
2332 B. Response to Hazardous Waste Identified During Collection. Under no 2333 circumstances shall Contractor’s employees knowingly Collect Hazardous Waste or 2334 remove unsafe or poorly containerized Hazardous Waste from a Collection 2335 Container. If Contractor determines that material placed in any Container for 2336 Collection is Hazardous Waste or other material that may not legally be accepted or 2337 safely processed at one of the Designated Facilities or presents a hazard to 2338 Contractor's employees or those at the Designated Facilities, the Contractor shall 2339 have the right to refuse to accept such material. The Generator shall be contacted 2340 by the Contractor and requested to arrange proper Disposal. If the Generator 2341 cannot be reached immediately, the Contractor shall, before leaving the Premises, 2342 leave a non-collection notice, which indicates the reason for refusing to Collect the 2343 material and lists the phone number for the San Mateo County Household 2344 Hazardous Waste Facility, or other resources as directed by City. Contractor’s 2345 environmental technician shall be notified to handle the issue with the Generator. 2346 The Contractor’s environmental technician shall be required to guide the Generator

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2347 to safely containerizing the Hazardous Waste and shall explain the Generator’s 2348 options for proper disposition of such material.
2349 If Hazardous Waste is found in a Collection Container or Collection area that could 2350 possibly result in imminent danger to people or property, the Contractor shall 2351 immediately notify the City’s Fire Department using the nine-one-one (911) 2352 emergency telephone number. The Contractor shall notify the City of any 2353 Hazardous Waste identified in Containers or left at any Premises within twenty-four 2354 (24) hours of identification of such material.
2355 C. Reporting, Regulations, and Record Keeping. Contractor shall comply with 2356 emergency notification procedures required by Applicable Laws and regulatory 2357 requirements. Contractor shall notify all appropriate agencies, including the 2358 California Department of Toxic Substances Control and Local Emergency 2359 Response Providers and the National Response Center of reportable quantities of 2360 Hazardous Waste found or observed in Solid Waste, Targeted Recyclable 2361 Materials, Organic Materials, Electronic Waste, Universal Waste, and Construction 2362 and Demolition Debris anywhere within Service Area. In addition to other required 2363 notifications, if Contractor observes any substances which it or its employees 2364 reasonably believe or suspect to contain Hazardous Wastes unlawfully Disposed of 2365 or released on any City property, including storm drains, streets or other public 2366 rights of way, Contractor will immediately notify the City. 2367 All records required by regulations to be maintained by Contractor shall be 2368 maintained at Contractor’s Facility at 2305 Palmetto Avenue, Pacifica, California. 2369 These records shall include: waste manifests, waste inventories, waste 2370 characterization records, inspection records, incident reports, and training records. 2371 Contractor shall maintain records showing the types and quantities, if any, of 2372 Hazardous Waste found in Solid Waste, Targeted Recyclable Materials, and 2373 Organic Materials which was inadvertently Collected from Customers within the 2374 Service Area, but diverted from landfilling.
2375 8.08 COMMUNICATION AND COOPERATION WITH CITY
2376 A. Communications. The Contractor’s general manager shall have e-mail 2377 capabilities to enable the City and the Contractor’s general manager to 2378 communicate via e-mail. Contractor’s general manager shall respond to City email 2379 correspondence within one (1) Business Day.
2380 B. Monthly Meetings. Upon request from City, beginning on the Commencement 2381 Date, and then on a monthly basis thereafter, Contractor shall meet with the City to 2382 discuss progress of each active diversion program, quality and reliability of 2383 Collection services, and compliance with the terms of the Agreement. At each 2384 monthly meeting, the City and Contractor shall have the opportunity to present and 2385 discuss proposed changes in service such as changing program requirements or 2386 modifying Collection methods.
2387 C. Inspection by City of Operations. City shall have the right, but not the obligation, 2388 to observe and inspect all of the Contractor’s operations under this Agreement to 2389 assure that the obligations of Contractor under this Agreement are being met by 2390 Contractor. In connection therewith, City shall have the right to conduct 2391 unannounced on-site inspections of facilities used by Contractor during operating 2392 hours without interference with Contractor’s operations, to speak to any of 2393 Contractor’s employees during such inspections and to receive reasonable 2394 cooperation from such employees in response to inquiries. If City so requests,

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2395 Contractor shall make specified personnel available to accompany City employees 2396 on such inspections.
2397 8.09 RESERVED
2398 8.10 BUY-RECYCLED POLICY
2399 The Contractor shall comply with the purchasing requirements described in this Section, 2400 and shall document its on-going compliance with these requirements upon City request. 2401 A. Recycled Paper. The Contractor shall use recycled paper for invoices, Bills, 2402 reports, and public education materials. The recycled paper shall have at least 2403 thirty percent (30%) post-consumer recycled content for uncoated paper and ten 2404 percent (10%) post-consumer recycled content for coated paper based on federal 2405 standards. Contractor shall state on all materials prepared with post-consumer 2406 recycled content the following: “Printed on Recycled Paper.” 2407 B. Re-Refined Motor Oil. Contractor shall be encouraged but not required to use re2408 refined motor oil for its Collection vehicles. 2409 C. Recycled Plastic. Contractor shall purchase Carts that contain the minimum post2410 consumer content as specified in Attachment D. All Carts shall be one hundred 2411 percent (100%) recyclable.
2412 8.11 TITLE TO SOLID WASTE, RECYCLABLES, AND ORGANICS 2413 Once Solid Waste, Targeted Recyclable Materials, and/or Organic Materials are placed 2414 in Containers and properly placed at the Collection location, ownership and the right to 2415 possession shall transfer directly from the Generator to Contractor by operation of this 2416 Agreement. Subject to Contractor's objective to meet the Act, City goals, and City's 2417 right to direct Contractor to process and Dispose of Solid Waste at a particular licensed 2418 Site or to Dispose of Solid Waste at a particular licensed Disposal Site, Contractor is 2419 hereby granted the right to retain, Recycle, process, Dispose of, and otherwise use such 2420 Solid Waste, Targeted Recyclable Materials, or Organic Materials or any part thereof, in 2421 any lawful fashion or for any lawful purpose desired by Contractor. Subject to the 2422 provisions of this Agreement, Contractor shall have the right to retain any benefit 2423 resulting from its right to retain, Recycle, process, Dispose of, or reuse the Solid Waste, 2424 Targeted Recyclable Materials or Organic Materials which it Collects. Solid Waste, 2425 Targeted Recyclable Materials, or Organic Materials or any part thereof, which is 2426 deposited at a Designated Facility shall become the property of the owner or operator of 2427 the facility, once deposited there by Contractor.
2428 On a short-term basis not to exceed more than five (5) calendar days per year, City may 2429 obtain ownership or possession of Solid Waste, Targeted Recyclable Materials, or 2430 Organic Materials placed for Collection upon written notice of its intent to do so, 2431 however, nothing in this Agreement shall be construed as giving rise to any inference 2432 that City has such ownership or possession unless such written notice has been given to 2433 Contractor.

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2434 ARTICLE 9 RECORD KEEPING AND REPORTING
2435 9.01 GENERAL
2436 Contractor shall compile and maintain records related to its performance as necessary 2437 to develop the reports required by this Agreement. Contractor agrees to conduct data 2438 collection, record keeping, and reporting activities necessary to meet the reporting and 2439 Solid Waste program management needs of the City with respect to the services 2440 provided by Contractor under this Agreement, and to comply with the Act, other 2441 Applicable Laws (including those specified in Section 15.14), and the requirements of 2442 this Agreement.
2443 Record keeping and reporting requirements specified in this Agreement shall not be 2444 considered a comprehensive list of reporting requirements. In particular, Article 9 is 2445 intended to highlight the general nature of records and reports and their minimum 2446 content and is not meant to comprehensively define the scope and content of the 2447 records and reports. Upon written direction or approval of City, in its reasonable 2448 discretion, the records and reports required by Contractor in accordance with this and 2449 other Articles of the Agreement shall be adjusted in number, format, or frequency. 2450 Contractor shall maintain all records necessary to allow the City to determine 2451 Contractor’s compliance with the Terms of the Agreement and compliance with the 2452 performance standards and presented in this Agreement including, but not limited to, 2453 those related to the quality of Collection services and customer service and those 2454 identified in Attachment J. The records shall be maintained in a manner that allows for 2455 easy verification of Contractor’s performance.
2456 9.02 GENERAL RECORD KEEPING PROVISIONS
2457 A. General. Contractor shall maintain records required to conduct its operations, to 2458 support requests it may make to City, and to respond to requests from City. All 2459 records shall be maintained for five (5) years after the expiration or early 2460 termination of this Agreement.
2461 For City to confirm Contractor’s entitlement to Contractor’s Compensation pursuant 2462 to Article 11 and Attachment K, it is necessary for Contractor to maintain accurate, 2463 detailed financial and operational information in a consistent format and to make 2464 such information available to the City in a timely fashion, and in accordance with 2465 reporting requirements specified in this Article.
2466 B. Inspection of Records. As used herein, “Records” means Contractor’s payroll tax 2467 reports, specific documents or records required to be kept by Contractor expressly 2468 or by inference pursuant to this Agreement, or any other similar records or reports 2469 of Contractor reasonably necessary to evaluate annual reports, compensation 2470 applications, Contractor’s performance or other matters related to this Agreement. 2471 The City, its auditors and other agents selected by the City, shall have the right, 2472 during regular business hours, upon reasonable notice and without interference 2473 with Contractor’s operations, to inspect or review Contractor’s Records and 2474 accounting systems and to make copies of any such Records. 2475 Upon request, Contractor shall arrange for records of Related Party Entities to be 2476 made available to City and its official representatives for review, to the extent such 2477 records are reasonably necessary to evaluate annual reports, compensation 2478 applications, Contractor’s performance or other matters related to this Agreement, 2479 provided, however, that no such records need be made available with respect to

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2480 Permitted Related Party Transactions (as defined in Section 15.05) and no such 2481 records need be made available with respect to a particular Related Party Entity if 2482 Contractor’s only transactions with such Related-Party Entity are Permitted Related 2483 Party transactions.
2484 C. Retention of Records. Unless otherwise herein required, Contractor shall retain 2485 all records and data required to be maintained by this Agreement for the Term plus 2486 at least five (5) years after expiration or early termination of the Agreement. 2487 Records and data shall be in a chronological and organized form and readily and 2488 easily interpreted. At the City’s request, records and data required to be retained 2489 shall be retrieved in a timely manner (which shall not exceed more than ten (10) 2490 Business Days unless Contractor obtains prior written approval from the City) by 2491 Contractor and made available to the City.
2492 Contractor shall maintain copies of all Billings and Billing Collections (e.g., 2493 Customer payments) records or copies of Billing summary reports (that document 2494 all Billings and Billing Collections for each Customer) for five (5) years, following the 2495 date of Billings, for inspection and verification by City. 2496 Records and data required to be maintained that are not specifically directed to be 2497 retained that are, in the sole opinion of the City, material to the determination of 2498 Contractor’s Compensation or to determination of Contractor's performance, shall 2499 be retrieved by Contractor and made available to the City in a timely manner (which 2500 shall not exceed ten (10) Business Days unless Contractor obtains prior written 2501 approval from the City). When records and data are not retained or provided by the 2502 Contractor, the City may make reasonable assumptions regarding what information 2503 is contained in such records and data, and such assumption(s) shall be conclusive 2504 in whatever action the City takes.
2505 D. Record Security. Contractor shall maintain adequate record security to preserve 2506 records from events that can be reasonably anticipated such as a fire, theft, and an 2507 earthquake. Electronically-maintained data and/or records shall be protected, 2508 backed up, and stored at a separate site from the original data. 2509 9.03 RECORD KEEPING REQUIREMENTS
2510 A. Maintenance of Financial and Operational Records 2511 1. General. For City to confirm Contractor’s entitlement to Contractor’s 2512 Compensation pursuant to Article 11 and Attachment K, it is necessary for 2513 Contractor to maintain accurate, detailed financial and operational information 2514 in a consistent format and to make such information available to the City in a 2515 timely fashion.
2516 2. Contractor's Accounting Records. Contractor shall maintain accurate and 2517 complete accounting records containing the underlying financial and operating 2518 data relating to, and showing the basis for computation of, all costs associated 2519 with providing services under this Agreement. The accounting records shall be 2520 prepared in accordance with Generally Accepted Accounting Principles, 2521 consistently applied (“GAAP”).
2522 B. Collection Service Records
2523 Records shall be maintained and retained by Contractor for City relating to:
2524 1. Customer and Billing information including, but not limited to, the following for 2525 each Customer:

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2526 a. Names, addresses, and phone numbers of Customer, Billing contact 2527 Person, and, if appropriate, property manager or on-site contact Person; 2528 b. Solid Waste service level, Targeted Recyclable Materials service level, and 2529 Organic Materials service level (where service level includes the number of 2530 Containers, size of each Container, and the Collection frequency of each 2531 Container);
2532 c. Number of tenant or living units at Multi-Family Residential Complexes; 2533 d. Service exemptions for SFD Premises (if applicable); 2534 e. Special services (e.g., Backyard and Special Handling Collection for SFD 2535 Premises, push/pull charges, lock/unlock charges, etc.). 2536 Contractor’s Customer and Billing system shall allow for information to be 2537 compiled easily and separately for each Service Sector. 2538 2. Weight and volume of material Collected by type (e.g., Solid Waste, Targeted 2539 Recyclable Materials, Organic Materials). Where possible, information shall be 2540 provided separately for each Service Sector.
2541 3. Route sheets and route maps identifying the accounts serviced by each 2542 Collection vehicle on a daily basis
2543 4. Facilities, equipment and personnel used.
2544 5. Tonnage of Solid Waste, Targeted Recyclable Materials, Universal Waste, and 2545 Organic Materials listed separately by materials type and Service Sector and 2546 the Designated Facility or other facility where materials were delivered. 2547 6. Monthly Overall Diversion Level, monthly SFD Diversion Level, and the monthly 2548 Commercial Diversion Level (each stated as a percentage) 2549 7. Targeted Recyclable Materials, Used Motor Oil and Used Motor Oil Filters, 2550 Household Batteries, Cell Phones and Organic Materials Collection 2551 participation and set-out rates.
2552 8. Tonnage of materials Collected from On-Call Bulky Item Collection services 2553 described in sections 5.05, 5.06 and 5.12, and abandoned waste clean-up 2554 events described in section 5.09, reported separately by material type 2555 Collected and listing destination where materials were delivered (e.g., Goodwill 2556 Industries, Designated Facilities, etc.).
2557 9. Tonnage of Solid Waste, Recyclable Materials, and Organic Materials 2558 Collected from Venues and Events as described in Section 5.08 reported 2559 separately by material type Collected and reported separately for each Venue 2560 and Event as the total Tonnage of each material type for each Venue or Event 2561 monthly.
2562 10. Volume of Used Motor Oil and number of Used Motor Oil Filters Collected by 2563 Contractor reported separately for each facility where materials were delivered. 2564 C. Other Programs Records
2565 Records for other programs shall be tailored to specific needs. In general, 2566 Contractor shall maintain and retain the following records:
2567 1. Plans, tasks, and milestones; and

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2568 2. Accomplishments including activities conducted, dates, quantities of products 2569 used, produced or distributed, and numbers of participants and responses. 2570 D. Customer Service Records. Daily logs of all Complaints and Inquiries shall be 2571 retained for a minimum of thirty-six (36) months. Contractor shall maintain and 2572 retain customer service center records which include, but are not limited to the 2573 following statistics:
2574 1. Number of calls received on a daily and monthly basis; 2575 2. Number of calls answered on a daily and monthly basis; 2576 3. Number of abandoned (dropped) calls on a daily and monthly basis; 2577 4. Average abandoned time (i.e., Hold Time before abandoning call); 2578 5. Average Hold Time for incoming calls on a daily and monthly basis; 2579 6. Percentage of calls answered by a Person within thirty (30) seconds on a daily 2580 and monthly basis;
2581 7. Number and percentage of Complaint and Inquiry e-mails that received 2582 responses by the close of business on the Day following the receipt of the 2583 Complaint or Inquiry;
2584 8. Number of Complaints and Inquiries received through Contractor’s website on 2585 a daily and monthly basis;
2586 9. Names of all Customer service representatives employed; and, 2587 10. Minimum, average, and maximum number of customer service representatives 2588 employed during each month.
2589 E. CERCLA Defense Records. City views the ability to defend against CERCLA and 2590 related litigation as a matter of great importance. For this reason, the City regards 2591 the ability to prove where Solid Waste Collected in the City area was taken for 2592 transfer or Disposal, to be matters of concern. Contractor shall maintain data 2593 retention and preservation systems which can establish where Solid Waste 2594 Collected in the Service Area was delivered for transfer or Disposal. This provision 2595 shall survive the expiration of this Agreement.
2596 F. Compilation of Information for State Law Purposes. Contractor shall compile 2597 information on amounts of Solid Waste delivered to the Designated Disposal 2598 Facility and to other locations, as well as other information which the City may 2599 reasonably request for state law reporting purposes. 2600 Contractor shall maintain these records for a minimum of seven (7) years after 2601 expiration or earlier termination of the Agreement. Contractor shall provide these 2602 records to City (upon request or at the end of the record retention period) in an 2603 organized and indexed manner rather than destroying or Disposing of them. 2604 9.04 GENERAL REPORTING REQUIREMENTS
2605 A. Purpose. Records shall be maintained and retained in forms, on media, and by 2606 methods that facilitate flexible use of data contained in them to structure reports, as 2607 needed. Reports are intended to compile recorded data into useful forms of 2608 information that can be used to, among other things:
2609 1. Evaluate Diversion performance

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2610 2. Evaluate Contractor’s performance
2611 3. Monitor Customer participation in Targeted Recyclable Materials and Organic 2612 Materials Collection programs and in other programs using several different 2613 performance measures
2614 4. Monitor changes in the number of Customers and Customers’ service levels 2615 5. Determine needs for adjustment to programs and cost for such changes 2616 6. Evaluate customer service and Complaints
2617 7. Confirm Contractor’s entitlement to Contractor’s Compensation pursuant to 2618 Article 11 and Attachment K.
2619 B. Report Format. Contractor may propose report formats that are responsive to the 2620 objectives and audiences for each report. The format of each report shall be 2621 approved by City. The City may review and request changes to Contractor’s report 2622 formats and content and Contractor shall not unreasonably deny such requests. 2623 Contractor agrees to mail a copy of all reports to the City, and submit all reports by 2624 e-mail in a format compatible with the City’s software and computers so the City 2625 can sort and analyze data. Contractor shall provide a certification statement, under 2626 penalty of perjury by the responsible Contractor official, that the report being 2627 submitted is true and correct to the best knowledge of such official after their 2628 reasonable inquiry.
2629 C. Submittal Schedule and Instructions. Contractor shall submit Monthly Reports 2630 within fifteen (15) Days after the end of the reporting month. Contractor shall 2631 submit Quarterly Reports within twenty (20) Business Days after the end of each 2632 quarter ending March 31, June 30, September 30, and December 31. Contractor 2633 shall submit Annual Reports within forty-five (45) Days after the end of each Rate 2634 Year. Contractor shall submit (via mail and e-mail) all reports to the person(s) 2635 designated by City.
2636 D. Failure to Report. The refusal or failure of Contractor to file any required reports, 2637 or to provide required information to the City, or the inclusion of any materially false 2638 or misleading statement or representation by Contractor in such report shall be 2639 deemed a Contractor Default for the purposes of Section 14.01 subject to the 2640 notice and cure provisions of that section, and shall subject Contractor to all 2641 remedies for such default which are available to the City under the Agreement or 2642 otherwise.
2643 E. Accuracy of Reports. The failure of Contractor to file accurate and timely reports, 2644 proposal(s), information or correspondence to the City, or the inclusion of any 2645 inaccurate or misleading data, statement or representation by Contractor in such 2646 report(s), proposal(s), information or correspondence to the City, shall be subject to 2647 Liquidated Damages as set forth in Attachment J. In addition, the inclusion of any 2648 materially false or misleading statement or representation by Contractor in such 2649 report shall be deemed a Contractor Default for the purposes of Section 14.01 2650 subject to the notice and cure provisions of that section, and shall subject 2651 Contractor to all remedies which are available to the City for such default under the 2652 Agreement or otherwise.

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2653 9.05 MONTHLY REPORTS
2654 Monthly reports shall present the information described in this Section. Each monthly 2655 report shall present the information below for that month and for each of the preceding 2656 twelve (12) months.
2657 A. Tonnage Information. Contractor shall provide the Tonnage information 2658 requested below by Service Sector on a monthly and year-to-date basis. However, 2659 the City reserves the right to request the monthly Tonnage data by route. 2660 1. Solid Waste. Total Solid Waste Tonnage Collected and Disposed by Service 2661 Sector.
2662 2. Targeted Recyclable Materials Services. Total Targeted Recyclable Materials 2663 Tonnage Collected and delivered for processing by Service Sector listed 2664 separately by material type Collected (e.g., Single-Stream Recyclable 2665 Materials, Source Separated Cardboard, Source Separated Paper, Used Motor 2666 Oil, Used Motor Oil Filters, etc.).
2667 3. Organic Materials Services. Total Organic Materials Tonnage Collected and 2668 delivered for processing by Service Sector listed separately by material type 2669 (e.g., Plant Materials, Food Scraps, or Organic Materials). 2670 B. Diversion Level. Contractor shall provide the monthly and year-to-date Calculated 2671 Overall Diversion Level, the monthly and year-to-date Residential Diversion Level, 2672 and the monthly and year-to-date Commercial Diversion Level. In addition, 2673 Contractor shall present the calculations used to determine the diversion levels. 2674 C. Complaint, Inquiry and Service Requests Data. Contractor shall provide 2675 information on the number of Complaints, Inquiries and service requests received 2676 from Customers, Generators, or other Person by category (e.g., missed pickups, 2677 noise Complaints, scheduled On-Call Bulky Item Collection Events, Overage 2678 events, Billing concerns, property damage claims, requests for information, 2679 Complaint summary) for each month and cumulative for Rate Year to date, 2680 summarized by nature of Complaint, Inquiry and service request on a compatible 2681 computer disc or other memory device approved by City. The categorization of 2682 Complaints, Inquiries and service requests shall be agreed-upon by the City, and 2683 Contractor prior to the Commencement Date, and shall be adjusted during the 2684 Term upon agreement between City, and Contractor.
2685 D. Call Center Data. Number of calls received, number of calls answered, number of 2686 dropped calls, percentage of dropped calls, Average Hold Time, percentage of calls 2687 answered in thirty (30) seconds.
2688 E. Monthly Gross Receipts. A statement setting forth monthly Gross Receipts, by 2689 Service Sector, for all operations conducted or permitted by this Agreement. 2690 F. Quality Assurance Program. Contractor shall report monthly on its 2691 implementation of this program, described in Section 7.02.F, during the prior month. 2692 The report shall include (i) name and Service Sector of each Customer contacted, 2693 (ii) date, time and length of telephone call, (iii) name of customer service 2694 representative placing call, (iv) summary of Customer’s responses to questions and 2695 other information provided, and (v) follow-up actions taken, if any, in response to 2696 calls.

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2697 9.06 QUARTERLY REPORTS
2698 Contractor shall submit quarterly reports that include the information described in this 2699 Section 9.06 in addition to the monthly information required by Section 9.05. 2700 A. Determination and Payment of Liquidated Damages. In accordance with the 2701 requirements of Section 14.07, Contractor shall provide with its quarterly report a 2702 report that identifies any non-compliance with performance measures listed in 2703 Attachment J and include calculation of the Liquidated Damages due. This report 2704 shall be accompanied by supporting documentation identifying either compliance 2705 with or level of non-compliance with the performance measures. The report 2706 submittal shall be accompanied by a check from Contractor in the amount of the 2707 Liquidated Damages due (per Contractor’s calculation and self-reporting) for the 2708 reporting period.
2709 Contractor may include with its report a written request to meet with the City 2710 Manager or his or her designee to discuss Contractor’s evidence refuting the basis 2711 for assessing Liquidated Damages pertaining to unacceptable employee behavior. 2712 In such cases, Contractor shall include with its report evidence in writing and written 2713 testimony of its employees and others relevant to the incident(s)/non-performance. 2714 The City Manager or his or her designee will provide Contractor with a written 2715 explanation of his or her determination on each incident(s)/non-performance. The 2716 decision of City Manager or his or her designee shall be final, subject to any judicial 2717 review permitted by law.
2718 B. Account Summary. Provide the following account summary information in table 2719 format:
2720 1. Number of Customers in each Rate category.
2721 2. Total number of Residential, Commercial, and Drop Box Customers 2722 subscribing to Solid Waste, Targeted Recyclable Materials, and Organic 2723 Materials Collection service listed separately by Service Sector and material 2724 type.
2725 3. Percentage of Customers subscribing to Targeted Recyclable Materials 2726 Collection service (listed separately for Multi-Family, Commercial, and Drop 2727 Box Customers), which shall be equal to the total number of Targeted 2728 Recyclable Materials Customers divided by the total number of Solid Waste 2729 Customers.
2730 4. Percentage of Customers subscribing to Organic Materials Collection service 2731 (listed separately for Multi-Family, Commercial, and Drop Box Customers), 2732 which shall be equal to the total number of Organic Materials Customers 2733 divided by the total number of Solid Waste Customers. 2734 C. On-Site Customer Assessments. Contractor shall report the number of and 2735 results of the site assessments conducted for Multi-Family and Commercial 2736 Customers, which are required by Section 7.04.E and 7.05.A.1. 2737 D. Public Education Plan. The quarterly report for the quarter ending September 30 2738 of each year shall include the public education plan for the coming year pursuant to 2739 Section 7.03 of this Agreement.

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2740 9.07 ANNUAL REPORTS
2741 Annual reports shall present the information described in this Section in addition to the 2742 information required for Monthly and Quarterly Reports pursuant to Sections 9.05 and 2743 9.06.
2744 A. Operational Information
2745 1. Routes by Service Sector
2746 a. Number of routes per Day
2747 b. Types of vehicles
2748 c. Crew size per route
2749 d. Number of full-time equivalent routes
2750 e. Route sheets and maps
2751 2. Personnel
2752 a. Organizational chart
2753 b. Job classifications and number of full-time equivalent positions for each 2754 (e.g. administrative, customer service representatives, drivers, 2755 supervisors, educational staff, etc.)
2756 c. Annual wages by job classification including benefits 2757 3. Productivity Statistics
2758 a. Number of accounts per Service Sector
2759 b. Tons per route per Day by Service Sector
2760 4. Operational Changes
2761 a. Number of routes
2762 b. Staffing
2763 c. Supervision
2764 d. Collection services
2765 5. Equipment - An inventory of equipment in accordance with Section 8.03.D. 2766 B. Customer Account Information. As part of the annual reporting requirement, 2767 Contractor shall make available to City detailed Customer account information in 2768 tabular format and in electronic format (in computer software format that is 2769 compatible with the City’s) that includes the following information for each 2770 Customer: account number; service address; Customer’s name, address, and 2771 phone number; Billing contact name, Billing address, and phone number; Solid 2772 Waste, Targeted Recyclable Materials, and Organic Materials Collection service 2773 level (i.e., number of Containers, size of Containers, frequency of Collection, and 2774 Day(s) of Collection), and Rate charged. For Multi-Family Customers, the 2775 Customer account information shall also include the number of dwelling units at 2776 each Multi-Family Residential Complex.
2777 C. Contractor’s Review of Billings. Pursuant to the requirements described in 2778 Section 7.01.E, Contractor shall submit a report on its review of Billings.

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2779 D. Customer Service Operations. Contractor shall include in its Annual Report the 2780 following information:
2781 1. The number of CSR supervisory staff and their responsibilities. 2782 2. Website Information (to the extent tracked by Contractor’s system):
2783 a. Number of on-line payments made
2784 b. Number of On-Call Collection Services scheduled 2785 c. Number of On-Call Bulky Goods Collections scheduled 2786 d. Number of extra Solid Waste pick-ups scheduled
2787 e. Number of service changes requested
2788 f. Number of Complaints documented and resolved
2789 3. Customer Information System
2790 a. Status of any changes or upgrades made to system software 2791 b. Description of proposed changes to system software 2792 c. Explanation and schedule of training activities 2793
2794 E. Climate Action Report. Submit climate action report required by Section 7.09. 2795 F. Financial Information. Within one hundred twenty (120) calendar days after the 2796 close of Contractor’s fiscal year, Contractor shall deliver to the City four (4) copies 2797 of the audited consolidated financial statements and profit and loss statements of 2798 Contractor for the preceding fiscal year for Recology of the Coast. Financial 2799 statements shall include a supplemental combining schedule showing Contractor's 2800 results of operations, including the specific revenues in connection with the 2801 operations provided for in this Agreement from others included in such financial 2802 statements. The financial statements and footnotes shall be prepared in 2803 accordance with Generally Accepted Accounting Principles (GAAP) consistently 2804 applied and fairly reflecting in all material respects Contractor’s results of operation 2805 and financial condition. Annual financial statements shall be audited, in accordance 2806 with Generally Accepted Auditing Standards (GAAS) by a Certified Public 2807 Accountant (CPA) licensed (in good standing) to practice public accounting in the 2808 State of California as determined by the State of California Department of 2809 Consumer Affairs Board of Accountancy, and that the CPA opinion on Contractor's 2810 annual financial statements shall be unqualified, and shall contain the CPA’s 2811 conclusions regarding the Contractor’s accounting policies and procedures, internal 2812 controls, and operating policies. The CPA shall perform an evaluation and, if 2813 necessary, shall cite recommendations for improvement. 2814 G. Related Party Entities. Contractor agrees that all its financial transactions (if any) 2815 with all Related Party Entities relating to this Agreement (other than Permitted 2816 Related Party Transactions) shall be approved in advance in writing by City and 2817 disclosed annually (concurrently with submission of Contractor’s annual audited 2818 financial statements referred to in Section 9.07.F) to the City in a separate 2819 disclosure letter to the City. This annual disclosure letter (if any) shall include the 2820 following information: A general description of the nature of each such transaction, 2821 or type of transaction (if many similar transactions exist) shall be provided, as 2822 applicable. Such description shall include for each (or similar) transaction, 2823 amounts, specific Related Party Entity, basis of amount (how amount was 2824 determined), and description of the allocation methodology used to allocate any 2825 common costs. Amounts shall be reconciled to the Related Party Entity disclosures

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2826 made in Contractor’s annual audited financial statements referred to in Section 2827 9.07.F. At the City’s request, Contractor shall provide the City with copies of 2828 working papers or other documentation deemed relevant by the Contractor relating 2829 to information shown in the annual disclosure letter (if any). The annual disclosure 2830 letter (if any) shall be provided to the City within one hundred twenty (120) calendar 2831 days after the end of the Contractor’s fiscal year. 2832 9.08 REQUIRED SPECIFIC REPORTING
2833 Event-specific reports shall be submitted following the occurrence of the event as 2834 described in this Section.
2835 A. Report of Accumulated Solid Waste; Unauthorized Dumping. As required by 2836 Section 5.09, Contractor shall report: (i) the addresses of any Premises at which 2837 the driver observes that Solid Waste, Targeted Recyclable Materials, and/or 2838 Organic Materials is accumulating; and (ii) the address, or other location 2839 description, at which Solid Waste, Targeted Recyclable Materials, and/or Organic 2840 Materials has been dumped in an apparently unauthorized manner. The report 2841 shall be delivered to the City within one (1) Business Day of such observation. 2842 B. Hazardous Waste. As required by Section 8.07, the Contractor shall notify the City 2843 of any Hazardous Waste identified in Containers or left at any Premises within 2844 twenty-four (24) hours of identification of such material. 2845 C. Reporting Adverse Information. Contractor shall provide City two (2) copies (one 2846 (1) to the City Manager, one (1) to the City Attorney) of all reports, pleadings, 2847 applications, notifications, Notices of Violation, communications or other material 2848 relating specifically to Contractor’s performance of services pursuant to this 2849 Agreement and adverse to Contractor (or pertaining to an adverse determination 2850 against Contractor), submitted by Contractor to, or received by Contractor from, the 2851 United States or California Environmental Protection Agency, the California 2852 Integrated Waste Management Board, the Securities and Exchange Commission or 2853 any other federal, State, County, or local agency, including any federal or State 2854 court. Copies shall be submitted to City simultaneously with Contractor’s filing or 2855 submission of such matters with said agencies. Contractor’s routine 2856 correspondence to or from said agencies need not be submitted to City, but shall 2857 be made available to City promptly upon City’s written request. 2858 D. Reporting of Claims. Contractor shall notify City of claims by third Persons as 2859 required by Section 13.02.F(2).
2860 E. City-Sponsored Event Report. No later than ten (10) Business Days following a 2861 City-sponsored event identified in Attachment C, Contractor shall report the 2862 Tonnage Collected by material type as required by Section 5.08 and the outreach 2863 efforts related to diversion, recycling, and composting. 2864 9.09 UPON-REQUEST REPORTING
2865 A. Holiday Tree Services. Within ten (10) Business Days of City’s request, 2866 Contractor shall report the Tonnage of Holiday Trees collected at the Drop Box 2867 sites or at drop-off sites (if drop-off sites were established). 2868 B. Performance Review. The City may conduct a review of Contractor’s performance 2869 under this Agreement at any time during the Term, but not more than once every 2870 three (3) Rate Years. In such case, the City will submit questions to Contractor 2871 pertaining to Contractor’s performance and Contractor shall submit its written

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2872 response within thirty (30) days. Prior to Contractor’s written submittal of its 2873 response to questions, City and Contractor shall meet to discuss the questions and 2874 Contractor’s response. City and Contractor may request from one another 2875 information or documents reasonably necessary to assess Contractor’s 2876 performance and City and Contractor shall provide such information promptly. 2877 Contractor shall cooperate with the performance review; provide reasonably 2878 requested information; actively participate in meetings to discuss the review; and 2879 develop and implement an action plan to improve performance, if any failure to 2880 comply with the terms of this Agreement is identified. 2881 C. Other. The City reserves the right to request additional reports from the 2882 Contractor, and the Contractor shall deliver such reports within twenty-five (25) 2883 Business Days of such request provided that such information is similar in nature to 2884 the required elements of the monthly, quarterly, or annual reporting requirements 2885 described in Sections 9.05, 9.06, and 9.07. If the information requested by the City 2886 is not typically part of the Contractor’s reporting requirements described in Sections 2887 9.05, 9.06, and 9.07, Contractor shall provide such information if the Contractor is 2888 required to maintain the information under the record-keeping requirements 2889 described in Sections 9.01, 9.02, and 9.03.

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2890 ARTICLE 10 PAYMENT BY CONTRACTOR OF FRANCHISE AND
2891 REGULATORY FEES
2892 10.01 FRANCHISE AND REGULATORY FEES
2893 City and Contractor acknowledge that an exclusive franchise is a special privilege that 2894 only government has the power to bestow. The exclusive franchise provided for in this 2895 Agreement is a grant of a right of way by City to Contractor to allow Contractor to use 2896 City property to provide Collection services. City has previously adopted or may adopt 2897 other regulatory fees which are intended to recover under the City’s police power the 2898 costs associated with certain adverse effects associated with solid waste management 2899 and recycling in order to promote the public health and welfare (“Regulatory Fees”). In 2900 consideration of the exclusive franchise granted to Contractor by this Agreement, 2901 Contractor shall pay to City the following fees, irrespective of the amount of Contractor’s 2902 Gross Receipts:
2903 A. Franchise Fee. Contractor shall pay to City a Franchise Fee in the amount of 2904 $67,083.33 per month, which totals $805,000 annually. 2905 B. Frontierland Park Remediation Fee. The City has an on-going obligation to 2906 remediate Frontierland Park for matters related to the closed landfill site at that 2907 location. Remediation efforts focus on minimizing or resolving health, safety, and 2908 public nuisance problems that may adversely affect the quality of life for citizens of 2909 the City. The remediation fee also provides funding for improvements to 2910 Frontierland Park facilities. The Frontierland Park remediation fee monies are used 2911 by the City to fund the remediation efforts. Contractor shall pay to City a 2912 Frontierland Park remediation fee in the amount of $6,250 per month, which totals 2913 $75,000 annually.
2914 C. AB 939 Fee. The Act (AB 939) requires the City to plan, implement, and monitor 2915 programs that will reduce the amount of Solid Waste Disposed by residents and 2916 businesses and report annually to the State. Programs include recycling and 2917 organics programs, public education and outreach efforts, franchise monitoring, etc. 2918 The AB 939 fee is used to fund these mandated efforts. Contractor shall pay to 2919 City an AB 939 fee in the amount of $2,500 per month, which totals $30,000 2920 annually.
2921 10.02 TIME AND METHOD OF PAYMENT
On or before the twentieth (20th 2922 ) day after the end of each month, Contractor shall pay 2923 to City the monthly amount due for the Franchise and Regulatory Fees specified in 2924 Section 10.01, in the amount of $75,833.33, unless City directs a different payment 2925 schedule.
2926 Payments from Contractor to City shall be made by wire transfer or other method 2927 authorized by City.
2928 If a fee is not paid on time, Contractor shall pay a late payment charge equal to two 2929 percent (2%) of the fees due for that month. In addition, Contractor shall pay an 2930 additional two percent (2%) on any unpaid balance for each thirty (30) Day period a 2931 portion of the fee due remains unpaid. Changes to Contractor’s Compensation to reflect 2932 decreases in fees are not subject to the special Rate review provisions in Section 11.04.

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2933 10.03 ADJUSTMENTS TO FEES; ADDITIONAL FEES
2934 City may from time to time, in connection with the Rate review process provided for in 2935 Article 11 and Attachment K, adjust the amount of the Franchise and Regulatory Fees 2936 described in this Article, and establish other fees. Changes in the total amount of fees 2937 to be paid by Contractor to City shall not become effective until they are reflected in a 2938 Rate adjustment as set forth in Article 11.
2939
2940

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2941 ARTICLE 11 CONTRACTOR’S COMPENSATION AND RATES
2942 11.01 OVERVIEW
2943 In consideration of Contractor’s performance of Collection services pursuant to this 2944 Agreement, Contractor shall have the right to charge and collect from Generators for 2945 Collection services rendered, at rates not exceeding the Rates set forth on Attachment 2946 N, as the same may be adjusted from time to time in accordance with this Article 11 and 2947 Attachment K. Contractor may set its rates at any level so long as the rate for a 2948 particular service does not exceed the then-applicable Rate for such service set forth on 2949 Attachment N.
2950 If Contractor’s actual costs, including fees due to City pursuant to Article 10, exceed 2951 Contractor’s actual Gross Receipts, Contractor shall not be compensated for the 2952 difference, except to the extent provided in this Article 11 and Attachment K. If 2953 Contractor’s actual costs are less than actual Gross Receipts, Contractor shall retain the 2954 difference, provided that Contractor has paid the fees due to City pursuant to Article 10. 2955 While a profit level (based on an Operating Ratio of 0.90) is used to calculate estimated 2956 contractor’s costs and Rates on an annual basis, the Contractor is not guaranteed this 2957 profit level.
2958 11.02 RATE-SETTING PROCESS
2959 A. New Rates. The City shall be responsible for confirming any Rate adjustment 2960 applications to assure that they are in compliance with this Agreement and 2961 specifically with Attachment K. If the proposed Rate adjustment is in accordance 2962 with the obligations and procedures set forth in this Agreement, then City shall 2963 authorize Contractor to establish the proposed Rates. 2964 If at any time during the Term of this Agreement, Contractor determines the need 2965 for a Rate that does not appear on the Rate schedule in Attachment N, Contractor 2966 shall immediately notify the City and request establishment of such a Rate. For 2967 example, if Contractor wishes to introduce Collection of a fifteen (15) cubic yard 2968 Compactor five (5) times per week, and the existing Rate schedule does not include 2969 a Rate for this service, Contractor must request that the City authorize such a Rate. 2970 B. Initial Rates. The Rates for the period from the Commencement Date through July 2971 31, 2010, and the Rates for the period from August 1, 2010 through February 28, 2972 2011, were the Rates for such periods set forth in Attachment N of the Original 2973 Agreement.
2974 C. Rates Adjustment Scheduled for March 1, 2011. Section 11.02.C and related 2975 provisions of the Original Agreement provided that a Rate adjustment should have 2976 taken effect as of March 1, 2011 (the “March 1 Adjustment”). Contractor timely 2977 submitted an Application for the March 1 Adjustment. In accordance with Section 2978 11.02.C of the Original Agreement, the amount of the March 1 Adjustment was 8%. 2979 The March 1 adjustment was delayed for three months, but the 8% increase 2980 ultimately went into effect as of June 1, 2011. As a result of the three month delay, 2981 Contractor experienced a shortfall in revenues of $135,580. To give effect to 2982 provisions of the Original Agreement and this Agreement that permit Contractor to 2983 recover the amount of such shortfall through an additional adjustment in Rates, City

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2984 and Contractor agreed that, notwithstanding any other provision of this Agreement, 2985 such $135,580 amount would be included in the Rates for Rate Year Three (which 2986 took effect January 1, 2012) over and above any other adjustment called for by the 2987 Original Agreement. Such amount was incorporated into the Rate adjustment 2988 calculation in Attachment K of the Franchise Agreement as an “Other Pass2989 Through Adjustment.” 2990 D. Subsequent Rate Adjustments. The Rates for Rate Year Four and subsequent 2991 Rate Years shall be determined based on annual adjustments in accordance with 2992 this Article 11 and Attachment K (i) using the index-based adjustment method set 2993 forth in Section 3 of Attachment K to determine the Rates for Rate Years three, five, 2994 six, eight, and, if the Term is extended, nine, eleven, twelve, and thirteen (the 2995 “Index-Based Adjustment Years”), and (ii) using the cost-based adjustment method 2996 set forth in Section 4 of Attachment K to determine the Rates for Rate Years four, 2997 seven and, if the Term is extended, ten (the “Cost-Based Adjustment Years”). The 2998 cost-based adjustment is intended to adjust Rates to more accurately reflect 2999 Contractor’s actual costs of operations, if the cost indices are not tracking with 3000 actual changes in costs. Table 1 below shows which method will be used for each 3001 Rate Year:
3002
TABLE 1
Rate
Year
Commencement Date of
Rate Year (which shall
be the Effective Date of
Rate Adjustment unless
otherwise noted)
Rate Adjustment Method Used to
Determine Rates for Rate Year
Rate Application
Submittal Date
1 Commencement Date No Rate adjustment; Rates specified in Attachment N
Not Applicable
1 Commencement Date;
Rates to be effective
August 1, 2010
Rate adjustment per Attachment N
(5% increase)
Not Applicable
2 January 1, 2011;
Rates to be effective
March 1, 2011**
Rate adjustment to be negotiated
per Section 11.02.C**
November 1, 2010
3 January 1, 2012 Index-Based September 1, 2011
4 January 1, 2013 Cost-Based June 1, 2012
5 January 1, 2014 Index-Based September 1, 2013
6 January 1, 2015 Index-Based September 1, 2014
7 January 1, 2016 Cost-Based June 1, 2015
8 January 1, 2017 Index-Based September 1, 2016
9* January 1, 2018 Index-Based September 1, 2017
10* January 1, 2019 Cost-Based June 1, 2018
11* January 1, 2020 Index-Based September 1, 2019
12* January 1, 2021 Index-Based September 1, 2020
13* January 1, 2022 Index-Based September 1, 2021
3003 *Applicable only if the Term is extended pursuant to Section 3.03. 3004 ** See Section 11.02.C.

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3005
3006 11.03 ANNUAL RATE APPLICATION PROCESS
3007 A. Application Date and Content
3008 1. Index-Based Rate Adjustment Methodology
3009 On or before September 1 of the Rate Year prior to each Index-Based 3010 Adjustment Year, Contractor shall submit three (3) copies of its Application for 3011 a Rate adjustment for such Index-Based Adjustment Year. The Application 3012 shall contain the following information:
3013
3014 (i) A copy of the current Cost Components, per Section 3.2 of Attachment K; 3015
3016 (ii) Contractor’s calculation of the adjustment to each Cost Component 3017 pursuant to Section 3.3 of Attachment K, to arrive at the forecasted values for 3018 the coming Rate Year;
3019
3020 (iii) Contractor’s calculation of the Rate Adjustment Factor as provided in 3021 Section 3.8 of Attachment K;
3022
3023 (iv) A copy of the Rate schedule currently in effect, and a pro forma Rate 3024 schedule showing the proposed Rates for the coming Rate Year; 3025
3026 (v) Any additional supporting documentation for the foregoing calculations, 3027 including evidence of the index values used and Solid Waste, Recyclable 3028 Materials, and Organic Materials Tonnage reports for the most-recently 3029 completed twelve (12) month period ending April 30; 3030
3031 (vi) A copy of the then-applicable collective bargaining agreement(s) 3032 governing Contractor’s employees performing services under this Agreement; 3033
3034 (vii) Contractor’s proposal for a special Rate adjustment pursuant to Section 3035 11.04, if any.
3036
3037 2. Cost-Based Rate Adjustment Methodology
3038 On or before June 1 of the Rate Year prior to each Cost-Based Adjustment 3039 Year, Contractor shall submit three (3) copies of its Application for a Rate 3040 adjustment for such Cost-Based Adjustment Year. The Application shall 3041 contain the following information:
3042
3043 (i) A copy of Contractor’s audited financial statements for Contractor’s most 3044 recently completed Fiscal Year pursuant to Section 9.07.F; 3045
3046 (ii) A copy of Contractor’s pro forma financial statement for such Fiscal Year 3047 prepared pursuant to Section 4.2.1 and 4.2.2 of Attachment K; 3048
3049 (iii) Contractor’s allocation of its costs for such Fiscal Year to the Cost 3050 Components comprising Total Annual Cost of Operations pursuant to Section 3051 4.2.3 of Attachment K;

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3052
3053 (iv) Contractor’s calculation of the adjustment to each Cost Component and 3054 Total Annual Cost of Operations pursuant to Section 4.3 of Attachment K, to 3055 arrive at the forecasted values for the coming Rate Year; 3056
3057 (v) Contractor’s calculation of the Rate Adjustment Factor as provided in 3058 Section 4.8 of Attachment K;
3059
3060 (vi) A copy of the Rate schedule currently in effect, and a pro forma Rate 3061 schedule showing the proposed Rates for the coming Rate Year. 3062
3063 (vii) Any additional supporting documentation for the foregoing calculations, 3064 including evidence of the index values used and Solid Waste, Recyclable 3065 Materials, and Organic Materials Tonnage reports for the most-recently 3066 completed twelve (12) month period ending April 30; 3067
3068 (viii) A copy of the then-applicable collective bargaining agreement(s) 3069 governing Contractor’s employees performing services under this Agreement; 3070
3071 (ix) Operational data listed in Section 9.07.A for the most-recently completed 3072 month.
3073
3074 (x) Contractor’s request for a special Rate adjustment pursuant to Section 3075 11.04, if any.
3076
3077 (xi) Other information that Contractor deems necessary to support the actual 3078 costs presented and the calculation of the assumptions made by Contractor 3079 with regard to forecasting the total annual cost of operations, profit, pass3080 through costs, pass-through City fees, and the total annual costs for the 3081 coming Rate Year.
3082 B. City Review of Rate Proposal
3083 City shall undertake an administrative review of Contractor’s Application for 3084 accuracy and consistency with the applicable Rate adjustment procedures specified 3085 in this Article 11 and Attachment K. Within thirty (30) days after Contractor’s 3086 submission of the Application, City shall notify Contractor of any factual or 3087 calculation errors that City has identified in the Application, and Contractor shall 3088 have the opportunity to revise the Application.
3089 In connection with City’s review of Contractor’s Application, Contractor shall provide 3090 all information reasonably requested by City to evaluate the Application (it being 3091 understood that information regarding Permitted Related Party Transactions need 3092 not be provided). Upon request, Contractor shall provide information from Related 3093 Party Entities regarding any financial transactions between Contractor and such 3094 Related Party Entities (other than Permitted Related Party Transactions) relating to 3095 this Agreement, to the extent reasonably necessary to evaluate Contractor’s 3096 Application.
3097 If City’s administrative review confirms that Contractor has submitted complete and 3098 accurate information as required by this Agreement, and if the hearing provided by 3099 Section 11.05 does not prevent Contractor from imposing the proposed Rates, the 3100 Rates shall be adjusted to reflect the adjustments required by Section 3 of 3101 Attachment K or Section 4 of Attachment K, as the case may be, and Section

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3102 11.03, if applicable subject to potential Rate constraints described in Section 11.07. 3103 City and the City Council shall use their reasonable best efforts and act in good faith 3104 to take action to complete its Rate review as contemplated by this Agreement so 3105 that Rate adjustments can be effective on or before January 1 of the Rate Year 3106 following the year in which the Application was submitted. 3107 11.04 SPECIAL RATE REVIEW
3108 A. Timing. A special Rate review may be initiated pursuant to this Section 11.04 3109 should one or more of the events set forth in Section 11.04.B occur. If such 3110 event(s) could reasonably be expected to have a combined effect (whether on 3111 Contractor’s costs or revenues, and whether in the then-current Rate Year or the 3112 subsequent Rate Year) totaling two percent (2%) or more of Contractor’s 3113 reasonably anticipated Gross Receipts (net of payments to City) in the then-current 3114 Rate Year, then the special Rate review may be initiated at any time. If such 3115 event(s) could reasonably be expected to have a combined effect less than as set 3116 forth in the preceding sentence, the special Rate review with respect to such 3117 event(s) shall occur the next time the annual Rate adjustment process is performed 3118 in accordance with Section 11.03.
3119 B. Eligible Items. Contractor (or City, with respect to item 1 below) may initiate a 3120 special Rate review pursuant to this Section 11.04 should one or more of the 3121 following events occur:
3122 1. City-directed changes pursuant to Section 15.12. 3123 2. Provision of emergency services pursuant to Section 7.06. 3124 3. Flood, earthquake, or other similar catastrophic event affecting City which is beyond 3125 the control of and not the fault of the Contractor. 3126 4. Changes in Law (including, but not limited to, Changes in Law that result in 3127 regulatory, governmental, or other surcharge fees) after the Effective Date that 3128 were not reasonably known to Contractor before the Effective Date. Adjustment to 3129 the Franchise and Regulatory Fees, as described in Section 10.01, in accordance 3130 with procedures described in Section 10.03, shall be excluded from Change in Law. 3131 5. Any change in the Designated Disposal Facility initiated by Contractor or City, 3132 provided that (i) such change results from Contractor’s inability to use the 3133 Designated Disposal Facility for reasons beyond the control of Contractor (and, if 3134 the Designated Disposal Facility is owned or operated by an Affiliate of Contractor, 3135 beyond the control of such Affiliate), and (ii) if the Designated Disposal Facility is 3136 not the Ox Mountain Sanitary Landfill, the Ox Mountain Sanitary Landfill is 3137 unavailable for use by Contractor.
3138 C. Ineligible Items. A special Rate review may not be initiated for the following items 3139 and Contractor shall not be compensated for such items unless the City and 3140 Contractor agree to an adjustment when determining Rates for Cost-Based 3141 Adjustment Years:
3142 1. Increases in the cost of Solid Waste, Recyclable Materials, or Organic Materials 3143 Collection, transportation, processing, or Disposal in excess of the increases 3144 provided through the annual adjustment mechanisms described in Attachment K,

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3145 unless such cost increases are related to eligible items listed in Section 11.04.B 3146 above.
3147 2. Decreases in revenues from the sale of Recyclable Materials or Organic Materials. 3148 3. Growth or decline in the number of Customers or their subscription levels; provided, 3149 however, that Contractor shall be entitled to bill all Customers at the Rates 3150 provided for by this Agreement, if allowed under Section 11.05 and subject to 3151 confirmation by City as provided in Section 11.03.B, and retain all Gross Receipts 3152 (net fees due to City) collected from Customers for Collection services provided 3153 under this Agreement.
3154 4. Change in the Tonnage or composition of Solid Waste, Recyclable Materials, or 3155 Organic Materials in excess of the increases or decreases provided through the 3156 annual adjustment mechanisms described in Attachment K, unless such changes 3157 are related to eligible items described in Section 11.04.B above. 3158 D. Submittal and Review of Request. If Contractor initiates a special Rate review, 3159 Contractor must submit its request for a special Rate adjustment, together with any 3160 cost and operational data Contractor wishes to provide in order to justify such Rate 3161 adjustment, at least five (5) months before the proposed effective date of such Rate 3162 adjustment. The City may waive the five (5)-month submittal requirement if the 3163 reason for the special Rate review is a Change in Law that will become effective in 3164 less than a five (5) month period.
3165 If the Contractor or the City requests a special Rate review, the City shall have the 3166 right to review records of Contractor and Related Party Entities to the extent set 3167 forth in Section 9.02.B.
3168 City shall review Contractor’s request and supporting documentation and shall 3169 notify Contractor, within thirty (30) days of Contractor’s submission, of City’s 3170 assessment of Contractor’s request and of any questions City may have regarding 3171 such request. If City confirms that Contractor is entitled to a special Rate 3172 adjustment under the terms of this Agreement, and if the hearing provided by 3173 Section 11.05 does not prevent Contractor from imposing the proposed Rate, 3174 Contractor may adjust Rates to reflect such adjustment. City and the City Council 3175 shall use their reasonable best efforts and act in good faith to take action to 3176 complete its Rate review as contemplated by this Agreement so that special Rate 3177 adjustments can be effective within five (5) months of Contractor’s submission. 3178 Whether the special Rate review is initiated by Contractor or City, the initiating Party 3179 shall indicate whether the requested Rate adjustment shall be in addition to or in 3180 lieu of the annual Rate adjustment to be performed in accordance with Section 3181 11.03.
3182 E. City-Initiated Changes. If City initiates a change pursuant to Section 15.12, City’s 3183 notice to Contractor required by Section 15.12.A shall set forth the specifications of 3184 any additional services that City wishes Contractor to perform, or any existing 3185 services that City wishes Contractor to cease performing, as the case may be. 3186 Within thirty (30) days after receipt of such notice, Contractor shall submit to City a 3187 cost and operational proposal to implement the Change in Service in accordance 3188 with such specifications, together with proposed Rate adjustments to cover 3189 Contractor’s reasonable increased or decreased costs resulting from such Change 3190 in Service. Such reasonable increased or decreased costs shall include a profit

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3191 margin calculated as set forth in Section 2.14 of Attachment K. Such increased or 3192 decreased costs shall be based on Contractor’s reasonable good faith estimate of 3193 Contractor’s actual costs (rather than any deemed cost resulting from an index3194 based adjustment to a Cost Component), and shall take into account Contractor’s 3195 capital expenditures and other fixed costs (whether sunk or prospective), migration 3196 by Customers from one type or level of service to another as a result of the Change 3197 in Service, the effect of the Change in Service on Contractor’s agreements with 3198 third parties, and any other relevant factors. The Parties shall negotiate 3199 Contractor’s proposal in good faith for a period of thirty (30) days after submission 3200 of Contractor’s proposal. During such negotiation period, Contractor shall provide 3201 City with such additional information as City may reasonably request in order to 3202 evaluate Contractor’s proposal. If the Change in Service results in a net increase in 3203 Contractor’s costs, Contractor shall be entitled to a special Rate increase sufficient 3204 to cover its reasonable additional costs resulting from such Change in Service. If 3205 the Change in Service results in a net decrease in Contractor’s costs, Contractor 3206 shall be subject to a special Rate decrease no greater than Contractor’s reasonable 3207 decreased costs resulting from such Change in Service. City and the City Council 3208 shall use their reasonable best efforts and act in good faith to confirm special Rate 3209 adjustments under this Section 11.04.E to be effective within five (5) months of 3210 Contractor’s submission of its cost and operational proposal. 3211 F. Burden of Justification. If Contractor initiates a special Rate review, Contractor 3212 shall bear the burden of justifying by substantial evidence its entitlement to any 3213 adjustment in Rates under this Section 11.04, and shall provide substantial 3214 evidence that one or more Eligible Events resulted in a net increase in Contractor’s 3215 costs of performing its obligations under this Agreement (taking into account any 3216 decreases in Contractor’s costs which may result from the same Eligible Event(s)). 3217 If Contractor is entitled to a special Rate increase under this Section 11.04, and if 3218 the hearing provided by Section 11.05 does not prevent Contractor from imposing 3219 the proposed Rate, such special Rate increase shall be established in such a 3220 manner as to generate sufficient additional revenues to Contractor to enable 3221 Contractor to recover all of its reasonable additional costs resulting from such 3222 Eligible Event(s), whether incurred before or after the date of Contractor submitted 3223 its request for a special Rate adjustment, or before or after the Rate adjustment 3224 took effect. Contractor’s costs of performing its obligations under this Agreement 3225 (and its reasonable additional costs resulting from Eligible Event(s)) shall include a 3226 profit margin calculated by applying the Operating Ratio of 0.90 in the same 3227 manner as is applied when implementing the cost-based adjustment method. 3228 If City’s review determines that the Contractor has not met its burden, Contractor 3229 may request a meeting with City staff and the City Manager at which Contractor 3230 may produce additional evidence in support of its request for a special Rate 3231 adjustment. Upon such request, City shall promptly arrange said meeting. 3232 G. Expenses of Review. Contractor shall reimburse City for City’s reasonable costs 3233 incurred in participating in any special Rate review, up to a maximum of $25,000. 3234 For special Rate reviews initiated by City pursuant to Section 15.12, or special Rate 3235 reviews initiated by Contractor arising from events described in Sections 11.04.B.1, 3236 11.04.B.2 or (if the Change in Law is initiated by City) 11.04.B.4., Contractor shall 3237 be entitled to recover the cost of such reimbursement through the Rate adjustment

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3238 mechanism (as an Eligible Cost or otherwise); otherwise, such reimbursement shall 3239 be a Non-Allowable Cost.
3240 11.05 NOTICE OF RATE ADJUSTMENTS
3241 For the Initial Term of this Agreement only, and without limiting the last paragraph of 3242 Section 11.07, if Contractor proposes an increase in Rates pursuant to this Article 11 3243 and/or Attachment K, City shall follow the procedures set forth in Article 13.D, section 6, 3244 subsections (a)(1) and (a)(2) of the California Constitution with respect to Contractor’s 3245 Application, except that (i) notice shall be mailed only to Contractor’s Customers (other 3246 than City), and (ii) only such Customers shall have an opportunity to protest approval of 3247 Contractor’s Application. If, after such notice is provided, a majority of Contractor’s 3248 Customers present written protests prior to or at the hearing, Contractor shall not 3249 impose the proposed Rate. Contractor shall provide all Customers with written notice of 3250 Rate changes, in the form of a bill insert, postcard, or other written notice prepared by 3251 City.
3252 11.06 FAILURE OR DELAY IN ADJUSTING RATES
3253 A. Annual Rate Application Submitted On Time
3254 If Contractor submits its Application on or before the Application submittal date 3255 identified in Table 1 for proposed Rate adjustments, such application is accurate 3256 and consistent with the applicable Rate adjustment procedures specified in this 3257 Article and Attachment K, the hearing provided by Section 11.05 does not prevent 3258 Contractor from imposing the proposed Rate, and City delays confirming 3259 Contractor’s entitlement to the proposed Rate adjustment until after January 1 of 3260 the following Rate Year, then Contractor shall be entitled to an additional Rate 3261 adjustment for such Rate Year (and, if necessary, subsequent Rate Years) to 3262 enable Contractor to recover the shortfall in revenues caused by City’s delay. 3263 To determine the amount of the shortfall, if any, City and Contractor shall meet and 3264 confer to determine the effect that the delay in adopting Rates has on the 3265 Contractor’s Gross Receipts. The assessment of the revenue impact shall consider 3266 Contractor’s billing cycle (e.g., impact to Customers billed in advance and to 3267 Customers billed in arrears), the ability of Contractor to delay issuance of bills, the 3268 payment cycle of Customers, and other relevant variables. 3269 B. Annual Rate Application Delayed
3270 If Contractor does not submit its Application on or before the Application submittal 3271 date identified in Table 1 for annual Rate adjustments, City Council shall complete 3272 its administrative review and Rates shall be adjusted not later than the number of 3273 days after January 1 of the applicable Rate Year equal to the number of days that 3274 Contractor’s Application was late so long as such application is accurate and 3275 consistent with the applicable Rate adjustment procedures specified in this Article 3276 and Attachment K and the hearing provided by Section 11.05 does not prevent 3277 Contractor from imposing the proposed Rate.
3278 If City delays confirming Contractor’s entitlement to impose the Rate adjustment 3279 within such period, then Contractor shall be entitled to an additional Rate 3280 adjustment for such Rate Year (and, if necessary, subsequent Rate Years) to 3281 enable Contractor to recover the shortfall in revenues caused by the delay. The

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3282 shortfall will be determined in the same manner as set forth in the second 3283 paragraph of Section 11.06.A.
3284 11.07 POTENTIAL RATE CONSTRAINTS
3285 The parties recognize that, as of the date this Agreement is entered into, there is no 3286 authoritative judicial determination that Articles 13.C and D of the California Constitution 3287 apply to charges imposed by private enterprises for Solid Waste handling and Recycling 3288 services. City will not be in default of this Agreement if (i) a majority protest prevents a 3289 proposed Rate increase from being adopted, (ii) a court rules that Rates imposed 3290 pursuant to this Agreement are not consistent with Article 13.D, or (iii) an initiative 3291 reduces Rates from those in effect. After any such event, the Parties shall promptly 3292 meet and confer in good faith to develop modifications to service levels commensurate 3293 with the Rates that Contractor may legally charge. 3294 Nothing in this Section 11.07, or elsewhere in this Agreement, including Section 11.05, 3295 shall be deemed or construed to be an admission by City or Contractor that Articles 3296 13.C or 13.D of the California Constitution apply to the Rates charged by Contractor 3297 under this Agreement.
3298 11.08 SHARING OF REVENUE FROM SALE OF RECYCLABLES
3299 On or before January 31 of each Rate Year beginning in Rate Year Three, Contractor 3300 shall pay City an amount equal to fifty percent (50%) of Contractor’s revenues above 3301 $269,000 in the most-recently completed Fiscal Year from sale of Recyclable Materials 3302 (other than Organic Materials). Contractor shall concurrently provide a statement 3303 showing the calculation of the amount paid, including a summary of all sales of 3304 Recyclable Materials (other than Organic Materials) during the most-recently completed 3305 Fiscal Year. Contractor’s Recycling revenues shall be allocated to the City on the basis 3306 of volume of Recyclable Materials Collected compared to the volume of all Recyclable 3307 Materials Collected in the City and other areas by Contractor. If the full amount is not 3308 timely paid, late charges shall apply as set forth in the third paragraph of Section 10.04. 3309
3310
3311

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3312 ARTICLE 12 CITY RIGHT TO USE EQUIPMENT AND FACILITIES 3313 12.01 PURPOSE
3314 The Parties recognize (i) that frequent and continuous collection of Solid Waste, 3315 Targeted Recyclable Materials and Organic Materials is an essential public service and 3316 an important element of public health in developed communities such as City, and (ii) 3317 that even a temporary interruption in the Collection and transport services performed by 3318 Contractor may threaten the public health and safety, as well as causing serious 3319 financial harm to business operations in the City. 3320 The purpose of this Article is to provide the City the ability to respond to such threats to 3321 the public health, safety and welfare by making use of Contractor’s Facilities and 3322 equipment. This Article applies to any interruption of services, regardless of whether or 3323 not Contractor’s failure to perform is excused under Section 14.09. 3324 12.02 CONDITIONS AUTHORIZING CITY’S RIGHT TO USE OF FACILITIES AND 3325 EQUIPMENT
3326 If Contractor, for any reason, fails, refuses or is unable to Collect Solid Waste, Targeted 3327 Recyclable Materials and Organic Materials from all or substantially all Customers at the 3328 times and in the manner required by this Agreement, and transport such materials to the 3329 Designated Facilities, for more than two (2) Business Days (a “Failure to Collect”), City 3330 may invoke this Article. City shall provide Contractor written notice that it intends to 3331 consider invoking this Article at a public meeting of its governing body, to be held two (2) 3332 or more Business Days from the date of the notice. 3333 At the meeting, the governing body may invoke its rights under this Article if it 3334 determines that there has been an interruption in Collection service and that such 3335 interruption may continue, thereby threatening the public health, safety and welfare. If 3336 the governing body makes that determination, it may also determine to exercise the 3337 City’s right to (i) perform Collection and transport services with its own personnel or 3338 authorize a third party to do so, and (ii) take possession of any of Contractor’s property, 3339 including vehicles, equipment used for billing and collection of fees, and other 3340 equipment, used in providing such services (collectively, “Properties”). 3341 12.03 NOTICE TO CONTRACTOR
3342 City shall deliver written notice to Contractor of its determination to exercise its right to 3343 provide Collection services and to make use of Contractor’s Properties to do so. Upon 3344 receipt of the notice, Contractor shall immediately take all steps necessary to make 3345 available to City any of its vehicles and equipment that are requested by City. 3346 Contractor shall also cooperate in any other way requested by City to assist City in 3347 providing Collection services on a temporary basis. 3348 12.04 RIGHTS AND RESPONSIBILITIES OF PARTIES
3349 If City exercises its right to provide collection services and make use of Contractor’s 3350 Properties to do so, City will be responsible for the proper use and operation of 3351 Contractor’s Properties, including maintenance and repair of vehicles and equipment. 3352 City will defend, indemnify and hold Contractor harmless from claims by third parties 3353 that are due solely to City's negligence or intentional misconduct in operating 3354 Contractor's vehicles or equipment, and not due in whole or in part to defects in the

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3355 design or manufacture of the vehicles or equipment or to Contractor's prior failure to 3356 maintain them in good and safe operating condition. 3357 Contractor shall not be liable for any Liquidated Damages with respect to any incidents 3358 occurring during the period that City (or any third party authorized by City) is performing 3359 Collection and transport services, or is in possession of, using or operating any of 3360 Contractor’s Properties, pursuant to this Article 12. 3361 If the interruption in service is excused under Section 14.09, City will pay Contractor one 3362 hundred dollars ($100) per Business Day per vehicle used by City to perform Collection 3363 and transport services, which will constitute full compensation for use of all Properties. 3364 If the interruption in service constitutes a breach of contract or default, no payment is 3365 required.
3366 Revenue received from Customers that is attributable to the period of time during which 3367 City provides temporary Collection service shall accrue to City rather than Contractor to 3368 the extent City provides temporary Collection services in lieu of Contractor. 3369 City may delegate the use and operation of any or all of Contractor’s Properties to a 3370 third party.
3371 12.05 DURATION OF CITY’S RIGHT TO POSSESSION AND USE OF 3372 VEHICLES/EQUIPMENT
3373 City may retain possession of Contractor’s Properties and provide Collection services 3374 until the Contractor demonstrates to City’s satisfaction that it is ready, willing and able to 3375 resume providing such services, or ninety (90) Days from the notice given under Section 3376 12.03, whichever occurs first.
3377 City has no obligation to exercise its rights under this Article or, having done so, to 3378 continue to provide Collection services. It may at any time, in its sole discretion, 3379 relinquish possession of Contractor’s Properties to Contractor. 3380 Contractor’s Properties shall be returned to Contractor in a condition substantially the 3381 same as that which existed at the time the City took possession of them, ordinary wear 3382 and tear excepted.
3383 12.06 GENERAL
3384 The City’s exercise of its rights under this Article, (i) does not constitute taking or 3385 damaging of property for which compensation (other than as provided in this Article) 3386 must be paid, (ii) does not exempt Contractor from its indemnity obligations under Article 3387 13, which are meant to extend to circumstances arising under this Article, provided that 3388 Contractor is not required to indemnify City against claims arising from the sole 3389 negligence or intentional misconduct of City’s employees or agents in the operation and 3390 use of Contractor’s Properties during the time the City has sole possession of them. 3391 The City’s rights under this Article do not preclude its permanent acquisition of 3392 Contractor’s vehicles and equipment used in providing service to City through the 3393 exercise of eminent domain.
3394 Subject to the second paragraph of Section 12.04, the City’s exercise of rights under 3395 this Article does not limit its ability to seek any of the remedies available to it under 3396 Article 14.
3397

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3398 ARTICLE 13 INDEMNITY, INSURANCE, BOND, GUARANTY
3399 13.01 INDEMNIFICATION
3400 Contractor shall indemnify, defend and hold harmless City, its officers, employees and 3401 agents (collectively, the “Indemnitees”), from and against (i) any and all liability, penalty, 3402 claim, demand, action, proceeding or suit, of any and every kind and description, 3403 whether judicial, quasi-judicial or administrative in nature, (ii) any and all loss including, 3404 but not limited to, injury to and death of any person and damage to property, and (iii) 3405 contribution or indemnity demanded by third parties (collectively, the “Claims”), arising 3406 out of or occasioned in any way by, directly or indirectly, Contractor’s performance of, or 3407 its failure to perform, its obligations under this Agreement. The foregoing indemnity 3408 shall not apply to the extent that a Claim is caused solely by the active negligence or 3409 intentional misconduct of the Indemnitees, but shall apply if the Claim is caused by the 3410 joint negligence of Contractor and other Persons, including an Indemnitee. Upon the 3411 occurrence of any Claim, Contractor shall defend (with attorneys reasonably acceptable 3412 to City) the Indemnitees. Contractor’s duty to defend and indemnify shall survive the 3413 expiration or earlier termination of this Agreement. 3414 13.02 INSURANCE
3415
3416 A. Types and Amounts of Coverage. Contractor shall procure from an insurance 3417 company or companies admitted to do business in the State of California, and shall 3418 maintain in force at all times during the Term, the following types and amounts of 3419 insurance:
3420 1. Workers’ Compensation and Employer’s Liability. Contractor shall maintain 3421 workers’ compensation insurance covering its employees in statutory amounts 3422 and otherwise in compliance with the laws of the State of California. Contractor 3423 shall maintain employer’s liability insurance in an amount not less than one 3424 million dollars ($1,000,000) per accident or disease. Contractor shall not be 3425 obligated to carry workers compensation insurance if (i) it qualifies under 3426 California law and continuously complies with all statutory obligations to self3427 insure against such risks; (ii) furnishes a certificate of Permission to Self Insure 3428 issued by the Department of Industrial Relations; and (iii) furnishes updated 3429 certificates of Permission to Self Insure periodically to evidence continuous self 3430 insurance.
3431 2. Commercial General Liability. Contractor shall maintain commercial general 3432 liability insurance with a combined single limit of not less than ten million dollars 3433 ($10,000,000) per occurrence covering all claims and all legal liability for 3434 personal injury, bodily injury, death, and property damage, including the loss of 3435 use thereof, arising out of, or occasioned in any way by, directly or indirectly, 3436 Contractor’s performance of, or its failure to perform, services under this 3437 Agreement.
3438 The insurance required by this subsection shall include:
3439 (i) Premises Operations (including use of owned and non-owned 3440 equipment);
3441 (ii) Personal Injury Liability with employment exclusion deleted;

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3442 (iii) Broad Form Blanket Contractual with no exclusions for bodily injury, 3443 personal injury or property damage (including coverage for the 3444 indemnity obligations contained herein).
3445 The commercial general liability insurance shall be written on an “occurrence” 3446 basis (rather than a “claims made” basis) in a form at least as broad as the most 3447 current version of the Insurance Service Office commercial general liability 3448 occurrence policy form (CG0001). If occurrence coverage is not obtainable, 3449 Contractor must arrange for “tail coverage” on a claims made policy to protect 3450 City from claims filed within four (4) years after the expiration or earlier 3451 termination of this Agreement relating to incidents that occurred prior to such 3452 expiration or termination.
3453 3. Automobile Liability. Contractor shall maintain automobile liability insurance 3454 covering all vehicles, including Owned, Non-Owned, and Hired Motor Vehicles, 3455 used in performing service under this Agreement with a combined single limit of 3456 not less than ten million dollars ($10,000,000) per occurrence for bodily injury 3457 and property damage.
3458 4. Pollution (Environmental Impairment) Liability. Contractor shall maintain 3459 pollution liability insurance coverage of not less than ten million dollars 3460 ($10,000,000) per occurrence covering claims for on-site or off-site bodily injury 3461 and property damage as a result of pollution conditions arising out of its 3462 operations under this Agreement.
3463 B. Acceptability of Insurers. The insurance policies required by this section shall be 3464 issued by an insurance company or companies admitted to do business in the State 3465 of California, subject to the jurisdiction of the California Insurance Commissioner, 3466 and with a rating in the most recent edition of Best’s Insurance Reports of size 3467 category XV or larger and a rating classification of A+ or better. 3468 C. Required Endorsements. Without limiting the generality of Sections 13.02.A and 3469 B, the policies shall contain endorsements in substantially the following form:
3470 1. Workers’ Compensation and Employers’ Liability Policy. 3471 (a) “Insurer waives all right of subrogation against the City of Pacifica and its 3472 officers and employees for injuries or illnesses arising from work performed 3473 for the City of Pacifica.”
3474 2. Commercial General Liability Policy; Automobile Liability Policy; and Pollution 3475 Liability Policy:
3476 (a) “Thirty (30) Days prior written notice shall be given to the City of Pacifica in 3477 the event of cancellation, reduction of coverage, or non-renewal of this 3478 policy.” Such notice shall be sent to:
3479
3480
3481
3482 Attention:
3483 (b) “The City of Pacifica, its officers, employees, and agents are additional 3484 insureds on this policy.”

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3485 (c) “This policy shall be considered primary insurance as respects any other 3486 valid and collectible insurance maintained by the City of Pacifica, including 3487 any self-insured retention or program of self-insurance, and any other such 3488 insurance shall be considered excess insurance only.” 3489 (d) “Inclusion of the City of Pacifica as an insured shall not affect the City of 3490 Pacifica’s rights as respects any claim, demand, suit or judgment brought or 3491 recovered against the Contractor. This policy shall protect Contractor and 3492 the City of Pacifica in the same manner as though a separate policy had 3493 been issued to each, but this shall not operate to increase the company’s 3494 liability as set forth in the policy beyond the amount shown or to which the 3495 company would have been liable if only one party had been named as an 3496 insured.”
3497 D. Deductibles and Self-Insured Retentions. The liability policies described in 3498 Sections 13.02.A(2) and (3) may contain a deductible or self-insured retention not 3499 to exceed $500,000 per occurrence. This amount may not be increased without 3500 City’s prior written consent.
3501 Contractor remains responsible for the payment of all losses and investigation, 3502 claim administration and defense expenses, including those of the City. 3503 E. Delivery of Proof of Coverage. Contractor shall furnish City upon request with 3504 one or more certificates of insurance on a standard ACORD form substantiating 3505 that each of the coverages required hereunder is in force, in form and substance 3506 satisfactory to City. Such certificates shall show the type and amount of coverage, 3507 effective dates and dates of expiration of policies and shall be accompanied by all 3508 required endorsements. If City requests, copies of each policy, together with all 3509 endorsements, shall also be promptly delivered to City. Contractor shall furnish 3510 renewal certificates to City to demonstrate maintenance of the required coverages 3511 throughout the Term.
3512 F. Other Insurance Requirements
3513 1. In the event performance of any services is delegated to a Subcontractor, 3514 Contractor shall require such subcontractor to provide statutory workers’ 3515 compensation insurance and employer’s liability insurance for all of the 3516 Subcontractor’s employees engaged in the work. The liability insurance 3517 required by subsection A.2 and the automobile liability policy required by 3518 subsection A.3 shall cover Contractor for work performed by all Subcontractors 3519 in connection with this Agreement, or the Subcontractor must furnish evidence 3520 of insurance provided by it meeting all of the requirements of this Section 3521 13.02.
3522 2. Contractor shall comply with all requirements of the insurers issuing policies. 3523 The carrying of insurance shall not relieve Contractor from any obligation under 3524 this Agreement, including those imposed by Section 13.01. If any claim is 3525 made by any third Person against Contractor or any Subcontractor on account 3526 of any occurrence related to this Agreement, other than claims by employees 3527 for work-related incidents, Contractor shall promptly report the facts in writing 3528 to the insurance carrier and to the City.
3529 3. If Contractor fails to procure and maintain any insurance required by this 3530 Agreement, City may take out and maintain such insurance as it may deem 3531 proper and may require Contractor to reimburse it for the cost incurred within

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3532 thirty (30) Days and/or deduct the cost from any monies due Contractor. City 3533 may also treat the failure as a Contractor Default pursuant to Section 14.01 3534 subject to the notice and cure provisions of that section. 3535 4. City is not responsible for payment of premiums for or deductibles under any 3536 required insurance coverages.
3537 5. Any excess or umbrella policies shall be written on a “following form” basis. 3538 6. Contractor shall provide City with thirty (30) Days prior written notice in the 3539 event of cancellation, reduction of coverage, or non-renewal of the 3540 aforementioned workers’ compensation and employers’ liability policy. Such 3541 notice shall be sent to the address set forth in subsection 13.02.C.2(a) above. 3542 13.03 FAITHFUL PERFORMANCE BOND
3543 On or before the Effective Date, Contractor shall file with City a bond securing the 3544 Contractor’s faithful performance of its obligations under this Agreement. The principal 3545 sum of the bond shall be no less than $500,000. The form of the bond shall be as set 3546 out in Attachment F. The bond shall be executed as surety by a corporation admitted to 3547 issue surety bonds in the State of California, regulated by the California Insurance 3548 Commissioner, and with a financial condition and record of service satisfactory to City. 3549 City shall have the right to draw on the performance bond only following the occurrence 3550 and during the continuation of a Contractor Default, and then only in an amount 3551 necessary to reimburse City for its reasonable costs and expenses of remedying such 3552 Contractor Default.
3553 The term of the bond shall be twenty-four (24) months. The bond shall be extended, or 3554 replaced by a new bond in the same principal sum (adjusted by the percentage change 3555 in the Consumer Price Index), for the same Term (i.e., twenty-four (24) months) and in 3556 the same form, bi-annually thereafter. Not less than ninety (90) Days before the 3557 expiration of the initial, or any subsequent, bond, Contractor shall furnish either a 3558 replacement bond or a continuation certificate substantially in the form attached as 3559 Attachment F, executed by the surety. It is the intention of this section that there be in 3560 full force and effect at all times a bond securing the Contractor’s faithful performance of 3561 the Agreement, throughout its Term.
3562 13.04 ALTERNATIVE SECURITY
3563 City may, in its sole discretion, allow Contractor to provide alternative security in the 3564 amount set forth in Section 13.03, in the form of (a) a prepaid irrevocable standby letter 3565 of credit in form and substance satisfactory to City, approved by the City's Attorney and 3566 issued by a financial institution acceptable to City, or (b) a certificate of deposit in the 3567 name of the City and in a form and with a Term satisfactory to City, accompanied by an 3568 agreement satisfactory to City and with a financial institution acceptable to City giving 3569 City the right to draw on the funds deposited. Interest on the certificate of deposit will be 3570 payable to Contractor. City shall have the right to draw on any such alternative security 3571 only following the occurrence and during the continuation of a Contractor Default, and 3572 then only in an amount necessary to reimburse City for its reasonable costs and 3573 expenses of remedying such Contractor Default.
3574 13.05 HAZARDOUS WASTE INDEMNIFICATION
3575 Contractor shall indemnify, defend and hold harmless the Indemnitees against all 3576 claims, of any kind whatsoever paid, incurred or suffered by, or asserted against

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3577 Indemnitees arising from or attributable to any repair, cleanup or detoxification, or 3578 preparation and implementation of any removal, remedial, response, closure or other 3579 plan (regardless of whether undertaken due to governmental action) concerning any 3580 Hazardous Wastes released, spilled or disposed of by Contractor pursuant to this 3581 Agreement. The foregoing indemnity is intended to operate as an agreement pursuant 3582 to Section 107(e) of the Comprehensive Environmental Response, Compensation and 3583 Liability Act, (“CERCLA”), 42 U.S.C. Section 9607(e), and California Health and Safety 3584 Code Section 25364, to defend, protect, hold harmless and indemnify Indemnitees from 3585 liability and shall survive the expiration or earlier termination of this Agreement. 3586 Notwithstanding the foregoing, Contractor is not required to indemnify the Indemnitees 3587 against claims arising from Contractor's delivery of Solid Waste, Recyclable Materials 3588 and Organic Materials to any of the Designated Facilities, or their subsequent delivery to 3589 other locations, unless such claims are due to Contractor's negligence or willful 3590 misconduct.
3591 13.06 CALIFORNIA INTEGRATED WASTE MANAGEMENT ACT INDEMNIFICATION 3592 Contractor agrees to indemnify and hold harmless the Indemnitees against all fines 3593 and/or penalties imposed by the California Integrated Waste Management Board 3594 (CIWMB) or the Local Enforcement Agency (LEA) to the extent of (and in proportion to) 3595 Contractor’s failure to comply with laws, regulations or permits issued or enforced by the 3596 CIWMB or the LEA, or Contractor’s failure to perform its obligations under this 3597 Agreement. This indemnity obligation is subject to the limitations and conditions in 3598 Public Resource Code Section 40059.1 but is enforceable to the maximum extent 3599 allowable by that Section. This indemnity shall survive the termination or earlier 3600 expiration of this Agreement.
3601 13.07 GUARANTY
3602 Concurrently with execution of this Agreement, Contractor shall furnish a Guaranty of its 3603 performance under this Agreement, in the form of Attachment G, properly executed by 3604 Recology Inc., a California corporation which owns all of the issued and outstanding 3605 common stock of Contractor.

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3606 ARTICLE 14 DEFAULT AND REMEDIES
3607 14.01 EVENTS OF DEFAULT
3608 Each of the following shall constitute an event of default (“Contractor Default”):
3609 A. Contractor fails to perform its obligations under any Article of this Agreement and 3610 its failure to perform is not cured within ten (10) Days after written notice from City, 3611 provided that if the nature of the failure is such that it will reasonably require more 3612 than ten (10) Days to cure, Contractor shall not be in default so long as it promptly 3613 commences the cure and diligently proceeds to completion of the cure, and 3614 provided further that neither notice nor opportunity to cure applies to events 3615 described in subsections B through G.
3616 B. Contractor ceases to provide Collection and transportation services to all or 3617 substantially all Customers for a period of two (2) Business Days for any reason 3618 within the Contractor's control, including labor unrest such as strike, work stoppage 3619 or slowdown, sickout, picketing, or other concerted job action by Contractor's 3620 employees.
3621 C. Contractor files a voluntary petition for relief under any bankruptcy, insolvency or 3622 similar law.
3623 D. An involuntary petition is brought against Contractor under any bankruptcy, 3624 insolvency or similar law which remains un-dismissed or un-stayed for ninety (90) 3625 Days.
3626 E. Contractor fails to furnish a replacement bond or a continuation certificate of the 3627 existing bond not less than ten (10) Days before expiration of the performance 3628 bond, as required by Section 13.03, or Contractor’s actions or omissions result in 3629 failure to maintain all required insurance coverage in force. 3630 F. Contractor fails to provide reasonable assurance of performance when required 3631 under Section 14.10.
3632 G. A representation or warranty contained in Article 2 proves to be false or misleading 3633 in a material respect as of the date such representation or warranty was made. 3634 H. Any Contractor Party is found guilty of Criminal Activity related directly or indirectly 3635 to performance of this Agreement or any other agreement held with the City. If City 3636 intends to terminate this Agreement by reason of a default under this Section 3637 14.01.H, then before such termination takes effect, Contractor shall be entitled to 3638 meet with the City Manager and present evidence regarding the steps Contractor 3639 has taken to minimize the adverse effect on City of such Criminal Activity. 3640 For the purposes of this Section 14.01.H, “Contractor Party(ies)” shall mean 3641 Contractor, its officers, directors, or management or fiscal employees, where 3642 “management employee” means any employee with direct or indirect responsibility 3643 for direction and control over the Contractor’s activities, and “fiscal employee” 3644 means an employee with direct or indirect responsibility and control duties relating 3645 to financial matters.
3646 For purpose of this Section 14.01.H, “Criminal Activity” shall mean any of the 3647 following events or circumstances: (i) the entry against any Contractor Party of a 3648 criminal conviction or a permanent mandatory or prohibitory injunction from a court, 3649 municipality or regulatory agency of competent jurisdiction based on a finding of 3650 wrongful acts taken in his, her or its official capacity on behalf of Contractor that

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3651 constitute: (a) fraud or criminal offense in connection with obtaining, attempting to 3652 obtain, procuring or performing a public or private agreement related to municipal 3653 solid waste services of any kind (including Collection, hauling, transfer, processing, 3654 composting or Disposal), including this Agreement or any amendment thereto; or 3655 (b) bribery or attempting to bribe a public officer or employee of a local, State, or 3656 federal agency; or (c) embezzlement, extortion, racketeering, false claims, false 3657 statements, forgery, falsification or destruction of records, obstruction of justice, 3658 knowingly receiving stolen property, theft, or misprision (failure to disclose) of a 3659 felony; or (d) unlawful disposal of Hazardous Waste or designated waste the 3660 occurrence of which any of Contractor Party knew or should have known; or (e) 3661 violation of antitrust laws, including laws relating to price-fixing, bid-rigging and 3662 sales and market allocation, and of unfair and anti-competitive trade practices laws, 3663 including with respect to inflation of Solid Waste Collection, transportation, 3664 processing fees, or Disposal Fees; or (f) violation of securities laws; or (g) felonies; 3665 or (ii) entry of a plea of “guilty,” “nolo contendere” or “no contest” by a Contractor 3666 Party based on acts taken in his, her or its official capacity on behalf of Contractor 3667 that constitute the conduct described in the preceding clause (i). 3668 14.02 RIGHT TO SUSPEND OR TERMINATE UPON DEFAULT
3669
3670 A. Upon any Contractor Default, City may terminate this Agreement, or suspend it, in 3671 whole for a reasonable period not to exceed thirty (30) days in order to enable the 3672 Parties to determine an appropriate cure for the Contractor Default. Such 3673 suspension or termination shall be effective thirty (30) Days after City has given 3674 notice of suspension or termination to Contractor, except that such notice may be 3675 effective in a shorter period of time, or immediately, if the Contractor Default is one 3676 which endangers the health, welfare or safety of the public, such as the failure to 3677 collect Solid Waste, Recyclable Materials, or Organic Materials for the period of time 3678 specified in Section 14.01.B. Notice may be given orally in person or by telephone 3679 to the representative of Contractor designated in or under Section 15.10 (or, if 3680 he/she is unavailable, to a responsible employee of Contractor) and shall be 3681 effective immediately. Written confirmation of such oral notice of suspension or 3682 termination shall be sent by personal delivery, facsimile, or other expedited means of 3683 delivery to Contractor within twenty-four (24) hours of the oral notification at the 3684 address shown in Section 15.09.
3685 B. City may also suspend or terminate this Agreement, upon the same notice 3686 provisions as above and under the conditions set forth in Section 14.09.D, if 3687 Contractor’s ability to perform is prevented or materially interfered with by a cause 3688 which excuses nonperformance under Section 14.09, despite the fact that 3689 Contractor’s nonperformance in such cases is neither a breach nor a Contractor 3690 Default.
3691 14.03 INJUNCTIVE RELIEF
3692 By virtue of the nature of this Agreement, the urgency of timely, continuous and high3693 quality service, the lead time required to effect alternative service, and the rights granted 3694 by City to Contractor, the remedy of damages for a breach hereof by Contractor may be 3695 inadequate and City shall be entitled to injunctive relief upon an appropriate showing.

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3696 14.04 RIGHT TO PERFORM; USE OF CONTRACTOR PROPERTY 3697 If this Agreement is terminated due to a Contractor Default, City shall have the right to 3698 perform, by contract or otherwise, the work herein or such part thereof as it may deem 3699 necessary. In such event, City shall have the right to use any of Contractor’s Properties 3700 reasonably necessary for the provision of services hereunder, upon the terms provided 3701 in Article 12, and City shall have the right to continue use of such Properties until other 3702 suitable arrangements can be made for the provision of such services, which may 3703 include the award of a contract to another service provider, but in no event longer than 3704 the period provided in Article 12.
3705 14.05 DAMAGES
3706 Contractor shall be liable to City for all direct, indirect, special and consequential 3707 damages arising out of Contractor’s default to the extent permitted under California law. 3708 14.06 CITY’S REMEDIES CUMULATIVE
3709 City’s rights to terminate the Agreement under Section 14.02, to obtain injunctive relief 3710 under Section 14.03 and to perform under Section 14.04 are not exclusive, and City’s 3711 exercise of one such right shall not constitute an election of remedies. Instead, they 3712 shall be in addition to any and all other legal and equitable rights and remedies that City 3713 may have, including a legal action for damages under Section 14.05 or imposition of 3714 Liquidated Damages under Section 14.07.
3715 14.07 LIQUIDATED DAMAGES
3716 The Parties acknowledge that consistent, courteous and efficient Collection of Solid 3717 Waste, Targeted Recyclable Materials and Organic Materials is of utmost importance 3718 and City has considered and relied on Contractor’s representations as to its quality of 3719 service commitment in entering into this Agreement. The Parties further recognize that 3720 quantified standards of performance are necessary and appropriate to ensure 3721 consistent and reliable service. The Parties further recognize that if Contractor fails to 3722 achieve the performance standards, City and its residents will suffer damages and that it 3723 is and will be impracticable and extremely difficult to ascertain and determine the exact 3724 amount of damages that City will suffer. Therefore, the Parties agree that the 3725 Liquidated Damage amounts listed on Attachment J represent a reasonable estimate of 3726 the amount of such damages considering all of the circumstances existing on the date 3727 of this Agreement, including the relationship of the sums to the range of harm to City 3728 that reasonably could be anticipated and recognition that proof of actual damages would 3729 be costly or inconvenient. By initialing the places provided, each party specifically 3730 confirms the accuracy of the statements made above and the fact that each party had 3731 ample opportunity to consult with legal counsel and obtain an explanation of this 3732 Liquidated Damage provision at the time that this Agreement was made. 3733 Contractor Initial Here: ______ City Initial Here: _____ 3734 Contractor agrees to pay (as Liquidated Damages and not as a penalty) the amounts 3735 set forth in Attachment J.
3736 In addition to considering the reports submitted by Contractor pursuant to Article 9, City 3737 may determine the occurrence of incidents giving rise to Liquidated Damages through 3738 the observation of its own employees or agents, through discussions with Customers, 3739 and through investigation of Customer Complaints made directly to City.

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3740 In order for an incident to be used as the basis for the assessment of Liquidated 3741 Damages, or to be used as an incident preceding an incident that is the basis for the 3742 assessment of Liquidated Damages, City shall provide Contractor written notice of the 3743 incident no more than fifteen (15) months after the occurrence of the incident(s) thereby 3744 allowing the City to identify occurrences through an annual or periodic review process 3745 with the exception of non-performance incidents related to failure to notify the 3746 appropriate authorities of reportable quantities of Hazardous Waste; late or incomplete 3747 report submittals, webpage information, and public educations tasks for which City shall 3748 provide Contractor written notice of the incident(s) within ten (10) Business Days after 3749 learning of its occurrence.
3750 Prior to assessing Liquidated Damages, City shall give Contractor notice of its intention 3751 to do so. The notice will include a brief description of the incidents giving rise to the 3752 assessment of Liquidated Damages. Contractor may review (and make copies of, at its 3753 own expense) all non-confidential information in the possession of City relating to such 3754 incidents.
3755 Contractor may, within ten (10) Days after receiving the notice, request a meeting with 3756 the City Manager or his or her designee. Contractor may present evidence in writing 3757 and through testimony of its employees and others relevant to the incident(s)/non3758 performance. City Manager or his or her designee will provide Contractor with a written 3759 explanation of his or her determination on each incident(s)/non-performance prior to 3760 authorizing the assessment of Liquidated Damages. The decision of the City Manager 3761 or his or her designee shall be final, subject to any judicial review permitted by law. 3762 The City’s right to recover Liquidated Damages for Contractor’s failure to meet the 3763 service performance standards shall not preclude the City from obtaining equitable relief 3764 for persistent failures to meet such standards nor from terminating the Agreement for 3765 such persistent failures.
3766 Notwithstanding any other provision of this Agreement, Contractor shall not be liable for 3767 Liquidated Damages with respect to any failure to perform caused by labor unrest of 3768 Contractor’s employees (including strike, work stoppage, slowdown, sick out, picketing, 3769 or other concerted job action).
3770 14.08 CITY DEFAULT
3771 City shall be in default under this Agreement (a “City Default”) in the event City commits 3772 a material breach of the Agreement and fails to cure such breach within thirty (30) Days 3773 after receiving notice from the Contractor specifying the breach, provided that if the 3774 nature of the breach is such that it will reasonably require more than thirty (30) Days to 3775 cure, City shall not be in default so long as City promptly commences the cure and 3776 diligently proceeds to completion of the cure. In the event of an asserted City Default, 3777 Contractor shall continue to perform all of its obligations hereunder until a court of 3778 competent jurisdiction has issued a final judgment declaring that City is in default. 3779 14.09 EXCUSE FROM PERFORMANCE
3780 A. Force Majeure. Neither Party shall be in breach or default of its obligations under 3781 this Agreement, or liable for Liquidated Damages hereunder, in the event, and for 3782 so long as, it is impossible or extremely impracticable for it to perform its obligations 3783 due to an “act of God” (including, but not limited to, flood, earthquake or other 3784 catastrophic events), war, insurrection, riot, labor unrest of other than the Party’s 3785 employees (including strike, work stoppage, slowdown, sick out, picketing, or other 3786 concerted job action), or other similar cause not the fault of, and beyond the

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3787 reasonable control of, the Party claiming excuse (any such event or cause, an 3788 “event of Force Majeure”). A Party claiming excuse under this Section must (i) 3789 have taken reasonable precautions, if possible, to avoid being affected by the 3790 cause, and (ii) notify the other party in writing as provided in Subsection C. 3791 B. Obligation to Restore Ability to Perform. Any suspension of performance by a 3792 Party pursuant to this Section shall be only to the extent, and for a period of no 3793 longer duration than, required by the nature of the event, and the Party claiming 3794 excuse shall use its best efforts to remedy its inability to perform as quickly as 3795 possible and to mitigate damages that may occur as result of the event. 3796 C. Notice. The Party claiming excuse shall deliver to the other Party a written notice 3797 of intent to claim excuse from performance under this Agreement by reason of an 3798 event of Force Majeure. Notice required by this Section shall be given promptly in 3799 light of the circumstances, but in any event not later than five (5) Days after the 3800 occurrence of the event of Force Majeure (or, if later, five (5) Days from the time 3801 that such event first caused the notifying Party to become unable to perform). Such 3802 notice shall describe in detail the event of Force Majeure claimed, the services 3803 impacted by the claimed event of Force Majeure, the expected length of time that 3804 the party expects to be prevented from performing, the steps which the party 3805 intends to take to restore its ability to perform, and such other information as the 3806 other party reasonably requests.
3807 D. City's Rights in the Event of Force Majeure. The partial or complete interruption 3808 or discontinuance of Contractor’s services caused by an event of Force Majeure 3809 shall not constitute a Contractor Default. Notwithstanding the foregoing: (i) City 3810 shall have the right to make use of Contractor’s Properties in accordance with 3811 Article 12 in the event of a Failure to Collect excused by an event of Force Majeure; 3812 (ii) if Contractor’s Failure to Collect by reason of an event of Force Majeure 3813 continues for a period of thirty (30) Days or more, City shall have the right to 3814 immediately terminate this Agreement or suspend it in whole for a reasonable 3815 period not to exceed thirty (30) days to determine an appropriate cure or 3816 Contractor’s nonperformance; and (iii) if Contractor’s Failure to Collect continues for 3817 two (2) Days or more from the date by which Contractor gave or should have given 3818 notice under Subsection C, City may terminate this Agreement, or suspend it in 3819 whole for a reasonable period not to exceed thirty (30) days to determine an 3820 appropriate cure or Contractor’s nonperformance.
3821 14.10 ASSURANCE OF PERFORMANCE
3822 If Contractor (i) persistently suffers the imposition of Liquidated Damages under Section 3823 14.07; (ii) is the subject of any labor unrest including work stoppage or slowdown, 3824 sickout, picketing or other concerted job action; (iii) appears in the reasonable judgment 3825 of City to be unable to regularly pay its bills as they become due; (iv) is the subject of a 3826 civil or criminal proceeding brought by a federal, State, regional or local agency for 3827 violation of an Environmental Law in the performance of this Agreement, or (v) performs 3828 in a manner that causes City to be uncertain about Contractor's ability and intention to 3829 comply with this Agreement, City may, at its option and in addition to all other remedies 3830 it may have, demand from Contractor reasonable assurances of timely and proper 3831 performance of this Agreement, in such form and substance as City may require.

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3832 ARTICLE 15 OTHER AGREEMENTS OF THE PARTIES
3833 15.01 RELATIONSHIP OF PARTIES
3834 The Parties intend that Contractor shall perform the services required by this Agreement 3835 as an independent contractor engaged by City and not as an officer or employee of City 3836 nor as a partner of or joint venturer with City. No employee or agent of Contractor shall 3837 be deemed to be an employee or agent of City. Except as expressly provided herein, 3838 Contractor shall have the exclusive control over the manner and means of conducting 3839 the services performed under this Agreement, and over all Persons performing such 3840 services. Contractor shall be solely responsible for the acts and omissions of its 3841 officers, employees, Subcontractors and agents. Neither Contractor nor its officers, 3842 employees, Subcontractors and agents shall obtain any rights to retirement benefits, 3843 workers’ compensation benefits, or any other benefits which accrue to City employees 3844 by virtue of their employment with City.
3845 15.02 COMPLIANCE WITH LAW
3846 In providing the services required under this Agreement, Contractor shall at all times 3847 comply with all applicable laws of the United States, the State and City, with all 3848 applicable regulations promulgated by federal, State, regional or local administrative and 3849 regulatory agencies, and by City, now in force and as they may be enacted, issued or 3850 amended during the Term, and with all permits affecting the services to be provided. 3851 15.03 ASSIGNMENT
3852 Contractor acknowledges that this Agreement involves rendering a vital service to City’s 3853 residents and businesses, and that City has selected Contractor to perform the services 3854 specified herein based on (i) Contractor’s experience, skill and reputation for conducting 3855 its operations in a safe, effective and responsible fashion, and (ii) Contractor’s and the 3856 Guarantor’s financial resources to maintain the required equipment and to support its 3857 indemnity obligations to City under this Agreement. City has relied on each of these 3858 factors, among others, in choosing Contractor to perform the services to be rendered by 3859 Contractor under this Agreement.
3860 A. City Consent Required. Contractor shall not assign its rights or delegate or 3861 otherwise transfer its obligations under this Agreement to any other Person without 3862 the prior written consent of City. Any assignment made in violation of this Section 3863 15.03.A shall be void and the attempted assignment shall constitute a Contractor 3864 Default.
3865 B. Assignment Defined. For the purpose of this Section, “assignment” shall include, 3866 but not be limited to, (i) a sale, exchange or other transfer to a third party of 3867 substantially all of Contractor’s assets dedicated to service under this Agreement; 3868 (ii) a sale, exchange or other transfer of outstanding common stock of Contractor to 3869 a Person who is not a shareholder as of the Effective Date which results in a 3870 change of ownership or control of Contractor; (iii) any dissolution, reorganization, 3871 consolidation, merger, re-capitalization, stock issuance or reissuance, voting trust, 3872 pooling agreement, escrow arrangement, liquidation or other transaction which 3873 results in a change of ownership or control of Contractor; (iv) any assignment by 3874 operation of law, including insolvency or bankruptcy, an assignment for the benefit 3875 of creditors, a writ of attachment for an execution being levied against this 3876 Agreement, appointment of a receiver taking possession of Contractor’s property,

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3877 or transfer occurring in the event of a probate proceeding; and (v) any combination 3878 of the foregoing (whether or not in related or contemporaneous transactions) which 3879 has the effect of any such transfer or change of ownership, or change of control of 3880 Contractor.
3881 C. Consent Requirements. If Contractor requests City’s consideration of and 3882 consent to an assignment, City may deny or approve such request in its complete 3883 discretion. No request by Contractor for consent to an assignment need be 3884 considered by City unless and until Contractor has met the following requirements:
3885 1. Contractor shall pay City its reasonable expenses for attorneys’ fees and 3886 investigation costs necessary to investigate the suitability of any proposed 3887 assignee, and to review and finalize any documentation required as a condition 3888 for approving any such assignment;
3889 2. Contractor shall furnish City with audited financial statements of the proposed 3890 assignee’s operations for the immediately preceding three (3) operating years; 3891 3. Contractor shall furnish City with satisfactory proof: (i) that the proposed 3892 assignee has at least ten (10) years of Solid Waste/Recycling management 3893 experience on a scale equal to or exceeding the scale of operations conducted 3894 by Contractor under this Agreement; (ii) that in the last five (5) years, the 3895 proposed assignee has not been the subject of any administrative or judicial 3896 proceedings initiated by a federal, State or local agency having jurisdiction over 3897 its operations due to an alleged failure to comply with federal, State or local laws 3898 or that the proposed assignee has provided City with a complete list of such 3899 proceedings and their status; (iii) that the proposed assignee conducts its 3900 operations in a safe and environmentally conscientious manner, in accordance 3901 with sound Solid Waste management practices in full compliance with all federal, 3902 State and local laws regulating the Collection and Disposal of Solid Waste and 3903 all Environmental Laws; (iv) of any other information required by City to ensure 3904 the proposed assignee can fulfill the terms of this Agreement in a timely, safe 3905 and effective manner.
3906 D. No Obligation to Consider. City will not be obligated to consider a proposed 3907 assignment if Contractor is in default.
3908 E. Consideration Fee. In the event an assignment as defined in this Section 15.03 is 3909 requested by Contractor and consented to by the City, Contractor agrees to pay an 3910 assignment fee in the amount of One Hundred Thousand dollars ($100,000) to the 3911 City. Said assignment fee shall be due and payable on the date the City consents 3912 in writing to the assignment. The assignment fee shall be in addition to the 3913 Contractor’s payment of the City’s expenses to investigate the assignment in 3914 subsection C.1. Notwithstanding the foregoing, Contractor shall not be required to 3915 pay an assignment fee if the assignment is to an Affiliate of Contractor. 3916 15.04 SUBCONTRACTING
3917 Contractor shall not engage any Subcontractors to perform any of the services required 3918 of it by Articles 5 or 6 of this Agreement without the prior written consent of City. 3919 Contractor shall notify City no later than ninety (90) Days prior to the date on which it 3920 proposes to enter into a subcontract. City may approve or deny any such request at its 3921 sole discretion.

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3922 15.05 TRANSACTIONS WITH AFFILIATES
3923 If Contractor enters into any financial transactions with any Affiliate (other than 3924 Permitted Related Party Transactions) for the provision of labor, equipment, supplies, 3925 services, or capital related to the furnishing of services under this Agreement, that 3926 relationship shall be disclosed to and approved by the City, and in the financial reports 3927 submitted to City
3928 Contractor will not form or use any Affiliate to perform any of the services or activities 3929 which Contractor is required or allowed to perform under this Agreement, other than as 3930 a Subcontractor approved by the City pursuant to Section 15.04. 3931 City approves the following transactions (each, a “Permitted Related Party Transaction”) 3932 between Contractor and an Affiliate of Contractor:
3933 (i) processing of Compostable Materials by Recology Pacheco Pass (d/b/a/ South 3934 Valley Organics), at the rate set forth in Section 1.7 of Attachment K; 3935 (ii) transfer and transport of Solid Waste, Recyclable Materials and Compostable 3936 Materials by Recology San Bruno, utilizing the San Bruno Transfer Station, at the 3937 rates set forth in Sections 1.9, 1.10, 1.11 and 1.12 of Attachment K; 3938 (iii) leasing of vehicles and equipment by Recology Leasing Inc. to Contractor, at 3939 the rate and on the terms set forth in Section 2.12 of Attachment K; 3940 (iv) leasing of real property and improvements located at 2305 Palmetto by 3941 Recology Properties Inc. to Contractor, at the rate set forth in Section 2.12 of 3942 Attachment K;
3943 (v) provision of management, financial and administrative services by Recology Inc. 3944 to Contractor, at a rate equal to five and seven tenths percent (5.7%) of allowable 3945 costs entitled to profit (e.g., all costs included in the Total Annual Costs of 3946 Operations as defined in Attachment K less the costs of Recology, Inc. as defined 3947 in Section 4.2.2.r of Attachment K); and
3948 (vi) Disposal of Solid Waste at the Hay Road Landfill owned and operated by 3949 Recology Hay Road, provided that (A) the tipping fee payable by Contractor at such 3950 landfill complies with Section 1.8 of Attachment K, and (B) Contractor’s agreement 3951 with Recology Hay Road includes substantially the language set forth in Section 3952 6.06.A, or similar language satisfactory to City.
3953 15.06 RESERVED
3954 15.07 NO WARRANTY BY CITY
3955 While City believes that the information that City has provided to Contractor in 3956 connection with Contractor’s investigation of the conditions and circumstances 3957 surrounding the Agreement and the work to be performed by it is substantially correct, 3958 City makes no warranties in connection with this Agreement, including but not limited to 3959 the accuracy or completeness of such information.
3960 15.08 CONDEMNATION
3961 City reserves the rights to acquire the Contractor’s property utilized in the performance 3962 of this Agreement through the exercise of eminent domain.

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3963 15.09 NOTICE
3964 All notices, demands, requests, proposals, approvals, consents and other 3965 communications which this Agreement requires, authorizes or contemplates shall be in 3966 writing and shall be deemed effectively given (i) upon personal delivery to a 3967 representative of the Party to be notified, (ii) when sent by facsimile with written 3968 confirmation of receipt if sent during the normal business hours of the recipient, or if not, 3969 then on the next business day, (iii) five (5) business days after having been sent by 3970 registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) 3971 business day after deposit with a nationally recognized overnight courier, specifying next 3972 day delivery, with written verification of receipt. All such notices shall be sent to the 3973 Party to be notified at the following address or fax number:
3974 If to City:
3975
3976 City Manager
3977 City of Pacifica
3978 170 Santa Maria Avenue
3979 Pacifica, CA 94044
3980 Fax: (650) 359-6038
3981
3982 If to Contractor:
3983
3984 Mr. Mark Arsenault, Group Manager
3985 Recology of the Coast
3986 1351 Pacheco Pass Highway
3987 Gilroy, CA 95020
3988 Fax: (408) 846-1386
3989
3990 The address or fax number to which communications may be delivered may be changed 3991 from time to time by a notice given in accordance with this Section. 3992 Contact information for Contractor’s General Manager is as follows:
3993 General Manager
3994 Recology of the Coast
3995 2305 Palmetto Avenue
3996 Pacifica, CA 94044
3997
3998 Contact information for Contractor’s Environmental Technician is as follows:
3999 Mr. Christopher Gibson, Environmental Technician
4000 Recology of the Coast
4001 2305 Palmetto Avenue
4002 Pacifica, CA 94044
4003
4004 Contractor shall promptly provide City the name and contact information for the above 4005 employees if there is a change during the Term.
4006 15.10 REPRESENTATIVES OF THE PARTIES.
4007 A. Representatives of City. Contractor may rely upon actions taken by the Mayor or 4008 City Manager as actions of City unless such actions are outside the scope of the

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4009 authority delegated to the City Manager as communicated by City to Contractor 4010 before the taking of the action.
4011 B. Representative of Contractor. City may rely upon action taken by Contractor’s 4012 Group Manager or General Manager as actions of Contractor unless such actions 4013 are outside the scope of the authority delegated to such individuals as 4014 communicated by Contractor to City before the taking of the action. 4015 15.11 DUTY OF CONTRACTOR NOT TO DISCRIMINATE
4016 In the performance of this Agreement Contractor shall not discriminate, nor permit any 4017 subcontractor to discriminate, against any employee, applicant for employment, or 4018 Customer on account of race, color, national origin, ancestry, religion, sex, age, physical 4019 disability, medical condition, sexual orientation, marital status, or other characteristic, in 4020 violation of any Applicable Law.
4021 15.12 RIGHT OF CITY TO MAKE CHANGES IN SERVICES AND SERVICE LEVELS 4022 A. City may, without amending this Agreement, at any time before the last Rate Year 4023 of the Term, direct Contractor to cease performing one or more types of service 4024 described in Articles 5 or 6, may direct Contractor to modify the scope of one or 4025 more such services, may direct Contractor to perform additional Solid Waste, 4026 Targeted Recyclable Materials, Organic Materials or Plant Materials handling 4027 services, or may otherwise direct Contractor to modify its performance under any 4028 other Section of this Agreement. City shall give Contractor at least ninety (90) 4029 Days prior written notice of the proposed change so that the Parties will have 4030 sufficient time to assess the operational and cost implications of the change and 4031 agree on an adjustment (if any) in Contractor’s Compensation. 4032 B. If such change causes an increase or decrease in the cost of performing services, 4033 an equitable adjustment in Contractor’s Compensation shall be made pursuant to 4034 Article 11 and Attachment K. Contractor shall not be required to perform the 4035 changed service unless and until the changed service and related compensation 4036 adjustment (if any) are approved by the City Council, except that under emergency 4037 circumstances, Contractor will begin performing the changed service while the 4038 appropriate adjustment in compensation is being determined. 4039 C. The City shall have the right to terminate a program if, in its discretion, the 4040 Contractor is not cost-effectively achieving the program’s goals and objectives. 4041 Thereafter, the City may utilize a third party to perform such program if the City 4042 reasonably believes the third party can improve on Contractor’s performance and 4043 cost effectiveness. Contractor shall continue the program until the third party 4044 takes over the program. This subsection C applies to programs initiated at City’s 4045 direction after the Commencement Date pursuant to Sections 15.12.A and 4046 15.12.B.
4047 15.13 TRANSITION TO NEXT SERVICE PROVIDER
4048 At the expiration of the Term or the earlier termination of the Agreement, or upon City's 4049 approval of a proposed assignment, Contractor shall cooperate fully with City to ensure 4050 an orderly transition to any and all new service providers. Contractor shall provide, 4051 within ten (10) Days of a written request by City, then-current route lists, which identify 4052 each Customer on the route, its service level (number of Containers, Container sizes, 4053 frequency of Collection, scheduled Collection day), any special Collection notes, and 4054 detailed then-current Customer account and Billing information. Contractor may, but is

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4055 not required to, sell Collection vehicles and containers to the next service provider, 4056 subject to City’s right to purchase Containers set forth in Section 8.05.G. 4057 Contractor shall upon City request, at least one-hundred-eighty (180) Days prior to the 4058 transition of services, attend meetings with the next service provider and with City and 4059 consultants to plan the recovery of Contractor's Containers and placement of the new 4060 Containers. Contractor shall perform in accordance with such plan and direct route 4061 supervisors to provide “ride-alongs” so that the new service provider’s employees may 4062 ride with drivers in Collection vehicles during Collection operations. Contractor will direct 4063 its drivers and other employees to provide accurate information to the new provider 4064 about routing and Customers.
4065 15.14 REPORTS AS PUBLIC RECORDS
4066 Contractor acknowledges that the reports and Rate applications submitted by Contractor 4067 to City pursuant to Sections 9.05, 9.07 and 11.03 are public records within the meaning 4068 of that term in the California Public Records Act, Government Code Section 6250 et 4069 seq. Unless a particular such record is exempted from disclosure by the California 4070 Public Records Act, it must be disclosed to the public by City upon request. 4071 15.15 CONFIDENTIALITY OF CONTRACTOR RECORDS
4072 City agrees to protect the confidentiality of any and all information which is either 4073 (i) contained in any report or communication by Contractor to City that is marked or 4074 otherwise designated as confidential and/or proprietary in nature (it being understood 4075 that the reports and Rate applications pursuant to Sections 9.05, 9.07 and 11.03 will not 4076 be so marked), or (ii) obtained by City or its agents pursuant to Section 9.02.B or the 4077 exercise of any other review or inspection right set forth in this Agreement or otherwise, 4078 unless in each case disclosure is authorized in writing by Contractor or required by law 4079 (subject to compliance with the procedures of the following paragraph). 4080 If City receives a request for disclosure of such information under the California Public 4081 Records Act or other applicable public records disclosure laws, City shall promptly notify 4082 Contractor in writing of such request prior to any disclosure of such information by City, 4083 and Contractor shall respond within ten (10) Business Days of receiving City’s notice 4084 whether the requested information should be disclosed or defended as exempt from 4085 disclosure under such laws. If Contractor requests that the City withhold such 4086 information from disclosure, and the City complies with the request, Contractor shall 4087 assume all responsibility for any challenges resulting from the non-disclosure, indemnify 4088 and hold harmless the City from and against all damages (including but not limited to 4089 legal counsel fees that may be awarded to the party requesting the Contractor 4090 information), and pay any and all costs and expenses related to the withholding of 4091 Contractor information. Contractor shall not make a claim, sue, or maintain any legal 4092 action against the City or its officers, employees, or agents concerning the withholding 4093 from disclosure of Contractor information.
4094 15.16 DISPUTE RESOLUTION
4095 Neither party to this Agreement shall be limited in its choice of remedy with respect to 4096 disputes or claims arising under the Agreement. Notwithstanding such preservation of 4097 remedies, in the event of a dispute or claim arising out of the Agreement, nothing herein 4098 shall prevent the parties from mutually agreeing to alternative means of dispute 4099 resolution, including formal or informal arbitration, mediation or any other means of 4100 resolution.

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4101 ARTICLE 16 MISCELLANEOUS PROVISIONS
4102 16.01 GOVERNING LAW
4103 This Agreement shall be governed by, and construed and enforced in accordance with, 4104 the laws of the State of California.
4105 16.02 JURISDICTION
4106 Any lawsuits between the Parties arising out of this Agreement shall be brought and 4107 concluded in the courts of the State of California, which shall have exclusive jurisdiction 4108 over such lawsuits. With respect to venue, the Parties agree that this Agreement is 4109 made in and will be performed in San Mateo County. 4110 16.03 BINDING ON SUCCESSORS
4111 The provisions of this Agreement shall inure to the benefit of and be binding on the 4112 successors and permitted assigns of the Parties.
4113 16.04 PARTIES IN INTEREST
4114 Nothing in this Agreement is intended to confer any rights on any Persons other than the 4115 Parties to it and their permitted successors and assigns. 4116 16.05 WAIVER
4117 The waiver by either Party of any breach or violation of any provisions of this Agreement 4118 shall not be deemed to be a waiver of any breach or violation of any other provision nor 4119 of any subsequent breach or violation of the same or any other provision. 4120 16.06 ATTACHMENTS
4121 Each of the attachments, identified as Attachments “A” through “P,” is attached hereto 4122 and incorporated herein and made a part hereof by this reference. 4123 16.07 ENTIRE AGREEMENT; RELATIONSHIP TO PRIOR AGREEMENT 4124 This Agreement, including the attachments, represents the full and entire agreement 4125 between the Parties with respect to the matters covered herein and supersedes all prior 4126 negotiations and agreements, either written or oral, including without limitation the Prior 4127 Agreement and the Original Agreement.
4128 16.08 SECTION HEADINGS
4129 The article headings and section headings in this Agreement are for convenience of 4130 reference only and are not intended to be used in the construction of this Agreement nor 4131 to alter or affect any of its provisions.
4132 16.09 INTERPRETATION
4133 This Agreement shall be interpreted and construed reasonably and neither for nor 4134 against either Party, regardless of the degree to which either Party participated in its 4135 drafting.
4136 16.10 AMENDMENT
4137 This Agreement may not be modified or amended in any respect except by a writing 4138 signed by the Parties.

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4139 16.11 SEVERABILITY
4140 If a court of competent jurisdiction holds any non-material provision of this Agreement to 4141 be invalid and unenforceable, the invalidity or unenforceability of such provision shall not 4142 affect any of the remaining provisions of this Agreement which shall be enforced as if 4143 such invalid or unenforceable provision had not been contained herein. 4144 16.12 COSTS AND ATTORNEYS’ FEES
4145 The prevailing Party in any action brought to enforce the terms of this Agreement or 4146 arising out of this Agreement may recover its reasonable costs expended in connection 4147 with such an action from the other Party. However, each Party shall bear its own 4148 attorneys’ fees.
4149 16.13 NO DAMAGES FOR INVALIDATION OF AGREEMENT
4150 If a final judgment of a court of competent jurisdiction determines that this Agreement is 4151 illegal or was unlawfully entered into by City, neither party shall have any claim against 4152 the other for damages of any kind (including but not limited to loss of profits) on any 4153 theory.
4154 16.14 REFERENCES TO LAWS
4155 All references in this Agreement to laws and regulations shall be understood to include 4156 such laws and regulations as they may be subsequently amended or recodified, unless 4157 otherwise specifically provided. In addition, references to specific governmental 4158 agencies shall be understood to include agencies that succeed to or assume the 4159 functions they are currently performing.
4160 16.15 INDEMNITY AGAINST CHALLENGES TO AGREEMENT
4161 Contractor shall indemnify, defend and hold harmless the Indemnitees from and against 4162 any and all liability, claim, demand, action, proceeding or suit of any and every kind and 4163 description brought by a third party challenging the process by which this Agreement 4164 was assigned or negotiated, to the extent that such liability, claim, demand, action, 4165 proceeding or suit was caused by Contractor’s failure to comply with applicable law or 4166 the instructions of any Indemnitee with respect to such process. 4167

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4169
4170 IN WITNESS WHEREOF, City and Contractor have executed this Agreement as of the day and 4171 year first above written.
4172
4173
4174 CITY OF PACIFICA RECOLOGY OF THE COAST
4175 By: ____________________________ By: __________________________ 4176 Name: Name: Michael J. Sangiacomo
4177 Title: Title: President and CEO
4178 ATTEST: _______________________ By: __________________________ 4179 Name: Roxanne L. Frye
4180 Title: Corporate Secretary
4181 APPROVED AS TO FORM:
4182 _________________________________
4183
4184

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SECOND AMENDMENT TO FRANCHISE AGREEMENT
This SECOND AMENDMENT to the Franchise Agreement (“Second Amendment”) hereinafter referenced is entered into and effective as of October 10, 2022 between the City of Pacifica, a California municipal corporation (“City”), and Recology of the Coast, a California corporation (“Contractor”). City and Contractor may be referred to individually or collectively referred to as “parties.”
WHEREAS, in February, 2010, the City and Contractor entered into a Franchise Agreement Between the City of Pacifica and Recology of the Coast for Recyclable Materials, Organic Materials and Solid Waste Collection Services; and WHEREAS, on March 11, 2013, the City and Contractor entered into a First Amended Franchise Agreement for Recyclable Materials, Organic Materials, and Solid Waste Collection Services (the “Agreement”) effective March 12, 2013; and WHEREAS, on October 24, 2016 the City Council adopted Resolution No. XXX, extending the term of the Agreement for an additional five years until December 31, 2022; and
WHEREAS, the parties wish to amend the Agreement as set forth herein, to extend the term of the Agreement and make other revisions pursuant to the terms and exhibits provided herein.

NOW, THEREFORE, in consideration of the mutual promises contained in this Second Amendment and for other good and valuable consideration, City and Contractor agree as follows:

1. The foregoing recitals are true and correct and are incorporated as terms into this Second Amendment.

2. The Agreement is hereby amended to delete all references to “Plant Materials” and replace all references within the Agreement to “Organic Materials or Plant Materials” with “Organic Materials”.

3. Section 3.03 (Extension of Term) of the Agreement is hereby amended to delete and replace that section in its entirety to read as follows:
“3.03 Extension of Term
City has the sole option to extend the Term of this Agreement for an additional period of five (5) years (“Extension Term”). If the City wishes to extend this Agreement it shall provide written notice to Contractor no less than one (1) year prior to the end of the Term.

The City has exercised its right to extend the Term of the Agreement as follows:

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On October 24, 2016, for an additional five years until December 31, 2022; and On October 10, 2022, for an additional ten years until December 31, 2032. The City and Contractor may mutually agree in writing to extend the Term for an additional five years no less than one (1) year prior to December 31, 2032.

During the Extension Term all provisions of the Agreement, as amended, shall apply.”

4. The third sentence of Section 5.02.D.4 (Solid Waste Collection; City Facilities; Public Litter Receptacles), which reads “These Collections will be made between one (1) and six (6) Days per week, as determined by the City” of the Agreement is hereby amended to delete and replace that sentence in its entirety to read as follows:
“These Collections will be made between one (1) and seven (7) Days per week.”

5. Section 5.03.A.2 (Targeted Recyclable Materials Collection; Single-Family Dwelling; Used Motor Oil and Used Motor Oil Filters) of the Agreement is hereby deleted in its entirety. Contractor and City mutually agreed prior to the Effective Date of this Second Amendment to eliminate Curbside Collection of Used Motor Oil and Used Motor Oil Filters based on environmental concerns. These items are accepted by Contractor at the drop-off facility pursuant to the terms of Section 5.14 of the Agreement.

6. The second sentence of Section 5.03.D.1 (Targeted Recyclable Materials Collection; City Facilities; General) of the Agreement, which reads “Such service shall be either Single-Stream or Source Separated Collection, as selected by City” shall be deleted in its entirety. Contractor and City mutually agreed prior to the Effective Date of this Second Amendment that all Targeted Recyclable Materials Collection Services shall be on a Single-Stream basis.

7. Section 5.05 (Residential On-Call Curbside Bulky Item Collection Service) of the Agreement is hereby amended as follows:
(a) Section 5.05.A (General) is hereby amended to delete Section 5.05.A and replace it in its entirety to read amended to read as follows:
“A. General. Contractor shall provide three (3) separate On-Call Curbside Collection Service pick-ups to each Single-Family Dwelling Residential Premises annually upon Owner or Occupant’s request.

Contractor will schedule the On-call Bulky Item Collection Service pick-up on the regularly scheduled Solid Waste Collection Day for Single-Family Dwellings, no more than ten (10) Business Days after the Owner or Occupant’s request. Notwithstanding the foregoing, On-Call Curbside Bulky Item Collection Service shall only be provided to Customers that are not delinquent on their service payments.

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Contractor will allow the scheduling of On-Call Bulky Item Collection Service from January 1 through December 10 of each Rate Year. Contractor may provide additional On-Call Bulky Item Collection Service for a Customer beyond three (3) pick-ups per Rate Year, and shall be entitled to bill Customer as specified in Attachment N. Customer allotted On-Call Curbside Collection Service pick-ups do not carry over from year to year and Contractor shall allow Customers to schedule up to three (3) pick-ups for the same date if requested by Customer. Contractor is required to notify Customer if they have already received the annually allocated three (3) Collection events within one (1) Business Day of Customer request. If Contractor fails to notify Customer that they have received the annually allocated three (3) Collection events, Contractor shall provide the service and is not entitled to additional Contractor’s Compensation from Customer or City for the third or subsequent On-Call Bulky Item Collection Service event.”
(b) Section 5.05.B (Accepted Materials) is hereby amended to delete Section

5.05.B and replace it in its entirety to read as follows:
“B. Accepted materials. Collection of any of the following shall constitute one (1) pick-up and Contractor shall accept only the following materials as part of its On-Call Bulky Item Collection Service:

1. Major Appliances – One (1) Major Appliance (e.g. washing machine or clothes dryer).

2. Bulky Items – One (1) large Bulky Item (e.g. reusable furniture, mattresses, four tires).

3. E-Scrap – One (1) item (e.g., a computer, computer monitor or television.

4. Miscellaneous. Up to five (5) thirty-two (32) gallon bags of Solid Waste.

Contractor shall reject: refrigerators or freezers; Construction and Demolition Debris; Hazardous Waste; Infections Waste; ashes; dirt; Organic Materials; or Targeted Recyclable Materials. Contractor may reject any individual item that weights more than one-hundred (100) pounds unless Customer has paid, or has agreed in advance to pay an additional fee for service.”
(c) Section 5.05.E (Collection and Processing Methods) is to hereby amended to delete Section 5.05.E and replace it in its entirety to read as follows:
“E. Collection and Processing Methods. All materials collected under this Section 5.05 will be collected by a flatbed truck and the items will be

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segregated in the recycling yard for (1) reuse or Recycling or (2) Disposal, prior to their transport for processing.”

8. Section 5.10 (Coats for Kids Program) of the Agreement is hereby deleted in its entirety and replaced with “5.10 RESERVED”.

9. Section 5.14 (Drop-Off Facility) of the Agreement is hereby amended as follows:
(a) Section 5.14.A is hereby amended to delete Section 5.14.A and replace it in its entirety to read as follows:
“A. General. Contractor shall operate a facility in City accepting the dropoff of the materials listed in subsection B below from residents of City, provided that such materials were generated at Residential Premises and not as a result of Commercial activity. If such materials are Recyclable Materials, Contractor shall handle them as such; otherwise, Contractor shall dispose of them as Solid Waste or handle them as Hazardous Waste, as the case may be. The facility’s hours of operation will be 8:00 a.m. to 4:00 p.m. Tuesday and Thursday. Contractor may establish limits on the volume and weight of materials that a resident may deliver to the drop-off facility that are consistent with the amount of waste normally generated at Residential Premises, provided that any limit on volume of material not be less than one (1) cubic yard per resident.”
(b) Section 5.14.B. is hereby amended to delete Section 5.14.B and replace it in its entirety to read as follows:
“B. Acceptable Materials. Residents of the City may deliver and Contractor shall accept at the drop-off facility the following types of materials: used motor oil, used motor oil filters, automotive batteries, mattresses, box springs furniture, Major Appliances, non-commercial size refrigerators and freezers (for an additional fee) unpainted and untreated wood only (not including plant materials), miscellaneous metals (white metal goods, etc.), Targeted Recyclable Materials, tires for an additional fee (i.e., four (4) per Customer removed from rims, no commercial tires), Universal Waste, and E-Scrap. Contractor shall be allowed to reject: liquids or sludge (not otherwise listed as acceptable materials); Construction and Demolition Debris; cement; dirt; asphalt; concrete; Plant Materials; Hazardous Waste; Infections Waste; Contaminated Targeted Recyclable Materials; and Organic Materials.”

10. The first paragraph of Section 7.02.A (Customer Service; Local Office) of the Agreement is hereby amended to delete Section 7.02.A and replace it in its entirety to read as follows:

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“Contractor shall operate a local office at 2305 Palmetto Avenue, Pacifica.

Contractor shall be responsible for ensuring that a qualified representative is available at the local office on Tuesdays and Thursdays, from 7:30am to 4:30pm, exclusive of Holidays to communicate with the public and accept non-cash Bill payments from Customers. The local office and customer service telephone number(s) shall be a local or toll free call.”

11. The third and fourth sentences of Section 7.02.B (Customer Service; Customer Service Call Center and Staffing) of the Agreement which reads “In addition, the Customer service call center will offer contracting with a service to provide bilingual capacity for other languages including Spanish, Cantonese, Mandarin, and Vietnamese.

Contractor shall provide immediate access to interpreters for over one-hundred and seventy-five (175) languages through the use of Language Line service, or a similar service” are hereby deleted in their entirety from Section 7.02.B.”

12. The phrase “or Source Separated” is hereby deleted from Section 7.05.A.1 (MultiFamily Recycling Promotion; Multi-Family Dwelling Promotion; Site Assessments) of the Agreement. Contractor and City mutually agreed prior to the Effective Date of this Second Amendment that all Collection Services of Targeted Recyclable Materials shall be done on a Single-Stream basis.

13. Section 8.01.A. (Collection Hours and Schedules) of the Agreement shall be amended to read as follows:
(a) Section 8.01.A.1 shall be deleted and replaced it in its entirety to read as follows:
“1. Residential. Residential Solid Waste, Targeted Recyclable Materials, and Organic Materials (including all such services provided to SFD and Multi-Family Dwelling Premises) shall be collected on weekdays (i.e., Monday through Friday) between 5:00 a.m. and 6:00 p.m. exclusive of Holidays.”
(b) Section 8.01.A.2 shall be deleted and replaced it in its entirety to read as follows:
“2. Commercial. Commercial and City Facilities Solid Waste, Targeted Recyclable Materials, and Organic Materials shall be Collected on weekdays (i.e., Monday through Friday) between 4:30 a.m. and 7:00 p.m. and weekends (i.e., Saturday and Sunday) between 6:00 a.m. and 5:00 p.m., exclusive of Holidays. The City may restrict or require modifications to hours for Collection from Commercial Premises and City Facilities to resolve noise Complaints, and, in such case, the City Manager may restrict the allowable operating hours.”

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(c) Section 8.01.A.3 shall be deleted and replaced in its entirety to read as follows:
“3. Commercial Exception. Collection from Commercial Premises that are one hundred (100) feet or less from Residential Premises shall only occur between the hours of 5:00 a.m. and 7:00 p.m., Monday through Saturday and all such operations shall be in accordance with permissions provided to Contractor by City. The City may restrict or require modifications to hours for Collection from Commercial Premises and City Facilities to resolve noise Complaints, and, in such case, the City Manager may restrict the allowable operating hours.”

14. In line 8 of Section 8.05.B (Containers; New SFD Carts) and line 4 of Section

8.05.C (Containers; Commercial and Multi-Family Containers) of the Agreement, “20” is hereby deleted. Contractor no longer provides twenty (20) gallon Solid Waste Carts as part of its offerings for Solid Waste Carts.

15. Section 10.01 (Franchise and Regulatory Fees) of the Agreement is hereby deleted and replaced in its entirety to read as follows:
“10.01 Franchise and Service Fees
City and Contractor acknowledge that an exclusive franchise is a special agreement that has been negotiated between City and Contractor. The exclusive franchise that has been granted through this Agreement is intended to allow Contractor to use City property to provide Collection services. City has previously imposed or may impose other fees, which are intended to recover the City’s costs associated with providing services and administering regulatory programs related to solid waste management and recycling and organic materials collection. In consideration of the exclusive franchise granted to Contractor by this Agreement, Contractor shall pay to City the following fees, irrespective of the amount of Contractor’s Gross Receipts:

A. Franchise Fee. Contractor shall pay to City a Franchise Fee in the amount of $200,000 annually. This fee was negotiated between the Contractor and City in good faith and at arms-length. The fee does not exceed the fair market value of City property used by Contractor pursuant to this Agreement and the property rights granted to Contractor by this Agreement, including, but not limited to, access for ingress and egress of the north eastern portion of the City yard at 2212 Beach Boulevard with access off of Palmetto Avenue for a total area of 40,000 square feet and the right to place Containers in public streets, sidewalks, and right-of-ways.

B. Franchise Administrative Services Fee. This fee is equal to the City’s costs of providing services related to this Agreement and Contractor’s Collection services for a total of $183,790 annually.

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C. Frontierland Park Remediation Fee. The City has an ongoing obligation to remediate Frontierland Park for matters related to the closed landfill site at that location. Remediation efforts focus on minimizing or resolving health, safety and public nuisance problems that may adversely affect the quality of life for citizens of the City. The remediation fee also provides funding for improvements to Frontierland Park facilities. The Frontierland Park remediation fee monies are used by the City to fund the remediation efforts. Contractor shall pay to City a Frontierland Park remediation fee in the amount of $6,250 per month, which totals $75,000 annually. The Frontierland Park remediation fee does not exceed the City’s annual costs to remediate Frontierland Park.

D. AB 939 Fee. The Act (AB 939) requires the City to plan, implement and monitor programs that will reduce the amount of Solid Waste Disposed by residents and businesses and report annually to the State. Programs include recycling and organics programs, public education and outreach efforts, franchise monitoring, etc. The AB 939 fee is used to fund these mandated efforts. Contractor shall pay to City an AB 939 fee in the amount of $2,500 per month, which totals $30,000 annually. The AB 939 fee does not exceed the City’s costs to comply with AB 939.

E. City Vehicle Impact Fee. Contractor shall pay City a refuse vehicle impact fee of $421,210 annually to compensate the City for the additional expenses it incurs to repair and address the impact to the City's public streets caused by Contractor's Collection vehicles while performing Collection services.”

16. Sections 10.02 (Time and Method of Payment) and section 10.03 (Adjustments to Fees; Additional Fees) of the Agreement are hereby amended to delete the phrase “Regulatory Fee(s)” and replace it with “Service Fee(s)”.

17. Section 11.02. (Rate-Setting Process) is hereby deleted and replaced in its entirety to read as follows:
“A. New Rates. The City shall approve the maximum allowable Rates that reflect the Rate adjustments provided for in this Article 11 and Attachment K. If at any time during the Term of this Agreement, Contractor determines the need for a Rate that does not appear on the City-approved Rate schedule in Attachment N, Contractor shall immediately notify the City and request establishment of such a Rate. For example, if Contractor wishes to introduce Collection of a fifteen (15) cubic yard Compactor five (5) times per week, and the City-approved Rate schedule does not include a Rate for this service, Contractor must request that the City approve such a Rate.

B. Initial Rates. The maximum allowable Rates for Rate Year Fourteen, January 1, 2023 through December 31, 2023, shall be the Rates set forth in Attachment N.

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C. [Reserved].

D. Subsequent Rate Adjustments. The Rates for subsequent Rate Years shall be determined based on annual adjustments in accordance with this Article 11 and Attachment K as follows: (i) seventeen, twenty, and twenty-three shall be CostBased Adjustment Years and (ii) Rate Years fifteen, sixteen, eighteen, nineteen, twenty-one, and twenty-two shall be Index-Based Adjustment Years.

E. Rate Structure. The Contractor may change the relationship of individual Rates in comparison with other Rates. Any such changes would occur in conjunction with the annual Rate adjustment process described in Section 11.02.D or in conjunction with a Rate adjustment resulting from a Special Rate Review in accordance with Section 11.04.”

18. Section 11.03 (A) (Annual Rate Application Process; Application Date and Content) of the Agreement is hereby amended to add a new subsection (3) to read as follows:
“(3) Maximum Rate Adjustment Factor.

The Rate Adjustment Factor calculated pursuant to Sections 11.03.A.1(iii) and

11.03.A.2.(v) of this Agreement, may not exceed six percent (6.0%). In the event that the Rate Adjustment Factor calculation exceeds six percent (6.0%), the percentage exceeding six percent (6.0%) shall be carried forward to the following year, and so on until all excess amounts are applied or the Agreement terminates. Notwithstanding the foregoing, the City shall not be required to compensate Contractor for any cumulative “roll-over” amounts remaining at the end of the Agreement Term, including extensions.

In the event that the calculated Rate Adjustment factor results in a negative Rate Adjustment Factor, the City reserves the right to “roll-under” the Rate reduction, such that there is no Rate adjustment in the Rate Period for which the negative Rate Adjustment Factor was calculated, but the calculated Rate reduction may be deferred to the following Rate Period, as a credit against future Rate increases.”

19. Section 11.03 (B) (Annual Rate Application Process; City Review and Approval) of the Agreement is hereby deleted and replaced in its entirety to read as follows:
“B. City Review and Approval
City shall review Contractor’s Application for accuracy and consistency with the applicable Rate adjustment procedures specified in this Article 11 and Attachment K. Within thirty (30) days after Contractor’s submission of the Application, City shall notify Contractor of any factual or calculation errors that City has identified in the Application, and Contractor shall have the opportunity to revise the Application.

In connection with City’s review of Contractor’s Application, Contractor shall provide all information reasonably requested by City to evaluate the Application (it being understood that information regarding Permitted Related Party Transactions need not be provided). Upon request, Contractor shall

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provide information from Related Party Entities regarding any financial transactions between Contractor and such Related Party Entities (other than Permitted Related Party Transactions) relating to this Agreement, to the extent reasonably necessary to evaluate Contractor’s Application.

The City Council shall review and approve Maximum Rates to reflect the adjustments required by Section 3 of Attachment K or Section 4 of Attachment K, as the case may be, and Section 11.03, if applicable subject to potential Rate constraints described in Section 11.07. City and the City Council shall use their reasonable best efforts and act in good faith to approve annual Rate adjustments to be effective on or before January 1 of the Rate Year following the year in which the Application was submitted.”

20. Section 11.04 (G) (Special Rate Review; Expenses of Review) of the Agreement is hereby deleted and replaced in its entirety to read as follows:
“G. Expenses of Review. Contractor shall reimburse City for City’s reasonable costs incurred in participating in any special Rate review, up to a maximum of $35,000. For special Rate reviews initiated by City pursuant to Section 15.12, or special Rate reviews initiated by Contractor arising from events described in Sections 11.04.B.1,

11.04.B.2 or (if the Change in Law is initiated by City) 11.04.B.4., Contractor shall be entitled to recover the cost of such reimbursement through the Rate adjustment mechanism (as an Eligible Cost or otherwise); otherwise, such reimbursement shall be a Non-Allowable Cost.”

21. Section 2.04 (No Conflict with Applicable Law or Other Documents) of the Agreement is hereby amended to add the following paragraph:
“The Parties agree that if there is any Change in Law that affects a Parties rights, obligations or liabilities under this Agreement the Parties shall meet and confer in good faith regarding the Change in Law and shall re-negotiate the terms of this Agreement to the extent necessary to address the Change in Law.”

22. Attachment A of the Agreement is hereby amended to delete and replace the following definitions:
“’Bulky Items’ means large items including, but not limited to, Major Appliances, furniture, carpets, mattresses, and other oversize materials whose large size precludes or complicates their handling by normal collection. Bulky items do not include abandoned automobiles, large auto parts, trees, refrigerators, or freezers.”
“’Business Days’ means days (i.e. Monday through Friday) during which Contractor’s Customer Service hotline is staffed to do business with the public.”
“’Designated Processing Facility’ means the Green Waste Recovery recycling plant located at 625 Charles Street, San Jose , which is

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owned and operated by Green Waste Recovery, and which will process Targeted Recyclable Materials.”
“’Holiday Schedule’ means the modified service schedule for the days following a Holiday. Customer will receive advance written notification of which weekend day their pick up will be scheduled following a holiday.” “’On-Call Service’ means Collection service provided by Contractor that is not regularly scheduled or is scheduled more than twenty-four (24) hours in advance. On-Call service is initiated by Customer by calling or emailing Contractor to request the service.”
“’Organic Materials’ means those materials that will decompose and/or putrefy and that the City permits, directs, or requires Generators to separate from Solid Waste and Targeted Materials for Collection in specially designated Containers for Organic materials Collection. Organic Materials include Plant Materials, Food Scraps, and uncoated paper contaminated with Food Scraps in accordance with Pacifica Municipal Code section 6-5.701 et seq. No Discarded Material shall be considered Organic Materials, unless such material is separated from Solid Waste and Targeted Recyclable Material.”
All other definitions not identified in Attachment A shall remain unchanged.

23. Attachment E of the Agreement is hereby deleted and replaced in its entirety with Attachment E (SB 1383 Matters) attached hereto and hereinafter incorporated by reference.

24. Attachment K of the Agreement is hereby deleted and replaced in its entirety with Attachment K (Rate Setting Methodology) attached hereto and hereinafter incorporated by reference.

25. Attachment N of the Agreement is hereby deleted and replaced in its entirety with Attachment N (Rate Schedule).

26. Attachment Q of the Agreement is hereby deleted in its entirety.

27. Except as expressly modified by this Second Amendment, all terms and conditions of the Agreement shall remain unchanged and in full force and effect. Capitalized terms used but not defined herein shall have the meanings given to them in the Agreement. All references in this Second Amendment to Articles, Sections and Exhibits refer to articles, sections and exhibits of the Agreement.
[Signatures on Next Page]

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OAK #4863-1442-6935 v4 10/6/22
IN WITNESS WHEREOF, the duly authorized representatives of the parties have executed this Second Amendment to Franchise Agreement as of the date first written above.

City of Pacifica
By:

Kevin Woodhouse, City Manager
Recology of the Coast
By:

Salvatore M. Coniglio
Chief Executive Officer
ATTEST:
________________________________
Sarah Coffey, City Clerk

APPROVED AS TO FORM
_______________________________
Michelle Marchetta Kenyon, City Attorney

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ATTACHMENT K

RATE-SETTING METHODOLOGY
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 1 of 16

1. DEFINITIONS
In addition to the terms defined in Attachment A of this Agreement, the following terms are defined as follows:

1.1 “CPI-U” means the Consumer Price Index, All Urban Consumers, All Items, Not Seasonally Adjusted, San Francisco-Oakland-San Jose Metropolitan Area (Series Id: cuura422sa0), compiled and published by the U.S. Department of Labor, Bureau of Labor Statistics.

1.2 “CPI-W” means the Consumer Price Index, Urban Wage Earners and Clerical Workers, All Items, Not Seasonally Adjusted, San Francisco-Oakland-San Jose Metropolitan Area (Series Id: cwura422sa0), compiled and published by the U.S.

Department of Labor, Bureau of Labor Statistics.

1.3 “PPI - Fuel Pricing Index” means the Producer Price Index, Commodities, Not Seasonally Adjusted, No. 2 Diesel Fuel (Series Id: wpu057303), compiled and published by the U.S. Department of Labor, Bureau of Labor Statistics.

1.4 “Motor Vehicle Maintenance and Repair Index” means the Consumer Price Index, All Urban Consumers, Motor Vehicle Maintenance and Repair, Not Seasonally Adjusted, U.S. City Average (Series Id: cuur0000setd), compiled and published by the U.S. Department of Labor, Bureau of Labor Statistics.

1.5 “Annual Percentage Change” means (1) the annual percentage change in any of the indices calculated as described below in this paragraph, or (2) six percent (6% or 0.06), whichever is less, with the exception that the six percent (6% or 0.06) cap shall not apply in the case of the PPI – Fuel Pricing Index. The Annual Percentage Change in an index is calculated as the Average Index Value for the 12-month period ending April 30 of the then-current Rate Year, minus the Average Index Value for the 12-month period ending April 30 of the prior year, and dividing the result by the Average Index Value for the 12-month period ending April 30 of such prior year. The Annual Percentage Change shall be rounded to the nearest hundredth of one percent (e.g., a calculated value of 0.02636 (2.636%) would be rounded to 0.0264 (2.64%)).

1.6 “Average Index Value” for a twelve (12) month period means the sum of the published monthly index values for such period divided by 12 (in the case of indices published monthly) or the sum of the bi-monthly index values for such period divided by 6 (in the case of indices published bi-monthly).

1.7 “Organics Processing Fee” for a given period means the highest per-ton fee payable by Contractor during such period for the processing of Organic Materials at the Designated Composting Facility net of any revenues from Compost Product. So long as the Designated Composting Facility is owned by an Affiliate of Contractor, the Organics Processing Fee shall equal $48.77 per ton for Rate Year Fourteen, and shall thereafter increase by the Annual Percentage Change in the CPI-U and changes in regulatory fees pursuant to Sections 3.3.9 and 4.3.9.

1.8 “Disposal Fee” for a given period means (i) if Contractor or City has entered into an agreement with the operator of the Designated Disposal Facility applicable

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ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
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to such period, the per-ton fee payable by Contractor pursuant to such agreement (including the Regulatory Fee Component) for Disposal of Solid Waste at the Designated Disposal Facility; and (ii) otherwise, a fee of $63.11 per Ton, for Rate Year Fourteen, which fee shall thereafter increase by the Annual Percentage Change in the CPI-U (except that the Regulatory Fee Component of such fee shall increase based on actual changes in regulatory fees at the Designated Disposal Facility).

1.9 “Transfer Station (Load-Out) Fee” or “Transfer Station Fee” for a given period means the highest per-ton fee payable by Contractor during such period for the transfer of Recyclable Materials and Organic Materials at the Designated Transfer Facility to cover costs related to receipt of materials in Collection vehicles and loading such materials into long-haul transfer vehicles. So long as the Designated Transfer Facility is owned by an Affiliate of Contractor, the Transfer Station Fee shall equal $8.41 per ton for Recyclable Materials for Rate Year Fourteen and , and shall thereafter increase by the Annual Percentage Change in the CPI-U and changes in regulatory fees pursuant to Sections 3.3.7, 3.6.1, 4.3.7, and 4.6.1.

1.10 “Organics Transport Fee” for a given period means the per-ton cost for such period for the transportation of Organic Materials from the Designated Transfer Facility to the Designated Composting Facility. The Contractor does not currently transfer Organic Materials at the Designated Transfer Facility owned by an Affiliate of Contractor.

Contractor and City shall negotiate a reasonable Organic Transport Fee in the event that Contractor is to begin transferring Organic Materials at the Designated Transfer Facility at any point during the term of this Agreement.

1.11 “Recyclables Transport Fee” for a given period means the per-ton cost for such period for the transportation of Recyclable Materials from the Designated Transfer Facility to the Designated Processing Facility. So long as the Designated Transfer Facility is owned by an Affiliate of Contractor, the Recyclables Transport Fee shall equal $32.02 per ton for Rate Year Fourteen, and shall thereafter increase by the Annual Percentage Change in the CPI-U and changes in regulatory fees pursuant to Sections 3.6.2 and 4.6.2.

1.12 “Base Component” means, with respect to a given fee, the portion of such fee that represents Contractor’s charge for transfer station, transport, processing, composting, or disposal and includes all Contractor’s expenses, but excludes the Regulatory Fee Component.

1.13 “Regulatory Fee Component” means, with respect to a given fee, that portion of such fee that represents amounts payable by Contractor for all federal, State, and local fees applied to transfer, transport, processing, composting, or disposal.

If an index is discontinued, the successor index with which it is replaced will be used for subsequent calculations. If no successor index is identified by the Bureau of Labor Statistics, the index published by the Bureau which, in the reasonable opinion of City after conferring with Contractor, is most comparable will be used.

9.b
Packet Pg. 293 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 3 of 16

2. COST COMPONENTS
Both index-based and cost-based Rate adjustments are effected by applying various adjustment factors as described herein to the following categories of costs and other amounts, which are referred to herein as “Cost Components” or “Components”:

2.1 “CBA Labor Costs” for a given period means the direct and indirect costs incurred by Contractor during such period for Contractor’s employees, who are governed by a collective bargaining agreement, including without limitation: (1) wage costs including costs for regular, overtime, holiday, vacation, and sick wages; (2) health and welfare costs; and (3) pension/retirement benefit costs, but excluding Workers Compensation and Payroll Taxes.

2.2 “Non-CBA Labor Costs” for a given period means the direct and indirect costs incurred by Contractor during such period for Contractor’s employees, including supervisory personnel, who are not governed by a collective bargaining agreement, including without limitation: (1) wage and salary costs including costs for regular, overtime, holiday, vacation, and sick wages; (2) health and welfare costs; and (3) pension/retirement benefit costs, but excluding Workers Compensation and Payroll Taxes.

2.3 “Workers Compensation” for a given period means the costs incurred by Contractor during such period for workers compensation insurance premiums.

2.4 “Payroll Taxes” for a given period means the costs incurred by Contractor during such period for payroll taxes.

2.5 “Vehicle-Related Costs” for a given period means direct and indirect costs incurred by Contractor during such period associated with maintenance, repair, licensing and registration of Contractor’s vehicles and equipment, but excluding Fuel Costs and Lease Costs.

2.6 “Fuel Costs” for a given period means the costs incurred by Contractor during such period for fuel.

2.7 “Organics Transfer Station (Load-Out) Costs” or “Organics Transfer Station Costs” for a given period means the total dollar amount (e.g., number of Tons multiplied by the per-Ton Organics Transfer Station Fee) of costs incurred by Contractor during such period for the transfer of Organic Materials at the Designated Transfer Facility.

2.8 “Organics Transport Costs” for a given period means the total dollar amount (e.g., number of Tons multiplied by the per-Ton Organics Transport Fee) of costs incurred by Contractor during such period for the transport of Organic Materials from the Designated Transfer Station to the Designated Composting Facility.

2.9 “Organics Processing Costs” for a given period means the total dollar amount (e.g., number of Tons multiplied by the per-Ton Organics Processing Fee) of fees incurred by Contractor during such period for the processing of Organic Materials at the Designated Composting Facility.

9.b
Packet Pg. 294 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 4 of 16

2.10 “Lease Costs” for a given period means the costs incurred by Contractor during such period for leases of facilities, vehicles and equipment (including Containers) leased from Affiliates of Contractor. Contractor’s lease costs include: (1) lease costs of $153,614 per year for all Rate Years for lease of the vehicle parking and maintenance facility located at 2305 Palmetto Avenue, Pacifica, from Recology Properties Inc.; and, (2) lease costs of $597,611 for new and used vehicles and containers for Rate Year Fourteen (adjusted in subsequent rate years as set forth below).

Lease costs for new and used vehicles and containers described in 2.10(2) above shall be adjusted based on a reconciliation of the actual lease costs and the projected lease costs included in the Contractor’s Application for the most recently completed Rate Year, and shall be adjusted further by any other written, mutually agreed-upon adjustments between City and Contractor. The difference between those amounts, which may be positive or negative, shall be added to or subtracted from the Contractor’s projected lease costs for the forthcoming Rate Year for which Contractor’s compensation is being calculated.

Leases for new vehicles and equipment (including Containers) shall fully amortize Contractor's acquisition cost over a 7-year period, and leases for used vehicles and equipment (including Containers) shall fully amortize Contractor's acquisition cost over a 5-year period, in each case based on the date the vehicles or equipment are put into service, and assuming equal monthly payments over the life of the lease. After the 5- or 7-year amortization period, the lease costs shall not be included in subsequent Rate Years. Lease rates shall be calculated at a rate equal to 1.9% plus the rate (as of the date the asset is put into service by Contractor) for Treasury bonds of constant maturity having the same term as the lease term (e.g., 7-year bonds for a 7-year lease term), as such rate appears on the web site of the Federal Reserve Board (http://www.federalreserve.gov/releases/H15/data.htm).

The specific Lease Costs set forth above (other than the 2305 Palmetto lease) reflect the leasing of the vehicles and equipment listed in Attachment P (the “Capital Requirements Schedule”). In connection with the Rate adjustment process for each Cost-Based Adjustment Year the Capital Requirements Schedule shall be adjusted by (1) deleting from the schedule vehicles and equipment no longer in use, and (2) adding to the schedule new and replacement vehicles and equipment approved by City in connection with City’s consideration of Contractor’s Application for such Cost-Based Adjustment Year. Lease terms and rates for new and replacement vehicles and equipments shall be as set forth in the preceding paragraph unless otherwise agreed by City.

2.11 “Start-Up Costs” shall be fixed at $0.00 per Rate Year for Rate Years Two through Eight and shall not be annually adjusted, and shall be zero in any subsequent Rate Year unless the Parties mutually agree to a different amount.

2.12 “Other Costs” for a given period means all costs reasonably incurred by Contractor during such period in connection with or arising from Contractor’s performance of its obligations under this Agreement, other than (i) costs attributable to the Cost Components set forth in Sections 2.1 through 2.11 above, (ii) Pass-Through Costs, (iv) Calculated Profit, and (v) Non-Allowable Costs.

2.13 “Total Annual Cost of Operations” means the sum of the Cost Components set forth in Sections 2.1 through 2.12 above. Total Annual Cost of Operations is used as a basis for determining Calculated Profit.

9.b
Packet Pg. 295 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 5 of 16

2.14 “Calculated Profit” means an estimate of Contractor’s profit based on the Operating Ratio of 0.90. Contractor’s profit margin with respect to a given amount (e.g., the Total Annual Cost of Operations) is calculated by dividing the given amount by the Operating Ratio, and subtracting from the result the given amount.

2.15 “Other City Fees” means an estimate of the amount of the fees other than the Franchise Fee payable by Contractor to City pursuant to Section 10.03 of this Agreement, used for purposes of determining Total Calculated Costs. To the extent that Other City Fees are determined as a percentage of Gross Receipts or other variables (as opposed to being fixed dollar amounts), the Other City Fees Component does not in any way guarantee the actual fees that will be paid by Contractor to City. Other City Fees shall be Pass-Through Costs.

2.16 “Calculated Franchise Fee” means an estimate of the amount of the Franchise Fee payable by Contractor to City pursuant to Section 10.02 of this Agreement, used for purposes of determining Total Calculated Costs. The Calculated Franchise Fee does not in any way guarantee the actual fee that will be paid by Contractor to City, which is based on Gross Receipts. The Franchise Fee shall be a Pass-Through Cost.

2.17 “Recyclables Transfer Station (Load-Out) Costs” or “Recyclables Transfer Station Costs” for a given period means the total dollar amount (e.g., number of Tons multiplied by the per-Ton Recyclables Transfer Station Fee) of costs incurred by Contractor during such period for the transfer of Recyclable Materials at the Designated Processing Facility. Recyclables Transfer Station Costs shall be Pass-Through Costs.

2.18 “Recyclables Transport Costs” for a given period means the total dollar amount (e.g., number of Tons multiplied by the per-Ton Recyclables Transport Fee) of costs incurred by Contractor during such period for the transport of Recyclable Materials from the Designated Transfer Station to the Designated Processing Facility. Recyclables Transport Costs shall be Pass-Through Costs.

2.19 “Recyclables Commodities Sales Offset” shall be negative $269,300 for Rate Years Two through Eight, and any subsequent Rate Years if the Term is extended.

The Recyclables Commodities Sales Offset reflects net revenues from the sale of Recyclables; therefore, the costs of processing Recyclable Materials are not included in the Rate adjustment process.

2.20 “Disposal Costs” for a given period means the total dollar amount (e.g., number of Tons multiplied by the per-Ton Disposal Fee) of fees incurred by Contractor during such period for the disposal of Solid Waste at the Designated Disposal Facility.

Disposal Costs shall be Pass-Through Costs.

2.21 “Total Calculated Costs” means the sum of the Cost Components set forth in Sections 2.13 through 2.20 above. Total Calculated Costs is used as a basis for determining the Rate Adjustment Factor under the index-based and cost-based Rate adjustment methodologies. Total Calculated Costs does not reflect or in any way guarantee the Gross Receipts that are to be generated by Rates or retained by Contractor.

9.b
Packet Pg. 296 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 6 of 16

2.22 “Pass-Through Costs” means the Franchise Fee, Other City Fees, Disposal Costs, Recyclables Transfer Station Costs, Recyclables Transport Costs and Other Pass-Through Adjustments.

3. INDEX-BASED RATE ADJUSTMENT METHODOLOGY

3.1 Summary. The index-based Rate adjustment methodology involves the application of the Annual Percentage Change in various price indices to certain categories of Contractor’s Total Annual Cost of Operations for the current Rate Year; the calculation of profit; and the calculation of Other City Fees and Franchise Fees. The difference (measured as a percentage) between Total Calculated Costs for the coming Rate Year and Total Calculated Costs for the current Rate Year is the Rate Adjustment Factor. The Rate Adjustment Factor is applied to the current Rates to determine the Rates for the coming Rate Year.

3.2 Determination of Contractor’s Costs. With respect to the Cost Components that comprise Total Annual Cost of Operations, the starting point for the adjustment calculations referred to in Section 3.1 is the value of each Cost Component for the Rate Year in which Contractor’s Application is submitted (i.e., the current year), as determined in the previous Rate adjustment process. For purposes of Contractor’s Application submitted in Rate Year Two to determine the Rates that will take effect on January 1 of Rate Year Three, the Cost Components that make up Total Annual Cost of Operations will be based on a pro forma financial statement prepared by Contractor that served as the basis for adjusting Rates for Rate Year Two, the form of which shall be in accordance with that presented in Attachment P.

3.3 Calculation of Adjustments to Cost Components. Each of the Cost Components will be adjusted as follows:

3.3.1 CBA Labor Costs. CBA Labor Costs for the coming Rate Year shall be determined by adjusting CBA Labor Costs for the current Rate Year in accordance with the procedures described in the then-current collective bargaining agreement.

3.3.2 Non-CBA Labor Costs. Non-CBA Labor Costs for the
coming Rate Year shall equal Non-CBA Labor Costs for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-W.

3.3.3 Workers Compensation. Workers Compensation for the coming Rate Year shall equal Workers Compensation for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U.

3.3.4 Payroll Taxes. Payroll Taxes for the coming Rate Year shall equal (i) Payroll Taxes for the current Rate Year multiplied by (ii) the sum of CBA Labor Costs and Non-CBA Labor Costs for the coming Rate Year, determined in accordance with Sections 3.3.1 and 3.3.2, respectively, and divided by (iii) the sum of CBA Labor Costs and Non-CBA Labor Costs for the current Rate Year.

9.b
Packet Pg. 297 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 7 of 16

3.3.5 Vehicle-Related Costs. Vehicle-Related Costs for the coming Rate Year shall equal Vehicle-Related Costs for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the Motor Vehicle Maintenance and Repair Index.

3.3.6 Fuel Costs. Fuel Costs for the coming Rate Year shall equal the approved Fuel Costs that are reflected on Contractor’s Application for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the PPI - Fuel Pricing Index, plus the difference between the most-recently completed Rate Year’s projected fuel costs that appear on Contractor’s Application for such year and including any other written mutually agreed-upon adjustments between City and Contractor, with the most-recently completed Rate Year’s actual fuel costs.

3.3.7 Organics Transfer Station (Load-Out) Costs. Organics Transfer Station Costs for the coming Rate Year shall equal (i) the Base Component of the Organics Transfer Station Fee for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the then-current (or known future) Regulatory Fees of the Regulatory Fee Component of the Organics Transfer Station Fee, multiplied by (ii) the total Tons of Organic Materials Collected by Contractor for the most-recently completed 12-month period ending April 30.

3.3.8 Organics Transport Costs. Organics Transport Costs for the coming Rate Year shall equal (i) the Base Component of the Organics Transport Fee for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the then-current (or known future) Regulatory Fees in the Regulatory Fee Component of the Organics Transport Fee, multiplied by (ii) the total Tons of Organic Materials Collected by Contractor for the most-recently completed 12-month period ending April 30.

3.3.9 Organics Processing Costs. Organics Processing Costs for the coming Rate Year shall equal (i) the Base Component of the Organics Processing Fee for the current Rate Year multiplied, which shall be $48.77 for 2023,by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the then-current (or known future) Regulatory Fees, multiplied by (ii) the total Tons of Organic Materials Collected by Contractor for the most-recently completed 12-month period ending April 30.

3.3.10 Lease Costs. Lease Costs for the coming Rate Year shall be determined in accordance with Section 2.10 above.

3.3.11 Start-Up Costs. Start-Up Costs for the coming Rate Year shall equal the applicable amount set forth in Section 2.11 above.

3.3.12 Other Costs. Other Costs for the coming Rate Year shall equal Other Costs for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U.

3.3.13 Total Annual Cost of Operations. Total Annual Cost of Operations for the coming Rate Year shall equal the sum of the amounts calculated in Sections 3.3.1 through 3.3.12 above.

9.b
Packet Pg. 298 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 8 of 16

3.4Calculated Profit. Calculated Profit for the coming Rate Year will be calculated by dividing the Total Annual Cost of Operations for the coming Rate Year (the value calculated in Section 3.3.13 above) by an operating ratio (0.90) and subtracting from the result the Total Annual Cost of Operations for the coming year.

3.5City Fees (For Which No Profit Shall be Added)

3.5.1 Franchise Fee. Contractor shall pay to City a Franchise Fee in the amount of $200,000 annually.

3.5.2 Frontierland Park Remediation Fee. The annual
remediation fee for Frontierland Park for the coming Rate Year shall be the fee for the then-current Rate Year multiplied by one plus the Annual Percentage Change for the CPIU or an amount specified by City in accordance with Article 10.

3.5.3 AB 939 Fee. The annual AB 939 fee for the coming Rate Year shall be the fee for the then-current Rate Year multiplied by one plus the Annual Percentage Change for the CPI-U or an amount specified by City in accordance with Article 10.

3.5.4 Franchise Administrative Services Fee. The annual franchise administrative services fee for the coming Rate Year shall be the fee for the then-current Rate Year multiplied by one plus the Annual Percentage Change for the CPIU or an amount specified by City in accordance with Article 10.

3.5.5 City Vehicle Impact Fee. The annual City vehicle impact fee for the coming Rate Year shall be the fee for the then-current Rate Year multiplied by one plus the Annual Percentage Change for the CPI-U or an amount specified by City in accordance with Article 10.

3.5.6 Total City Fees. The Total City Fees for the coming Rate Year shall equal the sum of the costs calculated in items 3.5.1 through 3.5.5 above; provided, however, that any adjustment in any such fee will be a Pass-Through Cost and reflected in the Total City Fees.

3.6Other Pass-Through Adjustments. Other Pass-Through Adjustments for the coming Rate Year shall equal (i) the sum of the costs calculated in items 3.6.1 through

3.6.5 below, plus (ii) any amounts (actual or reasonably estimated) not included in Total Annual Cost of Operations for which Contractor is entitled to reimbursement through the Rate adjustment mechanism, plus (iii) any other amounts mutually agreed by City and Contractor to be “Other Pass-Through Adjustments” hereunder.

3.6.1 Green Waste Adjustment. Rates for Rate Year Two shall include a negative adjustment in the amount of $56,250 to provide for the recapture by City and its residents of the certain amounts relating to Previous Contractor’s disposal of green waste and allocation of costs to its Affiliate, Sea Coast Disposal Company. Such adjustment shall not continue beyond Rate Year Two; and accordingly, for purposes of Contractor’s Application submitted in Rate Year Two to determine the Rates that will take effect on January 1 of Rate Year Three, the Green Waste Adjustment shall equal zero.

9.b
Packet Pg. 299 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 9 of 16
As a result, the green waste adjustment shall be zero for Rate Years Three through Eight and any extension of the Term.

3.6.2 Recyclables Transfer Station (Load-Out) Costs.

Recyclables Transfer Station Costs for the coming Rate Year shall equal (i) the Base Component of the Recyclables Transfer Station Fee for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the thencurrent (or known future) Regulatory Fees of the Regulatory Fee Component of the Recyclables Transfer Station Fee, multiplied by (ii) the total Tons of Recyclable Materials Collected by Contractor for the most-recently completed 12-month period ending April 30 (except that, for purposes of Contractor’s Application submitted in Rate Year One to determine the Rates that will take effect on March 1 of Rate Year Two, the Recyclables Transfer Station Fee for the current Rate Year shall equal $6.20 per Ton, and the total tons of Recyclable Materials Collected shall be calculated as the Tonnage Collected over the period from September 1, 2010 through October 15, 2010 divided by 1.5 months and multiplied by 12 months).

3.6.3 Recyclables Transport Costs. Recyclables Transport Costs for the coming Rate Year shall equal (i) the Base Component of the Recyclables Transport Fee for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the then-current (or known future) Regulatory Fees of the Regulatory Fee Component of the Recyclables Transport Fee, multiplied by (ii) the total Tons of Recyclable Materials Collected by Contractor for the most-recently completed 12-month period ending April 30.

3.6.4 Recyclables Commodities Sales Offset. The Recyclables Commodities Sales Offset for the coming Rate Year shall equal the amount set forth in Section 2.19 above.

3.6.5 Disposal Costs. Disposal Costs for the coming Rate Year shall equal the per-Ton Disposal Fee at the Designated Disposal Facility for the coming Rate Year multiplied by the total Tons of Solid Waste Collected by Contractor for the most-recently completed 12-month period ending April 30.

3.7Total Calculated Costs. The Total Calculated Costs for the coming Rate Year shall equal the sum of the Total Annual Cost of Operations for the coming Rate Year (as calculated in Section 3.3.13 above), Calculated Profit for the coming Rate Year (as calculated in Section 3.4 above), Total City Fees for the coming Rate Year (as calculated in Section 3.5.6 above), and Other Pass-Through Adjustments for the coming Rate Year (as calculated in Section 3.6 above).

3.8 Adjustment of Rates. The Rate Adjustment Factor for the coming Rate Year shall equal Total Calculated Costs for the coming Rate Year (as calculated in Section 3.7 above) divided by Total Calculated Costs for the current Rate Year, which shall be rounded to the nearest thousandth. Each then-effective Rate, as set forth on Attachment N, shall be multiplied by the Rate Adjustment Factor to calculate the effective Rate for the coming Rate Year. The adjustment to each Rate shall be rounded to the nearest cent.

9.b
Packet Pg. 300 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 10 of 16

3.9 Example. The estimated costs for Rate Year Two, which are included in Attachment P (but which are subject to adjustment as provided in Section 11.02.C), present an example of the index-based adjustment method.

4. COST-BASED RATE ADJUSTMENT METHODOLOGY

4.1 Summary. The cost-based Rate adjustment methodology involves:
review of Contractor’s actual, allowable and allocated Total Calculated Costs from Contractor’s most recently completed Fiscal Year; allocation of those costs to the Cost Components that comprise Total Annual Cost of Operations; the application of the Annual Percentage Change in various price indices to those Cost Components to reflect a 2-year increase (i.e., the period from the most recently completed Fiscal Year to the coming Rate Year); the calculation of Calculated Profit for the coming Rate Year based on Total Annual Cost of Operations; the calculation of the Calculated Franchise Fee for the coming Rate Year based on Total Annual Cost of Operations plus Calculated Profit plus Other City Fees and Other Pass-Through Adjustments; and the pass-through of Other City Fees and other actual or reasonably expected changes in costs, if any, to determine Total Calculated Costs for the coming Rate Year. The difference (measured as a percentage) between Total Calculated Costs for the coming Rate Year and Total Billings for the mostrecently completed twelve (12) month period ending April 30 (adjusted to reflect the most recent Rate adjustment) is the Rate Adjustment Factor. The Rate Adjustment Factor is applied to the current Rates to determine the Rates for the coming Rate Year. If the Rate Adjustment Factor is nine percent (9%) or more, then City may divide the Rate adjustment over two Rate Years, with nine percent (9%) of the Rate adjustment occurring in the coming Rate Year, and the remainder of the Rate adjustment being carried over to the following Rate Year and added to the Rate adjustment that would otherwise take effect in such Rate Year and, if necessary, carried over an additional Rate Year so that no adjustment in a given Rate Year exceeds nine percent (9%).

4.2 Determination of Contractor’s Costs. Contractor’s actual, allowable and allocated Total Calculated Costs from Contractor’s most recently completed Fiscal Year shall be derived from Contractor’s audited financial statements for such Fiscal Year, in accordance with the following steps:

4.2.1 Allocation Across Franchises. First, Contractor shall allocate its costs as set forth in such financial statements among the different jurisdictions to which Contractor provided services during the Fiscal Year. The amount of costs allocated to this Agreement shall be determined for each cost component described in Section 2 using one of the following allocation factors:
(a) Route allocation factor - Percentage of routes attributable to the City compared to total routes operated by Contractor, which shall be calculated as the number of routes Contractor operates to serve the City divided by the total routes Contractor operates to serve all jurisdictions, multiplied by 100. (b) Single-Family Customer allocation factor - Percentage of Single-Family Customers in the City compared to the total Single-Family Customers served by the Contractor, which shall be calculated as the total number of Single-Family

9.b
Packet Pg. 301 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 11 of 16
Customers served by Contractor under this Agreement, divided by the total number of Single-Family Customers served by Contractor in all jurisdictions, multiplied by 100. If Contractor expands its services to other areas in addition to Pacifica, Montara, and Granada, the City reserves the right to request that the Single-Family Customer allocation factor be modified to an allocation factor based on the total Customers including residential and commercial Customers.
(c) Tonnage allocation factor – Percentage of Tonnage of Solid Waste, Recyclable Materials and Organic Materials Collected by Contractor from City, compared to total Tonnage of Solid Waste, Recyclable Materials and Organic Materials, respectively, Collected by Contractor, which shall be calculated as the total number of Tons of the applicable materials type Collected by Contractor from City, divided by the total number of Tons of such materials type collected by Contractor from all jurisdictions, multiplied by 100.
(d) Drop box hauls allocation factor – Percentage of drop box hauls from City, compared to total hauls, which shall be calculated as the total number of hauls by Contractor from City, divided by the total number of hauls by Contractor from all jurisdictions, multiplied by 100.

The route allocation factor will be applied to all costs with the exception of (i) Other Costs, which shall be allocated using the Single-Family Customer allocation factor, (ii) Disposal Costs, which shall be allocated using the Solid Waste Tonnage allocation factor, (iii) Recyclables Transfer Costs and Recyclables Transport Costs, which shall be allocated using the Recyclables Tonnage allocation factor, and (iv) Organics Transfer Costs, Organics Transport Costs and Organics Processing Costs, which shall be allocated using the Organics Tonnage allocation factor.

The allocation factors shall be calculated using the then-current route information, Customer account data and tonnage information. Based on such allocations, Contractor shall prepare a pro forma financial statement which reflects Contractor’s costs of performing its obligations under this Agreement for such Fiscal Year.

4.2.2 Removal of Non-Allowable Costs. Second, Contractor shall adjust such pro forma financial statement by excluding therefrom all Non-Allowable Costs. “Non-Allowable Costs” means the following:
(a) Labor costs attributable to Contractor’s employees who are governed by a collective bargaining agreement resulting from adjustments to wages, health and welfare, and pension/retirement costs that are in excess of the adjustment made in accordance with the procedures described in the then-current collective bargaining agreement.
(b) Payments to directors and/or owners of Contractor, unless paid as reasonable compensation for services actually rendered. (c) Travel expenses and entertainment expenses (above
$5,000 annually in total), unless authorized in advance by City.

9.b
Packet Pg. 302 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 12 of 16
(d) Payments, not covered by insurance, to repair damage to property of third parties or City for which Contractor is legally liable. (e) Fines for penalties of any nature.
(f) Liquidated Damages assessed under this Agreement.
(g) Federal or State income taxes.
(h) Charitable or political donations.
(i) Lease costs in excess of those determined in accordance with the preapproved methods described in Section 2.10. (j) Attorney's fees and other expenses incurred by Contractor in any court proceeding in which City and Contractor are adverse Parties, unless Contractor is the prevailing Party in such proceeding.
(k) Attorney's fees and other expenses incurred by Contractor arising from any act or omission of Contractor in violation of this Agreement. (l) Attorneys' fees and other expenses incurred by Contractor in any court proceeding in which Contractor's own negligence, violation of law or regulation, or willful misconduct are in issue and occasion, in whole or in part, the attorneys' fees and expenses claimed.
(m) Attorneys' fees and other expenses incurred by Contractor in any court proceeding in which the legal theory or statute providing a basis of liability against Contractor also provides for separate potential liability for City derived from the action of its citizens or ratepayers (such as in a CERCLA lawsuit) unless Contractor is found not liable in such claims.
(n) Payments to Related Party Entities for products or services in excess of (1) in the case of transactions other than Permitted Related Party Transactions, the cost to the Related Party Entity for those products or services, or (2) in the case of Permitted Related Party Transactions, the applicable amounts set forth in this Agreement for such transactions (such as the Transfer Station Fee, the Organics Transport Fee, the Recyclables Transport Fee, the Organics Processing Fee, and Lease Costs.
(o) Goodwill.
(p) Costs of the Contractor’s Employee Stock Ownership Plan. (q) Depreciation and interest expenses because Contractor plans to lease equipment rather than purchase.
(r) Corporate and regional overhead costs greater than five and seven tenths percent (5.7%) of Total Annual Cost of Operations for the most-recently completed twelve (12) month period ending April 30. This cap on costs applies to the sum

9.b
Packet Pg. 303 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 13 of 16
total of the following line item expenses in the pro forma provided in Attachment P:
regional accounting fees, regional management fees, corporate accounting, IT fee, environmental compliance, human resources fee, corporate management, and public relations.
(s) Bad debt write-offs in excess of three percent (3.0%) of Gross Receipts for the most-recently completed twelve (12) month period ending April 30 with the exception that bad debt write-offs in excess of two percent (2.0%) of Gross Receipts shall not be allowable for Rate Year Two.

4.2.3 Allocation to Cost Components. Third, Contractor shall allocate the costs set forth in the adjusted pro forma financial statement prepared pursuant to Section 4.2.2 to each of the 12 Cost Components that make up Contractor’s Total Annual Costs of Operations (taking into account the fact that Lease Costs are determined as set forth in Section 2.10).

4.3 Calculation of Adjustments to Cost Components. Calculated Total Cost for the coming Rate Year shall be derived from the Cost Components that make up Contractor’s Total Annual Cost of Operations for the Fiscal Year as determined in Section

4.2.3, in the manner set forth below:

4.3.1 CBA Labor Costs. CBA Labor Costs for the coming Rate Year shall be determined by adjusting Allowable CBA Labor Costs for the previous Fiscal Year determined in accordance with Section 4.2 above adjusted in accordance with the procedures described in the then-current collective bargaining agreement, for the two (2) year period from the previous Fiscal Year to the coming Rate Year. All CBA Labor Costs shall be as determined in accordance with the procedures of this Section 4.3.1 or increased six percent (6%), which ever is less except health and welfare costs shall not be subject to the six percent (6%) cap.

4.3.2 Non-CBA Labor Costs. Non-CBA Labor Costs for the
coming Rate Year shall equal Allowable Non-CBA Labor Costs for the previous Fiscal Year determined in accordance with Section 4.2 above multiplied by (i) one (1) plus the Annual Percentage Change in the CPI-W, and multiplying the result by (ii) the same number used in clause (i).

4.3.3 Workers Compensation. Workers Compensation for the coming Rate Year shall equal Allowable Workers Compensation for previous Fiscal Year determined in accordance with Section 4.2 above multiplied by (i) one (1) plus the Annual Percentage Change in the CPI-U, and multiplying the result by (ii) the same number used in clause (i).

4.3.4 Payroll Taxes. Payroll Taxes for the coming Rate Year shall equal (i) Allowable Payroll Taxes for the previous Fiscal Year determined in accordance with Section 4.2 above, multiplied by (ii) the sum of CBA Labor Costs and Non-CBA Labor Costs for the coming Rate Year, determined in accordance with Sections 4.3.1 and 4.3.2, respectively, and divided by (iii) the sum of CBA Labor Costs and Non-CBA Labor Costs for the previous Fiscal Year.

9.b
Packet Pg. 304 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 14 of 16

4.3.5 Vehicle-Related Costs. Vehicle-Related Costs for the coming Rate Year shall equal Allowable Vehicle-Related Costs for the previous Fiscal Year determined in accordance with Section 4.2 above multiplied by (i) one (1) plus the Annual Percentage Change in the Motor Vehicle Maintenance and Repair Index, and multiplying the result by (ii) the same number used in clause (i).

4.3.6 Fuel Costs. Fuel Costs for the coming Rate Year shall equal Allowable Fuel Costs for the previous Fiscal Year determined in accordance with Section

4.2 above multiplied by (i) one (1) plus the Annual Percentage Change in the PPI - Fuel Pricing Index, and multiplying the result by (ii) the same number used in clause (i), adjusted further as set forth below.

The Fuel Costs calculated above shall be adjusted further based on a reconciliation of the actual fuel costs for the most recently completed Rate Year with the projected fuel costs included in Contractor’s Application and including any other written mutually agreed-upon adjustments between City and Contractor, for such Rate year. The difference, which may be positive or negative, shall be added to or subtracted from the Contractor’s projected fuel costs for the forthcoming Rate Year for which Contractor’s compensation is being calculated.

4.3.7 Organics Transfer Station (Load-Out) Costs. Organics Transfer Station Costs for the coming Rate Year shall equal (i) the Base Component of the Organics Transfer Station Fee for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the then-current (or known future) Regulatory Fees of the Regulatory Fee Component of the Organics Transfer Station Fee, multiplied by (ii) the total Tons of Organic Materials Collected by Contractor for the most-recently completed 12-month period ending April 30.

4.3.8 Organics Transport Costs. Organics Transport Costs for the coming Rate Year shall equal (i) the Base Component of the Organics Transport Fee for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the then-current (or known future) Regulatory Fees of the Regulatory Fee Component of the Organics Transport Fee, multiplied by (ii) the total Tons of Organic Materials Collected by Contractor for the most-recently completed 12-month period ending April 30.

4.3.9 Organics Processing Costs. Organics Processing Costs for the coming Rate Year shall equal (i) the Base Component of the Organics Processing Fee for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the then-current (or known future) Regulatory Fees, multiplied by (ii) the total Tons of Organic Materials Collected by Contractor for the most-recently completed 12-month period ending April 30.

4.3.10 Lease Costs. Lease Costs for the coming Rate Year shall be determined in accordance with Section 2.10 above.

4.3.11 Start-Up Costs. Start-Up Costs for the coming Rate Year shall equal the applicable amount set forth in Section 2.11 above.

9.b
Packet Pg. 305 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 15 of 16

4.3.12 Other Costs. Other Costs for the coming Rate Year shall equal Allowable Other Costs for the previous Fiscal Year determined in accordance with Section 4.2 above multiplied by (i) one (1) plus the Annual Percentage Change in the CPIU, and multiplying the result by (ii) the same number used in clause (i).

4.3.13 Total Annual Cost of Operations. Total Annual Cost of Operations for the coming Rate Year shall equal the sum of the amounts calculated in Sections 4.3.1 through 4.3.12 above.

4.4Calculated Profit. Calculated Profit for the coming Rate Year shall equal Total Annual Cost of Operations for the coming Rate Year (as calculated in Section 4.3.13 above) divided by the Operating Ratio, and subtracting from the result Total Annual Cost of Operations for the coming Rate Year.

4.5City Fees

4.5.1 Franchise Fee. Contractor shall pay to City a Franchise Fee in the amount of $200,000 annually.

4.5.2 Frontierland Park Remediation Fee. The annual
remediation fee for Frontierland Park for the coming Rate Year shall be the fee for the then-current Rate Year multiplied by one plus the Annual Percentage Change for the CPIU or an amount specified by City in accordance with Article 10.

4.5.3 AB 939 Fee. The annual AB 939 fee for the coming Rate Year shall be the fee for the then-current Rate Year multiplied by one plus the Annual Percentage Change for the CPI-U or an amount specified by City in accordance with Article 10.

4.5.4 Franchise Administrative Services Fee. The annual franchise administrative services fee for the coming Rate Year shall be the fee for the then-current Rate Year multiplied by one plus the Annual Percentage Change for the CPIU or an amount specified by City in accordance with Article 10.

4.5.5 City Vehicle Impact Fee. The annual City vehicle impact fee for the coming Rate Year shall be the fee for the then-current Rate Year multiplied by one plus the Annual Percentage Change for the CPI-U or an amount specified by City in accordance with Article 10.

4.5.6 Total City Fees. The Total City Fees for the coming Rate Year shall equal the sum of the costs calculated in items 4.4.1 through 4.4.5 above; provided, however, that any adjustment in any such fee will be a Pass-Through Cost and reflected in the Total City Fees.

4.6Other Pass-Through Adjustments. Other Pass-Through Adjustments for the coming Rate Year shall equal (i) the sum of the costs calculated in items 4.6.1 through

4.6.5 below, plus (ii) any amounts (actual or reasonably estimated) not included in Total Annual Cost of Operations for which Contractor is entitled to reimbursement through the

9.b
Packet Pg. 306 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to

ATTACHMENT K
RATE-SETTING METHODOLOGY (cont.)
Franchise Agreement with Recology of the Coast Attachment K, Rate-Setting Methodology and City of Pacifica Page 16 of 16
Rate adjustment mechanism, plus (iii) any other amounts mutually agreed by City and Contractor to be “Other Pass-Through Adjustments” hereunder.

4.6.1 Green Waste Adjustment. The green waste adjustment shall be the amount described in Section 3.6.1.

4.6.2 Recyclables Transfer Station (Load-Out) Costs.

Recyclables Transfer Station Costs for the coming Rate Year shall equal (i) the Base Component of the Recyclables Transfer Station Fee for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the thencurrent (or known future) Regulatory Fees of the Regulatory Fee Component of the Recyclables Transfer Station Fee, multiplied by (ii) the total Tons of Recyclable Materials Collected by Contractor for the most-recently completed 12-month period ending April 30.

4.6.3 Recyclables Transport Costs. Recyclables Transport Costs for the coming Rate Year shall equal (i) the Base Component of the Recyclables Transport Fee for the current Rate Year multiplied by one (1) plus the Annual Percentage Change in the CPI-U plus the sum of the then-current (or known future) Regulatory Fees of the Regulatory Fee Component of the Recyclables Transport Fee, multiplied by (ii) the total Tons of Recyclable Materials Collected by Contractor for the most-recently completed 12-month period ending April 30.

4.6.4 Recyclables Commodities Sales Offset. The Recyclables Commodities Sales Offset for the coming Rate Year shall equal the amount set forth in Section 2.19 above.

4.6.5 Disposal Costs. Disposal Costs for the coming Rate Year shall equal the per-Ton Disposal Fee at the Designated Disposal Facility for the coming Rate Year multiplied by the total Tons of Solid Waste Collected by Contractor for the most-recently completed 12-month period ending April 30.

4.7 Total Calculated Costs. Total Calculated Costs for the coming Rate Year shall equal the sum of Total Annual Cost of Operations for the coming Rate Year (as calculated in Section 4.3.13 above), Calculated Profit for the coming Rate Year (as calculated in Section 4.4 above), Total City Fees for the coming Rate Year (as calculated in Section 4.5.6 above), and Other Pass-Through Adjustments for the coming Rate Year (as calculated in Section 4.6 above).

4.8 Adjustment of Rates. The Rate Adjustment Factor for the coming Rate Year shall equal Total Calculated Costs for the coming Rate Year (as calculated in Section 4.7 above) divided by Total Billings for the most-recently completed twelve (12) month period ending April 30, which shall be rounded to the nearest thousandth. Each then-effective Rate, as set forth on Attachment N, shall be multiplied by the Rate Adjustment Factor to calculate the effective Rate for the coming Rate Year. The adjustment to each Rate shall be rounded to the nearest cent.

9.b
Packet Pg. 307 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to Recology of the Coast
City of Pacifica
Rate Application Yr 14 (2023)
Rate Schedule and Commercial Rate Matrices
Attachment N
2023
2022 Adjustment 2023
Rates Factor Rates
Single-Family Residential Service
One time additional 32 gallon bag 9.61 5.80% 10.17
Each additional gallon over 32 per pick up 1.68 5.80% 1.78 Mini can 20 gallons or less (20 gallon can) 27.58 5.80% 29.18 32 gallon Cart 42.57 5.80% 45.04
48 gallon Cart 63.30 5.80% 66.97
64 gallon Cart 84.07 5.80% 88.95
96 gallon Cart (acknowledged by City) 125.56 5.80% 132.84 Extra Recycling Cart 3.92 5.80% 4.15
Extra Organic Materials Cart 3.92 5.80% 4.15
Residential service rates are for solid waste container sizes and include costs for recyclables and organics materials collection service.

Commmercial Solid Waste Bin Collection Service
Commercial container rentals
1 cubic yard 72.15 5.80% 76.33
2 cubic yards 84.13 5.80% 89.01
Commercial container pick up for Solid Waste
1 cubic yard 66.14 5.80% 69.98
2 cubic yards 96.20 5.80% 101.78
Compacted commercial container pick up for Solid Waste
1 cubic yard 97.36 5.80% 103.01
2 cubic yards 167.40 5.80% 177.11
Commercial container pick up for Organics
1 cubic yard 5.80% 114.47 108.19
2 cubic yards 185.97 5.80% 196.76
Commmercial Can/Cart Solid Waste Pick Up
Each additional gallon over 32 2.45 5.80% 2.59
32 gallon Cart 48.08 5.80% 50.87
48 gallon Cart 72.09 5.80% 76.27
64 gallon Cart 91.04 5.80% 96.32
96 gallon Cart 144.20 5.80% 152.56
Commmercial Can/Cart Organics Pick Up
32 gallon Cart 43.27 5.80% 45.78
48 gallon Cart 64.90 5.80% 68.66
64 gallon Cart 86.53 5.80% 91.55
96 gallon Cart 129.79 5.80% 137.32
Attachment N

9.b
Packet Pg. 308 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to 2023
2022 Adjustment 2023
Rates Factor Rates
Debris Box Solid Waste and Construction and Demolition
Debris Collection
14 yard container (7 days) 610.66 5.80% 646.08
Each additional day 50.15 5.80% 53.06
20 yard container (7 days) 786.74 5.80% 832.37
Each additional day 70.42 5.80% 74.50
Miscellaneous Single-Family Services
Service from side or rear of house 7.01 5.80% 7.42
Return pick up charge 12.13 5.80% 12.83
Special call for large items charge by volume charge by volume Extra charge for collection private driveways:
1 to 30 feet no charge no charge
Over 30 feet (for every 10 feet or part thereof) 7.01 5.80% 7.42 Life line rates (available only for 20 gallon Cart Customers) 25.89 5.80% 27.39 Single Family return trip charge (i.e. provision 19.62 5.80% 20.76 of collection service after the regularly
scheduled collection day) per event
Miscellaneous Commercial and Multi-Family Services
Recycling services provided to commercial and no charge no charge multi-family customers
Distance charge for MFD and commercial
accounts for container size of 3 cubic yards or less:

Within fifty (50) feet of access by Contractor's collection no charge no charge vehicle
51 feet or more from access by Contractor's no charge no charge collection vehicle
Distance charge for MFD and commercial
accounts for container size larger than 3 cubic yards
or less:
0 to fifty (50) feet of access by Contractor's collection no charge no charge vehicle
51 feet or more from access by Contractor's no charge no charge collection vehicle
Extra pick up charge for MFD and commercial charge by volume charge by volume customers (charge per collection event)
Lock purchase fee (one time charge; replacement at 22.25 5.80% 23.54 no additional charge)
Key service (unlock and relock bin). Monthly charge 12.43 5.80% 13.15 based on once per week service
Container steam cleaning (or clean container exchange) 111.23 5.80% 117.68 Bin or debris box
Fee to collect contaminated Targeted Recyclable 27.97 5.80% 29.59 Materials or Organic Materials (per container)

9.b
Packet Pg. 309 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to 1 ATTACHMENT E
SB 1383 RELATED MATTERS

1. Definitions. All terms used herein shall be defined as set forth in Pacifica Municipal Code section 6-5.702. For the purposes of this Agreement, the term “segment” as used in Pacifica Municipal Code section 6-5.702.JJ shall mean regularly scheduled route to be performed by one collection vehicle providing regularly scheduled Solid Waste, Recyclable material or Mixed Organics collection services (not on-call or Bulky Item), excluding compactor collection services, within the Service Area.

2. Container Colors.

2.1.General Requirement. Contractor shall ensure that each Container that it newly purchases after January 1, 2022 and provides to a Customer for regularly scheduled collection under this Agreement conforms to the following color scheme: Gray Containers for collection of Solid Waste, Blue Containers for collection of Recyclable Materials, and Green Containers for collection of Organic Materials. In addition, Contractor shall ensure that all Containers it uses to provide such services to Customers serviced under the Agreement conform to such color scheme by January 1, 2036.

2.2.Specific Material Types. Paper products and printing and writing paper, each as defined in the SB 1383 Regulations, may be placed in either the Blue Container or the Green Container.

3. Container Labels.

3.1.General Requirement. Contractor shall ensure that each Container (or Container lid) that it newly purchases after January 1, 2022 and provides to a Customer for regularly scheduled collection under this Agreement shall be labeled or imprinted with language and/or graphics that clearly indicates the primary items accepted and the primary items that are Prohibited Container Contaminants for that Container type. Contractor may comply with this section by using model labeling provided by CalRecycle.

4. Route Reviews.

4.1.General Requirement. At least once annually, beginning in 2022, Contractor shall conduct a Route Review for each Hauler Route. For each Route Review of a Hauler Route, Contractor shall inspect a number of Containers equal to 2% of the number of Customers on the Hauler Route (rounded down to the nearest whole number), or 25 Containers, whichever is less. Only one (1) Container per Customer shall be counted towards the above threshold. For example, if an Organic Materials Hauler Route has 2,000 Customers, Contractor would inspect one (1) Organic Materials Container each for 25 Organic Materials Customers on that Hauler Route. Contractor may, but shall not be required to, inspect more than the above number of Containers. Each inspection shall involve observing the contents of the Container (whether by lifting the lid, using a camera, or other method deemed appropriate by Contractor), but shall not require Contractor to

9.b
Packet Pg. 310 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to 2 disturb the contents or open any bags. Contractor may select the Containers to be inspected at random, or (if mutually agreed with City) by any other method not prohibited under the SB 1383 Regulations. For the avoidance of doubt, Contractor shall not be required to annually inspect every Container on a Hauler Route. Contractor shall include the results of each Route Review in its reports to City, as required by Section 7.

4.2.Notice of Contamination. If Contractor finds Prohibited Container Contaminants in a Container during a Route Review, Contractor shall notify the Customer of the violation in writing. The written notice shall include information regarding the Customer’s requirement to properly separate materials into the appropriate Containers. The notice may be left on the Customer’s Container, gate, or door at the time the violation is discovered, and/or be mailed, e-mailed, electronically messaged or delivered personally to the Customer. Contractor may dispose of the contents of any Container found to contain Prohibited Container Contaminants. The notice shall be provided in English and Spanish.

5. Compliance Reviews.

5.1.General Requirement. At least once annually, beginning in 2022, Contractor shall review the records of its Commercial and Multi-Family Customers in City that are subscribed for at least two (2) cubic yards per week of combined Solid Waste, Organic Materials and Recyclable Materials service, to determine whether such Customers are subscribed for Organic Materials collection service or have an applicable waiver. Contractor shall include the results of each compliance review in its reports to City, as required by Section 7.

6. Education & Outreach.

6.1.Prior to February 1, 2022, and annually thereafter, Contractor shall provide the following to all its Organic Materials Customers under the Agreement:

6.1.1. Information on the Organic Materials Customer’s requirements to properly separate materials in appropriate containers.

6.1.2. Information on methods for: the prevention of Organic Materials generation, recycling Organic Materials on-site, sending Organic Materials to community composting, and any other local requirements regarding Organic Materials.

6.1.3. Information regarding the methane reduction benefits of reducing the landfill disposal of Organic Materials, and the methods of Organic Materials recovery contemplated by the Agreement.

6.1.4. Information regarding how to recover Organic Materials.

6.1.5. Information related to the public health and safety and environmental impacts associated with the landfill disposal of Organic Materials.

6.2.The above information will be provided, at a minimum, through print and/or electronic media, and may also be provided through workshops, meetings and/or on-site visits.

9.b
Packet Pg. 311 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to 3 6.3.Educational materials provided pursuant to the above shall be translated into Spanish.

7. Reporting.

7.1.Beginning January 1, 2022, Contractor shall provide the following information to City on at least a quarterly basis:

7.1.1. For information provided by Contractor pursuant to Section 6 above:
(a) Copies of all such information (including flyers, brochures, newsletters, invoice messaging, website and social media postings, mass emails, and other mass electronic messages).
(b) The date the information was disseminated or the direct contact made.

For website and social media postings, this shall be the date posted. (c) To whom the information was disseminated or the direct contact made.

For mass distributions such as mailings or bill inserts, Contractor may provide the type and number of accounts receiving the information, rather than listing each recipient individually.
(d) Notwithstanding any other provision, Contractor shall not be required to track or provide copies of emails, texts, or other electronic communications with individual Customers (e.g. if a CSR answers a customer question).

7.1.2. For Route Reviews and Compliance Reviews:
(a) The date the review was conducted.
(b) The name and title of each person conducting the review. (c) For Route Reviews, (i) a description of each Hauler Route reviewed, including Contractor’s route number and a description of the Hauler Route area, (ii) a list of the account names and addresses where Container inspections were performed, and (iii) the results of such review (i.e. the addresses where any Prohibited Container Contaminants were found).
(d) For Compliance Reviews, the results of such review (i.e. Contractor’s findings as to whether the Customers reviewed are subscribed for Organic Material collection service, have an applicable waiver, or neither), and any relevant evidence supporting such findings (e.g. a spreadsheet based on Contractor’s account records summarizing the reviewed Customers’ service levels and waiver status).
(e) Copies of any educational materials issued pursuant to such reviews (other than notices of Prohibited Container Contaminants, which are covered below).

9.b
Packet Pg. 312 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to 4 7.1.3. Documentation relating to observed Prohibited Container Contaminants, whether observed during Route Reviews or otherwise:
(a) Copies of the form of each notice issued by Contractor to Customers for Prohibited Container Contaminants, as well as, for each such form, a list of the Customers to which such notice was issued, the date of issuance, the Customer’s name and service address, and the reason for issuance (if the form is used for multiple reasons). (b) The number of times notices were issued to Customers for Prohibited Container Contaminants.
(c) The number of Containers where the contents were disposed due to observation of Prohibited Container Contaminants.
(d) For the avoidance of doubt, the notices of Prohibited Container Contaminants referred to in this subsection include both the notices issued during Route Reviews under Section 4 above, as well as the notices issued by drivers for excessive contamination issued under Section 6.07 of the Agreement.

7.1.4. A description of Contractor’s process for determining the level of Container contamination under the Agreement.

8. Contractor shall assist City in City’s preparation of the Implementation Record described in Section 18995.2 of the SB 1383 regulations by providing non-confidential information and documents that are in the possession of Contractor and as requested by the City.

9. In addition to the foregoing, Contractor shall comply with the requirements for “Haulers” as set forth in Pacifica Municipal Code section 6-5.708.

9.b
Packet Pg. 313 Attachment: Attachment 2- Proposed Second Amendment to Franchise Agreement with Attachments K, N and E (5154 : Second Amendment to Calculated City Costs to Be Paid to the City by Recology Franchise Fee – Use of Old Wastewater Treatment Plant Yard (40,000 sf x 50/sf =$2,000,000 land valuation= $200,000/year rental rate
Administration Cost:

Public Works Director/City Engineer – 520 hr x 165/hr = $85,800 City Manager – 100 hr x $187/hr = $18,700
Finance Manager – 50 hr x $144/hr = $7,200
Field Services Manager- 260 hr x $124/hr=$32,240
Project Coordinator- 140 hr x $59/hr=$8,850
Attorney- 60 hr x 350/hr= $21,000
Consultant Costs = $40,000
AB 939 Administration Costs= ($30,000)
Administrative Cost total = $183,790

9.c
Packet Pg. 314 Attachment: Attachment 3 - City Cost analysis (5154 : Second Amendment to Recology of the Coast Franchise Agreement)

CITY OF PACIFICA

COUNCIL AGENDA SUMMARY REPORT
10/10/2022
1 SUBJECT:

Short-term Rental Program Update and Discussion of Options for Future Amendments to Existing Regulations
RECOMMENDED ACTION:

Discuss the City’s existing Short-term Rental (STR) Program and information about residential property sales resulting in subsequent STR use and provide direction on whether amendments to the STR Program regulations are warranted at this time.

STAFF CONTACT:

Christian Murdock, AICP, Planning Director
(650) 738-7341
[email protected]
Yulia Carter, Assistant City Manager
(650) 738-7301
[email protected]
BACKGROUND/DISCUSSION:

The term “short-term rental” refers to the use of all or a portion of a residential dwelling unit for a rental of less than 30 consecutive days. The popularity of STRs has increased steadily over the past decade due in part to the convenience of booking provided by companies such as Airbnb and VRBO and the increased availability of STRs as an alternative to a traditional hotel or motel. STRs can also provide a source of income for owners and occupants of the residential dwelling units offered for rent as STRs.

A residential dwelling unit being offered as an STR may be exclusively used as an STR (i.e., unhosted) or the property owner/renter may reside on the property (i.e., hosted). Hosted STRs may be offered for rent by guests while the owner/renter is on-premises or may be offered for rent by guests periodically between occupancy by the property owner/renter. Because STRs utilize existing residential dwelling units, STRs are primarily interspersed within single-family residential neighborhoods or throughout apartment/condominium units in multi-family residential buildings. As such, STRs can have negative impacts on noise, garbage, and parking availability in a community. STRs can also have negative impacts on the availability of residential dwelling units for long-term housing needs in a community through the use of homes only as STRs, potentially causing a reduction in the supply of housing stock which can contribute to higher housing costs.

The increasing number of STRs in Pacifica led the City Council to adopt Ordinance No. 835- C.S. (“Ordinance”) in 2018. The Ordinance established a permit requirement for operation of an STR, certain operating requirements, and permit revocation and enforcement processes. The 10 Packet Pg. 315
Pacifica City Council 2
October 10, 2022
operating requirements established in the Ordinance also included certain guest safety standards including a requirement that a diagram of exits, fire extinguisher locations, and fire and police contact numbers be printed and on-site for the renter.

The Ordinance appoints the Assistant City Manager or designee as the responsible City official for administration of the STR permit process. Other staff primarily in the Finance Division of the Administrative Services Department are responsible for assisting applicants with completing their business license tax, TOT, and STR permit registrations. The City engaged a consultant, HdL in July 2021 to assist with annual filing and management services for the transient occupancy tax (TOT) returns and requirements for City hotels/motels, including TOT compliance verifications for STRs.

Since enactment of the Ordinance, the City has registered numerous STRs. HdL and City staff have identified a total of 172 total STR properties1 as of September 30, 2022. HdL has brought 148 of them to compliance by either helping them to register (101 properties) or close/ cease STR activities (47 properties), while 24
STR properties remain unresponsive,
subject to priority compliance
enforcement efforts by HdL. Therefore,
as of September 30, 2022 the City had
101 active registered and compliant
STRs.

It is important to note that the STR
advertisement count is a fluid number
that constantly changes. For
comparison, below is the STR map
distributed throughout Pacifica at the
time this report was written as shown in
Figure 1, (blue dots are listings with
identified properties, red dots show noncompliant properties being contacted, and yellow dots are listings in an
approximate location but that are not yet
associated with an identified property).

On June 13, 2022, City staff provided a
comprehensive update to the Council on implementation of the City’s STR Program2. At that meeting staff provided a detailed report on implementation of the STR Program, which included:

STR locations in Pacifica, the Transient Occupancy Tax (TOT) collections from STRs, the impact STRs have on the City’s housing stock, unpermitted STRs and City enforcement activities.

At that June 13th meeting, staff summarized the status of the STR Program as follows:
1 The number of active STR listings frequently changes as new properties are added and existing properties are removed by operators.
2 City Council Agenda Report, Item No. 14.
10 Packet Pg. 316
Pacifica City Council 3
October 10, 2022
• The City’s STR Program is still relatively new;
• STRs comprise a small share of dwelling units3(less than 1%), especially low for a coastal community;
• Some STR concentration observed in West Sharp Park and Pedro Point neighborhoods; • No evidence of significant neighborhood problems or impacts to public health, safety and welfare.

The City Manager’s recommendation, at that time, was to not undertake any modifications to the STR Program and to continue to gather data on the number and types of STRs, continue to work to identify unregistered STRs and assess and enforce as necessary any Accessory Dwelling Units (ADUs) as STRs. Ultimately, the City Council did not direct any changes to the STR Program but did direct that potential revisions to the STR Program be revisited during the Council goal setting in 2023.

Since the June 13th meeting there have been some concerns from members of the public relating to the sale of residential property in Pacifica for the singular purpose of using the property as an STR. These types of purchases can have a negative impact on the community as they remove an entire housing unit from the housing stock available for long-term residential use. As a result of these recent concerns, Councilmember Beckmeyer requested that this item be agendized for an initial Council discussion about this specific concern.

ANALYSIS:

Staff has worked with HdL to attempt to identify and analyze available data pertaining to the sale of properties to determine if there is indeed a correlation between the purchase of residential property and conversion of those properties to STRs. Data that is available on residential sales does not give details on the intended use of the residential property (i.e., was it purchased for family use or long-term rental or STR) at the time of purchase. However, HdL was able to prepare a chart that compares the residential properties sold in the last three years with properties advertised or registered as an STR4.
3 Overall, the 103 STRs identified by HdL in the June 13, 2022, report comprise less than 1 percent of Pacifica’s total housing stock.
4 This data is limited by only including the date of the last sale. It will not include data if a residence was sold multiple times over the last 3 years. Since the objective is to find the rate of conversion to STR in the City, historical sales do not have a noticeable impact on the figures listed. 10 Packet Pg. 317
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Count Year Rate
Total Residential Property Sales in 2019 321 2019 4.7%
Residential Properties sold in 2019 and advertised or registered as STR 15 2020 4.7% 2021 4.6%
%STR Conversion 4.673% 2022 8.1%
Count
Total Residential Property Sales in 2020 342
Residential Properties sold in 2020 years and advertised or registered as STR 16 %STR Conversion 4.678%
Count
Total Residential Property Sales in 2021 410
Residential Properties sold in 2021 and advertised or registered as STR 19 %STR Conversion 4.634%
Count
Total Residential Property Sales in 2022 YTD 260
Residential Properties sold in 2022 YTD and advertised or registered as STR 21 %STR Conversion 8.077%
*Totals for 2022 datra as of 9/30/2022
Pacifica, CA - STR Conversion Analysis- 2019 Conversion Rates Pacifica, CA - STR Conversion Analysis-2020
Pacifica, CA - STR Conversion Analysis - 2021
Pacifica, CA - STR Conversion Analysis - 2022
Pacifica STR Conversion Analysis (January 2019 - September 2022)

4.7% 4.7% 4.6%

8.1%

0.0%

2.5%

5.0%

7.5%

10.0%
2019 2020 2021 2022
Conversion Rate over Time
As can be seen in the foregoing chart, the number of residential properties sold in the last three years and advertised or registered as STR has varied from year to year, with the highest number being 21 in 2022, which shows an uptick of the STR conversions from an average 4.6% of sold properties in 2019-2021 to 8.1% in 2022 year-to-date. The partial year figure for January to September 2022 was 21 out of 260 sales. While the data show that the proportion of sales that resulted in advertising or registering as an STR varied between 2019 and 2022 (primarily because the number of residential properties sold varied each year), the actual count of properties converted to STRs from year to year has not varied significantly from 2019 to 2022.

Potential Amendment to STR Program
If Council determines that the STR Program needs to be revised to address the conversion of residential properties to STRs, staff has identified three regulatory options that may address this concern.

Option No. 1: Impose a Cap on the Total Number of STR Permits Issued in Pacifica Imposing a cap or limit on the total number of STR Permits issued in Pacifica could effectively curb the purchase of residential property for STRs. By imposing a cap on STR Permits the City may not be as attractive to those buyers who are purchasing residential property for the sole purpose of using that property as STRs. Through this type of regulation, once the total cap has been reached on STR Permits, no further STR Permits would be issued until an STR Permit has been revoked or relinquished.

If Council is inclined to impose a cap, staff would recommend limiting the STR Permits to 175 10 Packet Pg. 318
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given the total number of STRs currently permitted, the number of STR applicants that are currently pending processing of their applications, and those STRs that may be brought into compliance between now and the adoption of the ordinance in response to enforcement correspondence already sent by the City. This option would not require any further staff analysis to determine the appropriate limit and the revisions to the Ordinance that would be required are anticipated to be fairly straight forward. Imposing and enforcing a cap will present administrative challenges beyond the current program administration, but staff anticipates those impacts to be manageable.

Option No. 2: Limit the Total Number of Times an STR Can Be Rented A limit on the total number of times that STRs can be rented during a calendar year could also deter the purchase of residential property for only STR use. If a prospective buyer is purchasing the property with the desire to use the property as a full-time STR then they would need to assess whether a limitation on the total number of times an STR can be used would still meet their needs. Once the maximum number of rentals in a calendar year has been reached then the property could no longer be utilized as an STR until the following year.

If Council is inclined to impose a limit on the number of times an STR can be rented, staff would need to perform more analysis in order to determine what length of rental period would be appropriate. For example, the City of Daly City limits STRs to a maximum of 100 days per year for unhosted stays, while Redwood City limits STRs to a maximum of 120 days per year for unhosted STRs. Both cities have no limit on hosted STRs. This option would likely require significant amendments to the Ordinance to specify the maximum rental period. This option would also be more difficult to enforce as it may be difficult to determine actual days that the STRs are rented.

Option No. 3: Limit the Number of STR Permits that Can Be Issued to Each Person Currently, each property that operates as an STR in Pacifica must obtain an STR Permit and there is no limit on the number of STR Permits that may be issued to one person. A limit on the total number of STR Permits that can be issued to a single person could deter the purchase of residential property for exclusive use as an STR because they may not be able to obtain an STR Permit for multiple properties.

If Council is inclined to impose a limit on the number of STR Permits that can be issued to one person, staff would need to conduct more analysis in order to determine what the appropriate limit would be for STR Permits and the best approach to regulating in this manner. This option would likely require significant amendments to the Ordinance to provide a distinction between third party agencies that administer the use of the property as an STR and actual owners of the property. This option would also be difficult to enforce because it will require careful analysis of each person applying for an STR Permit to determine whether they have other STR Permits, a task further complicated by the common use of limited liability companies (LLCs) and other ownership structures that make determining the actual beneficial owner challenging.

Other Options
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There may be other options not listed above that the Council may wish to discuss, however staff’s preliminary analysis has focused on the three primary options above. Staff is aware that one city imposes a “waiting period” on new purchases before conversion to an STR is allowed.

However it is staff’s assessment that this option does not address the neighborhood impact concern, as there is no neighborhood impact difference between a long-term homeowner suddenly deciding to STR their property and a homeowner selling their property and it being immediately converted.

Practical Constraints to Revising STR Program at this Time As discussed at the meeting on June 13th, there are a number of revisions to the STR Program that Council could decide to undertake. If Council is inclined to undertake revisions to the STR Program at this time, there are some practical constraints such as staff time and certification of an amended ordinance by the California Coastal Commission (CCC) before it may take effect in the Coastal Zone, that must also be considered to determine whether and to what extent revisions can be made at this time. The Council should also consider the potential fiscal impacts of new regulations that would restrict STR rentals in light of the City’s overall fiscal condition5.

With regard to staff time, any amendment to the Ordinance would involve some amount of staff analysis and preparation. The Ordinance is found in Article 49 of the City’s Zoning Code and thus any amendments to the Ordinance would need to be prepared by the Planning Department. As Council is aware the Planning Department recently initiated the Housing Element update and is focusing on those efforts in order to meet applicable deadlines for adoption. As a zoning ordinance, any amendment would also need to undergo a public hearing and recommendation by the Planning Commission prior to consideration by the City Council.

With regard to the CCC’s consideration, no Ordinance amendments would become effective in the Coastal Zone until the CCC certifies an amendment to the City's local coastal program (LCP) pursuant to Section 30514 of the California Public Resources Code. The CCC is generally not supportive of outright STR bans in the Coastal Zone but has supported other STR programs with reasonable regulations. For example, the CCC recently denied a request from the City of Malibu for an LCP amendment to allow only hosted STRs, finding that the proposed amendment would unduly restrict the rental of residential units to visitors and diminish the public’s ability to access and recreate on the coast.6 Certification of LCP amendments can take several months or longer, which would affect how quickly an amendment to the Ordinance could take effect in the Coastal Zone. The Council could consider a separate numerical cap within the Coastal Zone so that a numerical cap could take effect more quickly outside the Coastal Zone.

Staff Recommendation
Given the foregoing constraints, if Council is inclined to give direction to revise the STR Program at this time, the City Manager would recommend selecting Option No. 1 because it would require the least amount of staff time and provide the most straight forward approach to 5 The City has received more than $2.1 million in TOT revenue from registered STRs since FY 2018- 2019. Based on the most recent HdL estimates the City could be receiving approximately $1.3 million in TOT revenue annually if all STRs it has identified as active on the current market were brought into compliance.
6 https://documents.coastal.ca.gov/reports/2022/8/F10a/F10a-8-2022-report.pdf 10 Packet Pg. 320
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addressing the concern that sale of residential property in Pacifica is being converted to STRs.

However, as stated above, any amendments to the Ordinance would require consideration by the Planning Commission and would not become effective in the Coastal Zone until the CCC certifies an amendment to the City’s LCP.

ALTERNATIVE ACTION:

City Council may direct staff to explore any alternative options.

RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
• “Fiscal Sustainability” The City’s efforts to ensure registration of all STRs should increase tax revenues in a manner consistent with this City Council Goal. • “An Engaged Community” Consideration of the STR program in a public forum expands public participation in a manner consistent with this City Council Goal. • “A Healthy and Compassionate Community” Evaluating the relationship of STRs to the City’s housing stock is consistent with this City Council Goal.

FISCAL IMPACT:

Any revisions to the STR Program that limit the STR Permits or rental opportunities would have an impact on the City’s revenue received from the STR Program through TOT or business license payments. It is also important to note that the compliance process takes time and staff is working diligently with the consultant on monitoring compliance activities. Out of 172 STR properties that were recently identified by HdL and staff, 148 (86%) have been brought into compliance by either helping property owners with their filings or close their ads and ceasing further business activities. The remaining unresponsive and non-compliant STRs are now being assessed for back taxes, penalties and interest and are in the process of collections by HdL.

The FY2021-22 year-to-date TOT revenues from STR reached $1.04 million, which is a 75% increase from the $593K in FY 2020-21 and is a result of the increased post-COVID activity level as well as compliance efforts. Staff will continue monitoring STR activities to ensure compliance with the policy options chosen by the City Council.

ORIGINATED BY:

City Manager's Office
ATTACHMENT LIST:
10 Packet Pg. 321

CITY OF PACIFICA

COUNCIL AGENDA SUMMARY REPORT
10/10/2022
1 SUBJECT:

Adoption of an Ordinance to enact a new Article 52 “Outdoor Commercial Permits” and to amend Section 9-4.2308 “Commercial and Industrial Uses Outside Structures” of Chapter 4 of Title 9 of the Pacifica Municipal Code to conduct commercial activity outside of an enclosed structure (Text Amendment TA-122-22, File No. 2022-017) and finding the Text Amendment Exempt from the California Environmental Quality Act (CEQA); Adoption of Resolution Approving the Outdoor Permit Guidelines with standards for development relating to Outdoor Commercial Areas; and Adoption of Resolution Approving Maximum Application Deposit Fee for Outdoor Commercial Permits
RECOMMENDED ACTIONS:

1. Move to waive the second reading and adopt an Ordinance entitled “An Ordinance of the City Council of the City of Pacifica to Enact a New Article 52 ‘Outdoor Commercial Permits’ and to Amend Section 9-4.2308 ‘Commercial and Industrial Uses Outside Structures’ of Chapter 4 of Title 9 of the Pacifica Municipal Code to Create a Process for Commercial Businesses to Conduct Commercial Activity Outside of an Enclosed Structure and Finding the Text Amendment Exempt from the California Environmental Quality Act (CEQA) (Text Amendment TA-122-22, File No. 2022-017),”

2. Adopt Resolution Approving the Outdoor Commercial Permit Guidelines and Finding the Outdoor Commercial Permit Guidelines Exempt from the California Environmental Quality Act (CEQA)(File No. 2022-017) included as Attachment A to this staff report.

3. Adopt Resolution Approving a Maximum Application Deposit Fee for Outdoor Commercial Permits (File No. 2022-017) included as Attachment B to this staff report.

STAFF CONTACTS:

Bonny O’Connor, AICP, Senior Planner
(650) 738-7443
[email protected]
BACKGROUND / DISCUSSION:

Outdoor Commercial Permit Ordinance
The Planning Commission held a duly noticed public hearing on the proposed amendments contained in Text Amendment TA-122-22 (File No. 2022-017) on September 6, 2022, and adopted Resolution No. 2022-019 by a vote of 6 to 0 (with one absence) initiating and recommending City Council approval of Text Amendment TA-122-22.

On September 26, 2022 the City Council held a duly noticed public hearing on the proposed Ordinance and introduced the Ordinance as amended to include the modification to insert “bars” as an eligible commercial use as listed in Section 9-4.5204(b) and referred the modified Ordinance to the Planning Commission for report and recommendation in accordance with Section 9-4.3507.
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At its regular meeting held on October 3, 2022, the Planning Commission received a staff report on the modification made by City Council on the introduction of the Ordinance and adopted Resolution No. 2022-022 by a vote of 5 to 0 (with 2 absences) to recommend approval of the modification made by City Council.

The proposed Ordinance is now in order for adoption by City Council.

Outdoor Commercial Permit Guidelines
Staff prepared Outdoor Commercial Permit Guidelines to supplement the ordinance. This document was prepared to provide additional details of the standards for development within the designated outdoor commercial area. The Council may amend the Outdoor Commercial Permit Guidelines from time to time without the need of a zoning text amendment. During the September 26, 2022 City Council meeting, staff presented the draft Outdoor Commercial Permit Guidelines to Council for comments and feedback. No changes were recommended by the Council at that time, therefore staff is recommending that Council adopt the attached resolution to approve the Outdoor Commercial Permit Guidelines (Attachment A).

As discussed at the September 26 City Council meeting, future steps for staff will include hiring a designer to prepare the pre-approved specifications for parklet designs in accordance with the adopted provisions and guidelines. Once available, staff will likely need to follow up with updated Outdoor Commercial permit guidelines to include specifications for parklets at a later time. Timing for this follow-on activity will be dependent on available budget as discussed further in the Fiscal Impact section of the staff report.

Outdoor Commercial Permit Fee
During the September 26, 2022 City Council meeting, to address Council’s desire to have a flat fee for the Outdoor Commercial Permit, staff proposed establishing a maximum hourly deposit of 10 hours (equivalent to $2,380 under the FY 2022-2023 Master Fee Schedule) for Outdoor Commercial Permits application in the parking lane of a public ROW and a maximum hourly deposit of 6 hours (equivalent to $1,428 under the FY 2022-2023 Master Fee Schedule) for all other Outdoor Commercial Permits application types. This method would allow the City to establish a maximum cost for business owners using rates already established by the City without having to conduct a cost allocation study to establish a new fee line item in the Master Fee Schedule. The suggested maximums reflect staff’s analysis of the total time the applications are expected to take to process and staff’s assessment that the processing of an Outdoor Commercial Permit application in the parking lane of a public ROW will likely require more time to confirm compliance with the applicable provisions, require more interdepartmental coordination, and will be more likely to be appealed compared to the other Outdoor Commercial Permit types. The Outdoor Commercial Permit applications in the parking lane will also require the execution of a License Agreement pursuant to Section 9-4.5207(a)(6) of the Ordinance and thus may require City Attorney time if the applicant desires to negotiate terms of the License Agreement.

Additionally, these maximum deposit amounts are well below the deposits that the Planning Department would request from an applicant for a use permit which would range from $6,000 to $15,575 in most typical circumstances. Since the fee will be considered a deposit, any remaining funds not used for the processing of the permit would be returned to the applicant.

However, any costs that would exceed the maximum hourly deposit would be absorbed by the City. The cost to the City to process an appeal of the Administrator’s action to the Planning Commission would likely exceed the suggested maximum hourly deposits. Therefore, the cost to the City to process an appeal of the Planning Commission’s action to the City Council would also exceed the suggested maximum hourly deposits. In an attempt to manage the number and 11 Packet Pg. 323
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extent of appeals filed, Section 9-4.5205(c) of the ordinance would limit a permit appeal to only the basis that the Administrator erred in determining the findings in Section 9-4.5205(a). This is intended to streamline the analysis required for any potential appeal which would have the effect of minimizing processing costs.

At the September 26, 2022 City Council meeting, City Council expressed support for the establishment of the maximum hourly deposit as well as the amounts established for each permit scenario. Therefore staff is recommending that Council adopt the attached resolution to approve the Outdoor Commercial Permit fee (Attachment B). Additionally, Council did request to better understand what additional costs a business owner may experience when establishing an outdoor commercial area. Table 1 identifies potential costs that may be associated with an Outdoor Commercial Permit. However, since this program has not yet commenced and every permit application will be different. Table 1 is not meant to be an exhaustive list. 11 Packet Pg. 324
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Table 1. Potential Costs Associated with Outdoor Commercial Permits and Cost Estimates Potential Business
Owner Costs
Outdoor Commercial Permit Scenario Type Current Cost
Estimates
Notes
Public ROW Private Property
Parking
Lane
Sidewalk Off-street
Parking
Other
Areas
Outdoor Commercial
Permit
X X X X $1,428-$2,380 (annual,
deposit)
Depends on permit
scenario type
Coastal
Development Permit
(CDP)
~ ~ ~ ~ $15,757 (one time,
deposit)
Staff will follow up
with an umbrella
CDP to unburden
compliant
applicants with this
cost
Parklet Design X ~ ~ $5,000 -$20,000 (one
time)
Staff will follow up
with pre-approved
parklet designs
specs to reduce
this cost
Parklet Construction X ~ ~
Building Permit X ~ ~ $0-$2,000 (one time) Depends if the improvement
triggers a building
permit and the
scale and value of
improvement.

Furniture/Decor X X X X Varies
Encroachment
Permit
X X Initial year: $500-
$1,500
(plus a potential bond
of at least $4,000)
Subsequent years
could be less.

City Required
General Liability
Insurance
X X Pending Staff is working to
present a range at
the meeting
Maintenance and
Repair
X X X X $200-$1,000 (annual)
Legend:

X – Applicable to permit scenario type
~ – May be applicable to permit scenario type.
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RELATION TO CITY COUNCIL GOALS AND WORK PLAN:

The adoption of an outdoor commercial permit ordinance is in line with the following goal of the Council:
• “Fiscal Sustainability” includes investing in economic development to increase revenues, funding a reserve/emergency fund, and being well prepared for grant opportunities.

Additionally, this ordinance is consistent with the following Council priority:
• Continue to evaluate and implement Economic Development Initiatives focused on Business Assistance
FISCAL IMPACT:

As proposed, the cost of processing the Outdoor Commercial Permits would be borne by the applicant up to a maximum of 6 to 10 hours of the Planning / Engineering Hourly Rate depending on the type of Outdoor Commercial Permit. Staff does not anticipate that the proposed streamlined permitting process would exceed this cost. However, unique situations, unforeseen conflicts, or appeals to the permit could cause costs to exceed the maximum funds provided by the applicant and the City would absorb these costs, including City Attorney’s Office costs. These instances are not anticipated to be frequent and therefore this amount is not anticipated to be significant.

In relation to the follow-on preparation of pre-approved specifications for parklet designs, the adopted Fiscal Year 2022-2023 Planning Department budget included $25,000 for this ordinance update. Staff will determine if remaining funds from the work to-date will allow the pre-approved specifications work to proceed this fiscal year, or whether an additional budget allocation may be required at the mid-year budget update or during adoption of the Fiscal Year 2023-2024 budget.

ORIGINATED BY:

Planning Department
City Clerk
ATTACHMENT LIST:

Attachment A - Draft Resolution Outdoor Commercial Permit Guidelines (PDF) Attachment B - Draft Resolution Outdoor Commercial Permit Fees (DOCX) 11 Packet Pg. 326
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ORDINANCE NO. (ID # 5150)
ORDINANCE NO. ___________

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PACIFICA TO ENACT A NEW ARTICLE 52 “OUTDOOR COMMERCIAL PERMITS” AND TO AMEND SECTION 9-4.2308 “COMMERCIAL AND INDUSTRIAL USES OUTSIDE STRUCTURES” OF CHAPTER 4 OF TITLE 9 OF THE PACIFICA MUNICIPAL CODE TO CREATE A PROCESS FOR

COMMERCIAL BUSINESSES TO CONDUCT COMMERCIAL ACTIVITY OUTSIDE OF AN

ENCLOSED STRUCTURE AND FINDING THE TEXT AMENDMENT EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) (FILE NO. 2022-017; TEXT AMENDMENT TA-122-22).

WHEREAS, on June 5, 2020, the City Manager, as Director of Emergency Services, issued an Emergency Order relating to the operation of outdoor commercial activities in the public right of way and on private property during the period of local emergency due to COVID19. This order, which was ratified by the City Council at the regular City Council meeting on June 8, 2020, enabled many businesses to survive the economic impacts of the pandemic; and WHEREAS, since June of 2020, approximately 30 businesses have participated in the Temporary COVID-19 Outdoor Activities program, including approximately 20 restaurants and 10 other types of businesses; and
WHEREAS, the Temporary COVID-19 Outdoor Activities program will expire under the Director of Emergency Services’ Emergency Order consistent with the State and County emergency orders and Council directed the City Manager to prioritize consideration of Municipal Code amendments related to commercial outdoor activities; and WHEREAS, on August 9, 2021 and November 22, 2021, the City Council held study sessions on the continuation of outdoor activities and provided direction to staff relevant to the development of a permanent ordinance; and
WHEREAS, on August 15, 2022, the Planning Commission of the City of Pacifica continued the duly noticed public hearing on the proposed amendments contained in Text Amendment TA-122-22 to September 6, 2022; and
WHEREAS, the Planning Commission held a public hearing on the proposed amendments contained in Text Amendment TA-122-22 (File No. 2022-017) on September 6, 2022, and adopted Resolution No. 2022-019 by a vote of 6 to 0 (with one absence) initiating and recommending City Council approval of Text Amendment TA-122-22; and WHEREAS, the City Council of the City of Pacifica held a duly noticed public hearing on the proposed ordinance on September 26, 2022, and introduced Ordinance No. ### including the modification to insert “bars” as an eligible commercial use as listed in sec. 9-4.5204(b).

WHEREAS, the Planning Commission of the City of Pacifica received a staff report on the modification made by City Council in the introduction of the Ordinance during the regular October 3, 2022 Planning Commission meeting in accordance with PMC sec. 9-4.3507 and adopted Resolution No. 2022-022 by a vote of 5 to 0 (with 2 absences) to recommend approval of the modification made by City Council.

NOW, THEREFORE, the City Council of the City of Pacifica does ordain as follows:
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Section 1. Recitals. The City Council of the City of Pacifica does hereby find that the above referenced recitals are true and correct and material to the adoption of this Ordinance.

Section 2. Enactment. Article 52, “Outdoor Commercial Permits” of Chapter 4, “Zoning” of Title 9, “Planning and Zoning” of the Pacifica Municipal Code is hereby enacted as follows:
“Article 52. Outdoor Commercial Permit
Sec. 9-4.5200 Purpose and Intent
The purpose of this article is to establish regulations to allow outdoor commercial use and nonpermanent structures within the public right-of-way or outdoor areas for commercial use on private properties. The intention of this article is to provide a tool for economic development and to encourages a sense of community.

Sec. 9-4.5201 Definitions
(a) "Administrator" shall mean the Planning Director or designee. (b) “Business sponsor” shall mean a single businessowner, a representative of business ownership of an existing commercial business who has submitted an application for an Outdoor Commercial permit on behalf of a single existing commercial business. A “business sponsor” may also include a representative of multiple existing commercial businesses that have submitted a joint application for a single Outdoor Commercial permit. A business shall only be associated with one business sponsor. (c) “Existing commercial business” shall mean an active commercial business with all valid and necessary licenses, permits, and approvals. For purposes of this article, a commercial business may also include non-profit and religious organizations. (d) “Designated Outdoor Commercial Area” shall mean the area defined for Outdoor Commercial Use under the Outdoor Commercial permit.
(e) “Furniture” shall mean tables, chairs, benches, and similar non-permanent amenities that facilitate commercial activities related to the existing commercial use. (f) “Outdoor Commercial Use” shall mean the conducting of commercial activity outside of an Enclosed Structure.
(g) “Parking lane” shall mean the area within a public right-of-way where on-street parking is permitted to occur. Parking lane shall not contain any bicycle or pedestrian paths. (h) “Parklet” shall mean a platform or similar level surface constructed within an existing paved parking lane that may accommodate furniture.
(i) “Permittee” shall mean a business sponsor who has been issued an Outdoor Commercial permit. In the instance when a business sponsor is a representative for more than one business, the business sponsor shall be considered the Permittee and shall be responsible for actions of the other businesses identified on the application. (j) “Public right-of-way” shall mean a strip of land that contains the public street, sidewalks, and utilities. The edge of the right-of-way is also the property line for the abutting property.
(k) “Enclosed structure” shall mean any structure having a roof and supported by walls on all elevations of the structure.

Sec. 9-4.5202 Outdoor commercial permit
No person or business shall undertake or establish a Commercial Use outside of an Enclosed Structure without first securing an Outdoor Commercial permit, unless the property has a valid use permit in accordance with Article 33 of this chapter or a development plan in accordance with Article 22 of this chapter or is otherwise permitted by law, and authorizes the specific Commercial Use to occur outside of an Enclosed Structure. An Outdoor Commercial permit may be issued for a Designated Outdoor Commercial Area in one of the following scenarios:
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(1) Parking lane of a public right-of-way; (2) sidewalk of a public right-of-way; (3) off-street parking space areas on private property; and (4) existing paved or solid surface areas of private property which do not provide off-street parking spaces.

Sec. 9-4.5203 Permit application, term, and renewal.
(a) The Business Sponsor must complete an application on a form provided by the City, as indicated by the Administrator. Such applications shall be accompanied by a fee as established by resolution of the City Council.
(1) Parking Lane of Public Right-of-Way. Applications for an Outdoor Commercial permit in the Parking lane of public right-of-way shall require a Business Sponsor to conduct neighborhood outreach to inform other businesses on the block that the Business Sponsor is seeking an Outdoor Commercial permit in the public right-of-way. The neighborhood outreach shall identify that more than one business can be part of an application and that only one Designated Outdoor Commercial area in the parking lane of a public right-of-way is permitted per block. A final copy of the neighbor outreach material shall be provided to the City. The neighborhood outreach shall be conducted using one or more of the following methods:
(i) Written communication via certified mail to all of the businesses on the block. The Business Sponsor shall provide City with certified mail receipts.
(ii) A petition with signatures from at least two-thirds of the business owners or their designees on the block. Business Sponsor shall provide City with signed petition.
(iii) Hosting one or more open house meetings (virtual or in-person) which is attended by at least two-thirds of the business owners or their designees on the block. Business Sponsor shall provide City with an attendance list for the meeting(s).
(b) The Administrator shall solicit written comments and recommendations from the City Engineer for applications for the proposed Outdoor Commercial permit in the public right-of-way prior to approving or denying any application submitted pursuant to this article.
(c) An Outdoor Commercial permit is valid for one year from the date of issuance, unless suspended or revoked by the Administrator in accordance with Section 9-4.5211. (d) The Permittee may renew the permit annually, by submitting a renewal application and fee before, but not more than 90 days prior to the expiration of the Outdoor Commercial permit. The City shall consider applications for renewal using the provision in section 9-4.5205 and the Permittee may continue to operate in the Designated Outdoor Commercial Area until such time as the City either grants the renewal or denies the renewal of the Outdoor Commercial permit. If the Permittee does not apply for a renewal of the Outdoor Commercial permit prior to the one-year anniversary of issuance of the Outdoor Commercial permit, the Outdoor Commercial permit shall expire on the one year anniversary without further notice to the Permittee.

Sec. 9-4.5204 Eligibility
The Business Sponsor must demonstrate compliance with the following eligibility standards:
(a) The Existing Commercial Business must be located in a zoning district that includes the use of the Existing Commercial Business as a permitted use, or a conditional use with a valid use permit. An Existing Commercial Business that is a nonconforming use shall not be eligible for an Outdoor Commercial permit. (b) The following commercial uses shall be eligible for an Outdoor Commercial permit:
retail, retail restaurant, fast-food restaurant, restaurant, bars, personal services, art galleries and instructional studios for dance and arts or crafts, offices, churches, and 11 Packet Pg. 329
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health/fitness club. All other commercial uses shall not be eligible for an Outdoor Commercial permit.
(c) Existing Commercial Businesses which operate within an Enclosed Structure are eligible to apply for Outdoor Commercial permit. Mobile businesses or businesses operating without an Enclosed Structure are not eligible for Outdoor Commercial permits. An Outdoor Commercial permit shall not be issued where the Commercial Use is proposed to occur on a vacant parcel.
(d) Except for Outdoor Commercial permits issued to multiple businesses, the Designated Area of the Outdoor Commercial permit must be within the same parcel where the operation of the Commercial Business occurs within an Enclosed Structure or within adjacent public right-of-way from the parcel where the operation of the business occurs within an Enclosed Structure. When an Outdoor Commercial permit is issued to a Permittee representing multiple businesses, the Designated Outdoor Commercial Area must be within the same parcel or within the public rightof-way adjacent to at least one of the businesses associated with the Outdoor Commercial permit. A public walkway may separate the parcel or public right-of-way from the Designated Outdoor Commercial Area.
(e) The proposed Designated Outdoor Commercial Area would comply with all applicable local, County and State permit and license requirements associated with the Outdoor Commercial use. An Existing Commercial Business that is prohibited to conduct business outdoors pursuant state or federal law shall not be eligible for an Outdoor Commercial permit.
(f) Proof of commercial general liability (or comprehensive) and property damage insurance including endorsements showing the City of Pacifica as an additional insured on the insurance policy and stating that the insurance is primary with regard to the City of Pacifica. It is the Business Sponsor’s responsibility to update insurance prior to permit expiration. Failure to do so will result in revocation of the outdoor commercial permit and/or encroachment permit.

Sec. 9-4.5205 Permit Approval
(a) The Administrator shall grant an Outdoor Commercial permit only upon determining that the following findings have been made:
(1) The Business Sponsor meets the eligibility standards as detailed in section 9-

4.5204.
(2) The proposed Designated Outdoor Commercial Area for the Outdoor Commercial Use meets the applicable provisions in this Article.
(3) The proposed development for the Outdoor Commercial permit is consistent with the City’s adopted Outdoor Commercial Guidelines, as may be amended from time to time.
(b) The Administrator may approve an application for Outdoor Commercial permit if the requirements in subdivision (a) have been met or the Administrator may deny the application for the Outdoor Commercial permit if the requirements in subdivision (a) cannot be met.
(c) Notice of any Outdoor Commercial permit approval pursuant to this Section shall be mailed to property owners and occupants within 300 feet of the property where the proposed Outdoor Commercial Use will be located.

Appeals filed by any person aggrieved by this decision of the Administrator, shall be taken in the manner set forth in Section 9-4.3804 of Article 38 of this chapter. Basis of the appeal shall be limited to whether the Administrator erred in determining the findings in Section 9-

4.5205(a).
(d) Applications for renewals filed by Permittees shall follow the process detailed in subsection (a) through subsection (d) of this section.

Sec. 9-4.5206 General Provisions Applicable to All Permittees 11 Packet Pg. 330
Pacifica City Council 10 October 10, 2022
All Permittees shall comply with the following provisions during the term of the Outdoor Commercial permit:
(a) A maximum of one Outdoor Commercial permit shall be issued per Business Sponsor. A Permittee may have either a Designated Outdoor Commercial Area in the public right-ofway or may have a Designated Outdoor Commercial Area on private property. A Permittee may not have an Outdoor Commercial permit that applies to both private property and public right-of-way.
(b) An Outdoor Commercial permit shall only allow uses which are consistent with the principal business use of the Permittee. When an Outdoor Commercial permit is issued to a Permittee representing multiple businesses, the Outdoor Commercial permit shall allow the use of all the principal uses of the all the businesses associated with the Outdoor Commercial permit.
(c) Designated Outdoor Commercial Areas may not unduly interfere with access by public employees and utility workers to meters, fire hydrants, fire department connections or valves, emergency shutoff switches associated with a fire or life safety features, manholes, or other objects (street hardware) in the public right-of-way or within public utility easements.
(d) Designated Outdoor Commercial Areas shall contain ADA accessible features and/or route if ADA access is not available.
(e) Permittee shall comply with all applicable California Alcoholic Beverage Control (“ABC”) regulations regarding alcohol use within the designated area of the Outdoor Commercial permit. Permittees are solely responsible for securing a valid ABC license to allow/extend business operations within the designated area of the Outdoor Commercial permit. An Outdoor Commercial permit or encroachment permit does not constitute approval by the ABC or City for alcohol use.
(f) Permittee may offer live entertainment with amplified and non-amplified sound between 4pm and 8pm on Thursday, and 12pm to 8pm on Friday through Sunday and Federal holidays, as part of the Outdoor Commercial permit. All sources of sound generated from a designated outdoor commercial area shall be limited so as not to be audible beyond 175 feet from the limits of the designated outdoor commercial area at all times. (g) All of the following are prohibited in within the Designated Outdoor Commercial Areas:
(1) Signage which does not comply with Article 29 of this chapter; (2) Smoking and vaping; and
(3) Internal combustion generators.
(h) An Outdoor Commercial permit shall only permit Outdoor Commercial Uses which shall not exceed the normal hours of operation for the Permittee or any of the other businesses identified on the Outdoor Commercial permit, and shall be further limited to the hours of 7am to 10pm.
(i) No permanent structures shall be erected or constructed in the Designated Outdoor Commercial Area.

Sec. 9-4.5207 Provisions Applicable to Designated Outdoor Commercial Areas in the Public Right-of-Way.
(a) In addition to the General Provisions in section 9-4.5206, Permittees for Designated Outdoor Commercial Areas in the Public Right-of-Way shall comply with the following additional standards during the term of the Outdoor Commercial permit:
(1) Designated Outdoor Commercial areas in the Public Right-of-Way, including sidewalk and parking spaces, requires the issuance of an encroachment permit issued by the City. Each Permittee that obtains an encroachment permit shall be responsible for complying with all requirements in its encroachment permit. (2) Designated Outdoor Commercial Areas in the Public Right-of-Way must be open and accessible to the public at all times and signed accordingly. (3) For businesses on corner lots where commercial zoning abuts the property on 11 Packet Pg. 331
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one street and residential zoning abuts the property along the intersecting street, the Designated Outdoor Commercial Areas in the Public Right-of-Way shall only be allowed along the street frontage of the property in line with the commercial zoning.
(4) Designated Outdoor Commercial Areas in the Public Right-of-Way shall not block or interrupt bike lanes.
(5) Access to the Public Right-of-Way may be required by the City or utilities for maintenance, repairs, emergency events and/or other purposes. The City shall provide reasonable notice when feasible. The City shall not be responsible for business losses related to the loss of seating or business interruptions due to construction or loss related to removal of any built features. Furthermore, if the City and/or utility companies do need to do maintenance, it shall be the responsibility of the owner to remove any Furniture or other improvements necessary for access.
(6) Prior to issuance of the Permit, the Business Sponsor shall execute a License Agreement with the City for use of the Public Right-of-Way. (b) In addition to the standards detailed in subsection (a) of this section, designated Outdoor Commercial Areas in the Parking Lane of a Public Right-of-Way shall comply with the following additional standards:
(1) A maximum of two parallel parking spaces or four perpendicular or angled parking spaces may be used for a Designated Outdoor Commercial Area in the Public Right-of-Way.
(2) A maximum of one Designated Outdoor Commercial Area in the Parking Lane of the Public Right-of-Way shall be permitted on a segment of street between the abutting two intersecting streets and shall be issued on a first come, first serve basis.
(3) Driveways, red curbs, accessible parking spaces, and accessible paths of travel shall not be blocked or become inaccessible from the Designated Outdoor Commercial Area. The City will consider Designated Outdoor Commercial Area that block or impede access to green or white curbs or inactive driveways on a case-by-case basis.
(4) Designated Outdoor Commercial Areas in the Parking Lane of the Public Rightof-Way shall meet the following setbacks:
(i) A 4-foot inner buffer is required between edge of Designated Outdoor Commercial Area and abutting parking spaces.
(ii) A 2-foot buffer is required when abutting a driveway, motorcycle parking, or a bicycle rack.
(iii) A 2-foot buffer is required between the Designated Outdoor Commercial Area and abutting travel lane.
(iv) Parklets located adjacent to controlled intersection crosswalks shall provide 25-foot setbacks from the nearest crosswalk. The City Engineer shall review and provide a necessary buffer for Parklets located adjacent to uncontrolled intersection crosswalks on a case-by-case basis. (5) The Designated Outdoor Commercial Area shall be no wider than the actual street frontage of the property of the commercial use unless the Outdoor Commercial permit is for multiple businesses and the Business Sponsor also represents abutting property owner.
(c) In addition to the standards detailed in subsection (a) of this section, Designated Outdoor Commercial Areas in the sidewalk of the Public Right-of-Way shall meet the following additional standards:
(1) Designated Outdoor Commercial Areas in the sidewalk shall have adequate space to accommodate Furniture and shall provide adequate safe passage along the sidewalk for pedestrian and wheelchair users of the sidewalk. A minimum width of 4 feet shall be maintained along the sidewalk. No Furniture shall be 11 Packet Pg. 332
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placed or allowed to remain on any sidewalk that inhibits the minimum 4-foot passage.
(2) No structures may be constructed within the sidewalk.

Sec. 9-4.5208 Provisions Applicable to Designated Outdoor Commercial Areas on Private Property.
(a) In addition to the General Provisions in section 9-4.5206, Permittees for Designated Outdoor Commercial Areas on Private Property shall comply with the following additional standards during the term of the Outdoor Commercial permit:
(1) Designated Outdoor Commercial Areas shall be located within outdoor space contiguous to the Business Sponsor’s tenant space unless authorized by the property owner to use other space contiguous to commercial structures or walkways immediately adjacent to Enclosed Structures. All Outdoor Commercial Use conducted on private property must be done with consent of property owner. (2) Designated Outdoor Commercial Areas shall be located on an existing level, paved or solid surface area. Business Sponsor may construct a platform or similar level surface which shall meet the standards provided for a Parklet in the Outdoor Commercial Guidelines.
(b) In addition to the standards detailed in subsection (a) of this section, designated Outdoor Commercial Area on private off-street parking areas shall meet the following standards:
(1) Designated Outdoor Commercial Areas on private property shall not make inaccessible or block more than two off-street parking spaces or more than 10 percent of the total onsite parking spaces, whichever is greater. (2) The City shall not be responsible for allocating and distributing off-street parking spaces to Business Sponsors within the provisions of subsection (1) on multi-unit commercial developments, as defined in PMC sec. 9-4.2902(ag). (3) Accessible parking space, accessible paths of travel, and electric vehicle charging stations shall not be blocked or become inaccessible from the establishment of the Designated Outdoor Commercial Area. (4) Development within the Designated Outdoor Commercial Area on private offstreet parking areas shall meet the following setbacks:
(i) A 2-foot inner buffer is required between edge of Designated Outdoor Commercial Area and abutting parking spaces.
(ii) A 2-foot buffer is required between when abutting to a driveway, motorcycle parking, or a bicycle rack.
(iii) A 1-foot buffer is required between the Designated Outdoor Commercial Area and abutting travel lane.

Sec. 9-4.5209. Compliance with other regulations.
(a) A parking exception pursuant to Article 28 of this Chapter shall not be required for any nonconformity created to off-street parking as a result of the approval of the Designated Outdoor Commercial Area for the duration of the Outdoor Commercial permit. Any expansion or alteration of the subject site unrelated to the Outdoor Commercial permit shall be subject to the provisions of Article 28 and Article 30 as applicable. (b) Nothing in this article shall be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act (Section 30000 et seq. of the Public Resources Code) or the City's certified local coastal program. (c) Development shall comply with all local building code requirements based on construction type.
(d) A Business Sponsor may not apply for a variance or other relief from the standards of this article. Businesses may pursue alternative permit or approval as otherwise provided in this chapter such as a use permit in accordance with section 9-4.2308 or a development plan amendment in accordance with Article 22, as appropriate to support a commercial use outside of a structure beyond the provisions of this article. 11 Packet Pg. 333
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Sec. 9-4.5210 Legalization of outdoor commercial.
(a) Any Outdoor Commercial Uses, which are not allowed or not consistent with an approval of an Outdoor Commercial permit or an approval as otherwise allowed in this chapter shall be considered unlawful and nonconforming.
(b) Unlawful and nonconforming Outdoor Commercial Uses may be legalized and considered conforming by complying with all provisions of this article. (c) Outdoor Commercial Uses authorized pursuant to an executed Temporary COVID-19 Outdoor Activities and Encroachment Agreement as allowed under the City’s Emergency Order No. 2020-02, as amended prior to the effective date of this article, shall not be considered unlawful and nonconforming provided that within six (6) months of the effective date of this article the “Outdoor Activities” that were the subject of the Temporary COVID-19 Outdoor Activities and Encroachment Agreement is approved through an Outdoor Commercial permit pursuant to this article.

Sec. 9-4.5211 Permit Amendment, Suspension, Revocation
(a) The Administrator may suspend, or revoke an Outdoor Commercial permit as follows:
(1) For Convenience. The Administrator may revoke the Outdoor Commercial permit for any reason at any time for the City’s convenience. (2) Non-Compliance. The Administrator may revoke or suspend the Outdoor Commercial permit due to the Permittee’s failure to comply with the terms and conditions of this article or the encroachment permit. In case a permit is suspended or revoked, the Administrator shall send notice to the Permittee of the violations of this article or the encroachment permit and advising of the potential for suspension period or revocation.
(3) For Health and Safety. The Administrator may suspend or revoke the Outdoor Commercial permit at any time if the City Manager, or designee, determines that the public health, safety or welfare warrant such action. (b) The Administrator may amend the Outdoor Commercial permit, as necessary, during the term of the Outdoor Commercial permit.
(c) Amendment, suspension, or revocation issued by the Administrator pursuant to this section will be effective ten business (10) days from the date appearing on the notice, unless some other time is identified in the notice.
(d) Any person aggrieved by the decision of the Administrator to amend, suspend or revoke, may file an appeal along with the deposit of an appeal fee as established by resolution of City Council. Appeals filed by any person aggrieved by this decision of the Administrator shall be taken in the manner set forth in Section 9-4.3804 of Article 38 of this chapter.
(e) If the Administrator revokes the Outdoor Commercial permit and the decision is not appealed or upheld on appeal, the Permittee shall remove all structures, Parklets or Furniture in the Designated Outdoor Commercial Area within ten (10) business days after the final determination. The Permittee shall pay all costs associated with said removal.

Sec. 9-4.5212 Interruption
(a) If necessary, for utility repair and maintenance the Permittee shall remove any structures, Parklets, Furniture or other improvements that interfere with the necessary repair and maintenance. The City shall provide reasonable notice of the repair and/or maintenance, when feasible. The Permittee shall be responsible for any and all costs of removing, storing, and re-installing the structures, Parklets, Furniture and/or other improvements from the Designated Outdoor Commercial Area. (b) In the case of an emergency, the City may remove the structures, Parklets, Furniture or other improvements from the Designated Outdoor Commercial Area without prior 11 Packet Pg. 334
Pacifica City Council 14 October 10, 2022
notice to the Permittee. The Permittee shall be responsible for any and all costs of removing, storing, and re-installing the structures, Parklets, Furniture and/or other improvements from the Designated Outdoor Commercial Area.

Sec. 9-4.5213 No Vested Rights
Nothing in this article shall establish a vested right or ownership interest in the Public Right-of-Way. Approval of an Outdoor Commercial permit does not legalize any use or alter provisions for use permitted by law or contract, including, but not limited to, restrictions imposed by a local, County, or State regulations or licenses or in a lease agreement.

Sec. 9-4.5214. - Enforcement
The City may enforce this article by any means permitted by law, including, but not limited to, those penalty provisions set forth in Chapter 2 of Title 1 of this Code. The City Council may establish fines for violating this article by resolution.” Section 3. Amendment. Section 9-4.2308 “Commercial and industrial uses outside structures“ of Article 23, “General Provision and Exceptions” of Chapter 4, “Zoning” of Title 9, “Planning and Zoning” of the Pacifica Municipal Code is hereby amended (deletions shown in strikethrough and additions shown in underline) as follows:
“Sec. 9-4.2308. Commercial and industrial uses outside structures. (a) All commercial and industrial uses conducted in any C or M District shall be conducted entirely within an enclosed structure unless a permit is obtained, as set forth in Article 33 of this chapter or Article 52 of this chapter, except as otherwise provided in this section.” Section 4. Compliance with CEQA. This action is exempt from the California Environmental Quality Act (“CEQA”), pursuant to section 15061(b)(3) of the CEQA Guidelines (14 Cal. Code Regs. 15000 et seq.) because it can be seen with certainty that there is no possibility that adoption of the ordinance may have a significant effect on the environment. Additionally, the text amendment would qualify for a Class 1 Categorical Exemption, CEQA Guidelines Section 15301 “Existing Structures”, Class 3 Categorical Exemption, CEQA Guidelines Section 15303 “New Construction or Conversion of Small Structures”, and Class 4 Categorical Exemption, CEQA Guidelines Section 15304 “Minor Alterations to Land.” The text amendment would consist of the minor alteration of existing public or private developed areas resulting in a negligible expansion of existing use. The text amendment may result in the construction of small structures such as parklets. Furthermore, the text amendment may result in minor temporary use of land having negligible or no permanent effect on the environment.

Section 5. Severability. If any section, subsection, sentence, clause or phase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, subsections, sentence, clauses or phrases be declared unconstitutional.

Section 6. Publication. The City Clerk is hereby ordered and directed to certify to the passage of this Ordinance by the City Council of the City of Pacifica, California, and cause the same to be published in accordance with State law.

Section 7. Coastal Act Compliance. The City Council hereby certifies that the zoning text amendment described herein is intended to be carried out in a manner fully in conformity with the California Coastal Act (Public Resources Code 30000 et seq.). The zoning text amendment described herein shall take effect immediately upon certification by the California Coastal 11 Packet Pg. 335
Pacifica City Council 15 October 10, 2022
Commission (“CCC”) if approved by the CCC as submitted. If the CCC certifies the zoning text amendment subject to modifications, final approval by the City Council shall be required prior to the zoning text amendment taking effect. The Planning Commission shall provide a recommendation to the City Council regarding any modifications proposed by the CCC prior to final City Council consideration and approval.

Section 8. Effective Date. This Ordinance shall be in full force and effective thirty (30) days after its adoption and shall be published and posted as required by law. For areas within the Coastal Zone, this Ordinance shall not become effective until the California Coastal Commission certifies an amendment to the City’s local coastal program pursuant to Section 30514 of the Public Resources Code.
* * * * *
11 Packet Pg. 336
Pacifica City Council 16 October 10, 2022
PASSED AND ADOPTED this 10th day of October, 2022 by the following vote:

AYES, Councilmembers:

NOES, Councilmembers:

ABSTAIN, Councilmembers:

ABSENT, Councilmembers:
____________________________
Mary Bier, Mayor
ATTEST: APPROVED AS TO FORM:
____________________________ ____________________________ Sarah Coffey, City Clerk Michelle Kenyon, City Attorney 11 Packet Pg. 337
Pacifica City Council 17 October 10, 2022
* * * * *
(ID # 5150) at 10/10/2022 6:00 PM City Council Regular Meeting 11 Packet Pg. 338
RESOLUTION NO. ___________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PACIFICA TO

APPROVE THE OUTDOOR COMMERCIAL PERMIT GUIDELINES AND FINDING

THE OUTDOOR COMMERCIAL PERMIT GUIDELINES EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) (FILE NO. 2022-017) ________________________________________________________________ Initiated by: City of Pacifica
WHEREAS, Outdoor Commercial Permit Guidelines were prepared to provide additional details of the standards for development within the designated outdoor commercial area pursuant to the Outdoor Commercial Permit ordinance (“Ordinance”); and WHEREAS, after duly noticing the public hearing for August 15, 2022, the Planning Commission of the City of Pacifica on August 15, 2022, continued the hearing for Text Amendment TA-122-22 to September 6, 2022, in response to staff’s request for additional time to prepare the ordinance; and
WHEREAS, the Planning Commission of the City of Pacifica held a public hearing on the proposed amendments contained in Text Amendment TA-122-22 on September 6, 2022 and adopted Resolution No. 2022-019 recommending that the City Council approve the Outdoor Commercial Permit ordinance (“Ordinance”) and Outdoor Commercial Permit Guidelines by a vote of 6-0 (with one absence); and
WHEREAS, the City Council of the City of Pacifica provided feedback to staff on the draft Outdoor Commercial permit Guidelines on September 26, 2022; and WHEREAS, the City Council of the City of Pacifica adopted Ordinance No. ## on October 10, 2022.

NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Pacifica as follows:

1. The above recitals are true and correct and material to this Resolution.

2. In making its finding, the City Council relied upon and hereby incorporates by reference all correspondence, staff reports, and other related materials.

3. The proposed Outdoor Commercial Permit Guidelines are consistent with the City’s General Plan and Local Coastal Land Use Plan.

4. This action is exempt from the California Environmental Quality Act (“CEQA”), pursuant to section 15061(b)(3) of the CEQA Guidelines (14 Cal. Code Regs. 15000 et seq.) because it can be seen with certainty that there is no possibility that adoption of the ordinance may have a significant effect on the environment. Additionally, the text amendment would qualify for a Class 1 Categorical Exemption, CEQA Guidelines Section 15301 “Existing Structures”, Class 3 Categorical Exemption, CEQA Guidelines Section 15303 “New Construction or Conversion of Small Structures”, and

11.a
Packet Pg. 339 Attachment: Attachment A - Draft Resolution Outdoor Commercial Permit Guidelines (5150 : Outdoor Commercial Permit Ordinance) Outdoor Commercial Permit Guidelines
File No. 2022-017
2 Class 4 Categorical Exemption, CEQA Guidelines Section 15304 “Minor Alterations to Land.” The Outdoor Commercial Permit Guidelines support the minor alteration of existing public or private developed areas resulting in a negligible expansion of existing use. The Outdoor Commercial Permit Guidelines may result in the construction of small structures such as parklets. Furthermore, the Outdoor Commercial Permit Guidelines may result in minor temporary use of land having negligible or no permanent effect on the environment.

BE IT FURTHER RESOLVED that the City Council of the City of Pacifica does hereby approve the Outdoor Commercial Permit Guidelines included as Exhibit A to this Resolution. * * * * *

11.a
Packet Pg. 340 Attachment: Attachment A - Draft Resolution Outdoor Commercial Permit Guidelines (5150 : Outdoor Commercial Permit Ordinance) Outdoor Commercial Permit Guidelines
File No. 2022-017
3 PASSED AND ADOPTED at a regular meeting of the City Council of the City of Pacifica, California, held on the 10th of October, 2022.

AYES, Councilmembers:

NOES, Councilmembers:

ABSENT, Councilmembers:

ABSTAIN, Councilmembers:
_____________________________
Mary Bier, Mayor
ATTEST: APPROVED AS TO FORM:
______________________________ _____________________________ Sarah Coffey, City Clerk Michelle Kenyon, City Attorney

11.a
Packet Pg. 341 Attachment: Attachment A - Draft Resolution Outdoor Commercial Permit Guidelines (5150 : Outdoor Commercial Permit Ordinance)

EXHIBIT
A

11.a
Packet Pg. 342 Attachment: Attachment A - Draft Resolution Outdoor Commercial Permit Guidelines (5150 : Outdoor Commercial Permit Ordinance)

CITY OF PACIFICA

OUTDOOR COMMERCIAL PERMIT GUIDELINES
The City of Pacifica has established a program to allow existing commercial businesses an opportunity to extend their operations outdoors, including in the public right of way. All terms are as defined in Pacifica Municipal Code section 9-4.5201 and all regulations pertaining to Outdoor Commercial Permits are provided in Pacifica Municipal Code section 9-4.2500 et seq. and should be reviewed in conjunction with these Guidelines.

I. General standards
A. The designated outdoor commercial area cannot impede the flow of curbside drainage.

B. Structures and parklets plans shall be prepared by Licensed B or C-5 Contractor, built to approved plans by a general contractor, have a California Registered Structural or Civil Engineer certification
C. Space underneath and surrounding structures, parklets, or furniture shall be kept clean and shall be maintained free of debris and obstruction to allow for proper drainage.

D. Space heaters are permitted if they are an outdoor approved type, are located in accordance with the manufacturer's recommendations, and are located at least 10 feet from the edge of any umbrella canvas, any tree foliage, and any other combustible materials. Approved portable fire extinguishers complying with the California Fire Code shall be in place and accessible within 75 feet travel distance.

E. All wiring and electrical cords must be exterior rated, GFCI protected, and UL listed. Cords shall not extend above the City right‐of way. Permittees are not allowed to tap into existing City electrical connections. Electrical cables and extension cords shall be placed in a manner that does not create a tripping hazard.

F. All development must meet the California Building Code and any construction necessary to conduct the outdoor commercial use must obtain a building permit from the City of Pacifica when applicable.

G. Designated outdoor commercial areas shall be kept in a safe and clean condition at all times, free of debris, grime, and graffiti, and all landscaping shall be kept in good health or replaced as necessary.

H. All outdoor Furniture (tables, chairs, umbrellas, planters, fencing, etc.) shall be maintained in clean and working order. Furniture must be heavy enough to withstand high winds in order to protect guests and pedestrians. Furniture shall be stored inside or secured to prevent use during non-operation hours of the business sponsor. All furnishings may need to be stored inside the business from time to time to accommodate maintenance, cleaning, special events, or during periods of inclement or hazardous weather. Weights used to anchor fixtures and furnishings shall not create tripping hazards for pedestrians.

II. Additional standards for a designated outdoor commercial area in the parking lane of a public right-of-way
A. The designated outdoor commercial areas must be a defined space separating the space for pedestrians from bicyclists and vehicular traffic. These requirements include:

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Packet Pg. 343 Attachment: Attachment A - Draft Resolution Outdoor Commercial Permit Guidelines (5150 : Outdoor Commercial Permit Ordinance)

1. Perimeter wall or rail must be 3 feet minimum and 42 inches maximum height and must not obstruct views of traffic.

2. Perimeter wall or parklet ends and corners must be capable of withstanding 500 pounds of horizontal force. Confirmation of these requirements must be provided by a certified structural engineer.

3. Additional street side platform or wall reinforcement capable of withstanding 500 pounds of horizontal force must be placed a minimum of every 15 feet

4. Parking stops and reflective delineators must be placed at the traffic flow side of the Perimeter wall or parklet. Parking stop may not be required if perimeter wall or parklet is directly adjacent to sidewalk “bulb-out”.

B. If not proposing a parklet, the designated outdoor commercial areas in the parking lane of a public right-of-way can utilize the existing road. Painting the road, poured concrete, or loose particles such as sand or stone are not permitted.

C. Parklets shall meet the following Parklet Standards

1. Platform surface materials should be textured or treated with a non-skid coating to ensure a safe walking surface.

2. Paneled decking is preferred as it allows for easy access under the deck if needed.

3. Parklet floor load-bearing weight minimum is 100 pounds per square foot.

4. The deck of a parklet platform shall be flush with the sidewalk without a horizontal or vertical separation greater than ½ inch. Vertical separation between the deck of the parklet platform and the sidewalk shall be between ¼ inch and ½ inch high shall be beveled with a slope not steeper than 1:4 (25%).

5. Bolting into the street or penetrating the surface of the road in anyway is prohibited. Bolts may penetrate the joint of the curb and sidewalk.

6. The parklet shall be an open design that allows for pedestrians on either side of the street to see into the parklet. Continuous opaque walls are not permitted.

7. The parklet should be designed as an extension of the sidewalk and should have multiple points of entry.

8. The design should include planting areas that utilize native, drought-tolerant plants.

Plantings can be used to discourage seating in areas such as the tops of walls.

9. Parklets and plantings shall be maintained in good condition, free of graffiti and litter.

Elements that are visually or structurally degraded shall be replaced expeditiously.

10. Overhead elements shall provide a minimum vertical clearance of 84” above the top of the platform. Structures shall have a maximum height of 108” (8.5’) as measured from the top of the platform.

11. There shall be no electrical fixtures or features within the parklet. Lighting may originate from the associated business and shall not shine into the street or otherwise interfere with vehicular travel. Battery or solar powered lighting elements are permitted within the designated open space area. Parklets must be illuminated to ensure safety but shall not cause glare for surrounding businesses or residents.

12. A six-inch wide minimum clear gutter space must be provided along the entire length of the parklet adjacent to the curb. Barrier adjacent to vehicle lane should incorporate two, sixinch clearance paths. (See Figure 1)

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Packet Pg. 344 Attachment: Attachment A - Draft Resolution Outdoor Commercial Permit Guidelines (5150 : Outdoor Commercial Permit Ordinance) Figure 1
Overhead View Side View
III. Additional standards for a designated outdoor commercial area on the sidewalk of a public rightof-way A. No structures or parklet shall be placed on the sidewalk.

B. Furniture may be placed within the designated outdoor commercial areas.

C. A minimum width of 4 feet shall be maintained along the sidewalk. No Furniture shall be placed or allowed to remain on any sidewalk that inhibits the minimum 4-foot passage.

D. Movable delineating barriers such as a fence or planters not more than 42 inches in height shall be placed to separate the designated sidewalk outdoor commercial area and furniture from the 4-foot sidewalk passageway.

IV. Additional standards for a designated outdoor commercial area on Private Property A. The designated outdoor commercial area cannot impede the flow of onsite drainage. Built facilities shall provide for proper drainage.

B. The designated outdoor commercial area must remain outside of necessary emergency vehicle access lanes.

C. Parklets on private property shall meet the applicable Parklet Standards listed in Section II.C, above.

D. Designated outdoor commercial areas on private off-street parking areas must have a defined space separating the space from vehicular traffic. These requirements include:

1. Perimeter wall or rail must be 3 feet minimum and 42 inches maximum height and must not obstruct views of vehicles.

2. Perimeter wall or parklet ends and corners must be capable of withstanding 500 pounds of horizontal force. Confirmation of these requirements must be provided by a certified structural engineer.

3. Additional street side platform or wall reinforcement capable of withstanding 500 pounds of horizontal force must be placed a minimum of every 15 feet

11.a
Packet Pg. 345 Attachment: Attachment A - Draft Resolution Outdoor Commercial Permit Guidelines (5150 : Outdoor Commercial Permit Ordinance) RESOLUTION NO. ___________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PACIFICA TO

ESTABLISH A MAXIMUM APPLICATION DEPOSIT FEE FOR OUTDOOR COMMERCIAL PERMITS (FILE NO. 2022-017)
________________________________________________________________ Initiated by: City of Pacifica
WHEREAS, the City Council of the City of Pacifica adopted Ordinance No. ## on October 10, 2022 to establish a permanent Outdoor Commercial Permit ordinance (“Ordinance”).

WHEREAS, the City of Pacifica operates on a deposit system and the City Council of the City of Pacifica seeks to establish a maximum application deposit fee for Outdoor Commercial Permit applicants; and
WHEREAS, the City of Pacifica Master Fee Schedule establishes a Planning/Engineering Hourly Rate ; and
WHEREAS, the City Council of the City of Pacifica provided feedback to staff on the proposal of setting a maximum hourly deposit for Outdoor Commercial Permit applications using the City existing Planning / Engineering Hourly Rate line item in the Master Fee Schedule on September 26, 2022.

NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Pacifica as follows:
1) That the City of Pacifica hereby establishes the following deposit fees to be collected from applicants for Outdoor Commercial Permits:
a. A maximum application deposit equivalent to 10 hours of the “Planning / Engineering Hourly Rate” as approved at the hourly rate set forth in the applicable Master Fee Schedule for Outdoor Commercial Permit applications with a designated outdoor commercial area in the Parking Lane of the Public Right of Way as defined in the Ordinance; and b. A maximum application deposit equivalent to 6 hours of “Planning / Engineering Hourly Rate” as approved at the hourly rate set forth in the applicable Master Fee Schedule for Outdoor Commercial Permit applications with a designated outdoor commercial area in all other permitted designated outdoor commercial area scenarios as detailed in the Ordinance.

BE IT FURTHER RESOLVED, that a renewal of an Outdoor Commercial Permit shall be subject to the maximum application deposit fee in the same manner as new Outdoor Commercial Permit.

BE IT FURTHER RESOLVED that since funds collected with an Outdoor Commercial Permit shall be considered a deposit, any remaining funds not used for the processing of the Outdoor Commercial Permit would be returned to the applicant.

BE IT FURTHER RESOLVED that the City of Pacifica shall not impose any City costs associated with processing the Outdoor Commercial Permit application that exceed the maximum application deposit amount set forth herein.

11.b
Packet Pg. 346 Attachment: Attachment B - Draft Resolution Outdoor Commercial Permit Fees (5150 : Outdoor Commercial Permit Ordinance) 2 BE IT FURTHER RESOLVED that the maximum application deposit fee for an Outdoor Commercial Permit shall not apply to related City fees and expenses associated with processing additional permits and approvals, which may include, but is not limited to, encroachment permits, building permit, development permits (e.g., Coastal Development Permit) and the City of Pacifica shall collect deposits or funds in accordance with standard practice.

BE IT FURTHER RESOLVED that the City Council of the City of Pacifica does hereby approve the maximum application deposit fee for Outdoor Commercial Permits as detailed in this Resolution.
* * * * *
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Pacifica, California, held on the 10th of October, 2022.

AYES, Councilmembers:

NOES, Councilmembers:

ABSENT, Councilmembers:

ABSTAIN, Councilmembers:
_____________________________
Mary Bier, Mayor
ATTEST: APPROVED AS TO FORM:
______________________________ _____________________________ Sarah Coffey, City Clerk Michelle Kenyon, City Attorney

11.b
Packet Pg. 347 Attachment: Attachment B - Draft Resolution Outdoor Commercial Permit Fees (5150 : Outdoor Commercial Permit Ordinance)