South Lake Tahoe City Council
August 22, 2023

City Council
Cristi Creegan, Mayor
Cody Bass, Mayor Pro Tem
John Friedrich, Councilmember
Tamara Wallace, Councilmember
Scott Robbins, Councilmember
Mission of the City Council
The City was established to provide essential,
outstanding and cost-effective services that
enhance environmental sustainability, economic
vitality and the quality of life for our residents,
businesses and guests.

City of South Lake Tahoe
City Council Budget Workshop
Meeting Agenda
Tuesday, August 22, 2023 at 9:00 am
City Hall - Council Chambers - 1901 Lisa Maloff Way, South Lake Tahoe Public Participation
City Council meetings are held in person at the time and location listed on this agenda. Meetings are live-streamed on Channel 21, City website at www.cityofslt.us, YouTube at https://www.youtube.com/channel/UC3LYne8Ih-kTPLnnuyJW9SQ/live and via ZOOM at https://us06web.zoom.us/j/89264526875
A public agenda packet is available for review at City Hall, 1901 Lisa Maloff Way, on the City's Website at www.cityofslt.us, or by contacting the City Clerk's Office, (530) 542-6005 or [email protected] Providing Public Comment:

In Person: Every agenda for regular meetings provides an opportunity for members of the public to directly address the legislative body (City Council), on any item of public interest which is within the jurisdiction of the City Council during Public Communications. For items on the agenda or in connection with any item which the City Council will consider, the public is given the opportunity to comment before or during the City Council's consideration of the item [Government Code Section 54954.3(a)].

By Phone: If you are joining the meeting via ZOOM and would like to make a comment, press the "raise a hand" button. If you are joining the meeting via Channel 21 or live stream and would like to make a comment, please call (530) 542-6500. The meeting ID is ID: 892 6452 6875 press *9 to indicate a desire to make a comment. Press *6 to unmute your phone. The Clerk will call you by the last three digits of your phone number when it is your turn to speak.

In Writing: Written comments received by 3 p.m. the day before the meeting will be distributed to City Council prior to the meeting. Written public comment regarding any item on this agenda may be sent to [email protected]. When emailing comments, identify the agenda item number in the subject line to which your comments relate. Any such comment that is a public record and is emailed to [email protected] or otherwise provided to a majority of the City Council before the meeting will be made available for public inspection during normal business hours at the City Clerk's Office located at City Hall, 1901 Lisa Maloff Way, South Lake Tahoe [Government Code Section 54957.5(b)]. 1 1. Franchise Agreement with South Tahoe Refuse Co. for Solid Waste, Recycling, and Organics Services

2. FY 2023-2024 Recommended Budget
Written comments will not be read out loud during the meeting.

The City Council Chambers meeting facility is accessible to people with disabilities. Every reasonable effort will be made to accommodate any person needing special assistance to attend this meeting.

Contact the City Clerk at (530) 542-6005 at least 48 hours in advance of the meeting for assistance [28 CFR 35.102.35.104 ADA Title II and Brown Act Government Code Sections 54953.2, 54954.1, 54954.2, and 54957.5].

Spanish Interpretations: The public may access Spanish interpretation using the ZOOM link listed on the front of the Agenda from an internet device (smartphone, laptop, tablet, home computer) with audio capabilities and selecting the Spanish language option. Persons without an internet device may attend the meeting in-person and a device will be provided while supplies last. Requests for interpreter services to offer public comment may be made by contacting the City Clerk.

Call to Order/Pledge of Allegiance
Roll Call
Closed Session Report
Public Communications
This is the public's opportunity to speak on any topic NOT LISTED on this agenda. Comments shall be limited to four (4) minutes. In accordance with the Brown Act, the City Council cannot deliberate or vote on any matter raised under public communications, but may briefly respond to statements made or questions posed. (Government Code Sections 54954.2)
Regular-Unfinished Business
Requested Action / Suggested Motions: Pass a Resolution approving an exclusive franchise agreement with South Tahoe Refuse Co. for solid waste, recycling, and organics services.

CEQA Determination: Entering into this franchise agreement is categorically exempt from review pursuant to CEQA Guidelines sections 15301 (operation and licensing of existing facilities involving negligible or no expansion of existing or former use), 15308 (actions by regulatory agencies for the protection of the environment), and 15061(b)(3) (common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment).

Responsible Staff Member(s): Heather Stroud, City Attorney Item 1 - Executive Summary.pdf
01 - Staff Report.docx
02 - Resolution.docx
03 - Franchise Agreement (Exh. A to Resolution)
04 - Franchise Exh. G1_STR 2024 Base Year and 3-Cart Program Rate WorkBook.xlsx 05 - 2007 STR Franchise Agreement and 2012 Amendment.pdf 06 -2021 Amendment.pdf
Regular-New Business
Requested Action / Suggested Motions: Receive presentation and either: (1) Pass a Resolution Approving FY 2023-2024 Municipal Operating and Capital Improvement Program Budget and $2,000,000 Set-Aside from the General Fund Unassigned Undesignated Excess Reserves for 2024-2025 and 2025-2026 Budget Years; and (2) Pass a Resolution Approving FY 2023-2024 List of Allocated Permanent Positions, including new, eliminated, and reclassified positions; or (3) Provide direction to staff on any desired changes to the FY 2023-2024 Recommend Budget, in 2 which case the budget and the list of allocated permanent positions will be brought back to City Council for adoption on September 12, 2023.

Responsible Staff Member(s): Olga Tikhomirova, Director of Finance and Joseph Irvin, City Manager
Item 2 - Executive Summary.pdf
01-Staff Report 2023-2024 Budget Workshop.docx
02-Resolution Budget 2023-2024.docx
03-Resolution Allocated Position Listing 2023-2024 Budget.docx 04-Allocated Permanent Positions 23-24 Budget (Exh. 1 to Resolution).pdf 05-Budget Details by Department 23-24 Budget.pdf
06-CIP 23-24 Budget.pdf
07-Draft_Departmental_Summaries_FY24.pdf
08_FY 2024 Budget PP Presentation.pdf
Adjournment
I, Susan Blankenship, City Clerk for the City of South Lake Tahoe, declare that the foregoing agenda for the Tuesday August 22, 2023 meeting of the City of South Lake Tahoe City Council was posted and available for review on Thursday, August 17, 2023 at City Hall, 1901 Lisa Maloff Way, South Lake Tahoe, CA 96150. The agenda was also available on the City website at https://www.cityofslt.us.

Signed August 17, 2023
\\sb\\
Susan Blankenship, Elected City Clerk
3 City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
__________________________________
Meeting Date: August 22, 2023
Agenda Item #:1
Agenda Item: Franchise Agreement with South Tahoe Refuse Co. for Solid Waste, Recycling, and Organics Services
Executive Summary: The City most recently entered into a franchise agreement with South Tahoe Refuse Co. to provide solid waste services in 2007, which was amended in 2012 and 2021. The current franchise agreement expires in 2028. The proposed new franchise agreement would replace the current agreement, and includes an initial term of 20 years to allow South Tahoe Refuse to amortize the capital costs required to implement the requirements of Senate Bill 1383 with respect to organic waste services, including a new fleet of semi-automated trucks and new carts for residential customers. The new franchise agreement is also updated to address other changes in state law since 2007 such as public outreach and reporting requirements, and to incorporate provisions to address some of the City’s sustainability goals and best practices in modern franchise agreements such as requiring a performance bond and providing for liquidated damages to ensure a certain level of performance. South Tahoe Refuse has been a good partner through its long-term relationship with the City and staff recommends that City Council adopt the resolution approving the new franchise agreement.

Requested Action / Suggested Motions: Pass a Resolution approving an exclusive franchise agreement with South Tahoe Refuse Co. for solid waste, recycling, and organics services.

Responsible Staff Member: Heather Stroud, City Attorney Reviewed and Approved By: Susan Blankenship, City Clerk Olga Tikhomirova, Director of Finance Attachments:
01 - Staff Report.docx
02 - Resolution.docx
03 - Franchise Agreement (Exh. A to Resolution)
04 - Franchise Exh. G1_STR 2024 Base Year and 3-Cart Program Rate WorkBook.xlsx 05 - 2007 STR Franchise Agreement and 2012 Amendment.pdf 06 -2021 Amendment.pdf
4 Council Agenda Report- August 22, 2023 Page 1 of 3
City of South Lake Tahoe
Report to City Council
Meeting Date: August 22, 2023
Title: Franchise Agreement with South Tahoe Refuse Co. for Solid Waste, Recycling, and Organics Services
Location: Citywide
Responsible Staff Member: Heather Stroud, City Attorney (530) 542-6046 Background: The City most recently entered into a franchise agreement with South Tahoe Refuse Co. to provide solid waste services in 2007, which was amended in 2012 and 2021. The current franchise agreement expires in 2028. The proposed new franchise agreement would replace the current agreement, and includes an initial term of 20 years to allow South Tahoe Refuse to amortize the capital costs required to implement the requirements of Senate Bill 1383 with respect to organic waste services, including a new fleet of semi-automated trucks and new carts for residential customers. The new franchise agreement is also updated to address other changes in state law since 2007 such as public outreach and reporting requirements, and to incorporate provisions to address some of the City’s sustainability goals and best practices in modern franchise agreements such as requiring a performance bond and providing for liquidated damages to ensure a certain level of performance. South Tahoe Refuse has been a good partner through its long-term relationship with the City and staff recommends that City Council adopt the resolution approving the new franchise agreement.

Issue and Discussion: Significant provisions of the new franchise agreement are as follows:
 Term: 20 years with ability extend for up to 5 additional years  Scope of Services: Exclusive franchise for South Tahoe Refuse to provide solid waste, recycling, and organic material collection services within the City to residential and commercial customers.
o By September 15, 2024, residential customers will receive three new carts for separate semi-automated collection of solid waste, recyclable materials, and organic materials (yard trimmings). Residential customers have unlimited solid waste collection and unlimited drop-off rights for excess recyclable materials, yard trimmings, and food waste at the South Tahoe Refuse Transfer Station. o Commercial customers to receive semi-automated or manual collection of solid waste depending on site constraints, and organic material collection services unless an exemption applies.
o Multi-family residential customers may be serviced as single-family residential or commercial, depending on the type of containers at the premises (3 carts vs. dumpster).
5 Council Agenda Report- August 22, 2023 Page 2 of 3
o South Tahoe Refuse to provide special collection services at up to 5 City-sponsored special events annually
o South Tahoe Refuse to provide public education and outreach on recycling and organic material collection.
o South Tahoe Refuse required to maintain customer service and performance standards, with ability of City to impose liquidated damages for violations. o South Tahoe Refuse required to perform annual route reviews, contamination monitoring, and waste characterization studies.
o South Tahoe Refuse required to maintain records and submit quarterly and annual reports to the City.
 Sustainability:
o South Tahoe Refuse to annually investigate feasibility of zero emission vehicles for use in its fleet of collection vehicles, including establishing a pilot program to test zero emission vehicles on one or more collection routes when feasible. o Upon implementing a zero emission vehicle fleet or once a disposal facility closer to the City implements methane capture, the parties will cooperate to transport solid waste to a disposal facility which captures methane.
o South Tahoe Refuse’s proposed biomass energy generation facility will provide organic materials collected from the City first priority to satisfy part or all of the City’s organic material procurement obligations under Senate Bill 1383.  Franchise Fee: Increased from 5 percent of Gross Revenues to 6 percent of Gross Revenues, to reimburse the City for the privilege of using City streets to provide its services, including running collection routes with large vehicles and other heavy equipment that causes damage to City streets in excess of that caused by day-to-day travel, and the use of City streets for placement of carts for collection.  Annual rates will continue to be set in accordance with the Rate Setting Manual adopted in 2012, with minor changes to allow for a longer useful life for calculating depreciation of vehicles and carts. As a subcontractor to South Tahoe Refuse, Clean Tahoe’s rates will be included in the annual rate-setting.
 Other provisions include indemnity, insurance, and performance bond requirements and default and dispute resolution provisions.

Financial Implications: Initial rates will be set prior to the Commencement Date of the new agreement, which is January 1, 2024. On July 24, 2023, the South Lake Tahoe Basin Waste Management Authority met and considered South Tahoe Refuse’s base year rate proposal for 2024. South Tahoe Refuse proposes to increase rates by 12.29 percent for base year 2024. In 2025 and 2026, South Tahoe Refuse proposes to split the cost for implementing the Senate Bill 1383 requirements, for an estimated increase of 5.36 percent in each of those years, in addition to any CPI increases. After the Waste Management Authority’s consultant finishes its rate review and the Waste Management Authority meets to recommend whether to increase the rates, City staff will prepare mailed notices to property owners 45 days ahead of the public hearing on the rate increase, scheduled for the City Council meeting on December 12, 2023.

The increase in the franchise fee from 5 to 6 percent of Gross Revenues combined with the South Tahoe Refuse proposed rates increase is anticipated to generate approximately $240K in additional revenue for the City on an annual basis, for a projected total of approximately $928K per year.

Environmental Considerations: Entering into this franchise agreement is categorically exempt from review under the California Environmental Quality Act (CEQA), pursuant to CEQA 6 Council Agenda Report- August 22, 2023 Page 3 of 3
Guidelines sections 15301 (operation and licensing of existing facilities involving negligible or no expansion of existing or former use), 15308 (actions by regulatory agencies for the protection of the environment), and 15061(b)(3) (common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment).

Policy Implications: Entering into this updated franchise agreement with South Tahoe Refuse advances several goals in the City of South Lake Tahoe Strategic Plan 2023-2028:
 Strategic Priority 1 Built Environment, Goal 1.5 Carbon Neutrality and Grid Reliability  Strategic Priority 3 Community For All, Goal 3.4 Waste Management and Stewardship 7 Resolution 2023-XXX August 22, 2023 Page 1 of 3
Resolution 2023-XXX
Adopted by the City of South Lake Tahoe
City Council
August 22, 2023
Approving an Exclusive Franchise Agreement with South Tahoe Refuse Co. for Solid Waste, Recycling, and Organics Services

BACKGROUND
A. The Legislature of the State of California, by enactment of the California Integrated Waste Management Act of 1989 (AB 939) (California Public Resources Code Section 40000 et seq.), has declared that it is in the public interest to authorize and require local agencies to make adequate provisions for Solid Waste Collection within their jurisdictions.

B. The State of California has found and declared that the amount of refuse generated in California, coupled with diminishing Disposal capacity and potential adverse environmental impacts from landfilling and the need to conserve natural resources, have created an urgent need for State and local agencies to enact and implement an aggressive integrated waste management program. The State has, through enactment of AB 939 and subsequent related legislation including, but not limited to: the Jobs and Recycling Act of 2011 (AB 341), the Event and Venue Recycling Act of 2004 (AB 2176), SB 1016 (Chapter 343, Statutes of 2008 [Wiggins, SB 1016]), the Mandatory Commercial Organics Recycling Act of 2014 (AB 1826), and the Short-Lived Climate Pollutants Bill of 2016 (SB 1383), directed the responsible State agency, and all local agencies, to promote Diversion and to maximize the use of feasible waste reduction, re-use, Recycling, and Composting options in order to reduce the amount of refuse that must be Disposed.

C. SB 1383 establishes regulatory requirements for jurisdictions, Generators, haulers, Solid Waste facilities, and other entities to support achievement of State-wide Organic Waste Disposal reduction targets.

D. SB 1383 requires the City to implement Collection programs, meet Processing Facility requirements, conduct Contamination monitoring, provide education, maintain records, submit reports, monitor compliance, conduct enforcement, and fulfill other requirements; and, the City has chosen to delegate some of its responsibilities to the Contractor, acting as the City’s designee, through this Agreement.

E. Pursuant to California Public Resources Code Section 40059(a)(2), the City has determined that the public health, safety, and well-being require that an exclusive right be awarded to a qualified contractor to provide for the Collection of Recyclable Materials, Organic Materials, and Solid Waste and other services related to meeting the City’s economic and environmental goals.
8 Resolution 2023-XXX August 22, 2023 Page 2 of 3
F. The City further declares its intent to approve and maintain reasonable Rates for the Collection, Recycling, Processing, Composting, and/or Disposal of Recyclable Materials, Organic Materials, and Solid Waste.

G. The City desires, having determined that South Tahoe Refuse Co., by demonstrated experience, reputation and capacity is qualified to provide for both the Collection of Recyclable Materials, Organic Materials, and Solid Waste within the corporate limits of the City and the Transportation of such material to appropriate places of Processing, Recycling, Composting, and/or Disposal, that South Tahoe Refuse Co. be engaged to perform such services on the basis set forth in this Agreement.

H. The City and South Tahoe Refuse have attempted to address conditions affecting their performance of services under this Agreement but recognize that reasonably unanticipated conditions may occur during the Term of this Agreement that will require the Parties to meet and confer to reasonably respond to such changed conditions.

I. Under South Lake Tahoe City Code Section 4.150.030, the City may enter into a contract for the Collection, removal and Disposal of all refuse in and from the City and the collection of Rates therefor, and the City Council is authorized to enter into such contract with any terms it deems necessary to protect the best interests of the City.

J. On August 21, 2007, the City and South Tahoe Refuse Co. entered into a Solid Waste Services Agreement with a term ending on December 31, 2028, which was amended on January 3, 2012, by adoption of City Council Resolution No. 2012-6, and was amended on December 7, 2021, by motion to include the Clean Tahoe program and services.

K. South Tahoe Refuse Co. has requested a new franchise agreement with a 20-year term to be able to amortize the capital expenses it will incur to implement the 3-Cart residential collection system required to implement SB 1383, and the City is willing to enter into a new franchise agreement with such a term based on Contractor’s prior satisfactory service and to ensure successful implementation of SB 1383, and with inclusion of other contractual provisions that advance the City’s economic and environmental goals.

L. This franchise grants South Tahoe Refuse Co. the privilege to use City streets to provide its services, including running Collection routes with large vehicles and other heavy equipment that causes damage and wear and tear on City streets in excess of that caused by day-today travel, and the right to use City streets for placement of Bins for Collection, such that the parties agree that the franchise fee of 6 percent of Gross Revenue, paid on a quarterly basis, represents the reasonable value of the franchise and the reasonable cost to the City of granting the franchise.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:

Authorizes and Directs the Mayor to execute the Franchise Agreement with South Tahoe Refuse Co. attached hereto as Exhibit “A.”
Adopted by the City of South Lake Tahoe City Council on August 22, 2023 by the following vote:
9 Resolution 2023-XXX August 22, 2023 Page 3 of 3
Yes:

No:

Absent:

Abstain:
________________________ Date:_________
Cristi Creegan, Mayor
Attest:
________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
10 FRANCHISE AGREEMENT

BETWEEN

CITY OF SOUTH LAKE TAHOE
AND
SOUTH TAHOE REFUSE CO.

FOR

RECYCLING, ORGANICS, AND SOLID WASTE COLLECTION
AND

RECYCLING AND ORGANICS PROCESSING SERVICES
AUGUST 22, 2023
11 {This page intentionally left blank}
12 -i- City of South Lake Tahoe/South Tahoe Refuse
Franchise Agreement
Table of Contents
RECITALS ................................................................................................................................ 1 ARTICLE 1. GRANT AND ACCEPTANCE OF FRANCHISE.................................................... 2

1.1 GRANT AND ACCEPTANCE OF FRANCHISE............................................................. 2

1.2 LIMITATIONS TO THE FRANCHISE........................................................................... 3

1.3 OBLIGATIONS OF PARTIES....................................................................................... 4 ARTICLE 2. TERM OF AGREEMENT...................................................................................... 5

2.1 TERM AND OPTION TO EXTEND .............................................................................. 5

2.2 CONDITIONS TO EFFECTIVENESS OF AGREEMENT................................................ 5 ARTICLE 3. SCOPE OF AGREEMENT .................................................................................... 6

3.1 SUMMARY SCOPE OF SERVICES .............................................................................. 6

3.2 USE OF APPROVED FACILITIES................................................................................ 7

3.3 SUBCONTRACTING................................................................................................... 7

3.4 RESPONSIBILITY FOR MATERIALS .......................................................................... 7

3.5 CITY-DIRECTED CHANGES TO SCOPE ..................................................................... 7 ARTICLE 4. SCOPE OF SERVICES.......................................................................................... 8

4.1 RECYCLABLE MATERIALS....................................................................................... 8

4.2 ORGANIC MATERIALS.............................................................................................10

4.3 SOLID WASTE...........................................................................................................12

4.4 BULKY ITEMS AND REUSABLE MATERIALS..........................................................13

4.5 SPECIAL EVENTS .....................................................................................................13

4.6 PUBLIC EDUCATION AND OUTREACH ...................................................................14

4.7 BILLING....................................................................................................................15

4.8 CUSTOMER SERVICE PROGRAM.............................................................................17

4.9 SERVICE EXEMPTIONS ............................................................................................19

4.10 CONTAMINATION MONITORING ............................................................................21 ARTICLE 5. STANDARD OF PERFORMANCE.......................................................................25

5.1 GENERAL..................................................................................................................25

5.2 OPERATING HOURS AND SCHEDULES ...................................................................25

5.3 COLLECTION STANDARDS......................................................................................26

5.4 TRANSFER AND PROCESSING STANDARDS ...........................................................28

5.5 COLLECTION VEHICLE REQUIREMENTS................................................................29

5.6 CONTAINER REQUIREMENTS..................................................................................30

5.7 PERSONNEL..............................................................................................................34

5.8 HAZARDOUS WASTE INSPECTION AND HANDLING..............................................36

5.9 CONTRACT MANAGEMENT.....................................................................................37

5.10 SUPPORT OF CITY’S ENVIRONMENTAL GOALS.....................................................37

5.11 DIVERSION REQUIREMENTS...................................................................................38 ARTICLE 6. RECORD KEEPING AND REPORTING..............................................................38

6.1 RECORD KEEPING....................................................................................................38

6.2 REPORT SUBMITTAL REQUIREMENTS ...................................................................39

6.3 PERFORMANCE REVIEW AND AUDIT .....................................................................39 ARTICLE 7. CITY REIMBURSEMENT ...................................................................................40 13 -ii- City of South Lake Tahoe/South Tahoe Refuse
Franchise Agreement

7.1 FRANCHISE FEE .......................................................................................................40

7.2 PAYMENT SCHEDULE AND LATE FEES ..................................................................40 ARTICLE 8. CONTRACTOR’S COMPENSATION AND RATE SETTING...............................41

8.1 GENERAL..................................................................................................................41

8.2 RATES AND ANNUAL ADJUSTMENTS.....................................................................41

8.3 EXTRAORDINARY RATE ADJUSTMENTS................................................................42

8.4 REGARDING EXHIBIT E ...........................................................................................43 ARTICLE 9. INDEMNITY, INSURANCE, AND PERFORMANCE BOND ................................44

9.1 INDEMNIFICATION ..................................................................................................44

9.2 INSURANCE..............................................................................................................46

9.3 PERFORMANCE BOND .............................................................................................49 ARTICLE 10. DEFAULT AND REMEDIES ..............................................................................49

10.1 EVENTS OF DEFAULT ..............................................................................................49

10.2 CONTRACTOR’S RIGHT TO CURE; RIGHT TO TERMINATE UPON EVENT OF DEFAULT..............................................................................................................................51

10.3 CITY’S REMEDIES IN THE EVENT OF DEFAULT .....................................................52

10.4 POSSESSION OF RECORDS UPON TERMINATION...................................................53

10.5 CITY'S REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.................................53

10.6 PERFORMANCE STANDARDS AND LIQUIDATED DAMAGES.................................53

10.7 EXCUSE FROM PERFORMANCE...............................................................................55

10.8 RIGHT TO DEMAND ASSURANCES OF PERFORMANCE .........................................55

10.9 DISPUTE RESOLUTION.............................................................................................56 ARTICLE 11. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.........................56

11.1 CONTRACTOR’S CORPORATE STATUS ...................................................................57

11.2 CONTRACTOR’S CORPORATE AUTHORIZATION ...................................................57

11.3 AGREEMENT WILL NOT CAUSE BREACH...............................................................57

11.4 NO LITIGATION........................................................................................................57

11.5 NO ADVERSE JUDICIAL DECISIONS........................................................................57

11.6 NO LEGAL PROHIBITION .........................................................................................57

11.7 CONTRACTOR’S ABILITY TO PERFORM .................................................................58 ARTICLE 12. OTHER AGREEMENTS OF THE PARTIES ......................................................58

12.1 RELATIONSHIP OF PARTIES ....................................................................................58

12.2 COMPLIANCE WITH LAW ........................................................................................58

12.3 GOVERNING LAW ....................................................................................................58

12.4 JURISDICTION ..........................................................................................................58

12.5 BINDING ON SUCCESSORS ......................................................................................58

12.6 ASSIGNMENT ...........................................................................................................58

12.7 NO THIRD-PARTY BENEFICIARIES..........................................................................60

12.8 WAIVER....................................................................................................................60

12.9 NOTICE PROCEDURES .............................................................................................61

12.10 REPRESENTATIVES OF THE PARTIES .....................................................................61 ARTICLE 13. MISCELLANEOUS AGREEMENTS ..................................................................62

13.1 ENTIRE AGREEMENT...............................................................................................62

13.2 SECTION HEADINGS ................................................................................................62 14 -iii- City of South Lake Tahoe/South Tahoe Refuse
Franchise Agreement

13.3 REFERENCES TO LAWS ...........................................................................................62

13.4 AMENDMENTS .........................................................................................................62

13.5 SEVERABILITY.........................................................................................................62

13.6 COUNTERPARTS ......................................................................................................62

13.7 EXHIBITS..................................................................................................................62 List of Exhibits
A. Definitions
B. Scope of Work for Collection Operations
B1. General Requirements
B2. Collection Services
B3. City Services
B4. Special Services
B5. Transition Plan
B.6 Route Operations
B.7 Operations Plan
B.8 Implementation Plan
C. Public Education and Outreach Requirements
D. Reporting Requirements
E. Rate Setting Manual
F. Performance Standards and Liquidated Damages
G. Contractor’s Proposal
G1. Cost Basis for Proposal
G2. Initial Rates for Collection Services
H. Clean Tahoe Scope of Work (including list of Approved Subcontractors and list of Approved Facilities) I. List of Properties with Bear Boxes as of Effective Date 15

Franchise Agreement
1 Franchise Agreement
2 between
3 City of South Lake Tahoe
4 and
5 South Tahoe Refuse Co.
6 for Recycling, Organics, and Solid Waste Collection
7 and Recycling and Organics Processing Services
8 THIS FRANCHISE AGREEMENT is made and entered into as of ________________, 2023 between the City 9 of South Lake Tahoe, California, a municipal corporation (hereinafter “City”), and South Tahoe Refuse Co. 10 (hereinafter referred to as the “Contractor”) (each a “Party” and collectively the “Parties”). 11 RECITALS
12 This Agreement is entered into with reference to the following facts and circumstances:
13 WHEREAS, the Legislature of the State of California, by enactment of the California Integrated Waste 14 Management Act of 1989 (AB 939) (California Public Resources Code Section 40000 et seq.), has declared 15 that it is in the public interest to authorize and require local agencies to make adequate provisions for 16 Solid Waste Collection within their jurisdictions; and 17 WHEREAS, the State of California has found and declared that the amount of refuse generated in 18 California, coupled with diminishing Disposal capacity and potential adverse environmental impacts from 19 landfilling and the need to conserve natural resources, have created an urgent need for State and local 20 agencies to enact and implement an aggressive integrated waste management program. The State has, 21 through enactment of AB 939 and subsequent related legislation including, but not limited to: the Jobs 22 and Recycling Act of 2011 (AB 341), the Event and Venue Recycling Act of 2004 (AB 2176), SB 1016 23 (Chapter 343, Statutes of 2008 [Wiggins, SB 1016]), the Mandatory Commercial Organics Recycling Act of 24 2014 (AB 1826), and the Short-Lived Climate Pollutants Bill of 2016 (SB 1383), directed the responsible 25 State agency, and all local agencies, to promote Diversion and to maximize the use of feasible waste 26 reduction, re-use, Recycling, and Composting options in order to reduce the amount of refuse that must 27 be Disposed; and
28 WHEREAS, SB 1383 establishes regulatory requirements for jurisdictions, Generators, haulers, Solid Waste 29 facilities, and other entities to support achievement of State-wide Organic Waste Disposal reduction 30 targets; and
31 WHEREAS, SB 1383 requires the City to implement Collection programs, meet Processing Facility 32 requirements, conduct Contamination monitoring, provide education, maintain records, submit reports, 33 monitor compliance, conduct enforcement, and fulfill other requirements; and, the City has chosen to 34 delegate some of its responsibilities to the Contractor, acting as the City’s designee, through this 35 Agreement; and
36 WHEREAS, pursuant to California Public Resources Code Section 40059(a)(2), the City has determined that 37 the public health, safety, and well-being require that an exclusive right be awarded to a qualified 38 Contractor to provide for the Collection of Recyclable Materials, Organic Materials, and Solid Waste and 16

Franchise Agreement
39 other services related to meeting the City’s economic and environmental goals; and 40 WHEREAS, the City further declares its intent to approve and maintain reasonable Rates for the Collection, 41 Recycling, Processing, Composting, and/or Disposal of Recyclable Materials, Organic Materials, and Solid 42 Waste; and
43 WHEREAS, the City desires, having determined that Contractor, by demonstrated experience, reputation 44 and capacity is qualified to provide for both the Collection of Recyclable Materials, Organic Materials, and 45 Solid Waste within the corporate limits of the City and the Transportation of such material to appropriate 46 places of Processing, Recycling, Composting, and/or Disposal, that Contractor be engaged to perform such 47 services on the basis set forth in this Agreement; and, 48 WHEREAS, the City and Contractor have attempted to address conditions affecting their performance of 49 services under this Agreement but recognize that reasonably unanticipated conditions may occur during 50 the Term of this Agreement that will require the Parties to meet and confer to reasonably respond to such 51 changed conditions; and,
52 WHEREAS, under South Lake Tahoe City Code Section 4.150.030, the City may enter into a contract for 53 the Collection, removal and Disposal of all refuse in and from the City and the collection of Rates therefor, 54 and the City Council is authorized to enter into such contract with any terms it deems necessary to protect 55 the best interests of the City; and
56 WHEREAS, on August 21, 2007, the City and Contractor entered into a Solid Waste Services Agreement 57 with a term ending on December 31, 2028, which was amended on January 3, 2012, by adoption of City 58 Council Resolution No. 2012-6, and was amended on December 7, 2021, by motion to include the Clean 59 Tahoe program and services (together, the “Prior Agreement”); and 60 WHEREAS, Contractor has requested a 20-year term to be able to amortize the capital expenses 61 Contractor will incur to implement the 3-Cart residential collection system required to implement SB 62 1383, and the City is willing to enter into a new franchise agreement with such a term based on 63 Contractor’s prior satisfactory service and to ensure successful implementation of SB 1383, and with 64 inclusion of other contractual provisions that advance the City’s economic and environmental goals. 65 WHEREAS, this franchise grants Contractor the privilege to use City streets to provide its services, 66 including running Collection routes with large vehicles and other heavy equipment that causes damage 67 and wear and tear on City streets in excess of that caused by day-to-day travel, and the right to use City 68 streets for placement of Bins for Collection, such that the parties agree that the franchise fee represents 69 the reasonable value of the franchise and the reasonable cost to the City of granting the franchise. 70 NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions contained in this 71 Agreement and for other good and valuable consideration, the Parties agree as follows:
72 ARTICLE 1.
73 GRANT AND ACCEPTANCE OF FRANCHISE
74 1.1 GRANT AND ACCEPTANCE OF FRANCHISE
75 By the signing of this Agreement, the City grants to Contractor and Contractor accepts an exclusive 17

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76 franchise within the corporate limits of the City. The franchise granted to Contractor shall be for the scope 77 of services described in this Agreement, subject to the limitations described in Section 1.2 and except 78 where otherwise precluded by Federal, State, and local laws and regulations. 79 1.2 LIMITATIONS TO THE FRANCHISE
80 The award of this Agreement shall not preclude the categories of Recyclable Materials, Food Waste, Solid 81 Waste, or other materials listed below from being delivered to and Collected and Transported by others, 82 provided that nothing in this Agreement is intended to or shall be construed to excuse any Person from 83 obtaining any authorization from the City which is otherwise required by law:
84 A. Donated or Sold Materials. Any items which are Source Separated at any Premises by the 85 Generator and (a) sold or (b) that are donated to youth, civic, or charitable organizations. 86 Materials will not be deemed donated if they are Collected by a non-franchised waste hauler that 87 is not a 501(c)(3) organization.
88 B. Food Waste. Other Persons shall maintain the right to: (1) accept Food Waste and Food-Soiled 89 Paper donated from the service recipient, or (2) to pay the service recipient for Food Waste and 90 Food-Soiled Paper provided that there is no net payment made by the service recipient to such 91 other Person in either case.
92 C. Edible Food. Edible Food which is Collected from a Generator by other Person(s), such as a Food 93 Recovery Organization or Food Recovery Service, for the purposes of Food Recovery; or which is 94 Self-Hauled by the Generator to another Person(s), such as a Food Recovery Organization, for the 95 purposes of Food Recovery, regardless of whether the Generator donates, sells, or pays a fee to 96 the other Person(s) to Collect or receive the Edible Food. 97 D. Food Scraps. Food Scraps that are separated by the Generator and used by the Generator or 98 distributed to other Person(s) for lawful use as animal feed, in accordance with 14 CCR Section 99 18983.1(b)(7). Food Scraps intended for animal feed may be Self-Hauled by Generator or hauled 100 by another party.
101 E. Materials That Contractor Does Not Divert. Discarded Materials which the Contractor is not 102 required to Process and Divert under this Agreement as of the Effective Date of this Agreement 103 which subsequently, in the City’s reasonable judgment, become economically feasible to Divert. 104 In such event, Contractor shall have the exclusive right to Collect and Process such materials if 105 Contractor agrees to do so without any change in Rates. If Contractor is unwilling to Process and 106 Divert such new materials at existing Rates, the City may provide for Collection, Processing, and 107 Diversion of such materials in any manner it deems appropriate. Such materials may include, but 108 not be limited to, Organic Materials which Contractor would otherwise Dispose. Contractor may 109 not enforce its exclusive franchise rights in a manner that would prevent the Diversion of material 110 that Contractor is unable or unwilling to Divert.
111 F. Beverage Containers. Containers delivered for Recycling under the California Beverage Container 112 Recycling and Litter Reduction Act, Section 14500, et seq. California Public Resources Code. 113 G. Materials Removed by Customer’s Contractor as Incidental Part of Services. Recyclable 114 Materials, Organic Materials, Solid Waste, and Bulky Items removed from a Premises by a 115 contractor (e.g., gardener, landscaper, tree-trimming service, construction contractor, Residential 18

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116 clean-out service) as an incidental part of the service being performed, rather than as a separately 117 contracted or subcontracted hauling service.
118 H. On-site or Community Composting. Organic Materials Composted or otherwise legally managed 119 at the site where it is generated (e.g., backyard Composting, or on-site anaerobic digestion) or at 120 a Community Composting site.
121 I. Excluded Waste. Excluded Waste regardless of its source. 122 J. Materials Generated by State and County Facilities. Materials generated by State and County 123 facilities located in the City, including but not limited to the Lake Tahoe Unified School District and 124 Lake Tahoe Community College District, provided that the Generator has arranged services with 125 other Persons or has arranged services with the Contractor through a separate agreement. 126 K. Construction and Demolition Debris. The Collection, removal, and Recycling of C&D Debris in 127 accordance with Section 6.15.600 et seq. of the South Lake Tahoe City Code. 128 Contractor acknowledges and agrees that the City may permit other Persons besides the Contractor to 129 Collect any and all types of materials excluded from the scope of this Franchise, as set forth above, without 130 seeking or obtaining approval of Contractor. If Contractor can produce evidence that other Persons are 131 servicing Collection Containers or are Collecting and Transporting Recyclable Materials, Organic Materials, 132 and/or Solid Waste in a manner that is not consistent with this Agreement or the City’s Code, it shall 133 report the location, the name and phone number of the Person or company to the City’s Contract Manager 134 along with Contractor’s evidence. In such case, City shall notify the Generator and Person providing service 135 of Contractor’s rights under this Agreement.
136 This Agreement and scope of this franchise shall be interpreted to be consistent with Applicable Law, now 137 and during the Term of the Agreement. If future judicial interpretations of current law or new laws, 138 regulations, or judicial interpretations limit the ability of the City to lawfully contract for the scope of 139 services in the manner and consistent with all provisions as specifically set forth herein, Contractor agrees 140 that the scope of the Agreement will be limited to those services and materials which may be lawfully 141 included herein and that the City shall not be responsible for any lost profits or losses claimed by 142 Contractor to arise out of limitations to the scope or provisions of the Agreement set forth herein. In such 143 an event, it shall be the responsibility of Contractor to minimize the financial impact of such future judicial 144 interpretations or new laws and the Contractor may meet and confer with City and may petition for a Rate 145 adjustment pursuant to Section 8.3.
146 1.3 OBLIGATIONS OF PARTIES
147 In addition to the specific performance required under the Agreement, City and Contractor shall:
148 1. Use their commercially reasonable efforts to enforce the exclusive nature of the franchise by the 149 Contractor’s identification and documentation of violations of this Agreement and the City’s 150 notification of Generators and collection Persons reasonably believed to be violating the franchise 151 regarding the terms of this Agreement.
152 2. Provide timely notice to one another of a perceived failure to perform any obligations under this 153 Agreement and access to information demonstrating the Party’s failure to perform. 19

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154 3. Provide timely access to the City Contract Manager and the Contractor’s designated 155 representative and complete and timely responses to requests of the other Party. 156 4. Provide timely notice of matters which may affect either Party’s ability to perform under the 157 Agreement.
158 ARTICLE 2.
159 TERM OF AGREEMENT
160 2.1 TERM AND OPTION TO EXTEND
161 The Term of this Agreement shall commence January 1, 2024 (Commencement Date) and continue in full 162 force for a period of twenty (20) years, through and including December 31, 2043, unless the Agreement 163 is extended in accordance with this Section or terminated pursuant to Section 10.2. Upon the 164 Commencement date, the Prior Agreement shall terminate. 165 At City’s sole discretion, this Agreement may be extended one or more times on the same terms and 166 conditions without amendment for a period of no more than five (5) additional years for a total Term that 167 does not extend beyond December 31, 2048. If City desires to extend the Agreement, City shall provide 168 the Contractor with written notice of its decision to extend the Agreement at least one (1) year before 169 the expiration of the initial Term and at least six (6) months before the expiration of any extended term. 170 Such notice by City shall specify the duration of the extension. 171 Between the Effective Date and the Commencement Date, Contractor shall perform all activities 172 necessary to prepare itself to start providing services required by this Agreement on the Commencement 173 Date.
174 2.2 CONDITIONS TO EFFECTIVENESS OF AGREEMENT
175 The obligation of City to permit this Agreement to become effective and to perform its undertakings 176 provided for in this Agreement is subject to the satisfaction of all the conditions below, each of which may 177 be waived, in written form only, in whole or in part by City. 178 A. Accuracy of Representations. The Contractor’s representations and warranties made in 179 Contractor’s Proposal and Article 11 of this Agreement are true and correct on and as of the 180 Effective Date.
181 B. Furnishings of Insurance and Performance Bond. Contractor has furnished evidence of the 182 insurance and performance bond required by Article 9 that is satisfactory to the City. 183 C. Absence of Litigation. To the best of Contractor's knowledge, after reasonable investigation, 184 there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or 185 governmental authority, commission, board, agency or instrumentality decided, pending or 186 threatened against Contractor wherein an unfavorable decision, ruling or finding, in any single 187 case or in the aggregate, would:
188 1. Materially adversely affect the performance by Contractor of its obligations hereunder; 189 2. Adversely affect the validity or enforceability of this Agreement; or, 20

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190 3. Have a material adverse effect on the financial condition of Contractor, or any surety or 191 entity guaranteeing Contractor's performance under this Agreement. 192 D. Permits Furnished. Contractor has provided City with copies of all permits necessary for operation 193 of all Approved Facilities owned or operated by Contractor or any Subcontractor for use under 194 the terms of this Agreement.
195 E. Legal Challenge. Contractor understands and acknowledges that the award of this Agreement and 196 related decisions may be subject to various types of legal and environmental challenges (such 197 legal and environmental challenges being referred to collectively as “Legal Challenges”). 198 Accordingly, this Agreement shall not become effective until the City reasonably determines that 199 (1) any Legal Challenges that had been initiated as of the time of such determination have been 200 resolved in favor of the City’s award of this Agreement to Contractor; and (2) the deadline to 201 initiate any additional Legal Challenges has expired; provided, however, that Contractor shall be 202 entitled to rescind this Agreement upon thirty (30) days’ prior written notice to the City if such 203 determination is not made by September 30, 2023.
204 ARTICLE 3.
205 SCOPE OF AGREEMENT
206 3.1 SUMMARY SCOPE OF SERVICES
207 The Contractor or its Subcontractor(s) shall be responsible for the following:
208 A. Providing a 3-Cart Collection program for the separate Collection of Recyclable Materials, Organic 209 Materials, and Solid Waste generated by and placed for Collection by Customers pursuant to the 210 requirements of Article 4 and Exhibit B.
211 B. Transporting Collected materials to the appropriate Approved Facilities pursuant to requirements 212 of Article 4 and Exhibit B;
213 C. Processing Collected Recyclable Materials and Organic Materials at the appropriate Approved 214 Facilities pursuant to the requirements of Article 4 and Exhibit B; 215 D. Performing all other services required by this Agreement including, but not limited to, Customer 216 billing, public education, Customer service, Contamination monitoring, record keeping, and 217 reporting pursuant to Articles 4 and 6 and Exhibits C (Public Education & Outreach) and D 218 (Reporting);
219 E. Furnishing all labor, supervision, vehicles, Containers, other equipment, materials, supplies, and 220 all other items and services necessary to perform its obligations under this Agreement; 221 F. Paying all expenses related to provision of services required by this Agreement including, but not 222 limited to, taxes, regulatory fees (including City Fees and Reimbursements), and utilities; 223 G. Performing or providing all services necessary to fulfill its obligations in full accordance with this 224 Agreement at all times using best industry practice for comparable operations; and, 225 H. Complying with all Applicable Laws.
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226 The enumeration and specification of particular aspects of service, labor, or equipment requirements shall 227 not relieve Contractor of the duty to perform all other tasks and activities necessary to fulfill its obligations 228 under this Agreement, regardless of whether such requirements are enumerated elsewhere in the 229 Agreement, unless excused in accordance with Section 10.7. 230 3.2 USE OF APPROVED FACILITIES
231 The Contractor, without constraint and as a free-market business decision in accepting this Agreement, 232 agrees to use the Approved Facilities for the purposes of Processing and/or Disposing of all Recyclable 233 Materials, Organic Materials, Solid Waste, and other materials Collected in the City. Use of a facility must 234 be approved, in writing, by the City prior to use consistent with the requirements of Article 4. Such 235 decision by Contractor in no way constitutes a restraint of trade notwithstanding any Change in Law 236 regarding Flow Control limitations or any definition thereof. 237 3.3 SUBCONTRACTING
238 Contractor shall not engage any Subcontractors for Collection, Transportation, or Processing of Recyclable 239 Materials, Organic Materials, or Solid Waste services without the prior written consent of City Contract 240 Manager. As of the Effective Date of this Agreement, City has approved Contractor’s use of Subcontractors 241 as set forth in Exhibit H. If the Contractor plans to engage any Affiliate in the provision of services, 242 Contractor shall provide City Contract Manager with thirty (30) days written notification of its plans and 243 provide an explanation of any potential impacts related to the quality, timeliness, or cost of providing 244 services under this Agreement. All insurance documents must be reviewed and approved by the City’s 245 Risk Manager prior to City acceptance. Contractor shall require that all Subcontractors file insurance 246 certificates with the City, name City as an additional insured, and comply with all material terms of this 247 Agreement.
248 3.4 RESPONSIBILITY FOR MATERIALS
249 Once Recyclable Materials, Organic Materials, and/or Solid Waste are placed in the Contractor’s 250 Containers and at the Collection location, the responsibility for their proper handling shall Transfer directly 251 from the Generator to Contractor, with the exception of Excluded Waste if the Contractor can identify the 252 Generator pursuant to Section 5.8.B. Once Recyclable Materials, Organic Materials, and/or Solid Waste 253 are deposited by Contractor at the appropriate Approved Facility, such materials shall become the 254 responsibility of the owner or operator of the Approved Facility except for Excluded Waste pursuant to 255 Section 5.8.C.
256 Responsibility for Excluded Waste that has been inadvertently Collected by the Contractor shall remain 257 with the Contractor if it cannot identify the Generator, and Contractor shall assume all responsibility for 258 its proper Disposal.
259 3.5 CITY-DIRECTED CHANGES TO SCOPE
260 City may require a proposal from Contractor to establish the scope of any modification to existing services 261 (which may include use of Approved Facilities) to be provided under this Agreement. In such case, 262 Contractor shall present, within thirty (30) calendar days of City’s request, unless an alternate schedule is 263 mutually agreed-upon, a written proposal to provide such modified or additional services. City shall review 264 the Contractor’s Proposal for the change in scope of services. City and Contractor may meet and confer 265 to negotiate Contractor’s proposed revisions and costs and shall amend this Agreement, as appropriate, 22

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266 to reflect the mutually agreed-upon changes in scope. If the City and Contractor are unable to agree on 267 terms and conditions, including compensation adjustments, of such services within ninety (90) calendar 268 days from City receipt of Contractor’s Proposal for such services, the City may permit other Persons to 269 provide such services. Nothing herein shall prevent the City from soliciting cost and operating information 270 from other Persons in order to inform the City’s evaluation of Contractor’s Proposal. 271 At any time during the Term of this Agreement, the City may solicit proposals from other Persons for 272 services not contemplated under this Agreement. In the event that contracting with other Persons for 273 such services will reduce Contractor’s Compensation under this Agreement, as described in Article 8, the 274 Contractor shall be offered the opportunity to match any other Person’s proposed pricing and retain the 275 added scope of services. However, nothing in this Agreement shall prevent the City from contracting with 276 other Persons in the event that Contractor is unable or unwilling to provide such services at or below the 277 cost proposed by the other Person.
278 ARTICLE 4.
279 SCOPE OF SERVICES
280 Contractor shall (a) Collect Solid Waste generated at Residential Premises, Commercial Premises, City 281 facilities, and other events and locations within the City, and deliver the Solid Waste to the Approved 282 Recovery Facility or other Approved Facility, and (b) Collect Recyclable Materials, Yard Trimmings, Food 283 Scraps, and other items specified in Exhibit B that are placed for Collection by participating Residential 284 Customers, Commercial Customers, City facilities and other events and locations within the City, and 285 deliver the Recyclable Materials, Yard Trimmings, Food Scraps, and other items specified in Exhibit B to 286 the Approved Recyclable Materials Processing Facility or other Approved Facility. 287 Contractor shall perform the Recyclable Materials, Organic Materials, Solid Waste, and Bulky Items 288 services described in this Article 4, for any Customer in the City that subscribes to Contractor’s Collection 289 services. Contractor’s Collection services shall be offered to any Customer that places Containers in a 290 public right-of-way or that provides a waiver for Contractor to access the Private Road(s) where Customer 291 places its Containers.
292 This Article 4 describes the general requirements for the services to be provided. More specific 293 requirements for how each service shall be provided to each Customer Type are described in Exhibit B. 294 Failure to specifically require an act necessary to perform the service does not relieve Contractor of its 295 obligation to perform such act.
296 4.1 RECYCLABLE MATERIALS
297 A. Collection. Contractor shall provide Recyclable Materials Collection services as described in 298 Exhibit B.
299 B. Processing. Contractor shall Transport and deliver all Source Separated Recyclable Materials 300 placed in Recyclable Material Containers in the City to the Approved Recyclable Materials 301 Processing Facility. All costs associated with Transporting to and Processing of such Recyclable 302 Materials at the Approved Recyclable Materials Processing Facility and Disposing of the Residue 303 as required in Section 4.1.D below shall be paid by Contractor. 304 Contractor guaranteessufficient capacity at the Approved Recyclable Materials Processing Facility 23

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305 to Process all Source Separated Recyclable Materials Collected by Contractor under this 306 Agreement throughout the Term of the Agreement.
307 Contractor shall keep all existing permits and approvals necessary for use of the Approved 308 Recyclable Materials Processing Facility in full regulatory compliance. Upon request, Contractor 309 shall provide copies of facility permits and/or notices of violations (obtained from its Processing 310 Facility Subcontractor if necessary) to City Contract Manager. 311 If Contractor is unable to use the Approved Recyclable Materials Processing Facility due to an 312 event that meets the requirements for excusing Contractor from performance of this specific 313 obligation as described in Section 10.7, Contractor shall use an alternative Processing Facility 314 provided that the Contractor provides written notice to City Contract Manager. Within forty-eight 315 (48) hours of such emergency or sudden and unforeseen closure, the Contractor shall provide a 316 written description of the reasons the use of the Approved Recyclable Materials Processing 317 Facility is not feasible, and the period of time Contractor proposes to use the alternative 318 Processing Facility. Such a change in Processing Facility shall be temporarily permitted until such 319 time as the City Contract Manager is able to consider and respond to the use of the proposed 320 alternative Processing Facility. If the use of the proposed alternative Processing Facility is 321 anticipated to or actually does exceed thirty (30) days in a consecutive twelve (12) month period, 322 the use of such Processing Facility shall be subject to approval by the City Contract Manager. The 323 City Contract Manager may, in their sole discretion, approve, conditionally approve, temporarily 324 approve, or disapprove of the use of the proposed alternative Processing Facility. If the City 325 disapproves the use of the proposed alternative Processing Facility, the Parties shall meet and 326 confer to determine an acceptable Processing Facility. 327 If the use of an alternative Processing Facility is for reasons within Contractor’s, or its Processing 328 Facility Subcontractor’s control, Contractor’s Compensation shall not be adjusted for any change 329 in Transportation and Processing costs associated with use of the alternative Processing Facility. 330 However, if the use of an alternative Processing Facility is due to reasons beyond Contractor’s or 331 its Subcontractor’s control, then City shall adjust, either up or down, Contractor’s Compensation 332 for changes in Transportation and Processing costs associated with the use of the alternative 333 Processing Facility. The performance of Recyclable Materials commodity markets shall not be 334 considered an acceptable basis for use an alternative Processing Facility nor shall it serve as the 335 basis for any adjustment in Contractor’s Compensation under this Agreement, other than as 336 specifically contemplated in Exhibit E to this Agreement. If the change in the Processing Facility 337 results in increased costs, City may identify and direct Contractor to an alternative Processing 338 Facility which results in less cost than the Contractor-identified alternative. 339 Except for the emergency conditions described in this section, Contractor shall not change its 340 selection of the Approved Recyclable Materials Processing Facility without City’s written approval, 341 which may be withheld in the City’s sole discretion. If Contractor elects to use a Recyclable 342 Materials Processing Facility that is different than the initial Approved Recyclable Materials 343 Processing Facility, it shall request written approval from the City Contract Manager sixty (60) 344 calendar days prior to use of the site and obtain City’s written approval no later than ten (10) 345 calendar days prior to use of the site. Failure to meet the requirements of this Section shall result 346 in Liquidated Damage as identified in Exhibit F.
347 Contractor shall observe and comply with all regulations in effect at the Approved Recyclable 24

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348 Materials Processing Facility and cooperate with and take direction from the operator thereof 349 with respect to delivery of Recyclable Materials. Contractor shall actively work with the Approved 350 Recyclable Materials Processing Facility operator throughout the Term of this Agreement to 351 ensure that Contamination of the Recyclable Materials Collected under this Agreement and 352 delivered to the Processing Facility remains below the limits established by Applicable Law 353 including, without limitation, SB 1383.
354 C. Marketing. The Contractor shall be responsible for marketing Recyclable Materials Collected in 355 City that are delivered for Processing at Contractor’s Approved Recyclable Materials Processing 356 Facility. Contractor’s marketing strategy shall promote the highest and best use of materials 357 presented in the waste management hierarchy established by AB 939. Where practical, the 358 marketing strategy should include use of local, regional, and domestic markets for Recyclable 359 Materials.
360 D. Residue Disposal. Residue from the Processing of Source Separated Recyclable Materials 361 Collected under this Agreement at Contractor’s Approved Recyclable Materials Processing 362 Facility, which cannot be marketed, shall be Disposed of by Contractor, or the Processing Facility 363 Subcontractor, at one or more Disposal Facilities selected by Contractor or such Processing 364 Facility. Residue delivered for Disposal shall not include any Excluded Waste. 365 4.2 ORGANIC MATERIALS
366 A. Collection. Contractor shall provide Organic Materials Collection services as described in Exhibit 367 B. City is currently subject to a high-elevation waiver from CalRecycle from the residential food368 waste collection requirements of SB 1383. Contractor agrees to work with the City annually to 369 evaluate implementation of residential food-waste programs, which may include cost analysis and 370 pilot programs.
371 B. Transfer. Contractor plans to Transport Organic Materials to the Approved Recovery Facility 372 where the materials will be unloaded from Collection vehicles and loaded into large-capacity 373 vehicles and Transported to the Approved Organic Materials Processing Facility. Contractor shall 374 keep all existing permits and approvals necessary for use of the Approved Recovery Facility in full 375 regulatory compliance.
376 C. Processing.
377 1. General. Contractor shall Transport and deliver all Source Separated Organic Materials 378 placed in Organic Material Containers in the City to the Approved Organic Materials 379 Processing Facility. All tipping fees and other costs associated with Transporting such 380 Organic Materials to the Approved Organic Materials Processing Facility and Disposing of 381 the Residue as required in Section 4.2.E below shall be paid by Contractor. 382 i. Capacity Guarantee. Contractor will use commercially reasonable efforts 383 to secure guarantees of sufficient capacity at the Approved Organic 384 Materials Processing Facility to Process all Source Separated Organic 385 Materials Collected by Contractor under this Agreement throughout the 386 Term of the Agreement.
387 ii. Compliance with Regulatory Requirements and Applicable Law. 25

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388 Contractor shall keep all existing permits and approvals necessary for use 389 of the Approved Organic Materials Processing Facility in full regulatory 390 compliance. Upon request, Contractor shall provide copies of facility 391 permits and/or notices of violations (obtained from its Processing Facility 392 Subcontractor if necessary) to City Contract Manager. 393 iii. Notification of Emergency Conditions. Each Approved Facility shall notify 394 the City of any unforeseen operational restrictions that have been 395 imposed upon the Facility by a regulatory agency or any unforeseen 396 equipment or operational failure that will temporarily prevent the Facility 397 from Processing the Discarded Materials Collected under this Agreement. 398 iv. Approved Facility(ies) Unavailable/Use of Alternative Facility(ies). If 399 Contractor is unable to use the Approved Organic Materials Processing 400 Facility due to an event that meets the requirements for excusing 401 Contractor from performance of this specific obligation as described in 402 Section 10.7, Contractor shall use an alternative Processing Facility 403 provided that the Contractor provides written notice to City Contract 404 Manager. Within forty-eight (48) hours of emergency or sudden and 405 unforeseen closure, the Contractor shall provide a written description of 406 the reasons the use of the Approved Organic Materials Processing Facility 407 is not feasible, and the period of time Contractor proposes to use the 408 alternative Processing Facility. Such a change in Processing Facility shall 409 be temporarily permitted until such time as the City Contract Manager is 410 able to consider and respond to the use of the proposed alternative 411 Processing Facility. If the use of the proposed alternative Processing 412 Facility is anticipated to or actually does exceed thirty (30) days in a 413 consecutive twelve (12) month period, the use of such Processing Facility 414 shall be subject to approval by the City Contract Manager. The City 415 Contract Manager may, in their sole discretion, approve, conditionally 416 approve, temporarily approve, or disapprove of the use of the proposed 417 alternative Processing Facility. If the City disapproves the use of the 418 proposed alternative Processing Facility, the Parties shall meet and 419 confer to determine an acceptable Processing Facility. 420 If the use of an alternative Processing Facility is for reasons within 421 Contractor’s, or its Processing Facility Subcontractor’s control, 422Contractor’s Compensation shall not be adjusted for any change in 423 Transportation and Processing costs associated with use of the 424 alternative Processing Facility. However, if the use of an alternative 425 Processing Facility is due to reasons beyond Contractor’s or its 426 Subcontractor’s control, then City shall adjust, either up or down, 427 Contractor’s Compensation for changes in Transportation and Processing 428 costs associated with the use of the alternative Processing Facility. In the 429 event that the change in the Processing Facility results in increased costs, 430 City may identify and direct Contractor to an alternative Processing 431 Facility which results in less cost than the Contractor-identified 432 alternative.
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433 Except for the emergency conditions described in this section, Contractor shall not change 434 its selection of the Approved Organic Materials Processing Facility without City’s written 435 approval, which may be withheld in the City’s sole discretion. If Contractor elects to use 436 an Organic Materials Processing Facility that is different than the initial Approved Organic 437 Materials Processing Facility, it shall request written approval from the City Contract 438 Manager sixty (60) calendar days prior to use of the site and obtain City’s written approval 439 no later than ten (10) calendar days prior to use of the site. Failure to meet the 440 requirements of this Section shall result in Liquidated Damage as identified in Exhibit F. 441 Contractor shall observe and comply with all regulations in effect at the Approved Organic 442 Materials Processing Facility and cooperate with and take direction from the operator 443 thereof with respect to delivery of Organic Materials. Contractor shall actively work with 444 the Approved Organic Materials Processing Facility operator throughout the Term of this 445 Agreement to ensure that Contamination of the Organic Materials Collected under this 446 Agreement and delivered to the Processing Facility remains below the limits established 447 by Applicable Law including, without limitation, SB 1383. 448 D. Marketing. The Contractor shall be responsible for marketing Organic Materials Collected in the 449 City that are delivered for Processing at the Approved Organic Materials Processing Facility. 450 Contractor’s marketing strategy shall promote the highest and best use of materials presented in 451 the waste management hierarchy established by AB 939. Where practical, the marketing strategy 452 should include use of local, regional, and domestic markets for Organic Materials. 453 E. Residue Disposal. Residue from the Processing of Organic Materials Collected under this 454 Agreement at the Approved Organic Materials Processing Facility, which cannot be marketed, 455 shall be Disposed of by Contractor, or the Processing Facility Subcontractor, at one or more 456 Disposal Facilities selected by Contractor or such Processing Facility. Residue delivered for 457 Disposal shall not include any Excluded Waste.
458 F. Biomass Project. Contractor is in the planning and permitting phase to construct and install a 459 biomass energy generation facility at the Approved Recovery Facility. If and when this biomass 460 facility becomes operational, appropriate Organic Materials Collected under this Agreement will 461 have first priority to be used in order to satisfy part or all of the City’s procurement obligations 462 under SB 1383.
463 4.3 SOLID WASTE
464 Contractor shall offer and provide Solid Waste Collection services as described in Exhibit B. 465 Contractor acknowledges that City is committed to Diverting materials from Disposal through the 466 implementation of source reduction, reuse, Recycling, Composting, and other programs, and that City 467 may implement new programs, with or without the involvement of the Contractor, that may impact the 468 overall quantity or composition of Solid Waste to be Collected by Contractor. Contractor shall not be 469 entitled to any compensation or other relief resulting from a decline in Solid Waste volumes or Tonnage 470 or from a change in the composition of Solid Waste. 471 Contractor plans to Transport Solid Waste to the Approved Recovery Facility where the materials will be 472 unloaded from Collection vehicles and loaded into large-capacity vehicles and Transported to the 473 Approved Disposal Facility. Contractor shall keep all existing permits and approvals necessary for use of 27

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474 the Approved Recovery Facility in full regulatory compliance. Upon request, Contractor shall provide 475 copies of facility permits and/or notices of violations (obtained from its Recovery Facility Subcontractor if 476 necessary) to City Contract Manager. If the Contractor is unable to use the Approved Recovery Facility, 477 then the Contractor shall be responsible for making other Transportation arrangements. In such event, 478 Contractor shall not be compensated for any additional costs. However, if the use of an alternative 479 Transfer Facility is due to reasons beyond the Contractor’s or its Subcontractor’s control, then City shall 480 adjust, either up or down, Contractor’s Compensation for changes in Transportation and Processing costs 481 associated with the use of the alternative Transfer Facility. In the event that the change in the Transfer 482 Facility results in increased costs, City may identify and direct Contractor to an alternative Transfer Facility 483 which results in less cost than the Contractor-identified alternative. If the Contractor plans to change its 484 Transfer method, Contractor shall obtain written approval from the City prior to making the change. 485 Contractor shall Transport all Solid Waste Collected in City to the Approved Disposal Facility. Contractor 486 shall pay all costs associated with Transportation and Disposal of Solid Waste including payment of any 487 gate fees charged at the Approved Disposal Facility. Contractor shall observe and comply with all 488 regulations and posted rules in effect at the Approved Disposal Facility and cooperate with and take 489 direction from the operator thereof with respect to delivery of Solid Waste. 490 Upon implementing a Zero Emission Vehicle fleet or once a disposal facility closer to the City than the 491 Approved Disposal Facility implements methane capture, Contractor shall cooperate with the City to work 492 towards Transporting Solid Waste Collected in City to a disposal facility which captures methane. 493 4.4 BULKY ITEMS AND REUSABLE MATERIALS
494 Contractor shall offer Bulky Item and Reusable Materials Collection services as described in Exhibit B. 495 Contractor shall Transport all Bulky Items or Reusable Materials Collected under this Agreement to the 496 Approved Reusable or Recyclable Materials Processing Facility. Contractor shall observe and comply with 497 all regulations in effect at the Approved Reusable or Recyclable Materials Processing Facility and 498 cooperate with and take direction from the operator thereof with respect to delivery of Bulky Items 499 and/or Reusable Materials.
500 4.5 SPECIAL EVENTS
501 Contractor shall offer annual Special Event services as described in Exhibit B. Contractor shall provide 502 Recyclable Materials, Organic Materials, and Solid Waste services to up to five (5) special events per Rate 503 Period, at no cost to the event or City. Contractor shall provide special event services to events that are 504 sponsored by City upon thirty (30) calendar days advance request by the City Contract Manager, at no 505 cost to the City. Special event services include all of the following unless specifically waived in writing by 506 City Contract Manager.
507 A. Event Collection Stations. Contractor shall provide and set-up event Collection stations for 508 Collection of Recyclable Materials, Organic Materials, and Solid Waste at City-sponsored special 509 events. Each event Collection station shall include a separate Cart for each of Recyclable 510 Materials, Organic Materials, and Solid Waste, as appropriate. Contractor shall provide a sufficient 511 number of event Collection stations of sufficient capacity to meet the needs of the event as 512 determined by Contractor in cooperation with the event organizer. Collection stations shall utilize 513 the same Carts used to provide services to Residential Customers, unless alternative Containers 514 are approved by the City. Collection stations shall include adequate signs and labeling. 28

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515 B. Drop Boxes. Upon request, Contractor shall provide Containers for the aggregation of material 516 removed from event Collection stations during the course of the event. Contractor shall provide 517 Containers in sufficient number of appropriate type(s) for the needs of the event as determined 518 by Contractor in cooperation with the event organizer. Contractor shall service Containers, as 519 agreed-upon with the event organizer, and deliver Collected materials to the appropriate 520 Approved Facility for Processing and/or Disposal.
521 C. Public Education Booth. Upon request of the City Contract Manager and no more than 5 events 522 per year, Contractor shall staff a booth or exhibit at the event for the purpose of educating the 523 public about the services and programs provided by Contractor under this Agreement and the 524 benefits of source reduction, reuse, Recycling, and Composting. 525 D. Reporting. Within thirty (30) calendar days of the end of the event, Contractor shall submit a 526 report to the City Contract Manager and event organizer. The report should include, at a 527 minimum: the number of event Collection stations deployed at the event, the number of 528 Collection station monitors, the Tonnage of each material type (i.e., Recyclable Materials, Organic 529 Materials, and Solid Waste) Collected, and a description of the public education provided at the 530 event.
531 Contractor may, at its sole discretion and expense, coordinate with local youth, community, or charitable 532 organizations to provide some or all of the required services. Regardless of Contractor’s use of such an 533 organization, Contractor shall be responsible for ensuring that service is provided to the Customer in a 534 professional and timely manner.
535 For special events which are not identified in Exhibit B5 or otherwise hosted or sponsored by the City, 536 Contractor shall provide the above-described special event services at the request of the event organizer 537 and may negotiate the charges for such services with the event organizer based on the specific needs of 538 the event.
539 4.6 PUBLIC EDUCATION AND OUTREACH
540 The public education and outreach activities included in the scope of services provided by Contractor 541 under this Agreement are described in Exhibit C. Contractor shall produce and distribute public education 542 and outreach materials upon City request.
543 A. Program Objectives. Contractor shall be responsible for designing and conducting a public 544 education and outreach program for City review and approval, and Contractorshall be responsible 545 for the production and distribution of all materials under this program in accordance with this 546 Agreement. The public education and outreach strategy shall focus on improving Generator 547 understanding of the benefits of and opportunities for source reduction, reuse, and landfill 548 Disposal reduction and supporting compliance with Applicable Laws and regulations, including, 549 but not limited to AB 341, AB 1826, and SB 1383. Examples of goals of the public education and 550 outreach program include, but are not limited to: (i) informing Generators about the services that 551 are provided under this Agreement with specific focus on describing the methods and benefits of 552 source reduction, reuse, Recycling, and Composting; (ii) instructing Generators on the proper 553 method for placing materials in Containers for Collection and setting Containers out for Collection, 554 with specific focus on minimizing Contamination of Recyclable Materials and Organic Materials; 555 (iii) clearly defining Excluded Waste and educating Generators about the hazards of such materials 29

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556 and their opportunities for proper handling; (iv) discouraging Generators from buying products if 557 the product and its packaging are not readily reusable, Recyclable, or Compostable; (v) informing 558 Generators subject to Food Recovery requirements under SB 1383 of their obligation to recover 559 Edible Food and actions they can take to prevent the creation of Food Waste; (vi) encouraging the 560 use of Compost and recovered Organic Waste products; and, (vii) encouraging Generators to 561 purchase products/packaging made with Recycled content materials. The cumulative intended 562 effect of these efforts is to reduce generation of Solid Waste and, ultimately, Disposal of Solid 563 Waste by each Generator in the City. Contractor agrees to support and not undermine or interfere 564 with such efforts, and the City agrees to amplify all such outreach efforts through all means 565 necessary, appropriate, and available to the City. The parties agree to cooperate on applications 566 for available grant funding for outreach programs.
567 B. Contractor Public Education Requirements. Contractor agrees to print, produce, and distribute 568 education materials and conduct outreach, as required by the City, based on the City’s adopted 569 program, the extent of these requirements may be similar to the example public education and 570 outreach requirements detailed in Exhibit C. Contractor shall provide these materials in English 571 and Spanish.
572 Contractor will evaluate changing to a billing system that allows education materials to be 573 included with bills mailed to customers.
574 Contractor acknowledges that they are part of a multi-party effort to operate and educate the 575 public about the regional integrated waste management system. Contractor shall cooperate and 576 coordinate with the City Contract Manager on public education activities to minimize duplicative, 577 inconsistent, or inappropriately timed education campaigns. 578 Contractor shall obtain approval from the City Contract Manager on all Contractor-provided 579 advertising, promotional, or service-related materials used within the City before publication, 580 distribution, and/or release. The City Contract Manager, in their sole discretion, shall have the 581 right to deny the use of any materials or content or may request that Contractor include City 582 identification and contact information on materials and Contractor’s approval of such requests 583 shall not be unreasonably withheld.
584 4.7 BILLING
585 Contractor shall bill all Customers and be solely responsible for collecting billings at Rates set in 586 accordance with Article 8. Individual contracts between Contractor and a Customer for services provided 587 under this Agreement shall be prohibited.
588 Contractor shall bill all Customers for scheduled and regularly recurring services on a quarterly, bi589 monthly, or monthly basis. Contractor shall bill Customers for any on-call and/or non-recurring services 590 no more frequently than bi-monthly and may only bill for services provided during the previous two (2) 591 months.
592 Contractor shall develop, maintain, and regularly update a Customer Account Information Database, 593 which shall include but is not limited to:
594 i. Customer name;
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595 ii. Phone number;
596 iii. Service address;
597 iv. Email address; and,
598 v. Customer Service Levels, including:
599 a. Customer Service Levels exceptions, and,
600 b. Customer service waivers.
601 Contractor shall make such database available, upon no more than five (5) Working Days request from 602 the City Contract Manager, in accordance with this Section and Section 6.1. Failure to maintain database 603 in accordance with this Section shall result in Liquidated Damages as identified in Exhibit F. 604 Contractor shall use commercially reasonable efforts to bill Customers electronically using paperless 605 invoices, however Contractor shall bill Customers who decline or are otherwise unable to provide email 606 contact information by standard mail, using standard (paper) invoices. Contractor shall permit Customers 607 the ability to pay their bills through an electronic check or credit card and include the ability for Customer 608 billings to be automatically charged on a recurring basis. Contractor shall prepare, mail, and collect bills 609 from Customers who decline to use such internet-based billing system. Contractor shall make 610 arrangements to allow such Customers to pay bills by cash, check, electronic check, money order, and 611 credit card.
612 Up to once per billing cycle, City may direct Contractor to attach inserts relating to City-sponsored events 613 and integrated waste management activities to Customer invoices. Contractor shall provide electronic bill 614 inserts to Customers who are billed electronically, and paper bill inserts to Customers who receive paper 615 bills. Electronic bill inserts/attachments must be readily available for the Customer to view upon receipt 616 of the invoice (attachments shall not be provided as links). Upon City request for such attachments, 617 Contractor shall comply with such request during its next billing cycle for the targeted Customer group. If 618 a postage increase is incurred because of the inserts, the City will be responsible for the actual cost of the 619 increase.
620 Contractor shall maintain copies of all billings and receipts, each in chronological order, for the Term of 621 this Agreement, for inspection and verification by the City Contract Manager at any reasonable time but 622 in no case more than thirty (30) calendar days after receiving a request to do so. 623 Contractor shall be responsible for collection of payment from Customers with past due accounts (“bad 624 debt”) in accordance with this Section 4.7. Contractor shall make reasonable efforts to obtain payment 625 from delinquent accounts through issuance of late payment notices and telephone requests for payments. 626 Mandatory collection fees which remain unpaid for a period of 180 days or more may be collected through 627 the lien process set forth in Section 4.150.370 of the South Lake Tahoe City Code. 628 In the event that any account becomes more than fifteen (15) calendar days past due, Contractor shall 629 notify such Customer of the delinquency via written correspondence, instructing the Customer that 630 unpaid bills which become more than thirty (30) calendar days delinquent may be assessed a 0.833% late 631 fee per month. Contractor shall provide a second written notice of delinquency to any account which 632 becomes more than sixty (60) calendar days past due. Should any account become more than sixty (60) 31

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633 calendar days past due, Contractor may discontinue providing service to the Customer. No less than seven 634 (7) calendar days prior to discontinuing service to a Customer, Contractor shall notify the City Contract 635 Manager of the address, Service Level, service frequency, and delinquent billing amount. Contractor may 636 withhold service from a delinquent account until past delinquencies are paid in full. 637 If Contractor fails to invoice a Customer, or otherwise under-charges a Customer for services provided for 638 more than six (6) months, Contractor may not subsequently attempt to collect the under-charged amount 639 for more than six months of service. If Contractor over-charges a Customer for a period of more than six 640 (6) months, Contractor shall reimburse or credit the Customer for at least six months of the over-charged 641 service, but is not required by this Agreement to reimburse or credit the Customer for more than six (6) 642 months of overcharges.
643 4.8 CUSTOMER SERVICE PROGRAM
644 4.8.1 Program Requirements
645 A. Business Office and Customer Service Center. Contractor shall establish and maintain a business 646 office at the Approved Recovery Facility or another location within the City for purposes of 647 carrying out its obligations under this Agreement. Contractor shall also provide a full customer 648 service center within City limits.
649 B. Customer Service Center Hours. Contractor’s business office and customer service center, 650 including telephone access,shall be open to the public to include at least the hoursfrom 8:00 a.m. 651 to 5:00 p.m. Monday through Friday. The business office and customer service center may be 652 closed on Saturdays, Sundays, and Holidays.
653 A representative of the Contractor who is knowledgeable of the service area, services, and Rates 654 shall be available from 8 a.m. to 5 p.m. Monday through Friday at both the business office and 655 customer service center to communicate with the City and the public by in person and by 656 telephone and to assist Customers making payment in person. Contractor shall maintain a local 657 telephone number which it shall publicize, and Contractor shall maintain a voicemail system 658 available twenty-four (24) hour per day.
659 C. Telephone. City shall secure, and Contractor shall use, pay all costs incurred by, and maintain 660 during the Term of this Agreement, a local phone number which shall serve as the primary point 661 of contact between Contractor and the public during normal business hours. Upon expiration or 662 early termination of this Agreement, the City shall retain the control of the local phone number. 663 The Contractor shall provide the City with a separate emergency telephone number for use by the 664 City Contract Manager outside normal business hours. The Contractor shall have such 665 representative available at the emergency telephone number during all hours other than normal 666 office hours.
667 Contractor shall maintain a telephone system in operation from 8 a.m. to 5 p.m. and shall have 668 sufficient equipment in place and staff a representative, or an answering service to available to 669 handle the volume of calls experienced on the busiest days and such telephone equipment shall 670 be capable of recording the responsiveness to calls. Contractor’s telephone system shall offer 671 Customers who have been placed on-hold to opt to leave a voice message or email, rather than 672 remain on-hold. If Contractor’s telephone Customer service performance falls below the 673 performance standards established in Exhibit F, the City shall have the right to require Contractor 32

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674 to increase its staffing levels and/or call handling capacity without requirement for any additional 675 compensation to the Contractor. Recording of Contractor’s responsiveness to calls shall include, 676 at a minimum, all items included in the “Service Quality and Reliability” and “Customer Service” 677 performance standards listed in Exhibit F. An answering machine or voicemail service shall record 678 Customer calls and voice messages between 5:00 p.m. and 8:00 a.m. Contractor shall provide a 679 live, not automated, call back on the same day to all Customers who leave voice messages by 3:00 680 p.m. on a Working Day and shall provide a live call back by noon of the following Working Day for 681 any voice messages left after 5:00 p.m.
682 D. Web Site and Email Access. Contractor shall develop and maintain a web site that is accessible by 683 the public and dedicated, in part, to the operations under this Agreement in the City. Contractor’s 684 web site shall include all Rates allowed to be charged under the Agreement, all public education 685 and outreach materials produced and distributed under this Agreement, and provide the public 686 the ability to e-mail Contractor questions, service requests, or Complaints. Contractor shall 687 respond the same day to all Customers who leave e-mail messages by 3:00 p.m. on a Working Day 688 and shall respond by noon of the following Working Day for any e-mail messages left after 5:00 689 p.m. Contractor may respond to Customer e-mails either via e-mail or phone. 690 4.8.2 Service Requests, Compliments, Complaints
691 Contractor shall be responsible for the prompt and courteous attention to, and prompt and reasonable 692 resolution of, all Customer service requests and Complaints. Contractor shall record, in its computer 693 system or a separate log, approved as to form by City Contract Manager, all Complaints, noting the name 694 and address of Complainant, date and time of Complaint, nature of Complaint, and nature and date of 695 resolution. The Contractor shall retain this Complaint log for the Term. Contractor shall record and 696 respond to all Complaints as communicated by the Customer, utilizing a “Customer is always right” 697 approach, shall not challenge or dispute the Customer’s assertions or Complaints, and shall always 698 prioritize Customer satisfaction. Upon request by the City Contract Manager, Contractorshall compile and 699 submit a summary statistical table of the Complaint log. 700 Contractor shall respond to all Complaints received in accordance with the requirements of Section 701 4.8.1.B, and 4.8.1.C. Complaints related to missed Collections shall be addressed in accordance with 702 Section 4.8.3. Complaints related to repair or replacement of Carts or Bins, shall be addressed in 703 accordance with Section 5.6.
704 4.8.3 SB 1383 Non-Compliance Complaints
705 For Complaints received in which the Person alleges that an entity is in violation of SB 1383 requirements, 706 Contractor shall document the information listed in Exhibit D. Contractor shall provide this information in 707 a brief Complaint report to the City for each SB 1383-noncompliance Complaint within seven (7) days of 708 receipt of such Complaint, and a monthly summary report of SB 1383-non-compliance Complaints in 709 accordance with Exhibit D.
710 Upon City request, Contractor shall conduct follow-up inspections and/or outreach to the violating entity, 711 and shall document the information in the reports provided pursuant to Exhibit D. 33

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712 4.9 SERVICE EXEMPTIONS
713 4.9.1 General Exemptions
714 Upon Customer request, and with written approval from the City Contract Manager, Contractor shall 715 cease providing, and collecting payment for, Collection services to a Residential or Commercial Premises 716 that is not connected to water and electric power and where water or electric power cannot be provided 717 to such Premises without action by a utility; provided that such exemption shall terminate upon 718 connection or reconnection of water and electric power. Upon request of a Commercial Customer, and 719 with written approval from the City Contract Manager, Contractor shall cease providing, and collecting 720 payment for, Collection services to a Premises for which all operations is suspended due to the seasonal 721 nature of its particular business.
722 4.9.2 Commercial and Multi-Family Customer Waivers
723 A. General. The City may grant waivers described in this Section to Commercial Customers or Multi724 Family Residential Customers that impact the scope of Contractor’s provision of service for those 725 Customers; provided, the Generator shall continue to subscribe with Contractor for franchised 726 Collection services to the extent such services are not waived by the City. Waivers issued shall be 727 subject to compliance with SB 1383 requirements, pursuant to 14 CCR Section 18984.11, or other 728 requirements specified by the City.
729 B. De Minimis Waivers. The City may waive a Commercial Customer or Multi-Family Residential 730 Customer’s obligation to comply with some or all of the Recyclable Materials and Organic Materials 731 requirements set forth in this Agreement, SB 1383, and of the City Code if the Customer provides 732 documentation or the City has evidence demonstrating one of the following de minimis conditions:
733 1. The Commercial Customer or Multi-Family Residential Customer’s total Discarded 734 Materials Collection service is two (2) cubic yards or more per week, and Organic Waste 735 subject to Collection in an Organic Materials Container comprises less than twenty (20) 736 gallons per week, per applicable Container, of the Customer’s total waste; or, 737 2. The Commercial Customer or Multi-Family Residential Customer’s total Discarded 738 Materials Collection service is less than two (2) cubic yards per week, and Organic Waste 739 subject to Collection in an Organic Materials Container comprises less than ten (10) 740 gallons per week, per applicable Container, of the Customer’s total waste. 741 C. Space Waivers. The City may waive a Commercial Customer or Multi-Family Residential Customer’s 742 obligation to comply with some or all of the Solid Waste, Recycling and Organic Waste Collection 743 service requirements if the City has evidence from its own staff, Contractor, a licensed architect, or 744 a licensed engineer demonstrating that the Customer’s Premises lacks adequate space for the 745 Collection Containers required for compliance with such requirements. 746 A Commercial Customer or Multi-Family Residential Customer may request a physical space waiver 747 through the following process:
748 1. Submit an application form specifying the type(s) of Collection services for which they are 749 requesting a compliance waiver.
750 2. Provide documentation that the Premises lacks adequate space for one or more Containers, 751 including documentation from Contractor, a licensed architect, or a licensed engineer. 34

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752 3. Provide written verification to the City that it is still eligible for a physical space waiver every 753 five (5) years if the City has approved a previous application for a physical space waiver. 754
755 D. Contractor Review of Waiver Requests. Generators may submit requests for de minimis waivers 756 and physical space waivers to the City. The City shall notify Contractor of the request, and 757 Contractor shall within thirty (30) days of receipt of the City’s request, inspect the Generator’s 758 Premises to verify the accuracy of the application. Contractor shall provide documentation of the 759 inspection, including the date of the inspection, Customer name and address, a description of the 760 Premises, evaluation of each criterion for the waiver, and photographic evidence. The Contractor 761 shall send this information and documentation to the City in a timely manner, not to exceed three 762 (3) days after the date of inspection. The City ultimately retains the right to approve or deny any 763 application, regardless of the information provided by the Contractor. Contractor shall report 764 information regarding waivers reviewed within the month, if any, in accordance with this Section 765 and Exhibit D.
766 E. Service Level Updates. When the City grants a waiver to a Customer, or the Customer’s waiver 767 status changes after a re-verification determination, the City shall notify the Contractor within seven 768 (7) days of the waiver approval or status change with information on the Customer and any changes 769 to Service Level or Collection service requirements for the Customer. Contractor shall have seven 770 (7) days to modify the Customer’s Service Level, Customer account data, and billing statement, as 771 needed.
772 F. Waiver Re-verification. The City shall be responsible for re-verification of waivers. Upon request of 773 the City, the Contractor shall support the City in this re-verification Process by providing requested 774 Customer information as per Customer database requirements in Section 4.7 In the event that a 775 waiver status changes, Contractor shall update the Customer’s information and Service Level in 776 accordance with subsection 4.9.2.D above.
777 4.9.3 Contractor Service Exemptions
778 A. Disaster Waivers. In the event of a disaster, the City may grant Contractor a waiver of some or all 779 Discarded Materials Collection requirements under this Agreement and 14 CCR, Division 7, Chapter 780 12, Article 3 in the disaster-affected areas for the duration of the waiver, provided that such waiver 781 has been approved by CalRecycle. Any resulting changes in Collection requirements shall be 782 addressed as a change in scope in accordance with Section 3.5. 783 B. Removal of Material from Homeless Encampments and Illegal Disposal Sites. The Contractor may, 784 but is not required to, separate or recover Organic Waste that City removes from homeless 785 encampments and illegal disposal sites as part of an abatement activity to protect public health and 786 safety. Contractor shall report the amount of Discarded Materials removed for Disposal from 787 homeless encampments and illegal disposal sites, in accordance with Exhibit D. 788 C. Quarantined Waste. If approved by the City, the Contractor may Dispose of, rather than Process, 789 specific types of Organic Materials and/or Recyclable Materials that are subject to quarantine and 790 meet the requirements described in 14 CCR Section 18984.13(d) for a period of time specified by 791 the City or until the City provides notice that the quarantine has been removed and directs 792 Contractor to Transport the materials to the Approved Facilities for such material. 793 In accordance with Exhibit D, the Contractor shall maintain records and submit reports regarding 35

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794 compliance agreements for quarantined Organic Materials and Recyclable Materials that are 795 Disposed of pursuant to this subsection.
796 D. Extreme Snow Events. In the case of extreme snow events where certain roads remain unplowed 797 and inaccessible for a period of time, the City may grant Contractor a temporary waiver of some or 798 all Discarded Materials Collection requirements under this Agreement, for the duration of time that 799 those certain roads remain inaccessible.
800 4.10 CONTAMINATION MONITORING
801 4.10.1 Annual Route Reviews
802 A. Methodology. At least once annually, beginning in 2024, Contractor shall conduct a route review 803 for each of its routes in compliance with the requirements of 14 CCR section 18984.5(b). The 804 number of Containers to review per route shall be calculated on the basis of the number of 805 Customers on a specific route for one week. For each route review, Contractor shall inspect at 806 least the minimum number of Containers set forth in 1. through 4. below, but may inspect more 807 if Contractor deems necessary. Each inspection shall involve lifting the Container lid and observing 808 the contents but shall not require Contractor to disturb the contents or open any bags. If 809 Contractor observes Contamination, Contractor shall follow the provisions outlined in Exhibit B. 810 Contractor may select the Containers to be inspected at random, or (if mutually agreed with the 811 City), by any other method not prohibited under the SB 1383 regulations. Contractor will also 812 collect photographic documentation during route reviews. For the avoidance of doubt, Contractor 813 shall not be required to annually inspect every Container on a route. Contractor shall include the 814 results of each route review in its next regularly scheduled report to the City as required by Exhibit 815 D.
816 1. For weekly routes with less than one thousand five hundred (1,500) Generators, the 817 Contractor shall sample a minimum of twenty-five (25) Containers; 818 2. For weekly routes with one thousand five hundred to three thousand nine hundred 819 ninety-nine (1,500-3,999) Generators, the Contractor shall sample a minimum of thirty 820 (30) Containers;
821 3. For weekly routes with four thousand to six thousand nine hundred ninety-nine (4,000- 822 6,999) Generators, the Contractor shall sample a minimum of thirty-five (35) 823 Containers; and,
824 4. For weekly routes with seven thousand (7,000) or more Generators, the Contractor 825 shall sample a minimum of forty (40) Containers.
826 B. Contamination Notification. Upon identification of Prohibited Container Contaminants in 827 a Customer’s Container, Contractor shall provide the Customer with a notice of Contamination in 828 the form of either a Courtesy Pick-Up Notice or a Non-Collection Notice as determined by the 829 route auditor.
830 C. Courtesy Pick-Up Notice. Upon identification of Prohibited Container Contaminants in a 831 Customer’s Container, Contractor shall provide the Customer a Courtesy Pick-Up Notice at the 832 Customer’s door or gate; or, subject to City’s approval, may deliver the notice by mail, e-mail, or 36

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833 text message. Contractor shall also attach or adhere Courtesy Pick-Up Notice to Customers’ 834 contaminated Containers.
835 The courtesy pick-up notification shall, at a minimum:
836 1. Inform the Customer of the observed presence of Prohibited Container Contaminants; 837 2. Include the date and time the Prohibited Container Contaminants were observed; 838 3. Include information on the Customer’s requirement to properly separate materials 839 into the appropriate Containers, and the accepted and prohibited materials for 840 Collection in each Container;
841 4. Inform the Customer of the courtesy pick-up of the contaminated materials on this 842 occasion with information that the Contractor may assess Contamination Processing 843 fees and/or issue a Non-Collection Notice in the future; and, 844 5. Include photographic evidence, when providing notice by mail, e-mail, or text 845 message.
846 The format of the Courtesy Pick-Up Notice shall be approved by the City Contract Manager and 847 must be a distinct color from the Non-Collection Notices. 848 Contractor shall Collect the contaminated Recyclable Materials and/or Organic Materials 849 Containers and either Transport the material to the appropriate Approved Facility for Processing; 850 or Contractor may Collect the contaminated materials with the Solid Waste and Transport the 851 contaminated materials to the Approved Disposal Facility. A Courtesy Collection of contaminated 852 Recyclable Materials or Organic Materials where the materials are sent to the Approved Disposal 853 Facility may be made with a Solid Waste Collection vehicle, provided that the contaminants may 854 safely and lawfully be Collected as Solid Waste.
855 D. Non-Collection Notices
856 1. Non-Collection Notice. Upon identification of Prohibited Container Contaminants in a 857 Container in excess of standards agreed upon by the Parties or Excluded Waste, Contractor 858 shall provide a Non-Collection Notice to the Generator. 859 The Non-Collection Notice shall, at a minimum:
860 a. Inform the Customer of the reason(s) for non-Collection; 861 b. Include the date and time the notice was left or issued; 862 c. Describe the premium charge to Customer for Contractor to return and 863 Collect the Container after Customer removes the Contamination; 864 d. Provide a warning statement that a Contamination Processing Fee may be 865 assessed; and,
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866 e. Include photographic evidence of the violation(s), when providing notice by 867 mail, e-mail, or text message.
868 2. Communications with Customer. Whenever a Container at the Premises of a Commercial or 869 a Multi-Family Customer is not Collected, Contractor shall contact the Customer on the 870 scheduled Collection day or within two (2) hours of the scheduled Collection day by 871 telephone, email, text message, or other verbal or electronic message to explain why the 872 Container was not Collected. Whenever a Container is not Collected because of Prohibited 873 Container Contaminants, a Customer service representative shall contact the Customer to 874 discuss, and encourage the Customer to adopt proper Discarded Materials preparation and 875 separation procedures.
876 3. Contractor Return for Collection. Upon request from Customer, Contractor shall Collect 877 Containers that received Non-Collection Notices within one (1) Working Day of Customer’s 878 request if the request is made at least two (2) Working Days prior to the regularly scheduled 879 Collection Day. Contractor may bill Customer for the extra Collection service event (“extra 880 pick-up”) at the applicable City-approved Rates only if Contractor notifies Customer of the 881 premium Rate for this service at the time the request is made by Customer. 882 E. Assessment of Contamination Processing Fees. If the Contractor observes twenty percent (20%) 883 or more Prohibited Container Contaminants and has issued a Courtesy Pick-Up Notice or Non884 Collection notice, as appropriate, the Contractor may impose a Contamination Processing Fee 885 approved by the City for that Customer’s Service Level. The intent of Contamination Processing 886 Fees is to provide a behavioral tool to educate and prevent Customers from placing Source 887 Separated Discarded Material into the improper designated Container(s), not to generate 888 revenue, and the Contamination Processing Fee should be set accordingly to achieve this intent. 889 Failure to comply with the requirements of this section shall equate to Liquated Damages in 890 accordance in Exhibit F.
891 Contractor shall leave a Contamination Processing Fee notice attached to the Generators’ 892 contaminated Container(s). Contractor must also deliver notice by mail to the bill-payer’s address 893 within twenty-four (24) hours of assessing the Contamination Processing Fee. 894 1. Contamination Processing Fee Notice. Contamination Processing Fee Notices shall be in a 895 format approved by the City Contract Manager. Contractor shall notify the City in its 896 monthly report of Customers for which Contamination Processing Fees were assessed per 897 Section 4.10.1(F).
898 Each Contamination Processing Fee Notice shall, at a minimum:
899 i. Describe the specific material(s) of issue;
900 ii. Explain how to correct future set outs; and,
901 iii. Indicate that the Customer will be charged a Contamination 902 Processing Fee on their next bill.
903 F. Reporting Requirements.
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904 1. Container Contaminant Log: The driver or other Contractor representative shall record 905 each event of identification of Prohibited Container Contaminants in a written log or in the 906 on-board computer system including, but not limited to: date, time, Customer’s address, 907 type of Container, and maintain photographic evidence. 908 2. Contaminant Fees Assessment Report: Additionally, on no less than a weekly basis, 909 Contractor’s Contract Administrator shall update the Customer’s account records to note 910 the contaminant event(s) as identified by driver(s). Contractor shall maintain records and 911 report to the City monthly on Contamination monitoring activities and actions taken, 912 consistent with the submittal timing and content requirements of Exhibit D. Failure to meet 913 the requirements of this Section 4.10.1(F)(2), shall equate to Liquidated Damages as 914 identified in Exhibit F.
915 3. Quarterly Report: The quarterly report shall include, but is not limited to: list of Customers 916 that were assessed charges; photographic evidence of each Contamination event(s) where 917 a fee(s) was assessed; verification processes to assure accurate fee assessment; date of 918 notification, form(s) of notification given to Customer; list of efforts made in educating the 919 Customer that was assessed a fee; list of Customer Complaints in response to fee 920 assessment; Contractor’s response and actions taken in response to Customer Complaints; 921 and, the dollar amount of Contamination Processing Fees assessed during the reporting 922 period. Failure to meet the requirements of this Section 4.11.1(F)(3), shall equate to 923 Liquidated Damages as identified in Exhibit F.
924 4.10.2 Waste Characterization Studies
925 Contractor will conduct annual waste characterization studies as required by SB 1383. 926
927 A. Methodology
928 The study shall include samples from each waste stream (Solid Waste, Recyclables, and Organic 929 Materials) To determine the ratio of Prohibited Container Contaminants, the Contractor shall use 930 the following protocol:
931 1. The Contractor shall take one sample of at least two hundred (200) pounds from the 932 material Collected from each material stream for sampling. For example, Contractor shall 933 take a two hundred (200) pound sample taken from the combined contents of the Organic 934 Materials Container samples.
935 2. The two hundred (200) pound sample shall be randomly selected from different areas of 936 the pile of Collected material for that material stream. 937 3. For each two hundred (200) pound sample, the Contractor shall remove any Prohibited 938 Container Contaminants and determine the weight of Prohibited Container Contaminants. 939 4. The Contractor shall determine the ratio of Prohibited Container Contaminants in the 940 sample by dividing the total weight of Prohibited Container Contaminants by the total 941 weight of the sample.
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942 5. All weights shall be recorded in pounds.
943 B. Recordkeeping and Reporting. Contractor shall maintain records of each study conducted and 944 report results directly to the City within fourteen (14) days of completing the study as well as 945 include the results in the Contractor’s annual report, in accordance with Exhibit D. 946 C. General. Pursuant to the requirements of SB 1383, 14 CCR, Division 7, Chapter 12, Article 10, the 947 City is responsible for developing and implementing a Food Recovery program in the City. The 948 Contractorshall cooperate with and shall not impede, interfere, or attempt to impede or interfere 949 with the implementation, expansion, or operation of Food Recovery program efforts in the City. 950 D. Identification of Commercial Edible Food Generators. Contractor shall assist the City with 951 identifying Tier One and Tier Two Commercial Edible Food Generators for the purpose of the Food 952 Recovery program. No later than six (6) months after the Effective Date of the Agreement, and 953 annually thereafter, the Contractor shall identify and provide a list to the City of Commercial 954 Customers that qualify, or appear to qualify, as Tier One or Tier Two Commercial Edible Food 955 Generators, as defined by this Agreement. The list shall include, at a minimum: the Customer 956 name; service address; contact information; Tier One or Tier Two classification; and, type of 957 business as it relates to the categories of entities specified under the definitions of Tier One and 958 Tier Two Commercial Edible Food Generators. The Contractor shall update this information 959 annually; maintain an up-to-date database; and include this information in the Contractor’s 960 annual report, in accordance with Exhibit D.
961 ARTICLE 5.
962 STANDARD OF PERFORMANCE
963 5.1 GENERAL
964 Contractor shall at all times comply with Applicable Law and provide services in a manner that is safe to 965 the public and the Contractor’s employees.
966 5.2 OPERATING HOURS AND SCHEDULES
967 A. Hours of Collection. Unless otherwise authorized by the City Contract Manager, Contractor’s days 968 and hours for Collection operations shall be as follows:
969 1. Residential Premises. Collection from Residential Premises shall only occur between the 970 hours of 7:00 a.m. and 7:00 p.m., Monday through Friday. 971 2. Commercial Premises. Collection from Commercial Premises shall only occur between 972 the hours of 5:00 a.m. and 8:00 p.m., Monday through Saturday. 973 3. City Facilities. The Collection schedule for City facilities shall be the same as Commercial 974 Premises specified in subsection 5.2.A.2 above.
975 B. Changes in Collection Routes. Prior to March 1, 2024, Contractor shall provide the City with route 976 maps identifying at a minimum: the type of route (e.g. Single-Family, Multi-Family, Commercial, 977 etc. and Solid Waste, Recycling, and Organic) and the service day. City shall either approve or deny 40

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978 proposed standard Collection routes prior to April 1, 2024. If City denies any standard Collection 979 routes, Contractor may request a meet and confer with the City Contract Manager to discuss 980 potential options. The City Contract Manager’s decision shall be final with respect to any routing 981 changes that may impact the day of service of any Customer. Contractor may, at any time during 982 the Term of this Agreement, propose changes or additional routes, subject to City approval. If a 983 standard Collection route change is approved, Contractor must notify all affected Customers 984 fourteen (14) days prior to Contractor implementing the new route. Failure to obtain City approval 985 on route changes resulting in service day changes for Customers shall be subject to Liquidated 986 damages as identified in Exhibit F.
987 C. Holiday Collection. Contractor, at its sole discretion, may choose not to provide Collection 988 services on a Holiday. In such event, Contractor shall provide Single-Family Collection services on 989 the day following the Holiday thereby adjusting subsequent work that week with normally 990 scheduled Friday Collection Services being performed on Saturday; however, Customer service 991 days shall be returned to the normal schedule within one (1) week of the Holiday. Multi-Family, 992 Commercial, and City Collection Services shall be adjusted as agreed between the Contractor and 993 the Customer but must meet the minimum frequency requirement of one (1) time per week. The 994 Contractor shall provide Customers notice of Holiday-related changes in Collection schedules at 995 least two (2) weeks prior to the change.
996 5.3 COLLECTION STANDARDS
997 A. Servicing Containers. Contractor shall Collect and return each Container to the Curbside location 998 where the Occupant is required to place the Container for Collection. Contractor shall place the 999 Containers upright with lids properly secured. During snow removal conditions, Contractor shall, 1000 without additional charge, Collect and return Containers to a location 10 feet outside of the right1001 of-way to avoid interference with or damage from City snow removal operations, so long as 1002 Occupant has cleared a path.
1003 Contractor shall Collect and return each Cart located in a Bear Box that isinstalled on the Premises 1004 as of the Effective Date of this Agreement. A list of Premises with an installed Bear Box subject to 1005 this requirement is attached hereto as Exhibit I.
1006 Contractor and City shall meet and confer at least annually regarding City snow removal 1007 operations with respect to trash pickup to work together cooperatively to minimize conflicts. 1008 B. Non-Collection, Courtesy Noticing. Prior to the Commencement Date, Contractor shall develop, 1009 and submit to the City Contract Manager for review and approval, and as per the requirements of 1010 Section 4.11.1(D)
1011 1. A template Non-Collection Notice, for use in instances of acceptable non-Collection of 1012 Discarded Materials; and,
1013 2. A template Courtesy Pick-Up Notice, for use in instances of improper set-out of Discarded 1014 Materials, which the Contractor, at its sole option, elects to Collect as a courtesy to the 1015 Customer.
1016 Per the requirements identified in Section 4.10.1, in the event that Contractor encounters 1017 circumstances at a Customer Premises which prevents the Contractor from Collecting Discarded 41

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1018 Materials which have been placed for Collection, Contractor shall leave a Non-Collection Notice 1019 at the Customer Premises clearly explaining Contractor’s reason for refusal to Collect the 1020 Discarded Materials. Contractor shall not be required to Collect Discarded Materials which are 1021 reasonably believed to contain Excluded Waste, pursuant to the requirements of Section 5.8. 1022 In the event that Contractor encounters circumstances at a Customer Premises which allow for 1023 safe Collection of Discarded Materials, but do not otherwise reflect proper set-out procedures 1024 (including, but not limited to spills not caused by the Contractor, Carts placed too close together, 1025 Carts placed in front of one another, and/or Carts placed too close to parked cars), Contractor 1026 shall Collect the material and leave a Courtesy Pick-Up Notice at the Customer Premises clearly 1027 explaining how the Customer failed to comply with proper set-out procedures. 1028 Contractor may educate the public on proper set-out procedures designed to maximize the 1029 efficiency of Collection. However, Contractor acknowledges that such procedures are not practical 1030 in all circumstances and failure of the Customer to follow such procedures does not constitute a 1031 reason for non-Collection if the Discarded Materials may be safely and reasonably serviced. 1032 Contractor’s route drivers shall dismount their Collection vehicles and reposition Containers as 1033 necessary to provide Collection service. Contractor may not require a Customer to set out the 1034 Customer’s Containers in such a manner that would block vehicle access to Customer’s driveway. 1035 Contractor and Customers may mutually agree to uncommon service locations if necessary for 1036 Collection in specific areas.
1037 Contractor may refuse to Collect Recyclable Materials or Organic Materials Containers which are 1038 contaminated in accordance with Exhibit B and Section 4.10, and shall leave an approved Non1039 Collection notice informing Customer how to properly separate materials. 1040 C. Litter Abatement. Contractor shall use due care to prevent spills or leaks of material placed for 1041 Collection, fuel, and other vehicle fluids while providing services under this Agreement. If any 1042 materials are spilled or leaked during Collection and Transportation, the Contractor shall clean up 1043 all spills or leaks before leaving the site of the spill. 1044 Contractor shall not Transfer loads from one vehicle to another on any Public Street, unless it is 1045 necessary to do so because of mechanical failure, combustion of material in the truck, or 1046 accidental damage to a vehicle.
1047 Contractor shall cover all open Drop Boxes at the pickup location before Transporting materials 1048 to the Approved Facility.
1049 Contractor shall conduct public outreach and staff training to Customers on best management 1050 practices for litter abatement at no extra charge. Such best management practices include, 1051 without limitation:
1052 1. Closing Container lids and right sizing service: Contractor staff will tag overfull Containers 1053 with Courtesy Pick-Up Notices, which will serve as outreach and education to the Customer. 1054 Photos of the Container will be taken by drivers, attached to the Customer’s account, and 1055 will be available to outreach and Customer service staff in order to demonstrate to the 1056 Customer where a problem exists.
1057 2. Outreach to Customer on importance of bagging lightweight materials such as plastic bags, 42

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1058 film plastics, foam peanuts, and other materials that can easily become litter due to their 1059 lightweight nature.
1060 3. Driver training on litter reduction techniques and litter removal best management 1061 practices.
1062 4. Affixing signage to the Contractor trucks which provides a phone number for residents to 1063 report material spills.
1064 5. Proper use of animal-resistant Carts and not placing Carts out for Collection prior to 6:00am 1065 on Collection day in order to minimize animal encounters. 1066 D. Enclosure Standards. Contractor shall work with the City to develop standard specifications for 1067 Collection Container enclosures at Commercial and Multi-Family Premises. These specifications 1068 shall be developed to ensure that the Collection Container enclosures are built to provide 1069 adequate space for and suitable configuration to allow the Contractor to safely and efficiently 1070 service Recyclable Materials, Organic Materials, and Solid Waste Containers. Contractor’s 1071 Operations Manager or other appropriately qualified staff shall, upon request by the City Contract 1072 Manager, provide a review of plans for new Multi-Family and Commercial development or project 1073 design drawings. Contractor shall provide comments and recommendations resulting from the 1074 review in writing within ten (10) Working Days of receipt of the documents for review. In each 1075 review report, Contractor shall comment on the acceptability of the proposed enclosure 1076 arrangements in terms of: i) the adequacy of space for Recyclable Materials, Organic Materials, 1077 and Solid Waste Containers; ii) the accessibility of the Containers for Collection including whether 1078 additional charges (e.g., push/pull, etc.) would apply; and iii) ease of use by tenants. 1079 E. No Commingling of Materials. Contractor shall Collect materials generated in the City in 1080 Collection vehicles separately from other materials generated outside the City service area, unless 1081 otherwise approved by the City Contract Manager. Contractor shall not commingle materials 1082 which have been Source Separated with other material types (for example, Source Separated 1083 Recyclable Materials which have been properly placed for Collection shall not be combined with 1084 Solid Waste or Source Separated Organic Materials). The purpose of this requirement is to ensure 1085 the ability to process and accurately report quantities of the various materials. 1086 5.4 TRANSFER AND PROCESSING STANDARDS
1087 5.4.1 Equipment and Supplies
1088 Contractor shall use commercially reasonable efforts to ensure the Approved Processing Facilities are 1089 equipped and operated in a manner to fulfill Contractor’s obligations under this Agreement. Contractor is 1090 responsible for ensuring the adequacy, safety, and suitability of the Approved Processing Facilities. 1091 Contractor shall use commercially reasonable efforts to modify, enhance, and/or improve the Approved 1092 Processing Facilities as needed to fulfill Services under this Agreement. 1093 Contractor shall provide all rolling stock, stationary equipment, material storage containers, spare parts, 1094 maintenance supplies, Transfer, Transport, and Processing equipment, and other consumables as 1095 appropriate and necessary to operate the Approved Processing Facilities and provide all services required 1096 by this Agreement. Contractor shall place the equipment in the charge of competent operators. 1097 Contractor shall repair and maintain all equipment at its own cost and expense. 43

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1098 5.4.2 Scales and Weighing
1099 Contractor is solely responsible for ensuring accurate weighing of all materials entering and leaving the 1100 Approved Processing Facilities.
1101 A. Facility Scales. Contractor shall maintain State-certified motor vehicle scales in accordance with 1102 Applicable Law. All scales shall be linked to a centralized computer recording system at the 1103 Approved Processing Facilities to record weights for all incoming and outgoing materials. Contractor 1104 shall provide back-up generator(s) capable of supplying power to the scales in the event of a power 1105 outage. Contractor shall promptly arrange for use of substitute portable scales should its usual 1106 scales not be available for whatever reason. Pending substitution of portable scales, Contractor shall 1107 as necessary estimate the Tonnages of materials delivered to and Transported from the Approved 1108 Processing Facilities, on the basis of delivery vehicle and Transfer trailer volumes, tare weights, 1109 and/or other available facility weight records. These estimates shall take the place of actual weights 1110 while scales are inoperable, and shall be identified as estimates in electronic records and reporting. 1111 B. Tare Weights. No later than June 15, 2024, Contractor shall ensure that all vehicles used by 1112 Contractor to deliver Recyclable Materials, Organic Materials, and Solid Waste to the Approved 1113 Processing Facilities are weighed to determine unloaded (“tare”) weights. Contractor shall 1114 electronically record the tare weight, identify vehicle as Contractor owned, and provide a distinct 1115 vehicle identification number for each vehicle. Contractor shall provide City with a report listing the 1116 vehicle tare weight information upon request. Contractor shall promptly weigh additional or 1117 replacement vehicles prior to placing them into service. Contractor shall check tare weights at least 1118 annually, or within fourteen (14) calendar days of a City request, and shall re-tare vehicles 1119 immediately after any major maintenance or service event. 1120 C. Testing. Contractor shall test and calibrate all scales in accordance with Applicable Law, but at least 1121 one (1) test and recalibration per scale every twelve (12) months or upon City request. 1122 D. Records. Contractor shall maintain computerized scale records and reports that provide 1123 information including date of receipt, inbound time, inbound and outbound weights of vehicles, and 1124 vehicle identification number. Contractor shall also maintain computerized scale records and 1125 reports providing historical vehicle tare weights for each vehicle and the date and location for each 1126 tare weight recorded.
1127 E. Upon-Request Reporting. If vehicle receiving and unloading operations are recorded on video 1128 cameras at the Approved Processing Facilities, Contractor shall make those videos available for City 1129 review during the Approved Processing Facility’s operating hours, upon request of the City, and shall 1130 provide the name of the driver of any particular load if available. 1131 F. Volumetric Conversion. For all material that an Approved Processing Facility operator is allowed to 1132 not weigh with scales, the operator shall use reasonable volumetric conversion factors to estimate 1133 the weight of the material. Volumetric conversion factors used shall meet the requirements in 14 1134 CCR Section 18809.2.
1135 5.5 COLLECTION VEHICLE REQUIREMENTS
1136 A. Vehicle Requirements. Contractor shall provide a fleet of Collection vehicles sufficient in number 1137 and capacity to efficiently perform the work required by the Agreement in strict accordance with 44

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1138 its terms. Contractor shall have available sufficient back-up vehicles for each type of Collection 1139 vehicle used to respond to scheduled and unscheduled maintenance, service requests, Complaints, 1140 and emergencies.
1141 1. All such vehicles shall have watertight bodies designed to prevent leakage, spillage, or 1142 overflow. All such vehicles shall meet On-Road Heavy Duty Vehicle emissions requirements 1143 for model year 2022, regardless of the actual model year of Contractor’s vehicles, and 1144 generally comply with all Federal, State, and local laws and regulations. 1145 2. Contractor does not propose the immediate use of Zero Emission Vehicles due to a lack of 1146 demonstrated feasibility in the South Lake Tahoe climate and lack of charging infrastructure, 1147 however Contractor acknowledges the importance of this to the City’s sustainability goals and 1148 will continue to review the potential for this option throughout the Term of the Agreement. 1149 Contractor will annually investigate the ability to procure Zero Emission Vehicles to use in its 1150 fleet of Collection vehicles, including establishing a pilot program to test Zero Emission 1151 Vehicles on one or more Collection routes when feasible. Contractor and City will meet 1152 annually to discuss Contractor’sfeasibility analysis and site planning concepts, and Contractor 1153 commits to implement a Zero Emission Vehicle fleet once determining that such 1154 implementation would be feasible and once the City agrees to the required increased costs, 1155 if any.
1156 3. Collection vehicles shall present a clean appearance while providing service under this 1157 Agreement.
1158 B. Vehicle Display. Contractor’s name and local telephone number shall be displayed in readable text 1159 on all vehicles. Vehicles shall be equipped with sign board holders or other hardware to allow public 1160 education signage to be displayed on both sides of the vehicle. 1161 C. Vehicle Inspection. Contractor shall inspect each vehicle daily to ensure that all equipment is 1162 operating properly. Vehicles that are not operating properly shall be taken out of service until they 1163 are repaired and operate properly. Contractor shall repair, or arrange for the repair of all its vehicles 1164 and equipment for which repairs are needed because of accident, breakdown or any other cause so 1165 as to maintain all equipment in a safe and operable condition. City Contract Manager may inspect 1166 vehicles at any reasonable time, and within three (3) calendar days of such a request, to determine 1167 compliance with sanitation requirements.
1168 D. Vehicle Operations. All Collection operations shall be conducted as quietly as possible and shall 1169 conform to applicable Federal, State, Tahoe Regional Planning Agency, and City noise level 1170 regulations. The City may request Contractor to check any piece of equipment for conformance with 1171 the noise limits in response to Complaints and/or when the City Contract Manager believes it is 1172 reasonable to do so.
1173 5.6 CONTAINER REQUIREMENTS
1174 A. Containers Provided to Customers. On or before September 15, 2024, Contractor shall provide 1175 Residential Customers with new Carts to implement the 3-Cart Collection program. Contractor may 1176 request an extension from the City based on good cause, which the City may grant or deny within 1177 its reasonable discretion. Contractor shall provide Containers to new Customers requesting service 1178 initiation within three (3) Working Days of Contractor’s first receipt of the Customer request. 45

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1179 Contractor-provided Containers for new Customers shall be new, and shall comply with the 1180 Container standards set forth in the Section. All Containers shall display Contractor’s name, logo, 1181 and telephone number described in Section 4.8.1, website, capacity (yards or gallons) and some 1182 identifying inventory or serial number.
1183 B. Container Standards
1184 1. All Carts shall be manufactured by injection or rotational molding methods. The Cart handles 1185 and handle mounts may be an integrally molded part of the Cart body or molded as part of 1186 the lid. The Cart handles shall provide comfortable gripping area for pulling or pushing the 1187 Cart or lifting the lid. Pinch points are unacceptable. Carts provided to Customer shall have a 1188 useful life of ten (10) or more years or more as evidenced by a manufacturer’s warranty or 1189 other documentation acceptable to the City.
1190 2. Carts shall remain durable, and at a minimum, shall meet the following durability 1191 requirements to satisfy its intended use and performance, for the Term of this Agreement:
1192 maintain its original shape and appearance; be resistant to kicks and blows; require no routine 1193 maintenance and essentially be maintenance free; not warp, crack, rust, discolor, or 1194 otherwise deteriorate over time in a manner that shall interfere with its intended use; resist 1195 degradation from ultraviolet radiation; be incapable of penetration by biting or clawing of 1196 household pets (i.e., dogs and cats); the bottoms of Cart bodies must remain impervious to 1197 any damage, that would interfere with the Cart’s intended use after repeated contact with 1198 gravel, concrete, asphalt, or any other rough and abrasive surface; all wheel and axle 1199 assemblies are to provide continuous maneuverability and mobility as originally designed and 1200 intended.
1201 3. Carts shall be resistant to common household or Residential products and chemicals; human 1202 and animal urine and feces; and, airborne gases or particulate matter currently present in the 1203 ambient air of the Service Area.
1204 4. Except for Customers listed on Exhibit I, Contractor shall provide all Single-Family customers 1205 with an animal-resistant Cart for Solid Waste. The Solid Waste Cart shall be designed such 1206 that wild animals, especially bears, cannot open it when the lid is properly closed. 1207 5. All Containers with a capacity of one (1) cubic yard or more shall meet applicable Federal 1208 regulations for Bin safety and be covered with attached lids. 1209 6. Contractor shall obtain the City’s written approval of Container material, design, colors, 1210 labeling, and other specifications before acquisition, painting, labeling, or distribution occurs. 1211 7. When purchasing plastic Collection Containers, Contractor shall use commercially reasonable 1212 efforts to purchase Containers that contain a minimum of thirty percent (30%) post-consumer 1213 recycled plastic content, unless such requirement is waived by the City Contract Manager. 1214 8. Container lids shall be designed such that the follow requirements are met:
1215 a. Prevents the intrusion of rainwater and vectors; 1216 b. Prevents the emissions on odors;
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1217 c. Enables the free and complete flow of material from the Container during the dump 1218 cycle without interference with the material already deposited in the truck body or the 1219 truck body itself and its lifting mechanism;
1220 d. Permits users of the Cart to conveniently and easily open and shut the lid throughout 1221 the serviceable life of the Cart;
1222 e. Hinges to the Cart body in such a manner to enable the lid to be fully opened, free of 1223 tension, to a position whereby it may rest against the backside of the Cart body; 1224 f. Prevents damage to the Container body, the lid itself, or any component parts through 1225 repeated opening and closing of the lid by Generators or in the dumping process as 1226 intended;
1227 g. Remains closed in winds up to twenty-five (25) miles per hour from any direction. All lid 1228 hinges must remain fully functional and continually hold the lid in the original designed 1229 and intended positions when either opened or closed or any position between the two 1230 (2) extremes; and,
1231 h. Designed and constructed such that it prevents physical injury to the user while opening 1232 and closing the Cart.
1233 9. Containers shall be stable and self-balancing in the upright position, when either empty or 1234 loaded to its maximum design capacity with an evenly distributed load, and with the lid in 1235 either a closed or an open position. Containers shall be capable of maintaining upright 1236 position in sustained or gusting winds of up to twenty-five (25) miles per hour as applied from 1237 any direction.
1238 10. Containers shall be capable of being easily moved and maneuvered, if applicable, with an 1239 evenly distributed load equal in weight to its maximum design capacity on a level, sloped or 1240 stepped surface.
1241 11. All such Containers shall be one hundred percent (100%) recyclable at the end of their useful 1242 life.
1243 12. All Containers shall be designed and constructed to be watertight and prevent the leakage of 1244 liquids.
1245 C. Container Colors. Contractor shall provide all Customers with Collection Containers that comply 1246 with the Container color requirements specified in this Section 5.6, or as otherwise specified in 1247 14 CCR Section 18982; 14 CCR, Division 7, Chapter 12, Article 3; or other Applicable Law. Colors 1248 shall be colorfast and resistant to fading as a result of weathering or ultraviolet degradation; as 1249 follows:
1250 1. Recyclable Materials Container lids shall be blue; 1251 2. Organic Materials Container lids shall be green; and, 1252 3. Solid Waste Container lids shall be black.
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1253 Hardware such as hinges and wheels on the Containers may be a different color than specified 1254 above.
1255 D. Container Labeling. All markings on the Containers shall be approved by the City in advance of 1256 ordering such Containers. On the lid of each Cart, and the body of each Bin and Drop Box, 1257 Contractor shall label the ultimate destination of such materials as follows: “LANDFILL” for Solid 1258 Waste; “RECYCLE” for Recyclable Materials; and, “YARD WASTE” or “FOOD SCRAPS” for Organic 1259 Materials. On the body of each Cart, Bin, and Drop Box, Contractor shall label the Container 1260 capacity (in gallons for Carts, and cubic yards for Bins and Drop Boxes). Container body labeling 1261 shall be positioned on the side of each Container so it is visible to the Customer at all times. 1262 Carts shall have positional marking in the form of an arrow (at least three (3) inches by five (5) 1263 inches) hot stamped in white color on the Cart lid or side, indicating the direction of Cart 1264 placement; and the phrase: “PLACE CART WITH ARROW FACING STREET FOR COLLECTION.” 1265 All Carts shall include a high-quality educational information label using in-mold technology, such 1266 that all labeling shall be integral to the lid, though the use of injection molding, and shall not be 1267 affixed to any part of the Cart or lid using adhesives unless absolutely necessary. Notwithstanding 1268 the provisions of this Section, or the requirements of SB 1383, the in-mold lid label shall, at a 1269 minimum, include for each Container: primary materials accepted; primary materials prohibited; 1270 a clear indication of Prohibited Container Contaminants for that Container type; a clear indication 1271 of acceptable materials; notification forbidding Hazardous Waste and describing proper Disposal 1272 thereof; notification forbidding scavenging (through words and international symbols) and 1273 describing the penalties therefore under California law or City Code; information about the 1274 Collection program; and, Contractor’s name and logo. Upon expiration or early termination of this 1275 Agreement, Contractor shall transfer access and rights of such phone number and website to the 1276 City.
1277 E. Repair and Replacement of Containers; Inventory. Contractor shall be responsible for repairing 1278 or replacing Containers when Contractor determines the Container is no longer suitable for 1279 service; or when the City or Customer requests replacement of a Container that does not properly 1280 function, leaks, is damaged, or is otherwise not fit for service. Contractor shall be responsible for 1281 acquiring and providing the replacement Containers. Weather conditions permitting, Contractor 1282 shall repair or replace all damaged or broken Containers within three (3) Working Days of 1283 Customer or City request. Minor cracks, holes, and other damages to hinges, wheels, axle, 1284 hardware, and other component parts shall be readily repairable by the Contractor personnel. All 1285 repairs must restore the Cart to its full functionality to meet the design and performance 1286 requirements as set for herein.
1287 Contractor shall maintain a sufficient inventory of Containers to accommodate new Customer 1288 requests for service, requests for change in Service Levels (size, type, or number of Containers) 1289 from current subscribers, and requests for replacement due to damage. 1290 Contractor shall provide to Single-Family Customers at least one (1) free Cart replacement per any 1291 twelve (12) month period for damage to the Cart that renders it unusable as determined by 1292 Contractor, upon Customer request. If Customer requests more than one (1) Cart replacement 1293 per any twelve (12) month period, Contractor shall make Carts available at the City-approved Rate 1294 for such services. In addition, Single-Family Customers may also request one Cart size exchange 48

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1295 per Rate Period at no charge. Weather conditions permitting, allsuch Containers shall be provided 1296 within three (3) Working Days of request. Contractor’s failure to comply with the Container 1297 requirements may result in assessment of Liquidated Damages pursuant to Section 10.6 and 1298 Exhibit F.
1299 F. Maintenance, Cleaning, Painting. All Containers shall be maintained in a safe, serviceable, and 1300 functional condition, and present a clean appearance. Contractor shall repair or replace all 1301 Containers damaged by Collection operations in accordance with standards specified in Section 1302 5.6.D, unless damage is caused by Customer’s gross negligence, in which case, the Customer will 1303 be billed for repair or replacement of Container at a City-approved Rate for such service. All 1304 Containers shall be maintained in a functional condition. 1305 Contractor shall steam clean and/or repaint all Containers as needed (other than Carts) to present 1306 a clean appearance. Contractor shall offer steam cleaning service (or clean Container exchange) 1307 to Customers requesting such service and shall charge Customers for such cleaning (or Container 1308 exchange) at the City-approved Rate for such service, up to two times per year. 1309 Weather conditions permitting, Contractor shall remove graffiti from Containers within forty1310 eight (48) hours of identification by Contractor or notice by City or Customer. 1311 Upon request from the City Contract Manager, Contractor shall provide the City with a list of 1312 Containers and the date each Container was painted and maintained. 1313 G. City Ownership of Containers at End of Term. Upon expiration or early termination of Agreement, 1314 all Containers purchased and put into service at Customer Premises during the Term of the 1315 Agreement shall become property of the City at no cost to the City if such Containers are fully 1316 depreciated. All Containers, and Compactors purchased and put into service at Customer 1317 Premises during the Term of the Agreement that have not been fully depreciated shall be available 1318 to the City, at the City’s option, at a cost reflecting the net book value for ratemaking purposes. 1319 At its sole discretion, the City may elect not to exercise its rights with regards to this Section and, 1320 in such case, the Containers, and Compactors shall remain the property of the Contractor upon 1321 the date of this Agreement’s expiration or earlier termination. In such case, Contractor shall be 1322 responsible for outstanding depreciation and for removing all Containers, and Compactors in 1323 service from the Premises within fourteen (14) Working Days of the expiration date or early 1324 termination date of this Agreement or within a different timeframe mutually agreed to by the 1325 Parties. Contractor shall arrange for reuse or Recycling of Containers, and Compactors removed 1326 from the City.
1327 5.7 PERSONNEL
1328 A. General. Contractor shall furnish such qualified personnel as may be necessary to provide the 1329 services required by this Agreement in a safe and efficient manner. 1330 Contractor shall use its best efforts to assure that all employees present a neat appearance and 1331 conduct themselves in a courteous manner. Contractor shall not permit its employees to accept, 1332 demand, or solicit, directly or indirectly, any additional compensation, or gratuity from Customers 1333 or members of the public.
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1334 B. Hiring of Displaced Employees. Contractor is aware of and shall comply with the requirements of 1335 and duties imposed by Sections 1072 and 1075 of the California Labor Code regarding offers of 1336 employment to any displaced employees resulting from a change in service provider, if any, 1337 resulting from this Agreement or upon the expiration of this Agreement. 1338 C. Driver Qualifications. All drivers must have in effect a valid license, of the appropriate class, issued 1339 by the California Department of Motor Vehicles. Contractor shall use the Class II California 1340 Department of Motor Vehicles employer “Pull Notice Program” to monitor its drivers for safety. 1341 D. Safety Training. Contractor shall provide suitable operational and safety training for all employees 1342 who operate Collection vehicles or equipment. Contractor shall train its employees involved in 1343 Collection to identify, and not to Collect, Excluded Waste. Upon the City Contract Manager’s 1344 request, Contractor shall provide a copy of its safety policy and safety training program, the name 1345 of its safety officer, and the frequency of its trainings. 1346 E. Designated Staff.
1347 1. Contractor’s Contract Administrator. Contractor shall designate at least one (1) qualified 1348 employee as City’s primary point of contact with Contractor who is principally responsible 1349 for Collection operations and resolution of service requests and Complaints. Such individual 1350 shall be empowered to negotiate on behalf of and bind Contractor with respect to any 1351 changes in scope, dispute resolution, compensation adjustments, and service-related 1352 matters which may arise during the Term of this Agreement. Such individual is defined as 1353 Contractor’s General Manager.
1354 2. Field Supervisor. Contractor shall designate one (1) qualified full-time employee as 1355 supervisor of field operations. The designated Field Supervisor will devote at least fifty 1356 percent (50%) of his/her time in the City in the field checking on Collection operations, 1357 including responding to Customer requests, inquiries, and Complaints. 1358 3. Environmental Compliance Manager. Contractor shall provide one (1) full-time 1359 Environmental Compliance Manager. The duties of the Environmental Compliance Manager 1360 will be focused on all SB 1383 requirements, including public education and outreach, 1361 Commercial and Multi-Family site visits, and technical assistance, as set forth in Exhibit C, 1362 Public Education and Outreach Requirements. The Environmental Compliance Manager 1363 shall be a full-time, regular, professional position, compensated in accordance with the 1364 wages shown in Contractor’s Proposal for such position. Contractor acknowledges that the 1365 Environmental Compliance Manager role is not intended to be an internship, or entry-level 1366 role. City may also employ corresponding staff members who will work in partnership with 1367 Contractor’s Environmental Compliance Manager and Contractor’s Environmental 1368 Compliance Manager shall cooperate and share information openly with such City 1369 employee.
1370 4. Contractor shall hire an additional full-time Customer Service Representative who is 1371 dedicated to all SB 1383 compliance monitoring and data collection. 1372 5. Contractor shall expend at least $25,000.00 per year (as adjusted annually by the CPI All 1373 Other) for development and subsequent implementation of all SB 1383 requirements, 1374 which may include the annual subscription costs for a Waste Reporting System and 50

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1375 consultants, but may not include direct personnel or benefits costs associated with 1376 Contractor’s staff designated pursuant to this Section 5.7. 1377 F. Key Personnel. Contractor shall make every reasonable effort to maintain the stability and 1378 continuity of Contractor’s staff assigned to perform the services required under this Agreement. 1379 Contractor shall notify the City of any changes in Contractor’s designated staff pursuant to this 1380 Section 5.7 to be assigned to perform the services required under this Agreement and shall obtain 1381 the approval of the City Contract Manager of all proposed new designated staff members 1382 pursuant to this Section 5.7 who are to be assigned to perform services under this Agreement 1383 prior to any such performance.
1384 Notwithstanding City’s approval of Contractor’s personnel, Contractor shall not be relieved from 1385 any liability resulting from the work to be performed under this Agreement, nor shall Contractor 1386 be relieved from its obligation to ensure that its personnel maintain all requisite certifications, 1387 licenses, and the like, and Contractor shall ensure that its personnel at all times fully comply with 1388 Applicable Law.
1389
1390 5.8 HAZARDOUS WASTE INSPECTION AND HANDLING
1391 A. Inspection Program and Training. Contractor shall develop a load inspection program that 1392 includes the following components: (i) personnel and training; (ii) load checking activities; (iii) 1393 management of wastes; and, (iv) record keeping and emergency procedures. 1394 Contractor’s load checking personnel, including its Collection vehicle drivers, shall be trained in:
1395 (i) the effects of Hazardous Substances on human health and the environment; (ii) identification 1396 of prohibited materials; and, (iii) emergency notification and response procedures. Collection 1397 vehicle drivers shall inspect Containers before Collection when practical. 1398 B. Response to Excluded Waste Identified During Collection. If Contractor determines that material 1399 placed in any Container for Collection is Excluded Waste or presents a hazard to Contractor's 1400 employees, the Contractor shall have the right to refuse to accept such material. The Generator 1401 shall be contacted by the Contractor and requested to arrange proper Disposal. If the Generator 1402 cannot be reached immediately, the Contractor shall, before leaving the Premises, leave Non1403 Collection Notice, which indicates the reason for refusing to Collect the material and lists the 1404 phone number of a facility that accepts the Excluded Waste or a phone number of an entity that 1405 can provide information on proper Disposal of the Excluded Waste. Under no circumstances shall 1406 Contractor’s employees knowingly Collect Excluded Waste or remove unsafe or poorly 1407 containerized Excluded Waste from a Collection Container. 1408 If Excluded Waste is found in a Collection Container or Collection area that could possibly result 1409 in imminent danger to people or property, the Contractor shall immediately notify the Fire 1410 Department.
1411 C. Response to Excluded Waste Identified At Processing or Disposal Facility. Materials Collected by 1412 Contractor will be delivered to the Approved Facilities for purposes of Processing or Disposal. In 1413 the event that load checkers and/or equipment operators at such facility identify Excluded Waste 1414 in the loads delivered by Contractor, such personnel shall remove these materials for storage in 51

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1415 approved, on-site, Excluded Waste storage Container(s). Contractor shall arrange for removal of 1416 the Excluded Wastes at its cost by permitted haulers in accordance with Applicable Laws and 1417 regulatory requirements. The Contractor may at its sole expense attempt to identify and recover 1418 the cost of Disposal from the Generator. If the Generator can be successfully identified, the cost 1419 of this effort, as well as the cost of Disposal shall be chargeable to the Generator. 1420 5.9 CONTRACT MANAGEMENT
1421 Consistent with Section 12.10, the City Contract Managershall monitor and administer of this Agreement. 1422 Contractor shall designate an employee to serve as Contractor’s Contract Administrator(s), to be 1423 responsible for working closely with the City Contractor Manager in the monitoring and administration of 1424 this Agreement. Contractor shall be responsible for notifying the City Contract Manager of any change in 1425 assignments.
1426 The Contractor’s Contract Administrator shall meet and confer with the City Contract Administrator to 1427 resolve differences of interpretation and implement and execute the requirements of this Agreement in 1428 an efficient, effective, manner that is consistent with the stated objectives of this Agreement. 1429 The City Contract Manager and the Contractor’s Contract Administrator shall hold contract management 1430 meetings quarterly or at such other frequency as designated by the City Contract Manager. This meeting 1431 is intended to review the status of Contractor’s implementation of programs and services required under 1432 this Agreement, coordinate shared efforts between the parties, and such other agenda items as are 1433 deemed appropriate by the Parties for such meetings. 1434 From time to time the City Contract Manager may designate other agents of City to work with Contractor 1435 on specific matters. In such cases, those individuals should be considered designates of the City Contract 1436 Manager for those matters to which they have been engaged. Such designates shall be afforded all of the 1437 rights and access granted thereto.
1438 In the event of dispute between the City Contract Manager and the Contractor regarding the 1439 interpretation of or the performance of services under this Agreement, the City Contract Manager’s 1440 determination shall be conclusive except where such determination results in a material impact to the 1441 Contractor’s revenue and/or cost of operations. In the event of a dispute between the City Contract 1442 Manager and the Contractor results in such material impact to the Contractor, the provisions of Section 1443 10.9 shall apply. For the purposes of this Section, “material impact” is an amount equal to or greater than 1444 one percent (1%) of Contractor’s annual Gross Receipts under this Agreement. 1445 City Contract Manager or their designate shall have the right to observe and review Contractor operations 1446 and Processing Facilities and enter Premises for the purposes of such observation and review, including 1447 review of Contractor’s records, during reasonable hours with reasonable notice. In no event shall 1448 Contractor prevent access to such Premises for a period of more than three (3) calendar days after 1449 receiving such a request.
1450 5.10 SUPPORT OF CITY’S ENVIRONMENTAL GOALS
1451 Contractor shall perform services under this Agreement in a manner which supports the City’s 1452 environmental goals. This includes, but is not limited to, providing services, education, and outreach to 1453 Customers and in the community which promote source reduction, reuse, Recycling, Composting, and 1454 other methods to reduce landfill Disposal.
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1455 5.11 DIVERSION REQUIREMENTS
1456 Contractor shall maintain at least fifty percent (50%) Diversion of all materials Collected by Contractor in 1457 the City (including only materials Collected by Contractor under this Agreement, and excluding 1458 Commercial Recyclable Materials, Organic Materials, and C&D Collected by other City-approved service 1459 providers in accordance with Section 1.2). The Diversion percentage shall be calculated as total Tons 1460 Diverted divided by total Tons Collected. Total Tons Diverted does not include Processing Residue that is 1461 Disposed.
1462 Contractor shall also use commercially reasonable efforts to Divert at least eighty-five percent (85%) of 1463 Recyclable Materials Collected in the City by Contractor and seventy percent (70%) of Commercial/MFD 1464 Organic Materials Collected in the City by Contractor (excluding Source Separated wood and Yard 1465 Trimmings Collected in Drop Boxes.) Disposed Processing Residue must not exceed fifteen percent (15%) 1466 for Recyclable Materials or thirty percent (30%) for Commercial/MFD Organic Materials, calculated on an 1467 annual average.
1468 ARTICLE 6.
1469 RECORD KEEPING AND REPORTING
1470 6.1 RECORD KEEPING
1471 Contractor shall maintain Customer contact data, Customer service, accounting, statistical, operational, 1472 programmatic, and other records, and associated documentation, related to its performance as shall be 1473 necessary to provide detailed and accurate reports under this Agreement, and to demonstrate compliance 1474 with this Agreement and Applicable Law. Unless otherwise required in this Article, Contractor shall retain 1475 all records and data required to be maintained by this Agreement for the Term of this Agreement plus five 1476 (5) years after its expiration or earlier termination. Records and data shall be in chronological and 1477 organized form that is readily and easily interpreted to facilitate the flexible use of data to structure 1478 reports. Contractor’s records shall be stored in one central location, physical or electronic, that can be 1479 readily accessed by Contractor. Upon request, any such records shall be retrieved in a timely manner, not 1480 to exceed five (5) Working Days of a request by the City Contract Manager, and made available to the City 1481 Contract Manager; including any record or documentation that City, in their sole discretion, may deem 1482 necessary, for the City to fulfill obligations under Applicable Law including, but not limited to, AB 939, AB 1483 341, AB 1826, AB 876, AB 901, SB 1383, and other current or future Federal, State, or local regulations, as 1484 amended.
1485 Contractor shall maintain adequate record security to preserve records from events that can be 1486 reasonably anticipated such as a fire, theft, and an earthquake. Electronically maintained data and records 1487 shall be protected and backed-up. The City reserves the right to require the Contractor to maintain the 1488 records required herein using a City-selected web-based software platform, at Contractor’s expense. To 1489 the extent that Contractor utilizes its computer systems to comply with record keeping and reporting 1490 requirements under this Agreement, Contractor shall, on a monthly basis, save all system-generated 1491 reports supporting those record keeping and reporting requirements in a static format in order to provide 1492 an audit trail for all data required by City, as requested, under this Agreement. 1493 At a mutually agreed upon time during normal business hours, but within five (5) Work Days of a written 1494 request, Contractor shall provide to the City the Contractor’s data and records with respect to the matters 1495 covered by this Agreement and Applicable Law. Contractor shall permit the City, or its designee, to audit, 53

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1496 examine, and make excerpts or transcripts from such data and records, and make copies of all data 1497 relating to all matters covered by this Agreement and the Applicable Law. Contractor shall maintain such 1498 data and records in an accessible location and condition for a period of not less than five (5) years 1499 following the City’s receipt of final payment under this Agreement unless the City agrees in writing to an 1500 earlier disposition. Contractor agrees that all data regarding business operations, Customer lists, routing, 1501 Tonnage, Service Levels, work orders issued from dispatch, Customer service logs and account notes, and 1502 work force and bargaining agreements, do not constitute Proprietary Information or Trade Secrets and 1503 shall be made available to the City Contract Manager or their designee upon request and within the 1504 timelines required by this Section 6.1. City is subject to the California Public Records Act (Government 1505 Code section 7920.000, et. seq.) and nothing in this Agreement is intended to impair City’s requirements 1506 or obligations under that Act.
1507 City views its ability to defend itself against Comprehensive Environmental Response, Compensation and 1508 Liability Act (CERCLA), and related litigation as a matter of great importance. For this reason, City regards 1509 its ability to prove where Collected Recyclable Materials, Organic Materials, and Solid Waste are taken for 1510 Transfer, Processing, or Disposal. Contractor shall maintain records which can establish where Recyclable 1511 Materials, Organic Materials, and Solid Waste Collected were Transferred, Processed, or Disposed. This 1512 provision shall survive the expiration or earlier termination of this Agreement. Contractor shall maintain 1513 these records for a minimum of ten (10) years beyond expiration or earlier termination of the Agreement. 1514 Contractor shall provide these records to City (upon request or at the end of the record retention period) 1515 in an organized and indexed manner rather than destroying or Disposing of them. 1516 6.2 REPORT SUBMITTAL REQUIREMENTS
1517 Contractor shall submit quarterly reports within fourteen (14) calendar days after the end of the quarter 1518 and annual reports no later than forty-five (45) calendar days after the end of each calendar year. 1519 Quarterly and annual reports shall include at a minimum, all data and information described in Exhibit D, 1520 unless otherwise specified under this Agreement.
1521 Contractor may propose report formats that are responsive to the objectives and audiences for each 1522 report. The format of each report shall be approved by the City Contract Manager, in their sole discretion. 1523 City Contract Manager may, from time to time during the Term, review, and request changes to 1524 Contractor’s report formats and content and Contractor shall not unreasonably deny such requests. 1525 Contractor shall submit all reports to the City Contract Manager electronically via e-mail using software 1526 acceptable to the City. The City reserves the right to require the Contractor to maintain records and submit 1527 the reports required herein through use of a City-selected web-based software platform, at the 1528 Contractor’s expense.
1529 City reserves the right to require Contractor to provide additional reports or documents as City Contract 1530 Manager reasonably determines to be required for the administration of this Agreement or compliance 1531 with Applicable Law.
1532 6.3 PERFORMANCE REVIEW AND AUDIT
1533 The City may conduct, and Contractor shall cooperate with, performance reviews and detailed financial 1534 audits, at any point during the Term of this Agreement in the City Contract Manager’s sole discretion, to 1535 verify Contractor has fulfilled its financial and operational obligations under this Agreement. The purpose 1536 of such review and audit shall be, without limitation, to review Complaints, billings, and fee payments to 54

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1537 City, and to determine if Contractor has met the performance standards described in this Agreement 1538 (including, without limitation, direct services provided to Customers as described in Exhibit B, public 1539 education and outreach required in Exhibit C, recordkeeping and reporting as required in Exhibit D, and 1540 performance standards established in Exhibit F). City may choose to enlist professional service providers 1541 to perform such review and audit, at its own cost. Contractor may not influence or control the City’s 1542 selection of professional service providers nor the specific review items covered by the review. Contractor 1543 shall cooperate with the City and its agents during the review and audit process. If any noncompliance 1544 with the Agreement is found, the City may direct the Contractor to correct the inadequacies in accordance 1545 with Article 10 of this Agreement.
1546 At the City’s sole option, with at least thirty (30) calendar days written notification to the Contractor, it 1547 may conduct a public hearing at which the Contractor shall be present and shall participate, to review the 1548 Contractor's performance, quality of service, and evaluation of technological and regulatory changes. The 1549 reports required by Exhibit D to this Agreement regarding Customer Complaints may be utilized as a basis 1550 for review as well as any findings from performance review and/or audits. Performance and service quality 1551 review hearings may be scheduled by the City at its discretion throughout the Term of the Agreement. 1552 In addition to the other requirements of this Agreement, the Parties shall be subject to the examination 1553 and audit of the State Auditor for a period of three (3) years after final payment under the Agreement, 1554 per Government Code section 8546.7.
1555 ARTICLE 7.
1556 CITY REIMBURSEMENT
1557 7.1 FRANCHISE FEE
1558 The Contractor shall pay a Franchise Fee to City each quarter in exchange for the exclusive rights granted 1559 under this Agreement, including the exclusive right to use City rights-of-way for Collection vehicles and 1560 placement of Carts for Collection. The amount of the Franchise Fee shall be equal to six percent (6%) of 1561 Gross Receipts, paid out of Contractor’s Profit, for all services performed under this Agreement and shall 1562 be paid in equal quarterly installments, paid in arrears. 1563 7.2 PAYMENT SCHEDULE AND LATE FEES
1564 Within forty-five (45) calendar days of the end of each calendar quarter, during the Term of this 1565 Agreement, Contractor shall remit to City all fees as described in this Article. Such fees shall be remitted 1566 to City and sent or delivered to the City Finance Department. If such remittance is not paid to City on or before the forty-fifth (45th 1567 ) calendar day following the end of a calendar quarter, all fees due shall be 1568 subject to a delinquency penalty of ten percent (10%) per annum. 1569 Each quarterly remittance to City shall be accompanied by a statement listing the amount of each fee 1570 paid; calculation of each fee; and statement of Gross Receipts which separately identifies SB 1383 Fee 1571 eligible revenues, by Customer Type for the period collected from all operations conducted or permitted 1572 by this Agreement. City Contract Manager may, at any time during the Term, request a detailed calculation 1573 of Gross Receipts which may include, but is not necessarily limited to, the number of Customers charged 1574 at each Service Level and Rate for each billing period. Contractor shall maintain all supporting documents 1575 and calculations for each payment made to City as required by Section 6.1. 55

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1576 City Contract Manager may, at any time during the Term, perform an audit of Contractor’s billings and 1577 payment of fees. Contractor shall cooperate with the City Contract Manager in any such audit. Should City 1578 or its agent perform this review and identify billing errors or other errors in payment of fees valued at one 1579 percent (1%) or more of Gross Receipts for the period reviewed, Contractor shall, in addition to 1580 compensating City for lost fees, reimburse the City’s actual cost of the review. 1581 ARTICLE 8.
1582 CONTRACTOR’S COMPENSATION AND RATE
1583 SETTING
1584 8.1 GENERAL
1585 The Contractor’s Compensation for performance of all its obligations under this Agreement shall be Gross 1586 Receipts. Contractor’s Compensation provided for in this Article shall be the full, entire and complete 1587 compensation due to Contractor pursuant to this Agreement for all labor, equipment, materials and 1588 supplies, Transfer, Processing and Disposal fees, City Fees, taxes, insurance, bonds, overhead, operations, 1589 profit, and all other things necessary to perform all the services required by this Agreement in the manner 1590 and at the times prescribed. Nothing herein shall obligate City to provide any compensation to Contractor 1591 beyond Gross Receipts.
1592 If Contractor’s actual costs, including fees due to City, are more than Gross Receipts, Contractor shall not 1593 be compensated for the difference in actual costs and actual Gross Receipts. If Contractor’s actual costs 1594 are less than the actual Gross Receipts, Contractor shall retain the difference provided that Contractor 1595 has paid City Fees pursuant to Article 7.
1596 Under this Agreement, Contractor shall have the right and obligation to charge and collect from 1597 Customers, Rates in Exhibit G2 that are approved by the City for provision of services to Customers. The 1598 initial Rates will be set prior to Commencement of this Agreement. Contractor’s proposed costs and 1599 operating assumptions are presented in Exhibit G1. This Agreement includes references to Contractor’s 1600 ability to charge Customers for various services provided and described in this Agreement. Contractor 1601 may not charge Customer any Rate which is not approved in Exhibit G2, as may be amended from time to 1602 time. Exhibit G2 includes descriptions of the basis for and occasions upon which Contractor may charge 1603 those Rates. Contractor may not charge a Rate for a service other than that which is described in Exhibit 1604 G2. In the event of a conflict between Exhibit G2 and any other provision of this Agreement, the 1605 description in Exhibit G2 shall control.
1606 The Approved Recyclable Materials Processing Facility shall retain a portion of revenues received for the 1607 sale of Recyclable Materials including California Redemption Value revenues as set forth in Table 1-3 of 1608 Exhibit E. Such revenues will be considered in the establishment of Rates for services provided under this 1609 Agreement under Exhibit E. Neither Contractor nor the Approved Recovery Facility are entitled to funds 1610 available through the Department of Resources Recycling and Recovery (CalRecycle) through its 1611 “City/County Payment Program” pursuant to Section 14581(a)(5)(A) of the California Beverage Container 1612 Recycling and Litter Reduction Act.
1613 8.2 RATES AND ANNUAL ADJUSTMENTS
1614 A. General. Rates shall be set by the City Council following a recommendation from the South Lake 1615 Tahoe Basin Waste Management Authority in accordance with the procedures set forth in Exhibit 56

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1616 E, as may be modified by the City from time to time as required to comply with state law. 1617 B. Initial Rates. Rates applicable upon the Commencement Date of this Agreement will be 1618 determined through the 2024 Base Year rate-setting process in accordance with Exhibit E. 1619 C. Rates for Subsequent Rate Periods. Rates for subsequent Rate Periods shall be adjusted annually 1620 in accordance with this Section 8.2 and Exhibit E. 1621 The interim year index-based adjustment, which is described in Exhibit E, involves use of various 1622 cost adjustment factors (such as the percentage change in the consumer price index and changes 1623 in disposal fees) to calculate adjusted Rates. Such Rate adjustment calculations shall be performed 1624 in strict conformance to the procedures described in Exhibit E. 1625 Base year Rates shall be adjusted using the cost-based methodology described in Exhibit E that 1626 involves a review of Contractor’s actual costs and revenues and projection of costs and revenues 1627 for the coming Rate Period. This cost-based Rate adjustment will be performed instead of the 1628 index-based Rate adjustment for that Rate Period. The cost-based adjustment process is intended 1629 to provide the City an opportunity to adjust Rates to more accurately reflect actual revenues and 1630 costs of operations. Such Rate adjustment calculations shall be performed in strict conformance 1631 to the procedures described in Exhibit E.
1632 8.3 EXTRAORDINARY RATE ADJUSTMENTS
1633
1634 In the event of any Change in Scope (as defined below) or any Change in Law (as defined in Exhibit A) 1635 either of which results in an increase or decrease in Contractor’s costs or revenues, in the event of an 1636 Extraordinary Cost Increase (as defined below), or in the event of any Change in Fees (as defined below), 1637 an appropriate adjustment will be made in the Rates in order to compensate, to the maximum extent 1638 possible, for such increase or decrease in costs, revenues or Fees, commencing from the date(s) such 1639 increase or decrease first occurs using the rate-setting process described in Exhibit E as amended by 1640 Section 8.4 of this Agreement. Any Rate adjustment due to a Change in Scope, a Change in Law or an 1641 Extraordinary Cost Increase shall be in the reasonable discretion of City. 1642 “Change in Fees” shall mean any change in Franchise Fees and/or other fees charged to Contractor by any 1643 governmental agency (including, without limitation, City) in connection with the Services provided by 1644 Contractor under this Agreement, including, without limitation, the cancellation of any existing fees and 1645 the adoption of any new fees.
1646 “Change in Scope” shall mean any change directed by City in the scope of services provided by Contractor 1647 under this Agreement, including, without limitation, Contractor’s use of any different Approved Facilities 1648 at City’s direction, as described in Section 3.5.
1649 “Extraordinary Cost Increase” shall mean a substantial increase in Contractor’s operating or capital costs 1650 or expenses that is outside of Contractor’s control but not due to a Change in Scope or a Change in Law, 1651 including, without limitation, additional wage and/or benefit costs for employees that become subject to 1652 a collective bargaining agreement.
1653 In the case of a Change in Scope, a Change in Law or an Extraordinary Cost Increase, Contractor shall 1654 provide City with projected operational, cost and revenue data reflecting the entire financial effect of such 1655 Change or Increase, including any projected change in Contractor’s profit. City reserves the right to require 57

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1656 that Contractor supply any additional operational, cost and revenue data, or any other information it may 1657 reasonably need, to ascertain the appropriate financial impact of the Change in Scope, Change in Law or 1658 Extraordinary Cost Increase and any necessary adjustment to rates resulting from such Change in Scope, 1659 Change in Law or Extraordinary Cost Increase.
1660 Rate adjustments for a qualifying Change in Scope or Change in Law, for a Change in Fees, or for an 1661 Extraordinary Cost Increase shall take effect as of the beginning of the next calendar year, and the 1662 applicable annual rate increase will capture any incremental increased cost and related profit, if 1663 applicable, from the date of the Change in Scope or Change in Law, or Change in Fees. The underlying 1664 service, cost, revenue or Fee changes supporting any rate adjustment under this Section 8.3 will be added 1665 to the appropriate category in Exhibit E for purposes of future Rate adjustments. 1666
1667 8.4 REGARDING EXHIBIT E
1668
1669 In the event of any conflict between the terms of this Agreement and the terms of Exhibit E, the terms of 1670 this Agreement shall prevail.
1671
1672 For the avoidance of doubt, in connection with the establishment of the initial Rates for the year 1673 commencing January 1, 2024, the Parties hereby agree that the terms of Exhibit E shall be modified in the 1674 following respects from and after December 31, 2023:
1675
1676 A. For purposes of calculating depreciation on new vehicles, the useful life will be changed from 1677 eight (8) years to ten (10) years.
1678
1679 B. For purposes of calculating depreciation on new Carts, the useful life will be changed from five (5) 1680 years to ten (10) years, subject to C below.
1681
1682 C. For purposes of calculating depreciation on new Animal-Resistant Carts, the useful life will be 1683 changed from five (5) years to six (6) years.
1684
1685 D. The unpaid principal balance as of December 31, 2023 of Contractor’s debt financing for the 1686 Resource Recovery Facility (i.e., $2,377,619) will be amortized ratably over the initial Term of this 1687 Agreement, starting January 1, 2024 and ending December 31, 2044. 1688
1689 E. Subject to the rate-setting process in Exhibit E and this Article 8, 10.72% of the cost increases set 1690 forth in Exhibit G2 that are not reflected in the initial Rates effective January 1, 2024 will be 1691 reflected, in equal parts, in a 5.36% increase in Rates for each of the year beginning January 1, 1692 2025 and the year beginning January 1, 2026, in addition, in each case, to the rate increase for 1693 such year under the process pursuant to Exhibit E. 1694
1695 F. Amounts paid by Contractor to Clean Tahoe under that certain Agreement dated December 7, 1696 2021, as may be amended, will be allowable costs for purposes of Exhibit E. 1697
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1698 ARTICLE 9.
1699 INDEMNITY, INSURANCE, AND PERFORMANCE
1700 BOND
1701 9.1 INDEMNIFICATION
1702 A. General. Contractor shall indemnify, defend with counsel acceptable to City, and hold harmless 1703 (to the full extent permitted by law) City and its officers, officials, employees, volunteers, and 1704 agents from and against any and all claims, liability, loss, injuries, damage, expense, and costs 1705 (including without limitation costs and fees of litigation, including reasonable attorneys’ and 1706 expert witness fees) (collectively, “Damages”) of every nature arising out of or in connection with 1707 Contractor’s performance, and the performance of any Subcontractor, or agent of Contractor, 1708 under this Agreement, or its failure to comply with any of its obligations contained in the 1709 Agreement, except to the extent such loss or damage was caused by the negligence or willful 1710 misconduct of City. This Section 9.1 shall survive the expiration or termination of this Agreement 1711 and shall not be construed as a waiver of City’s legal and/or equitable rights as defined herein and 1712 permitted under Applicable Law.
1713 B. Excluded Waste. Contractor acknowledges that it is responsible for compliance during the entire 1714 Term of this Agreement with all Applicable Laws. Contractor shall not store, Transport, use, or 1715 Dispose of any Excluded Waste except in strict compliance with all Applicable Laws. 1716 If Contractor negligently or willfully mishandles Excluded Waste in the course of carrying out its 1717 activities under this Agreement, Contractor shall at its sole expense promptly take all investigatory 1718 and/or remedial action reasonably required for the remediation of such environmental 1719 contamination. Prior to undertaking any investigatory or remedial action, however, Contractor 1720 shall first obtain City’s approval of any proposed investigatory or remedial action. Should 1721 Contractor fail at any time to promptly take such action, City may undertake such action at 1722 Contractor’s sole cost and expense, and Contractor shall reimburse City for all such expenses 1723 within thirty (30) calendar days of being billed for those expenses, and any amount not paid within 1724 that thirty (30) calendar day period shall thereafter be deemed delinquent and subject to the 1725 delinquent fee payment provision of Section 7.4. These obligations are in addition to any defense 1726 and indemnity obligations that Contractor may have under this Agreement. 1727 Notwithstanding the foregoing, Contractor’s duties under this subsection shall not extend to any 1728 claims arising from the Disposal of Solid Waste at the Approved Disposal Facility, including, but 1729 not limited to, claims arising under Comprehensive Environmental Response, Compensation and 1730 Liability Act (CERCLA) unless such claim is a direct result of Contractor’s negligence or willful 1731 misconduct.
1732 C. Environmental Indemnity. Contractor shall defend with counsel acceptable to City, indemnify, 1733 and hold City harmless against and from any and all claims, suits, losses, penalties, damages, and 1734 liability for damages of every name, kind and description, including attorneys’ fees and costs 1735 incurred, attributable to the negligence or willful misconduct of Contractor in handling Excluded 1736 Waste.
1737 D. Electronic and Web based Information Indemnity. Contractor shall defend with counsel 1738 acceptable to City, indemnify, and hold City harmless against and from any and all related claims, 59

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1739 including but not limited to, suits, losses, penalties, damages, responsibility for costs, regulatory 1740 fines, penalties, credit monitoring expenses, and liability for damages of every name, kind and 1741 description, including reasonable attorneys’ fees and costs incurred, attributable to the 1742 negligence or willful misconduct of Contractor and any Subcontractors used in performance of 1743 this Agreement in handling or protecting Customer information over which Contractor has 1744 control, including but not limited to billing details, electronic payment(s), and Customer account 1745 information that is not readily available to the general public. Contractor shall maintain electronic 1746 files and Contractor’s website in accordance with the industry best practices for maintaining such 1747 information as safely and securely as possible. Nothing in this Section 9.1(D) shall prevent or 1748 restrict Contractor’s obligation and responsibility to provide City with information required under 1749 this Agreement.
1750 E. Related to AB 939, AB 341, AB 1826, and SB 1383. Contractor’s duty to defend and indemnify 1751 herein includes all fines and/or penalties imposed by CalRecycle, if the requirements of AB 939, 1752 AB 341, AB 1826, and/or SB 1383 are not met by the Contractor with respect to the Contractor’s 1753 obligations under this Agreement, and such failure is: (i) due to the failure of Contractor to meet 1754 its obligations under this Agreement; or, (ii) due to Contractor delays in providing information 1755 that prevents Contractor or City from submitting reports to regulators in a timely manner. This 1756 indemnity is subject to the provisions of Public Resources Code § 40059.1. 1757 F. Related to Proposition 218. Should there be a Change in Law or a new judicial interpretation of 1758 Applicable Law, including, but not limited to, Article XIII C and D of the California Constitution 1759 (Commonly Proposition 218), which impacts the Rates for the Collection services established in 1760 accordance with this Agreement, Contractor agrees to meet and confer with City to discuss the 1761 impact of such Change in Law on either Party’s ability to perform under this Agreement. 1762 If, at any time, a Rate adjustment determined to be appropriate by both City and Contractor to 1763 compensate Contractor for increases in costs as described in this Agreement cannot be 1764 implemented for any reason, Contractor shall be granted the option to negotiate with City, in 1765 good faith, a reduction of services equal to the value of the Rate adjustment that cannot be 1766 implemented. If City and Contractor are unable to reach agreement about such a reduction in 1767 services, then Contractor may terminate this Agreement upon one (1) year’s prior written notice 1768 to City, in which case the Contractor and City shall each be entitled to payment of amounts due 1769 for contract performance through the date of termination but otherwise will have no further 1770 obligation to one another unless this Agreement specifically states otherwise, after the date of 1771 such termination. Should a court of competent jurisdiction determine that the Contractor cannot 1772 charge and/or increase its Rates for charges related to Franchise Fees and governmental fees and 1773 charges, Contractor shall reduce the Rates it charges Customers a corresponding amount, and 1774 Contractor shall be relieved from paying any such fees that are payable to the City, providing said 1775 fees, reimbursements, Rates and/or charges disallowed by the court are not related to the cost 1776 of providing service hereunder and had been incorporated in the Rates charged by Contractor to 1777 its Customers.
1778 Nothing herein is intended to imply that California Constitution, Articles XIIIC or XIIID, apply to the 1779 Rates established for services provided under this Agreement; rather this Section is provided 1780 merely to allocate risk of an adverse judicial interpretation between the Parties. 1781 G. CalPERS Eligibility Indemnification. Contractor’s employees, agents, or Subcontractors providing 60

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1782 service under this Agreement shall not: (i) qualify for any compensation and benefit under 1783 CalPERS; (ii) be entitled to any benefits under CalPERS; (iii) enroll in CalPERS as an employee of 1784 City; (iv) receive any employer contributions paid by City for CalPERS benefits; or (v) be entitled 1785 to any other CalPERS-related benefit that would accrue to a City employee. Contractor’s 1786 employees, agents, or Subcontractors hereby waive any claims to benefits or compensation 1787 described in this Section 9.1. This Section 9.1 applies to Contractor notwithstanding any other 1788 agency, State or Federal policy, rule, regulation, law, or ordinance to the contrary. 1789 If Contractor’s employees, agents, or Subcontractors providing services under this Agreement 1790 claim, or are determined by a court of competent jurisdiction or the California Public Employees 1791 Retirement System (“CalPERS”) to be eligible for enrollment in CalPERS of the City, Contractor 1792 shall indemnify, defend, and hold harmless City for the payment of any employer and employee 1793 contributions for CalPERS benefits on behalf of the employee as well as for payment of any 1794 penalties and interest on such contributions which would otherwise be the responsibility of the 1795 City.
1796 Contractor’s Compensation under this Agreement shall be the full and complete compensation to 1797 which Contractor and Contractor’s officers, employees, agents, and Subcontractors are entitled 1798 for performance of any work under this Agreement. Neither Contractor nor Contractor’s officers, 1799 employees, agents, and Subcontractors are entitled to any salary or wages, or retirement, health, 1800 leave or other fringe benefits applicable to City employees. The City will not make any Federal or 1801 State tax withholdings on behalf of Contractor. The City shall not be required to pay any workers’ 1802 compensation insurance on behalf of Contractor.
1803 Contractor agrees to defend and indemnify the City for any obligation, claim, suit, or demand for 1804 tax, retirement contribution including any contribution to CalPERS, social security, salary or 1805 wages, overtime payment, or workers’ compensation payment which the City may be required to 1806 make on behalf of (1) Contractor, (2) any employee of Contractor, or (3) any employee of 1807 Contractor construed to be an employee of the City, for work performed under this Agreement. 1808 9.2 INSURANCE
1809 A. General Requirements. Contractor shall, at its sole cost and expense, maintain in effect at all times 1810 during the Term of this Agreement not less than the following coverage and limits of insurance:
1811 B. Coverages and Requirements. During the Term of this Agreement, Contractor shall at all times 1812 maintain, at its expense, the following coverages and requirements. Failure to maintain the 1813 identified insurance requirements during the entire Term of this Agreement shall constitute an 1814 event of default subject to Section 10.1(C). The comprehensive general liability insurance shall 1815 include broad form property damage insurance.
1816 1. Minimum Coverages. Insurance coverage shall be with limits not less than the following:
1817 Comprehensive General Liability – $6,000,000 combined single limit per occurrence for 1818 bodily injury, personal injury, and property damage, including, without limitation, blanket 1819 contractual liability. If a general aggregate limit applies, either the general aggregate limit 1820 shall apply separately to this Agreement or the general aggregate limit shall be twice the 1821 required occurrence limit.
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1822 Automobile Liability – $6,000,000 combined single limit per accident for bodily injury and 1823 property damage (include coverage for Owned, Hired, and Non-owned vehicles). 1824 Workers’ Compensation – Statutory Limits/Employers’ Liability - $1,000,000/accident 1825 for bodily injury or disease.
1826 Employee Blanket Fidelity Bond – $500,000 per employee loss covering dishonesty, 1827 forgery, alteration, theft, disappearance, and destruction (inside or outside). 1828 Pollution Liability – $5,000,000 per loss and annual aggregate applicable to bodily injury; 1829 property damage, including loss of use of damaged property or of property that has not 1830 been physically damaged or destroyed; clean-up costs, including first party cleanup of the 1831 City’s property and third-party cleanup, and bodily injury costs if pollutants impact other 1832 properties; and defense, including costs, fees and expenses incurred in the investigation, 1833 defense, or resolution of claims. Coverage shall include completed operations and shall 1834 apply to liability arising out of sudden, accidental, and gradual pollution conditions and 1835 remediation. Coverage shall apply to acts, errors or omissions arising out of, or in 1836 connection with, Contractor’s scope of work under this Agreement. Coverage shall also 1837 apply to the hauling of waste to the Approved Facilities, including non-owned disposal 1838 sites (“NODS”) that shall protect against, for example, claims regarding bodily injury, 1839 property damage, and/or cleanup costs involving NODS. All activities contemplated in this 1840 Agreement shall be specifically scheduled on the policy as “covered operations.” 1841 Coverage is preferred by the City to be occurrence based. However, if provided on a 1842 claims-made basis, Contractor warrants that any retroactive date applicable to coverage 1843 under the policy precedes the Effective Date of this Agreement, and that continuous 1844 coverage shall be maintained, or an extended discovery period will be exercised through 1845 completion or termination of this Agreement for a minimum of five (5) years. This 1846 provision does not limit or alter any rights or remedies to City allowable under this 1847 Agreement and/or Applicable Law in perpetuity.
1848 Technology Professional Liability Errors and Omissions Insurance (Cyber Liability) 1849 appropriate to the Contractor’s profession and industry practice, with limits not less than 1850 $1,000,000 per occurrence. Coverage for cyber risks shall be sufficiently broad to respond 1851 to the duties and obligations as are undertaken by Contractor under this Agreement and 1852 shall include, but not be limited to claims involving infringement of intellectual property, 1853 including but not limited to infringement of copyright, trademark, trade dress, invasion 1854 of privacy violations, information theft, damage to or destruction of electronic 1855 information, release of private information, alteration of electronic information, 1856 extortion, and network security. The policy shall provide coverage for breach response 1857 notification and remediation costs, regulatory fines and penalties, credit monitoring 1858 expenses, electronic funds transfer losses, electronic data restoration expenses, and 1859 business interruption costs with limits sufficient to respond to these obligations, in the 1860 sole discretion of the City’s Risk Manager.
1861 If Contractor maintains broader coverage and/or higher limits than the minimums shown 1862 above, the City requires and shall be entitled to the broader coverage and/or higher limits 1863 maintained by the Contractor. Any available insurance proceeds in excess of the specified 1864 minimum limits of insurance and coverage shall be available to the City. 62

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1865 2. Additional Insured. City, its officers, agents, employees, and volunteers shall be named as 1866 additional insured on all but the workers’ compensation and professional liability 1867 coverages.
1868 3. Said policies shall remain in force through the life of this Agreement and, with the 1869 exception of professional liability coverage, shall be payable on a “per occurrence” basis 1870 unless City’s Risk Manager specifically consents in writing to a “claims made” basis. For all 1871 “claims made” coverage, if the Contractor changes insurance carriers Contractor shall 1872 purchase “tail” coverage or otherwise provide for continuous coverage covering the Term 1873 of this Agreement and not less than three (3) years thereafter, except for the five (5) year 1874 tail of Pollution Liability Coverage as described above. Proof of such “tail” or other 1875 continuous coverage shall be required at any time that the Contractor changes to a new 1876 carrier prior to receipt of any payments due.
1877 4. The Contractor shall declare all aggregate limits on the coverage before commencing 1878 performance of this Agreement, and City’s Risk Manager reserves the right to require 1879 higher aggregate limits to ensure that the coverage limits required for this Agreement as 1880 set forth above are available throughout the performance of this Agreement. 1881 5. The deductibles or self-insured retentions are for the account of Contractor and shall be 1882 the sole responsibility of the Contractor.
1883 6. Each insurance policy shall provide or be endorsed to state that coverage shall not be 1884 suspended, voided, canceled by either Party, reduced in coverage or in limits except after 1885 thirty (30) calendar days prior written notice by certified mail, return receipt requested, 1886 has been given to City Contract Manager ten (10) Business Days for delinquent insurance 1887 premium payments).
1888 7. Insurance must be placed with insurers with a current A.M. Best’s rating of no less than 1889 A-VII, or with a surplus line carrier appearing on the List of Approved Surplus Line Insurers, 1890 (“LASLI”) with a Best’s Key Rating Guide of at least A: X. 1891 8. The policies shall cover all activities of Contractor, its officers, employees, agents and 1892 volunteers arising out of or in connection with this Agreement. 1893 9. For any claims relating to this Agreement, the Contractor’s insurance coverage shall be 1894 primary, including as respects City, its officers, agents, employees, and volunteers. Any 1895 insurance maintained by City shall apply in excess of, and not contribute with, insurance 1896 provided by Contractor’s liability insurance policy. 1897 10. The Contractor shall waive all rights of subrogation against City, its officers, employees, 1898 agents, and volunteers.
1899 C. Endorsements. Prior to the Effective Date pursuant to this Agreement, Contractor shall furnish 1900 City Contract Manager with certificates, additional insured endorsements, primary and non1901 contributory endorsements, and waivers of subrogation evidencing the insurance coverage 1902 required by this Agreement. The certificates or endorsements are to be signed by a Person 1903 authorized by that insurer to bind coverage on its behalf. All certificates and endorsements are to 1904 be received by, and are subject to the approval of, City Risk Manager before work commences. 63

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1905 D. Renewals. During the Term of this Agreement, Contractor shall furnish City Contract Manager 1906 with certificates and original endorsements reflecting renewals, changes in insurance companies, 1907 and any other documents reflecting the maintenance of the required coverage throughout the 1908 entire Term of this Agreement. The certificates and endorsements are to be signed by a Person 1909 authorized by that insurer to bind coverage on its behalf. 1910 E. No Cap on Indemnity. The minimum amounts of coverage described in this Section 9.2 will not 1911 constitute any limitations or cap on Contractor’s indemnification obligations under this 1912 Agreement.
1913 F. Workers' Compensation. Contractor shall provide workers’ compensation coverage as required 1914 by State law and shall comply with Section 3700 of the State Labor Code. 1915 G. Special Risks or Circumstances. The City reserves the right at any time during the Term of this 1916 Agreement to modify these insurance requirements, including limits, based on the nature of the 1917 risk, prior experience, insurer, coverage, or other special circumstances, provided that any such 1918 modifications shall be deemed a Change in Scope subject to Section 8.3 above. 1919 9.3 PERFORMANCE BOND
1920 Within seven (7) calendar days of the City’s notification to Contractor that the City has executed this 1921 Agreement, Contractor shall file with the City a bond, payable to the City, securing the Contractor's 1922 performance of its obligations under this Agreement and such bond shall be renewed annually if 1923 necessary, so that the performance bond is maintained at all times during the Term. The principal sum of 1924 the bond shall be three million, four-hundred eleven thousand, and nine-hundred twelve dollars 1925 ($3,411,912) and shall be adjusted every three (3) years, commencing in 2027, to equal three (3) months 1926 of annual Gross Receiptsfor the prior calendar year. The bond shall be executed as surety by a corporation 1927 authorized to issue surety bonds in the State of California that has a rating of A or better in the most 1928 recent edition of Best’s Key Rating Guide, and that has a record of service and financial condition 1929 satisfactory to the City. The bond shall be in the form approved by the City Attorney. 1930 ARTICLE 10.
1931 DEFAULT AND REMEDIES
1932 10.1 EVENTS OF DEFAULT
1933 All provisions of the Agreement are considered material. Each of the following shall constitute an event 1934 of default.
1935 A. Fraud or Deceit. Contractor practices, or attempts to practice, any fraud or deceit upon the City. 1936 B. Insolvency or Bankruptcy. Contractor becomes insolvent, unable, or unwilling to pay its debts, or 1937 upon listing of an order for relief in favor of Contractor in a bankruptcy proceeding. 1938 C. Failure to Maintain Coverage. Contractor fails to provide or maintain in full force the workers’ 1939 compensation, insurance coverage required by Section 9.2, or indemnification coverage as 1940 required by this Agreement.
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1941 D. Violations of Regulation. Contractor violates any orders or filings of any regulatory body having 1942 authority over Contractor relative to this Agreement, which violation the City reasonably 1943 determines is material. If Contractor contests any such orders or filings by appropriate 1944 proceedings conducted in good faith, no breach or default of this Agreement shall be deemed to 1945 have occurred until the conclusion of such proceedings finding that a violation occurred. 1946 E. Violations of Applicable Law. Contractor violates Applicable Law relative to this Agreement, 1947 which violation the City reasonably determines is material. If Contractor contests any alleged 1948 violation by appropriate proceedings conducted in good faith, no breach or default of this 1949 Agreement shall be deemed to have occurred until the conclusion of such proceedings finding 1950 that a violation occurred.
1951 F. Failure to Perform Direct Services. Contractor ceases to provide Collection, Transportation, or 1952 Processing services as required under this Agreement for a period of two (2) consecutive calendar 1953 days or more, for any reason within the control of Contractor. 1954 G. Failure to Pay or Report. Contractor fails to make any payments to City required under this 1955 Agreement including payment of City Fees or Liquidated Damages and/or refuses to provide City 1956 with required information, reports, and/or records in a timely manner as provided for in the 1957 Agreement.
1958 H. Acts or Omissions. Any other act or omission by Contractor which violates the terms, conditions, 1959 or requirements of this Agreement, or Applicable Law and which is not corrected or remedied 1960 within the time set in the written notice of the violation. Additionally, an event of default occurs 1961 if Contractor cannot reasonably correct or remedy the breach within the time set forth in a notice 1962 of violation, or if Contractor fails to commence to correct or remedy such violation within the time 1963 set forth in such notice and diligently effect such correction or remedy thereafter. 1964 I. False, Misleading, or Inaccurate Statements. Any representation or disclosure made to the City 1965 by Contractor in connection with or as an inducement to entering into this Agreement, or any 1966 future amendment to this Agreement, which proves to be false or misleading in any material 1967 respect as of the time such representation or disclosure is made, whether or not any such 1968 representation or disclosure appears as part of this Agreement. Additionally, a default occurs if 1969 any Contractor-provided report contains a misstatement, misrepresentation, data manipulation, 1970 or an omission of fact or content explicitly defined by the Agreement, excepting non-numerical 1971 typographical and grammatical errors.
1972 J. Seizure or Attachment. There is a seizure of, attachment of, or levy on, some or all of Contractor’s 1973 operating equipment, including without limits its equipment, maintenance or office facilities, 1974 Approved Facility(ies), or any part thereof.
1975 K. Suspension or Termination of Service. There is any termination or suspension of the transaction 1976 of business by Contractor related to this Agreement, including without limit, due to labor unrest 1977 including strike, work stoppage or slowdown, sick-out, picketing, or other concerted job action 1978 lasting more than two (2) calendar days.
1979 L. Criminal Activity. Contractor, its officers, managers, or employees are found guilty of Criminal 1980 Activity related directly or indirectly to performance of this Agreement or any other agreement 1981 held with the City.
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1982 M. Assignment without Approval. Contractor transfers or assigns this Agreement without the 1983 expressed written approval of the City unless the assignment is permitted without City approval 1984 pursuant to Section 12.6.
1985 N. Failure to Provide Proposal or Implement Change in Service. Contractor fails to provide a 1986 proposal for new services or changes to services or fails to implement a change in service as 1987 requested by the City as specified in Section 3.5. 1988 O. Failure to Complete Transition. Contractor fails to complete the tasks identified in Contractor’s 1989 Implementation Plan as specified in Exhibit B.
1990 P. Failure to Implement Collection Program. Contractor fails to implement a Collection program 1991 that complies with the requirements of Article 4 and Exhibit B, which is essential for the City to 1992 achieve compliance with SB 1383.
1993 Q. Failure to Provide Processing Capacity. Contractor fails to provide adequate Processing capacity 1994 in accordance with Articles 4 and 5, which is essential for the City to achieve compliance with SB 1995 1383.
1996 R. Failure to Achieve Processing Standards. Contractor fails to achieve the Processing standards 1997 specified in Articles 4 and 5 including achievement of minimum Organic Waste recovery rates, 1998 which are essential for the City to achieve SB 1383 compliance. 1999 S. Failure to Comply with Other Requirements of SB 1383. Contractor fails to comply with other 2000 requirements of Contractor under this Agreement including, but not limited to, public education, 2001 reporting, Contamination monitoring, recordkeeping and reporting, or other obligations of this 2002 Agreement that delegate the City’s responsibility and/or authority under SB 1383 to the 2003 Contractor.
2004 T. Failure to Perform Any Obligation. Contractor fails to perform any obligation of Contractor 2005 established under this Agreement, which the City reasonably determines is material. 2006 City shall provide Contractor written notice of default within seven (7) calendar days of the City’s first 2007 knowledge of the Contractor’s default.
2008 10.2 CONTRACTOR’S RIGHT TO CURE; RIGHT TO TERMINATE UPON EVENT OF 2009 DEFAULT
2010 Contractor shall be given ten (10) Business Days from written notification by the City Contract Manager 2011 to cure any default which, in the City Contract Manager’s sole opinion, creates a potential public health 2012 and safety threat.
2013 Contractor shall be given ten (10) Business Days from written notification by the City Contract Manager 2014 to cure any default arising under subsections C, E, F, I, J, and K in Section 10.1. However, the City shall not 2015 be obligated to provide Contractor with a notice and cure opportunity if the Contractor has committed 2016 the same or similar breach/default within a twenty-four (24) month period. 2017 Contractor shall be given thirty (30) calendar days from written notification by the City Contract Manager 2018 to cure any other default (which is not required to be cured within ten (10) Business Days). Furthermore, 66

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2019 if Contractor cannot reasonably cure a default within the applicable period described in this section, 2020 except for defaults that create a potential health and safety threat, and Contractor promptly commences 2021 the cure or remedy within the initial cure period and thereafter diligently pursues the cure or remedy to 2022 completion, Contractor shall not be in default of this Agreement. However, the City shall not be obligated 2023 to provide Contractor with a notice and cure opportunity if the Contractor has committed the same or 2024 similar default within a twenty-four (24) month period. 2025 10.3 CITY’S REMEDIES IN THE EVENT OF DEFAULT
2026 Upon Contractor’s default, City has the following remedies in the event of Contractor default:
2027 A. Waiver of Default. City may waive any event of default or may waive Contractor’s requirement 2028 to cure a default event if City determines that such waiver would be in the best interest of the 2029 City. City’s waiver of an event of default is not a waiver of future events of default that may have 2030 the same or similar conditions.
2031 B. Suspension of Contractor’s Obligation. City may suspend Contractor’s performance of its 2032 obligations if Contractor fails to cure default in the time frame specified in Section 10.2 until such 2033 time the Contractor can provide assurance of performance in accordance with Section 10.8. 2034 C. Liquidated Damages. City may assess Liquidated Damages for Contractor’s failure to meet specific 2035 performance standards pursuant to Section 10.6 and Exhibit F. 2036 D. Termination. The City Contract Manager may, in their sole discretion, set a public hearing for the 2037 City Council to determine whether to terminate this Agreement. Subject to Contractor’s right to 2038 cure as described in Section 10.2, such termination hearing must be set if a default remains 2039 uncured thirty (30) calendar days after receipt of written notice of default from the City. Such 2040 termination hearing must also be set if a Contractor’s default is not cured within ten (10) calendar 2041 days and the default:
2042 1. Creates a potential public health and safety threat; or 2043 2. Arises under Section 10.1.C, E, F, I, J, or K.
2044 If the City terminates this Agreement based on the adopted findings of the termination hearing, 2045 the City Contract Manager shall first provide written notice to the Contractor twenty (20) calendar 2046 days before the date of termination. The Contractor shall thereafter be relieved on a going2047 forward basis of all liabilities and obligations required by this Agreement, except for Section 9.1 2048 and any other provisions specifically identified to survive termination of this Agreement. Upon 2049 expiration of the twenty (20) day notice, the City may, in its sole discretion:
2050 1. Directly undertake performance of the services; or 2051 2. Arrange with other Persons to perform the services with or without a written 2052 agreement; or
2053 3. Permit Contractor to continue operating under this Agreement including 2054 Contractor’s Compensation until such time that City is able to find substitute 2055 services.
2056 This right of termination is in addition to any other rights upon a failure of Contractor to perform 2057 its obligations under this Agreement.
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2058 Contractor shall not be entitled to any further revenues from Collection operations authorized 2059 hereunder from and after the date of termination.
2060 E. Other Available Remedies. City’s election of one (1) or more remedies described herein shall not 2061 limit the City from any and all other remedies at law and in equity including injunctive relief, etc. 2062 10.4 POSSESSION OF RECORDS UPON TERMINATION
2063 In the event of termination for an event of default, the Contractor shall furnish City Contract Manager 2064 with immediate access to all of its business records, including without limitation, Proprietary Information 2065 and Contractor computer systems, related to its Customers, Collection routes, and billing of accounts for 2066 Collection services.
2067 10.5 CITY'S REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE 2068 City's rights to terminate the Agreement under Section 10.2 and to take possession of the Contractor's 2069 records under Section 10.4 are not exclusive, and City's termination of the Agreement and/or the 2070 imposition of Liquidated Damages shall not constitute an election of remedies. Instead, these rights shall 2071 be in addition to any and all other legal and equitable rights and remedies which City may have. 2072 By virtue of the nature of this Agreement, the urgency of timely, continuous, and high-quality service; the 2073 lead time required to effect alternative service; and, the rights granted by City to the Contractor, the 2074 remedy of damages for a breach hereof by Contractor is inadequate and City shall be entitled to injunctive 2075 relief (including but not limited to specific performance). 2076 10.6 PERFORMANCE STANDARDS AND LIQUIDATED DAMAGES
2077 A. General. The Parties find that as of the time of the execution of this Agreement, it is impractical, 2078 if not impossible, to reasonably ascertain the extent of damages which shall be incurred by City 2079 as a result of a breach by Contractor of its obligations under this Agreement. The factors relating 2080 to the impracticability of ascertaining damages include, but are not limited to, the fact that: (i) 2081 substantial damage results to members of the public who are denied services or denied quality or 2082 reliable service; (ii) such breaches cause inconvenience, anxiety, frustration, and deprivation of 2083 the benefits of the Agreement to individual members of the general public for whose benefit this 2084 Agreement exists, in subjective ways and in varying degrees of intensity which are incapable of 2085 measurement in precise monetary terms; (iii) that exclusive services might be available at 2086 substantially lower costs than alternative services and the monetary loss resulting from denial of 2087 services or denial of quality or reliable services is impossible to calculate in precise monetary 2088 terms; and, (iv) the termination of this Agreement for such breaches, and other remedies are, at 2089 best, a means of future correction and not remedies which make the public whole for past 2090 breaches.
2091 B. Service Performance Standards; Liquidated Damages for Failure to Meet Standards. The Parties 2092 further acknowledge that consistent, reliable Collection services are of utmost importance to City 2093 and that City has considered and relied on Contractor's representations regarding its quality-of2094 service commitment in awarding the Agreement to it. The Parties recognize that some quantified 2095 standards of performance are necessary and appropriate to ensure consistent and reliable service 2096 and performance. The Parties further recognize that if Contractor fails to achieve the performance 2097 standards or fails to submit required documents in a timely manner, City and its residents and 68

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2098 businesses will suffer damages, and that it is, and will be, impractical and extremely difficult to 2099 ascertain and determine the exact amount of damages which City will suffer. Therefore, without 2100 prejudice to City’s right to treat such non-performance as an event of default under this Section, 2101 the Parties agree that the Liquidated Damages amounts established in Exhibit F of this Agreement 2102 and the Liquidated Damage amounts therein represent a reasonable estimate of the amount of 2103 such damages considering all of the circumstances existing on the Effective Date of this 2104 Agreement, including the relationship of the sums to the range of harm to City that reasonably 2105 could be anticipated and the anticipation that proof of actual damages would be costly or 2106 impractical.
2107 Contractor agrees to pay (as Liquidated Damages and not as a penalty) the amounts set forth in 2108 the Performance Standards and Liquidated Damages, Exhibit F. 2109 Before assessing Liquidated Damages, City Contract Manager shall give Contractor notice of City’s 2110 intention to do so. The notice will include a brief description of the incident(s) and non2111 performance. City Contract Manager may review (and make copies at City’s own expense) all 2112 information in the possession of Contractor relating to incident(s) and/or non-performance. 2113 Contractor may, within ten (10) Business Days after receiving the notice, request a meeting with 2114 City Contract Manager. City Contract Manager may present evidence of non-performance in 2115 writing and through testimony of City’s employees and others relevant to the incident(s) and non2116 performance. City Contract Manager will provide Contractor with a written explanation of their 2117 determination on each incident(s) and non-performance prior to authorizing the assessment of 2118 Liquidated Damages under this Section 10.6. The decision of City Contract Manager to assess 2119 Liquidated Damages that exceed $30,000 in total may be appealed by Contractor to the City 2120 Council by filing an appeal with the City Clerk within ten (10) Business Days of the City Contract 2121 Manager’s decision. If Contractor has made such an appeal within the required timeframe, the 2122 intended assessment of Liquidated Damages will not be imposed on Contractor until the City 2123 Council issues a decision. In such case, the decision of the City Council shall be final and Contractor 2124 shall not be subject to, or required to exhaust, any further administrative remedies. Should 2125 Contractor not exercise its right to appeal as described in this paragraph, and in all other cases, 2126 the decision of the City Contract Manager shall be final. The City Contract Manager shall provide 2127 Contractor with a written explanation of their determination on each incident prior to assessing 2128 the Liquidated Damages.
2129 C. Amount. City Contract Manager may assess Liquidated Damages for each calendar day or event, 2130 as appropriate, that Contractor is determined to be liable in accordance with this Agreement in 2131 the amounts specified in Exhibit F subject to annual adjustment described below. 2132 D. Timing of Payment. Contractor shall pay any Liquidated Damages assessed by City Contract 2133 Manager within ten (10) Business Days of the date the Liquidated Damages are assessed. If they 2134 are not paid within the ten (10) Business Day period, City Contract Manager may proceed against 2135 the performance bond required by the Agreement, order the termination (subject to the 2136 provisions of Section 10.2) of the rights granted by this Agreement, or all of the above, except 2137 that no payment of Liquidated Damages shall be due to the City until any appeal by Contractor to 2138 the City Council has been decided.
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2139 10.7 EXCUSE FROM PERFORMANCE
2140 Notwithstanding any other provision in this Agreement, each Party shall be excused from performing its 2141 respective obligations hereunder and from any obligation to pay Liquidated Damages if that Party is 2142 prevented from so performing by reason of floods, earthquakes, other acts of nature, governmental 2143 actions (including judicial action) or inactions, laws or regulations, including, without limitation, 2144 restrictions, directives or orders, epidemics or pandemics that actually negatively impact such Party’s 2145 ability to perform, war, civil insurrection, riots, and other similar catastrophic events which are beyond 2146 the control of and not the fault of the Party claiming excuse from performance hereunder (each a “Force 2147 Majeure Event”).
2148 In the case of labor unrest or job action directed at a third party over whom Contractor has no control, 2149 the inability of Contractor to provide services in accordance with this Agreement due to the unwillingness 2150 or failure of the third party to: (i) provide reasonable assurance of the safety of Contractor's employees 2151 while providing such services; or, (ii) make reasonable accommodations with respect to Container 2152 placement and point of Delivery, time of Collection, or other operating circumstances to minimize any 2153 confrontation with pickets or the number of Persons necessary to make Collections shall, to that limited 2154 extent, excuse performance. The foregoing excuse shall be conditioned on Contractor's cooperation in 2155 performing Collection services at different times and in different locations. Further, in the event of labor 2156 unrest, including but not limited to strike, work stoppage or slowdown, sickout, picketing, or other 2157 concerted job action conducted by the Contractor’s employees or directed at the Contractor, or a 2158 subsidiary, the Contractor shall not be excused from performance. In such case, Contractor shall continue 2159 to provide a reasonably satisfactory level of performance during the pendency thereof, but the Contractor 2160 shall not be required to adhere strictly to the specific requirements of this Agreement regarding routes, 2161 Collection times or similar matters; provided, however, that in no event shall more than seven (7) calendar 2162 days elapse between pickups for Residential and Commercial Customers. Any labor action initiated by 2163 Contractor, including but not limited to a lock-out, shall not be grounds for any excuse from performance 2164 and Contractor shall perform all obligations under this Agreement during the pendency of such 2165 Contractor-initiated labor action.
2166 The Party claiming excuse from performance shall, within two (2) calendar days after such Party has notice 2167 of such cause, give the other Party notice of the facts constituting such cause and asserting its claim to 2168 excuse under this Section.
2169 If either Party validly exercises its rights under this Section, the Parties hereby waive any claim against 2170 each other for any damages sustained thereby.
2171 The partial or complete interruption or discontinuance of Contractor's services caused by one (1) or more 2172 of the Force Majeure Events shall not constitute a default by Contractor under this Agreement. 2173 Notwithstanding the foregoing, however, if Contractor is excused from performing its obligations 2174 hereunder for any of the causes listed in this Section for a period of thirty (30) calendar days or more, City 2175 shall nevertheless have the right, in its sole discretion, to terminate this Agreement by giving ten (10) 2176 Business Days’ notice to Contractor, in which case the provisions of Section 10.4 shall apply. 2177 10.8 RIGHT TO DEMAND ASSURANCES OF PERFORMANCE
2178 The Parties acknowledge that it is of the utmost importance to City and the health and safety of all those 2179 members of the public residing or doing business within City who will be adversely affected by interrupted 70

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2180 waste management service, that there be no material interruption in services provided under this 2181 Agreement.
2182 If Contractor: (i) is the subject of any labor unrest including work stoppage or slowdown, sick-out, 2183 picketing or other concerted job action; (ii) appears in the reasonable judgment of City to be unable to 2184 regularly pay its bills as they become due; or, (iii) is the subject of a civil or criminal judgment or order 2185 entered by a Federal, State, regional or local agency for violation of an Applicable Law, and City believes 2186 in good faith that Contractor’s ability to perform under the Agreement has thereby been placed in 2187 substantial jeopardy, City may, at its sole option and in addition to all other remedies it may have, demand 2188 from Contractor reasonable assurances of timely and proper performance of this Agreement, in such form 2189 and substance as City believes in good faith is reasonably necessary in the circumstances to evidence 2190 continued ability to perform under the Agreement. If Contractor fails or refuses to provide satisfactory 2191 assurances of timely and proper performance in the form and by the date required by City, such failure or 2192 refusal shall be an event of default for purposes of Section 10.1. 2193 10.9 DISPUTE RESOLUTION
2194 In the event of dispute between the City Contract Manager and the Contractor regarding the 2195 interpretation of or the performance of services under this Agreement which results in a material impact 2196 to the Contractor’s revenue and/or cost of operations, as defined in Section 5.9, the provisions of Section 2197 10.9 shall apply.
2198 A. Meet and Confer. In the event of disputes regarding the performance of any obligation under this 2199 Agreement which results in a material impact to the Contractor’s revenue and/or cost of 2200 operations, the City and Contractor agree that they promptly will meet and confer to attempt to 2201 resolve the matter between themselves.
2202 B. Mediation. If disputes which arise under this Agreement cannot be resolved satisfactorily 2203 between the Parties in accordance with Section 10.9.A, the City and Contractor agree that such 2204 disputes shall be submitted to mandatory, non-binding mediation by a mutually agreed upon 2205 independent third party.
2206 C. Period of Time. Insofar as allowed by Applicable Law, the period otherwise applicable for filing 2207 claims against the City under Applicable Law shall be tolled during the period of time for which 2208 meet and confer or mediation procedures are pending, in accordance with Sections 10.9.A and 2209 10.9.B.
2210 D. Litigation. Litigation may be commenced only after all reasonable efforts to resolve the dispute(s) 2211 pursuant to Sections 10.9.A, 10.9.B, and 10.9.C have failed and any necessary claim(s) have been 2212 denied.
2213 ARTICLE 11.
2214 REPRESENTATIONS AND WARRANTIES OF
2215 THE PARTIES
2216 The Parties, by acceptance of this Agreement, represent and warrant the conditions presented in this 2217 Article.
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2218 11.1 CONTRACTOR’S CORPORATE STATUS
2219 Contractor is a corporation duly organized, validly existing and in good standing under the laws of the 2220 State. It is qualified to transact business in the State and has the power to own its properties and to carry 2221 on its business as now owned and operated and as required by this Agreement. 2222 11.2 CONTRACTOR’S CORPORATE AUTHORIZATION
2223 Contractor has the authority to enter this Agreement and perform its obligations under this Agreement. 2224 The Board of Directors of Contractor (or the shareholders, if necessary) has taken all actions required by 2225 law, its articles of incorporation, its bylaws, or otherwise, to authorize the execution of this Agreement. 2226 The Person signing this Agreement on behalf of Contractor represents and warrants that they have 2227 authority to do so. This Agreement constitutes the legal, valid, and binding obligation of the Contractor. 2228 11.3 AGREEMENT WILL NOT CAUSE BREACH
2229 To the best of Contractor’s and City’s knowledge after reasonable investigation, the execution or delivery 2230 of this Agreement or the performance by either Party of their obligations hereunder does not conflict 2231 with, violate, or result in a breach: (i) of any Applicable Law; or, (ii) any term or condition of any judgment, 2232 order, or decree of any court, administrative agency or other governmental authority, or any agreement 2233 or instrument to which Contractor or City is a party or by which Contractor or any of its properties or 2234 assets are bound, or constitutes a default hereunder. 2235 11.4 NO LITIGATION
2236 To the best of Contractor’s and City’s knowledge after reasonable investigation, there is no action, suit, 2237 proceeding or investigation, at law or in equity, before or by any court or governmental authority, 2238 commission, board, agency or instrumentality decided, pending or threatened against either Party 2239 wherein an unfavorable decision, ruling or finding, in any single case or in the aggregate, would:
2240 A. Materially adversely affect the performance by Party of its obligations hereunder; 2241 B. Adversely affect the validity or enforceability of this Agreement; or, 2242 C. Have a material adverse effect on the financial condition of Contractor, or any surety or entity 2243 guaranteeing Contractor's performance under this Agreement. 2244 11.5 NO ADVERSE JUDICIAL DECISIONS
2245 To the best of Contractor’s and City’s knowledge after reasonable investigation, there is no judicial 2246 decision that would prohibit this Agreement or subject this Agreement to legal challenge. 2247 11.6 NO LEGAL PROHIBITION
2248 To the best of each Party’s knowledge, after reasonable investigation, there is no Applicable Law in effect 2249 on the date that Party signed this Agreement that would prohibit the performance of either their 2250 obligations under this Agreement and the transactions contemplated hereby. 72

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2251 11.7 CONTRACTOR’S ABILITY TO PERFORM
2252 Contractor possesses the business, professional, and technical expertise to perform all services, 2253 obligations, and duties as described in and required by this Agreement including all Exhibits thereto. 2254 Contractor possesses the ability to secure equipment, facility, and employee resources required to 2255 perform its obligations under this Agreement.
2256 ARTICLE 12.
2257 OTHER AGREEMENTS OF THE PARTIES
2258 12.1 RELATIONSHIP OF PARTIES
2259 The Parties intend that Contractor shall perform the services required by this Agreement as an 2260 independent Contractor engaged by City and neither as an officer nor employee of City, nor as a partner 2261 or agent of, or joint venture with, City. No employee or agent of Contractor shall be, or shall be deemed 2262 to be, an employee or agent of City. Contractor shall have the exclusive control over the manner and 2263 means of performing services under this Agreement, except as expressly provided herein. Contractor shall 2264 be solely responsible for the acts and omissions of its officers, employees, Subcontractors and agents. 2265 Neither Contractor nor its officers, employees, Subcontractors, and agents shall obtain any rights to 2266 retirement benefits, workers’ compensation benefits, or any other benefits which accrue to City 2267 employees by virtue of their employment with City. 2268 12.2 COMPLIANCE WITH LAW
2269 Contractor shall at all times, at its sole cost, comply with all Applicable Laws. 2270 12.3 GOVERNING LAW
2271 This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the 2272 State.
2273 12.4 JURISDICTION
2274 Any lawsuits, at law or in equity, between the Parties arising out of this Agreement shall be filed in a court 2275 of competent jurisdiction in the County. With respect to venue, the Parties agree that this Agreement is 2276 made in and will be performed in the County. The Parties waive all provisions of law providing for a change 2277 of venue in these proceedings to any other county. 2278 12.5 BINDING ON SUCCESSORS
2279 The provisions of this Agreement shall inure to the benefit to and be binding on the successors and 2280 permitted assigns of the Parties.
2281 12.6 ASSIGNMENT
2282 Neither Party shall assign its rights nor delegate or otherwise transfer its obligations under this Agreement 2283 to any other Person without the prior written consent of the other Party. Any such assignment made 2284 without the consent of the other Party shall be void and the attempted assignment shall constitute a 2285 material breach of this Agreement.
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2286 For purposes of this Section, “assignment” shall include, but not be limited to: (i) a sale, exchange or other 2287 transfer of substantially all of Contractor's local, regional, and/or corporate assets dedicated to service 2288 under this Agreement to a third party; (ii) a sale, exchange or other transfer of ten (10) percent or more 2289 of the local, regional, and/or corporate assets, stock, or ownership of Contractor to a Person (other than 2290 a transfer of shares in Contractor by the owner of such shares to Contractor, to adult members of his or 2291 her family who are competent to do business, to a trust for the benefit of members of his or her family, 2292 or to another owner of shares in Contractor) except that no cumulative sale, exchange, or transfer of 2293 shares may exceed twenty percent (20%) during the Term of the Agreement (other than a transfer of 2294 shares in Contractor by the owner of such shares to Contractor, to adult members of his or her family who 2295 are competent to do business, to a trust for the benefit of members of his or her family, or to another 2296 owner of shares in Contractor); (iii) any reorganization, consolidation, merger, recapitalization, stock 2297 issuance or re-issuance, voting trust, pooling agreement, escrow arrangement, liquidation or other 2298 transaction to which Contractor or any of its shareholders is a party which results in a change of ownership 2299 or control of ten percent(10%) or more of the value or voting rights in the local, regional, and/or corporate 2300 stock of Contractor (excluding as the result of changes in ownership or control between an owner of 2301 shares in Contractor and adult members of his or her family who are competent to do business or a trust 2302 for the benefit of members his or her family); (iv) divestiture of an Affiliate (e.g., trucking company, 2303 materials recovery facility, transfer station, etc.) used by Contractor to fulfill its obligations under this 2304 Agreement; and, (v) any combination of the foregoing (whether or not in related or contemporaneous 2305 transactions) which has the effect of any such transfer or change of local, regional, and/or corporate 2306 ownership and/or control of Contractor. For purposes of this Section, the term “proposed assignee” shall 2307 refer to the proposed transferee(s) or other successor(s) in interest pursuant to the assignment. For 2308 purposes of this Section, the term “owner” shall mean the Person with legal title to shares of Contractor 2309 and “family” shall mean the parents, children, spouses, and siblings, excluding brothers-in-law and sisters2310 in-law of any owner that is a natural person. 2311 Contractor acknowledges that this Agreement involves rendering a vital service to City's residents and 2312 businesses, and that City has selected Contractor to perform the services specified herein based on: (i) 2313 Contractor's experience, skill, and reputation for conducting its Recyclable Materials, Organic Materials, 2314 and Solid Waste management operations in a safe, effective, and responsible fashion, at all times in 2315 keeping with applicable waste management laws, regulations, and good waste management practices; 2316 and, (ii) Contractor's financial resources on a local, regional, and/or corporate level to maintain the 2317 required equipment and to support its indemnity obligations to City under this Agreement. City has relied 2318 on each of these factors, among others, in choosing Contractor to perform the services to be rendered by 2319 Contractor under this Agreement.
2320 If Contractor requests City’s consideration of and consent to an assignment, City may deny or approve 2321 such request in its sole discretion at a regularly scheduled meeting of the City Council. No request by 2322 Contractor for consent to an assignment need be considered by City unless and until Contractor has met 2323 requirements A – E below. The City may, in its sole discretion, waive one (1) or more of the following 2324 requirements:
2325 A. On the date the City approves Contractor’s written request for the City’s written consent of an 2326 assignment and the assignment closes, Contractor shall pay the City a Transfer fee in the amount 2327 of one percent (1%) of the Gross Receipts for the most-recently completed Rate Period. 2328 B. Contractor shall pay City its actual expenses for attorneys’, consultants’, accountants’ fees, staff 2329 time, and investigation costs necessary to investigate the suitability of any proposed assignee, 74

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2330 and to review and finalize any document required as a condition for approving any such 2331 assignment. Such payment shall be required regardless of the ultimate determination of the City 2332 regarding the approval or denial of the assignment. Upon submittal of Contractor’s request for 2333 assignment to City, Contractor shall submit an initial deposit of thirty thousand dollars ($30,000) 2334 for this purpose.
2335 C. Contractor shall furnish City with reviewed financial statements of the proposed assignee's 2336 operations for the immediately preceding three (3) operating years. 2337 D. Contractor shall furnish City with satisfactory proof: (i) that the proposed assignee has at least ten 2338 (10) years of Recyclable Materials, Organic Materials, and Solid Waste management experience 2339 on a scale equal to or exceeding the scale of operations conducted by Contractor under this 2340 Agreement; (ii) that in the last five (5) years, the proposed assignee has not suffered any citations 2341 or other censure from any Federal, State or local contractor having jurisdiction over its waste 2342 management operations due to any significant failure to comply with State, Federal or local waste 2343 management laws and that the assignee has provided the City with a complete list of such 2344 citations and censures; (iii) that the proposed assignee has at all times conducted its operations 2345 in an environmentally safe and conscientious fashion; (iv) that the proposed assignee conducts its 2346 operations and management practices in accordance with sound waste management practices in 2347 full compliance with all Federal, State, and local laws regulating the Collection, Transportation, 2348 Processing and Disposal of Recyclable Materials, Organic Materials, and Solid Waste including 2349 Hazardous Waste; and, (v) that any other information required by City demonstrates that the 2350 proposed assignee can fulfill the terms of this Agreement in a timely, safe and effective manner. 2351 E. Contractor shall provide the City with any and all additional records or documentation which, in 2352 the City Contract Manager’s sole determination, would facilitate the City’s review of the proposed 2353 assignment.
2354 Under no circumstances shall any proposed assignment be considered by City if Contractor is in default at 2355 any time during the period of consideration. If, in the City Contract Manager’s sole determination, there 2356 is any doubt regarding the compliance of the Contractor with the Agreement, City Contract Manager may 2357 require an audit of the Contractor’s compliance and the costs of such audit shall be paid by Contractor in 2358 advance of the performance of said audit.
2359 12.7 NO THIRD-PARTY BENEFICIARIES
2360 This Agreement is not intended to, and will not be construed to, create any right on the part of any third 2361 party to bring an action to enforce any of its terms. 2362 12.8 WAIVER
2363 The waiver by either Party of any breach or violation of any provisions of this Agreement shall not be 2364 deemed to be a waiver of any breach or violation of any other provision nor of any subsequent breach of 2365 violation of the same or any other provision. The subsequent acceptance by either Party of any monies 2366 which become due hereunder shall not be deemed to be a waiver of any pre-existing or concurrent breach 2367 or violation by the other Party of any provision of this Agreement. 75

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2368 12.9 NOTICE PROCEDURES
2369 All notices, demands, requests, proposals, approvals, consents, and other communications, which this 2370 Agreement requires, authorizes or contemplates, shall be in writing and shall either be personally 2371 delivered to a representative of the Parties at the address below or deposited in the United States mail, 2372 first class postage prepaid, addressed as follows:
2373 If to City:
2374 City of South Lake Tahoe
2375 Attn: City Manager
2376 1901 Lisa Maloff Way
2377 South Lake Tahoe, CA 96150
2378
2379 With a copy to:
2380 City of South Lake Tahoe
2381 Attn: City Attorney
2382 1901 Lisa Maloff Way, Suite 300
2383 South Lake Tahoe, CA 96150
2384 If to Contractor:
2385 South Tahoe Refuse Co.
2386 Attn: Jeffery R. Tillman, CEO
2387 2140 Ruth Avenue
2388 South Lake Tahoe, CA 96150
2389
2390 With a copy to:
2391 David Cohen, Esq.
2392 Cohen & Ostler, APC
2393 455 N. Whisman Road, Suite 100
2394 Mountain View, CA 94043
2395
2396 The address to which communications may be delivered may be changed from time to time by a notice 2397 given in accordance with this Section. Notice shall be deemed given on the day it is personally delivered 2398 or, if mailed, three (3) calendar days from the date it is deposited in the mail. Either Party may choose to 2399 provide email notification to the other Party that notice has been deposited in the mail, however such 2400 email notification shall not constitute official notice. 2401 12.10 REPRESENTATIVES OF THE PARTIES
2402 References in this Agreement to the “City” shall mean the City’s elected body and all actions to be taken 2403 by City except as otherwise provided in this Section 12.10. Each reference to an act performed by, or 2404 obligation of the City Contract Manager in this Agreement is itself a delegation of authority from the City. 2405 The City may delegate, in writing, further authority to the City Contract Manager and/or to other City 2406 officials and may permit such officials, in turn, to delegate in writing some or all of such authority to 76

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2407 subordinate officers. The Contractor may rely upon actions taken by such delegates if they are within the 2408 scope of the authority properly delegated to them. 2409 The Contractor shall, by the Effective Date, designate in writing a responsible officer who shall serve as 2410 the representative of the Contractor in all matters related to the Agreement and shall inform City in 2411 writing of such designation and of any limitations upon his or her authority to bind the Contractor. City 2412 may rely upon action taken by such designated representative as actions of the Contractor unless they 2413 are outside the scope of the authority delegated to him/her by the Contractor as communicated to City. 2414 ARTICLE 13.
2415 MISCELLANEOUS AGREEMENTS
2416 13.1 ENTIRE AGREEMENT
2417 This Agreement is the entire agreement between the Parties with respect to the subject matter hereof 2418 and supersedes all prior and contemporaneous oral and written agreements and discussions. Each Party 2419 has cooperated in the drafting and preparation of this Agreement and this Agreement shall not be 2420 construed against any Party on the basis of drafting. This Agreement may be amended only by an 2421 agreement in writing, signed by each of the Parties hereto. 2422 13.2 SECTION HEADINGS
2423 The article headings and section headings in this Agreement are for convenience of reference only and 2424 are not intended to be used in the construction of this Agreement nor to alter or affect any of its 2425 provisions.
2426 13.3 REFERENCES TO LAWS
2427 All references in this Agreement to laws and regulations shall be understood to include such laws as they 2428 may be subsequently amended or recodified, unless otherwise specifically provided herein. 2429 13.4 AMENDMENTS
2430 This Agreement may not be modified or amended in any respect except in writing signed by the Parties. 2431 13.5 SEVERABILITY
2432 If any non-material provision of this Agreement is for any reason deemed to be invalid and unenforceable, 2433 the invalidity or unenforceability of such provision shall not affect any of the remaining provisions of this 2434 Agreement, which shall be enforced as if such invalid or unenforceable provision had not been contained 2435 herein.
2436 13.6 COUNTERPARTS
2437 This Agreement may be executed in counterparts, each of which shall be considered an original. 2438 13.7 EXHIBITS
2439 Each of the Exhibits identified as Exhibit “A” through “I” is attached hereto and incorporated herein and 77

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2440 made a part hereof by this reference. Except as described in Section 8.1 related to Exhibit G2, in the event 2441 of a conflict between the terms of this Agreement and the terms of an Exhibit, the terms of this Agreement 2442 shall control.
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2443 IN WITNESS WHEREOF, this Agreement is entered by the Parties hereto in El Dorado County, California on 2444 the day and year first above written.

City of South Lake Tahoe
A Municipal Corporation “CITY”
“CONTRACTOR”
Cristi Creegan
Mayor
Signature Date
Print Name of Signatory
Title of Signatory
Signature Date
Print Name of Signatory
Title of Signatory
APPROVED AS TO FORM:

Heather L. Stroud Date
City Attorney
City Business License #
Resolution Number XXXX-XXX
ATTEST: Approved by City Council
Susan Blankenship Date
City Clerk
2445
79 EXHIBIT A

DEFINITIONS
80 FRANCHISE EXHIBITS
EXHIBIT A: DEFINITIONS
81 EXHIBIT A DEFINITIONS
For purposes of this Agreement, unless a different meaning is clearly required, the following words and phrases shall have the following meanings respectively ascribed to them by this Exhibit and shall be capitalized throughout this Agreement:
“Abandoned Waste” means Recyclable Materials, Organic Materials, Solid Waste, C&D, Excluded Waste, Bulky Items, or other materials which have been abandoned, littered, or illegally dumped in the public right of way or on public or City property.
“AB 1826” means the Organic Waste Recycling Act of 2014 (Chapter 727, Statutes of 2014 modifying Division 30 of the California Public Resources Code), also commonly referred to as "AB 1826," as amended, supplemented, superseded, and replaced from time to time. “AB 341” means the California Jobs and Recycling Act of 2011 (Chapter 476, Statues of 2011 [Chesbro, AB 341]), also commonly referred to as “AB 341”, as amended, supplemented, superseded, and replaced from time to time.
“AB 939” means the California Integrated Waste Management Act of 1989 (Division 30 of the California Public Resources Code), also commonly referred to as "AB 939," as amended, supplemented, superseded, and replaced from time to time.
“Affiliate” means any Person that is directly or indirectly related to Contractor by virtue of direct or indirect Ownership interest or common management. Any such Person shall be deemed to be “Affiliated with” Contractor and included within the term “Affiliate” as used herein, except Affiliates shall be limited to those Persons which are directly or indirectly involved in the provision of service under this Agreement. An Affiliate shall include: (i) a Person in which Contractor has a direct or indirect Ownership interest; (ii) a Person which has a direct or indirect ownership interest in Contractor: and/or (iii) a Person who is also Owned, controlled, or managed by any Person which has a direct or indirect Ownership interest in Contractor. For purposes of this definition, “Ownership” means ownership as defined in the constructive ownership provisions of Section 318(a) of the Internal Revenue Code of 1986, as in effect on the date this Agreement is executed. For the purpose of determining Ownership under this paragraph and constructive or indirect ownership under Section 318(a), ownership interests of less than fifty percent (50%) shall be disregarded, and percentage interests shall be determined on the basis of the percentage of voting interest or value which the ownership interest represents. “Agreement” means this Agreement between City and Contractor, including all exhibits, and any future amendments hereto.
“Animal-Resistant” means a Cart equipped with a locking lid that is intended, but not guaranteed, to prevent tampering by bears and other animals.
“Applicable Law” means all Federal, State, County, and local laws, regulations, rules, orders, judgments, degrees, permits, approvals, or other requirement of any governmental agency having jurisdiction over the Collection, Transportation, and Processing of Recyclable Materials, Organic Materials, and Solid Waste that are in force on the Effective Date and as may be enacted, issued or amended during the Term of this Agreement. Applicable Law includes, but is in no way limited to, AB 939, AB 341, AB 1826, and SB 1383.
82 “Approved Disposal Facility” means any of the Approved Disposal Facilities set forth in Exhibit H. “Approved Facility(ies)” means any one of or any combination of the: Approved Recovery Facilities; Approved Organic and Recycling Materials Processing Facilities; and/or Approved Disposal Facilities. The current Approved Facilities are set forth in Exhibit H to the Agreement. “Approved Processing Facility(ies)” means any one of or any combination of the Approved Recyclable Materials Processing Facilities or Approved Organic Materials Processing Facilities. “Approved Recovery Facility” means any of the Approved Recovery Facilities set forth in Exhibit H. “Bear Box” means a metal container used at a Residential property which is intended to store Solid Waste, Recyclable Materials, and/or Organic Materials until Collection day, and which includes a locking mechanism to prevent bear access.
“Bin” means a Container with a hinged and tight-fitting lid and wheels designed or intended to be mechanically serviced by a commercial Collection vehicle. It shall be designed to hold from one (1) to (6) cubic yards of material with the lid properly closed. Temporary Bins may be open topped. "Bulky Items" means discarded household appliances furniture, tires, carpets, mattresses, bundled and tied Yard Trimmings and/or wood waste, and similar large items which can be handled by two (2) people, weigh no more than one hundred fifty (150) pounds, and require special Collection due to their size or nature, but can be Collected without the assistance of special loading equipment (such as forklifts or cranes) and without violating vehicle load limits. Bulky Items must be generated by the Customer and at the service address wherein the Bulky Items are Collected. Bulky Items do not include refrigerators, Ewaste, freon-containing appliances, abandoned automobiles, large auto parts, hot tubs, trees, Construction and Demolition Debris, or items herein defined as Excluded Waste. “Business Days” mean days during which the City offices are open to do business with the public. “California Code of Regulations (CCR)” means the State of California Code of Regulations. CCR references in this Agreement are preceded with a number that refers to the relevant Title of the CCR (e.g., “14 CCR” refers to Title 14 of CCR).
“CalRecycle” means California's Department of Resources Recycling and Recovery and any successor agency.
“Cardboard” means a thin, stiff pasteboard made of paper pulp, used for making cartons, signs, and boxes. Cardboard is a subset of Recyclable Materials.
“Cart” means a plastic Container with a hinged and tight-fitting lid and wheels that is serviced by an automated or Semi-Automated Collection vehicle. A Cart has capacity of at least 20 and not more than 95 gallons and is provided by Contractor, approved by the City, and used by Customers for Collection, accumulation, and removal of Solid Waste, Recyclable Materials, and Organic Materials from Commercial or Residential premises in connection with Collection Services. “City” means the City of South Lake Tahoe, a municipal corporation, and all the territory lying within its boundaries as presently existing or as such boundaries may be modified during the Term of this Agreement.
83 “City Council” means the duly elected representative council, or its successor municipal governing body, of the City.
“City Contract Manager” means the City Manager, who is responsible for the administrative management of this Agreement, or their designee.
“City Fees” means all fees payable to the City, identified and referenced in Article 7 of this Agreement. “Change in Law” means any of the following events or conditions that has a material and adverse effect on the performance by either Party or any Subcontractor of its respective obligations under this Agreement (except for payment obligations) or on the activities of any Approved Facility in connection with this Agreement:
a. The enactment, adoption, promulgation, issuance, modification, or written change in administrative or judicial interpretation, of any Applicable Law on or after the Effective Date; or b. The order or judgment of any governmental body, on or after the Effective Date, to the extent such order or judgment is not the result of willful or negligent action, error or omission or lack of reasonable diligence of City or of Contractor (or Subcontractor), whichever is asserting the occurrence of a Change in Law; provided, however, that the contesting in good faith or the failure in good faith to contest any such order or judgment shall not constitute or be construed as such a willful or negligent action, error or omission or lack of reasonable diligence. “Collect” or “Collection” (or any variation thereof) means the act of taking possession of Recyclable Materials, Organic Materials, Solid Waste, Bulky Items, and other material at the place of generation in City.
“Commencement Date” means the date specified in Section 2.1 when the Term of the Agreement begins.
“Commercial” shall mean of, from, or pertaining to non-Residential Premises where business activity is conducted, including, but not limited to, retail sales, services, wholesale operations, manufacturing, and industrial operations, but excluding businesses conducted upon Residential property which are permitted under applicable zoning regulations and are not the primary use of the property. “Commercial Premises” means that portion of any building or other Premises which is not Residential. “Commercial Edible Food Generator” includes Tier One Commercial Edible Food Generators and Tier Two Commercial Edible Food Generators, or as otherwise defined in 14 CCR Section 18982(a)(7). For the purposes of this definition, Food Recovery Organizations and Food Recovery Services are not Commercial Edible Food Generators, or as otherwise specified by 14 CCR Section 18982(a)(7). “Community Composting” means any activity that Composts green material, agricultural material, food material, and vegetative food material, alone or in combination, and the total amount of feedstock and Compost on-site at any one time does not exceed one hundred (100) cubic yards and seven hundred fifty (750) square feet, as specified in 14 CCR Section 6 17855(a)(4); or as otherwise defined in 14 CCR Section 18982(a)(8).
“Compactor” means any Container which has a compaction mechanism, whether stationary or mobile.

Compactors are most typically roll-off Containers but may also be Bins. 84 “Complaint” shall mean each written or orally communicated statement made by any Person, whether to City or Contractor, alleging: (1) non-performance, or deficiencies in Contractor’s performance, of its duties under this Agreement; (2) a violation by Contractor of this Agreement; or, (3) an SB 1383 NonCompliance Complaint. “Composting” or “Compost” (or any variation thereof) includes a controlled biological decomposition of Organic Materials yielding a safe and nuisance free Compost product. “Construction and Demolition Debris (C&D)” means materials generated by or resulting from construction or demolition-related activities, including building, construction, deconstruction, demolition, excavation, grading, improvement, land clearing, reconstruction, remodeling, and renovation, such as discarded building materials, packaging, debris, and rubble resulting from construction, alteration, remodeling, repair, or demolition operations on any pavements, excavation projects, houses, Commercial buildings, or other structures, excluding Excluded Waste. Construction and Demolition Debris includes rocks, soils, tree remains, and other Yard Trimmings which result from land clearing or land development operations in preparation for construction. “Container(s)” mean Bins, Carts, Compactors, Customer Owned Containers, and Drop Boxes. “Contamination” means the presence of Prohibited Container Contaminants in a Container. “Contamination Processing Fee Notice” means the notice as described in Section 4.10.1.E. “Contractor” means South Tahoe Refuse Co., organized and operating under the laws of the State through its officers, directors, employees, agents, Affiliates, and Subcontractors. “Contractor’s Compensation” means the monetary compensation received by Contractor in return for providing services in accordance with this Agreement as described in Article 8. “Contractor’s Contract Administrator” means the President of Contractor, who is authorized by Contractor as described by Section 5.7.E.1.
“Contractor’s Proposal” means the proposal submitted to City by Contractor for provision of Recyclable Materials, Organic Materials, and Solid Waste Collection and Processing services and certain supplemental written materials, which are included as Exhibit B to this Agreement and are incorporated by reference.
“County” means the County of El Dorado, a political subdivision of the State of California. “Courtesy Pick-Up Notice” means the Contractor’s notice to Customer(s) as described in Section

4.10.1.C.
“Criminal Activity” means the approval of a plea of nolo contendere or the entry against Contractor or any of its employees of a criminal conviction, or a permanent mandatory or prohibitory injunction from a court, municipality, or regulatory agency of competent jurisdiction, based, in the case of Contractor’s employees, on acts taken in their official capacity on behalf of Contractor, with respect to:
a. Fraud or criminal offense in connection with obtaining, attempting to obtain, procuring, or performing a public or private agreement;
85 b. Bribery or attempting to bribe a public officer or employee of a local, State, or Federal agency;
c. Embezzlement, extortion, racketeering, false claims, false statements, forgery, falsification or destruction of records, obstruction of justice, knowingly receiving stolen property, theft, or misprision (failure to disclose) of a felony;
d. Unlawful disposal of Hazardous Waste or Designated Waste, the occurrence of which any Contractor Party knew or should have known;
e. Violation of antitrust laws, including laws related to price-fixing, bid-rigging, and sales and market allocation, and of unfair and anti-competitive trade practice laws, including with respect to inflation of Solid Waste Collection, Transportation, Processing fees, or Disposal Fees;
f. Violation of securities laws; or
g. Felonies or misdemeanors involving moral turpitude.
“Curb” or “Curbside” means as near but in no event more than five (5) feet from the property line that abuts a paved public street or, in the event the property does not abut a paved public street, where the property abuts a public street, alley, right-of-way or easement and, in the case of a Commercial location, in the service alley of a Commercial or institutional entity. “Customer” means the Owner or Occupant who is billed by Contractor at any Premises at which Solid Waste, Recyclable Materials, and Organic Waste are generated and collected by Contractor. “Customer Account Information Database” means the Customer Account Information Database as identified in Section 4.7 that shall be developed, maintained, and monitored in accordance with the requirements of this Agreement.
“Customer Owned Container” means a 20-32 gallon plastic can owned by a Customer and used for the Collection of additional Recyclable Materials or Organic Materials. “Customer Type” means the Customer’s sector category including, but not limited to, Single-Family Residential, Multi-Family, Commercial, and City.
“Designated Waste” means non-Hazardous Waste which may pose special Disposal problems because of its potential to contaminate the environment and which may be Disposed of only in Class II Disposal sites or Class III Disposal sites pursuant to a variance issued by the California Department of Health Services. Designated Waste consists of those substances classified as Designated Waste by the State, in California Code of Regulations Title 23, Section 2522 as may be amended from time to time. “Divert” or “Diversion” (or any variation thereof) means to prevent Discarded Materials from Disposal at landfill or transformation facilities, (including facilities using incineration, pyrolysis, distillation, gasification, or biological conversion methods) through source reduction, reuse, Recycling, Composting, anaerobic digestion or other method of Processing, subsequent to the provisions of AB 939. Diversion is a broad concept that is to be inclusive of material handling and Processing changes that may occur over the Term including, but not limited to, changes in standard industry practice or implementation of innovative (but not necessarily fully proven) techniques or technology that reduce Disposal risk, decrease costs and/or are for other reasons deemed desirable by the City. “Diversion Coordinator” means the individual authorized by Contractor as described by Section 5.7.E.3. 86 “Discarded Materials” means Recyclable Materials, Organic Materials, and Solid Waste placed by a Generator in a receptacle and/or at a location for the purposes of Collection by Contractor, excluding Excluded Waste.
“Disposal” or “Dispose” (or any variation thereof) means the final disposition of Solid Waste, or Processing Residue at a Disposal Facility. “Disposal Facility” means a landfill, or other facility for ultimate Disposal of Solid Waste.
“Drop Box” means an open-top or closed top Container with a capacity of ten (10) to forty (40) cubic yards that is serviced by a roll-off Collection vehicle. “Dwelling Unit” means any individual living unit in a: Single-Family Residential dwelling (SFD) or MultiFamily Residential dwelling (MFD) structure or building, a mobile home, or a motor home located on a permanent site intended for, or capable of being utilized for, Residential living, including a Single Room Occupancy.
“Edible Food” means food intended for human consumption. For the purposes of this Agreement, Edible Food is not Solid Waste if it is recovered and not discarded. Nothing in this Agreement requires or authorizes the recovery of Edible Food that does not meet the food safety requirements of the California Retail Food Code. If the definition in 14 CCR Section 18982(a)(18) for Edible Food differs from this definition, the definition in 14 CCR Section 18982(a)(18) shall apply to this Agreement. “Effective Date” means the date on which the latter of the two Parties signs this Agreement. “Excluded Waste” means Hazardous Substance, Hazardous Waste, Infectious Waste, Designated Waste, volatile, corrosive, biomedical, infectious, biohazardous, and toxic substances or material, waste that Contractor reasonably believes would, as a result of or upon Disposal, be a violation of local, State or Federal law, regulation or ordinance, including land use restrictions or conditions, waste that cannot be Disposed of in Class III landfills, waste that in Contractor’s reasonable opinion would present a significant risk to human health or the environment, cause a nuisance or otherwise create or expose Contractor or City to potential liability; but not including de minimis volumes or concentrations of waste of a type and amount normally found in Residential Solid Waste after implementation of programs for the safe Collection, Recycling, treatment, and Disposal of batteries and paint in compliance with Sections 41500 and 41802 of the California Public Resources Code. Excluded Waste does not include Used Motor Oil and Filters, or household batteries when properly placed for Collection by Contractor as set forth in this Agreement.
“Electronic Waste” or “E-Waste" means discarded electronic equipment including, but not limited to, televisions, computer monitors, central processing units (CPUs), laptop computers, computer peripherals (including external hard drives, keyboards, scanners, and mice), printers, copiers, facsimile machines, radios, stereos, stereo speakers, VCRs, DVDs, camcorders, microwaves, telephones, cellular telephones, and other electronic devices. Some E-Waste or components thereof may be Hazardous Waste or include Hazardous Substances and thus require special handling, Processing, or Disposal. “Field Supervisor” means the Field Supervisor of Contractor, who is the individual authorized by Contractor as described by Section 5.7.E.2.
“Federal” means belonging to or pertaining to the Federal government of the United States. 87 “Flow Control” means City right to direct Discarded Materials to a facility of the City’s choosing. “Food Recovery” means actions to Collect and distribute food for human consumption which otherwise would be Disposed, or as otherwise defined in 14 CCR Section 18982(a)(24). “Food Recovery Organization” means an entity that primarily engages in the Collection or receipt of Edible Food from Commercial Edible Food Generators and distributes that Edible Food to the public for Food Recovery either directly or through other entities, including, but not limited to: A. A food bank as defined in Section 113783 of the Health and Safety Code; B. A nonprofit charitable organization as defined in Section 113841 of the Health and Safety code; and, C. A nonprofit charitable temporary food facility as defined in Section 113842 of the Health and Safety Code. If the definition in 14 CCR Section 18982(a)(25) for Food Recovery Organization differs from this definition, the definition in 14 CCR Section 18982(a)(25) shall apply to this Agreement.
“Food Recovery Service” means a Person or entity that Collects and Transports Edible Food from a Commercial Edible Food Generator to a Food Recovery Organization or other entities for Food Recovery; or as otherwise defined in 14 CCR Section 18982(a)(26). “Food Scraps" means those Discarded Materials that will decompose and/or putrefy including: (i) all kitchen and table Food Waste; (ii) animal or vegetable waste that is generated during or results from the storage, preparation, cooking or handling of food stuffs; (iii) fruit waste, grain waste, dairy waste, meat, and fish waste; and, (iv) vegetable trimmings, houseplant trimmings and other Compostable Organic Waste common to the occupancy of Residential dwellings. Food Scraps are a subset of Food Waste. “Food-Soiled Paper” means Compostable paper material that has come in contact with Food Scraps or liquid, such as, but not limited to, Compostable paper plates, paper coffee cups, napkins, pizza boxes, and milk cartons.
“Food Waste” means Source Separated Food Scraps. Food Waste is a subset of Organic Materials. “Generator” means any Person whose act or process produces Discarded Materials as defined in the Public Resources Code, or whose act first causes Discarded Materials to become subject to regulation. “Franchise Fee” means the fee paid by Contractor to the City as described in Section 7.1. “Gross Receipts” shall mean total cash receipts collected from Customers by the Contractor for the provision of services pursuant to this Agreement, without any deductions. Gross Receipts do not include revenues from the sale of Recyclable Materials or Organic Materials. “Hazardous Substance” means any of the following: (a) any substances defined, regulated or listed (directly or by reference) as "Hazardous Substances", "hazardous materials", "Hazardous Wastes", "toxic waste", "pollutant", or "toxic substances", or similarly identified as hazardous to human health or the environment, in or pursuant to: (i) the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) of 1980, 42 USC §9601 et seq. (CERCLA); (ii) the Hazardous Materials Transportation Act, 49 USC §1802, et seq.; (iii) the Resource Conservation and Recovery Act, 42 USC §6901 et seq.; (iv) the Clean Water Act, 33 USC §1251 et seq.; (v) California Health and Safety Code §§25115-25117, 25249.8, 25281, and 25316; (vi) the Clean Air Act, 42 USC §7901 et seq.; and, (vii) California Water Code §13050; (b) any amendments, rules or regulations promulgated thereunder to such enumerated statutes or acts currently existing or hereafter enacted; and, (c) any other hazardous 88 or toxic substance, material, chemical, waste or pollutant identified as hazardous or toxic or regulated under any other Applicable Law currently existing or hereinafter enacted, including, without limitation, friable asbestos, polychlorinated biphenyl’s (PCBs), petroleum, natural gas, and synthetic fuel products, and by-products. “Hazardous Waste” means all substances defined as Hazardous Waste, acutely Hazardous Waste, or extremely Hazardous Waste by the State in Health and Safety Code §25110.02, §25115, and §25117 or in the future amendments to or recodifications of such statutes or identified and listed as Hazardous Waste by the U.S. Environmental Protection Agency (EPA), pursuant to the Federal Resource Conservation and Recovery Act (42 USC §6901 et seq.), all future amendments thereto, and all rules and regulations promulgated thereunder.
“High Elevation Waiver” means the exception from SB 1383’s residential Food Waste Collection requirements CalRecycle granted to the City, effective January 1, 2022. “Holidays” are defined as New Year’s Day, Thanksgiving Day, and Christmas Day. “Household Hazardous Waste” or “HHW” means Hazardous Waste generated at Residential Premises within the City and includes any substance or mixture that, if improperly handled, may be damaging to human health and well-being or a threat to the environment. HHW includes flammables, combustibles, poisons, toxics, oxidizers, corrosives, compressed gas, oil, antifreeze, explosives, and radioactive materials as well as any other hazardous waste as described in Health & Safety Code section 25117 and the Hazardous Waste Management Reform Act of 1995.
“Infectious Waste” means biomedical waste generated at hospitals, public or private medical clinics, dental offices, research laboratories, pharmaceutical industries, blood banks, mortuaries, veterinary facilities and other similar establishments that are identified in Health and Safety Code Section 25117.5 as may be amended from time to time.
“In-Home Recycling Container” refers to a small, easily portable tote bag with a capacity of at least three (3) gallons to be included by Contractor in the Multi-Family Move-in Kit to facilitate convenient accumulation of Recyclable Materials within a Multi-Family Dwelling Unit. “Liquidated Damages” means the amounts due by Contractor for failure to meet specific quantifiable standards of performance as described in Section 10.6 and Exhibit F. “Multi-Family” or “MFD” means any Residential Premises, other than a Single-Family Premises, with five (5) or more Dwelling Units used for Residential purposes (regardless of whether residence therein is temporary or permanent), including such Premises when combined in the same building with Commercial establishments, that receive centralized, shared, Collection service for all units on the Premises which are billed to one (1) Customer at one (1) address. Customers residing in Townhouses, mobile homes, condominiums, or other structures with five (5) or more Dwelling Units who receive individual service and are billed separately shall not be considered Multi-Family. “Mulch” means a layer of material applied on top of soil, and, for the purposes of the Agreement, Mulch shall conform with the following conditions, or conditions as otherwise specified in 14 CCR Section 18993.1(f)(4): A. Meets or exceeds the physical contamination, maximum metal concentration, and pathogen density standards for land applications specified in 14 CCR Section 17852(a)(24.5)(A)(1) through (3). B. Was produced at one or more of the following types of Facilities: 1. A Compostable material handling operation or facility as defined in 14 CCR Section 17852(a)(12), that is permitted or 89 authorized under Division 7 of Title 14 of the CCR, other than a chipping and grinding operation or facility as defined in 14 CCR Section 17852(a)(10); Guidance: Note that this criteria disallows Mulch produced from chipping and grinding operations to count toward fulfillment of a jurisdiction’s annual Organic Waste product procurement target; 2. A Transfer/Processing Facility or Transfer/Processing operation as defined in 14 CCR Section 17402(a)(30) and (31), respectively, that is permitted or authorized under 14 CCR, Division 7, Chapter 12; or, 3. A Solid Waste landfill as defined in PRC Section 40195.1 that is permitted under 27 CCR, Division 2.
“Non-Collection Notice” means the notice as described in Section 4.10.1.D. “Occupant” means the Person who occupies a Premises.
“Organic Materials” means Yard Trimmings and Food Waste, individually or collectively. No Discarded Material shall be considered to be Organic Materials, however, unless it is separated from Recyclable Material and Solid Waste. Organic Materials are a subset of Organic Waste. “Organic Waste” means wastes containing material originated from living organisms and their metabolic waste products including, but not limited to, food, Yard Trimmings, organic textiles and carpets, lumber, wood, paper products, printing and writing paper, manure, biosolids, digestate, and sludges, or as otherwise defined in 14 CCR Section 18982(a)(46). Biosolids and digestate are as defined in 14 CCR Section 18982(a)(4) and 14 CCR Section 18982(a)(16.5), respectively. “Owner” means the Person(s) holding legal title to real property and/or any improvements thereon, and shall include the Person(s) listed on the latest equalized assessment roll of the County Assessor. “Paper Garden Bags” means a paper bag approved by City which may be purchased by Residents from Contractor or elsewhere for the Collection of Organic Materials overages. “Party” or “Parties” refers to the City and Contractor, individually or together. “Person(s)” means any individual, firm, association, organization, partnership, consortium, corporation, trust, joint venture, Commercial entity, governmental entity, public entity, or any other legal person. “Premises” means any land or building in the City where Recyclable Materials, Organic Materials, or Solid Waste are generated or accumulated.
“Processing” or “Process” means to prepare, treat, or convert through some special method. “Processing Facility” means any plant or site used for the purpose of sorting, cleansing, treating or reconstituting Recyclable Materials, or Reusable Materials for the purpose of making such material available for Recycling or reuse or the facility for the Processing and/or Composting of Organic Materials.
“Prohibited Container Contaminants” means the following: (i) Discarded Materials placed in the Recyclable Materials Container that are not identified as acceptable Recyclable Materials for the City’s Collection program; (ii) Discarded Materials placed in the Organic Materials Container that are not identified as acceptable Organic Materials for the City’s Collection program; (iii) Discarded Materials placed in the Solid Waste Container that are acceptable Recyclable Materials and/or Organic Materials to be placed in the City’s Recyclable Materials or Organic Materials Containers or otherwise managed under the City’s Collection program; and, (iv) Excluded Waste placed in any Container. 90 “Proprietary Information” or “Proprietary” means that information provided by Contractor to the City which is protected from disclosure by the California Public Records Act and meets that definition of Proprietary Information. Nothing shall be considered Proprietary which is required to be submitted to the City in any report described in this Agreement. Contractor’s Customer lists for Customers served under this Agreement are specifically not considered Proprietary for the purposes of this Agreement, however, the City may protect such information from disclosure consistent with the provisions of the Public Records Act.
“Public Street” means all City-owned and maintained paved areas between the normal Curb line of a roadway, including public parking lots, roadway dividers, and medians. “Rate” means the maximum amount, expressed as a dollar unit, approved by the City that the Contractor may bill a Customer for providing services under this Agreement. A Rate will be established for each individual Service Level. The Rates approved by City are the maximum Rate that Contractor may charge a Customer and Contractor may, in its sole discretion, charge any amount up to and including the maximum Rate approved by the City.
“Rate Period” means a twelve (12) month period, commencing January 1 and concluding December 31. “Recyclable Materials” means materials which are reused or Processed or are in the future reused or Processed into a form suitable for reuse through reprocessing or remanufacture, consistent with the requirements of the Act. The term “Recyclable Material” includes paper newsprint, printed matter, pasteboard, paper containers, cardboard, glass, aluminum, PET, HDPE, and other, beverage containers, transformable and compostable materials, used motor oil, automotive batteries, antifreeze, latex paint, brick and stone in reusable size and condition, and such other material designated by the City or designated as recyclable by CalRecycle, or other agency with jurisdiction. “Recycle” or “Recycling” means the Process of sorting, cleansing, treating, and reconstituting at a Recyclable Materials Processing Facility materials that would otherwise be Disposed of at a landfill for the purpose of returning such materials to the economy in the form of raw materials for new, reused, or reconstituted products. Recycling includes Processes deemed to constitute a reduction of landfill Disposal pursuant to 14 CCR, Division 7, Chapter 12, Article 2. Recycling does not include gasification or transformation as defined in Public Resources Code Section 40201. “Residential” shall mean of, from, or pertaining to a Single-Family Premises or Multi-Family Premises including Single-Family homes, apartments, condominiums, Townhouse complexes, mobile home parks, cooperative apartments, and Single Room Occupancies.
“Residue” means those materials which, after Processing, are Disposed rather than Recycled due to either the lack of markets for materials or the inability of the Processing Facility to capture and recover the materials.
“Reusable Materials” means items that are capable of being used again after minimal Processing.

Reusable Materials may be Collected Source Separated or recovered through a Processing Facility. “SB 1383” means Senate Bill 1383 of 2016 approved by the Governor on September 19, 2016, which added Sections 39730.5, 39730.6, 39730.7, and 39730.8 to the Health and Safety Code, and added Chapter 13.1 (commencing with Section 42652) to Part 3 of Division 30 of the Public Resources Code, 91 establishing methane emissions reduction targets in a statewide effort to reduce emissions of shortlived climate pollutants as amended, supplemented, superseded, and replaced from time to time. For the purposes of this Agreement, SB 1383 specifically refers to the Short-Lived Climate Pollutants (SLCP):

Organic Waste Reductions regulations developed by CalRecycle and adopted on November 3, 2020 that created Chapter 12 of 14 CCR, Division 7 and amended portions of regulations of 14 CCR and 27 CCR. “Self-Hauler” means a Person who hauls Construction and Demolition Debris, Yard Waste, Edible Food or Food Scraps that such Person generates at the Person’s own Premises, with such Person’s own vehicle or equipment, to another Person in accordance with Section 1.2C. or 1.2D. of the Agreement, and “Self-Haul” means the process of such hauling by such Person to another Person. “Semi-Automated” Collection service means the use of Collection vehicles with automated tippers to empty Carts.
“Service Level” refers to the size of a Customer’s Container and the frequency of Collection service. “Service Opportunity” means each individual scheduled opportunity the Contractor has to Collect from a Container at a Customer’s location.
“Single-Family” or “SFD” means, notwithstanding any contrary definition in City Code, any detached or attached house or residence designed or used for occupancy by one (1) family, provided that Collection service feasibly can be provided to such Premises as an independent unit, and the Owner or Occupant of such independent unit is billed directly for the Collection service. Single-Family includes Townhouses, and each independent unit of duplex, tri-plex, or four-plex Residential structures, regardless of whether each unit is separately billed for their specific Service Level. “Single Room Occupancy” means any lodging property with five or more rooms which are (1) intended or designed to be used, or which are used, rented, or hired out, to be occupied, or which are occupied, for sleeping purposes by tenants, which is or may be the primary residence of such tenants, or (2) intended or designed to be used, or which are used, rented, or hired out, to be occupied, or which are occupied, for periods greater than twenty-nine (29) days. “Single-Stream” or “Single-Stream Recycling” means the Collection from a single Container of mixed Recyclable Materials in accordance with Exhibit B.
“Solid Waste” means Solid Waste as defined in California Public Resources Code, Division 30, Part 1, Chapter 2, §40191 and regulations promulgated hereunder. Excluded from the definition of Solid Waste are Excluded Waste, C&D, Source Separated Recyclable Materials, Source Separated Organic Materials, and radioactive waste. Notwithstanding any provision to the contrary, Solid Waste may include de minimis volumes or concentrations of waste of a type and amount normally found in Residential Solid Waste after implementation of programs for the safe Collection, Recycling, treatment, and Disposal of Household Hazardous Waste in compliance with Section 41500 and 41802 of the California Public Resources Code as may be amended from time to time. Solid Waste includes salvageable materials only when such materials are included for Collection in a Solid Waste Container not Source Separated from Solid Waste at the site of generation.
“Source Separated” means the segregation, by the Generator, of materials designated for separate Collection for some form of Recycling, Composting, recovery, or reuse. 92 “Specialty Recyclable Material” means material not specified in this Agreement that can be or will be Collected for purposes of Recycling. Such Specialty Recyclable Material may include, but is not limited to, scrap metal, high-grade paper (including office mixed paper), pallets, and plastic film. “Split-Bin” means a Bin that is split or divided into two (2) sections in order to segregate two (2) Source Separated Discarded Material types in one Container.
“State” means the State of California.
“Subcontractor” means a Party who has entered into a contract, express or implied, with the Contractor for the performance of an act that is necessary for, and directly related to, the Contractor’s fulfillment of its obligations for providing service under this Agreement. Notwithstanding any other provision of this Agreement, vendors providing services, materials, and/or supplies to Contractor that are not directly related to Contractor’s provision of services under this Agreement (such as office supplies, equipment parts, and paving services at Contractor’s facilities), professional service firms providing legal, accounting, and/or other consulting services to Contractor, and all subcontractors and Approved Facilities that are not owned or operated by Affiliates of Contractor, shall not be considered Subcontractors for any purpose under this Agreement. Exhibit H includes a list of all approved Subcontractors as of the date of execution of this Agreement. “Term” means the Term of this Agreement, including extension periods if granted, as provided for in Article 2.
“Temporary Bin” means a collection container of no less than six (6) cubic yards in capacity and no greater than forty (40) cubic yards in capacity for temporary collection of solid waste, recyclables, or organic materials.
“Tier One Commercial Edible Food Generator” means a supermarket with gross annual sales of $2,000,000 or more, a grocery store with a total facility size equal to or greater than 10,000 square feet, food service provider, food distributor, or wholesale food vendor, as defined in Section 18982(a) of Title 14 of the California Code of Regulations, which may be amended from time to time. “Tier Two Commercial Edible Food Generator” means a restaurant with 250 or more seats or a total facility size equal to or greater than 5,000 square feet, hotel with an on-site food facility and 200 or more rooms, health care facility with an on-site food facility and 100 or more beds, large venue, large event, state agency with a cafeteria with 250 or more seats or total facility size equal to or greater than 5,000 square feet, and local education agency with an on-site food facility, as defined in Section 18982(a) of Title 14 of the California Code of Regulations, which may be amended from time to time. “Ton” or “Tonnage” means a unit of measure for weight equivalent to two thousand (2,000) standard pounds where each pound contains sixteen (16) ounces.
“Townhouse” means an attached or semi-attached Single-Family Premises within a group of attached or semi-attached Single-Family Premises, regardless of whether the Premises is billed individually or through a central account (e.g. homeowner association, property manager), wherein each unit maintains individual Collection service subscription, as determined in writing by the City Contract Manager.
93 “Trade Secrets” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) derives actual independent economic value from not being generally known to the public or to other Persons who can obtain economic value from its disclosure or use; and, (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
“Transfer” means the act of transferring the materials Collected by Contractor in its route vehicles into larger vehicles for Transport to other facilities for the purpose of Recycling or Disposing of such materials.
“Transportation” or “Transport” means the act of conveying Collected materials from one location to another.
“Universal Waste” or “U-Waste” means all wastes as defined by Title 22, Subsections 66273.1 through 66273.9 of the California Code of Regulations. These include, but are not limited to, batteries, fluorescent light bulbs, mercury switches, and E-Waste. “Used Motor Oil and Filter” means used oil fluids for vehicles including motor oil, brake, transmission and hydraulic fluids, crankcase and differential oils, lubricating oils for vehicles, and oil filters from automobiles and light trucks.
“Used Oil Recovery Kit” means a kit containing: one (1) reusable plastic jug of at least one (1) gallon capacity with a leak-proof, watertight screw-on top to contain Used Motor Oil or used cooking oil; one (1) six (6) mil plastic Disposable resealable bag with double track seal of sufficient capacity to accommodate one (1) Used Motor Oil Filter; and, a flyer, brochure, or other informational media approved by the City intended to educate Customers about the Used Motor Oil and Filter Collection program and the benefits resulting from the proper handling of Used Motor Oil and Filters. The Used Oil Recovery Kit is to be provided to Customers by Contractor to recover Used Motor Oil and Filter, and used cooking oil from Single-Family and Townhouse residents. “Waste Reporting System” means an online/digital data system designated by Contractor for recording and documenting outreach, customer service, site visits, service levels, weights and volumes by waste stream, and field issues for compliance and reporting purposes. “Working Days” means days on which the Contractor is required to provide regularly scheduled Collection services under this Agreement.
“Yard Trimmings” means those Discarded Materials that will decompose and/or putrefy, including, but not limited to, green trimmings, grass, weeds, leaves, prunings, branches, dead plants, brush, tree trimmings, dead trees, small pieces of unpainted and untreated wood, and other types of Organic Materials resulting from normal yard and landscaping maintenance that may be specified in City Legislation for Collection and Processing as Organic Materials under this Agreement. Yard Trimmings does not include items herein defined as Excluded Waste. Yard Trimmings are a subset of Organic Materials. Yard Trimmings placed for Collection may not exceed six (6) inches in diameter and three (3) feet in length and must fit within the Contractor-provided Container. 94 “Zero Emission Vehicle” means a vehicle that produces no emissions of criteria pollutants, toxic air contaminants, and greenhouse gases when stationary or operating, as determined by the California Air Resources Board.
95 EXHIBIT B

SCOPE OF WORK FOR COLLECTION OPERATIONS
96 Exhibit B

SCOPE OF WORK FOR COLLECTION OPERATIONS
SECTION 1 - GENERAL REQUIREMENTS

1.1 General Requirements for Collec�on and Billing.

The Contractor shall Collect, Transport, and Dispose of all Solid Waste and shall collect and recycle marketable Recyclable Materials and Organic Materials which are placed for collec�on at Residen�al Premises, Commercial Premises and at City Facili�es and events at which the Solid Waste, Recyclable Materials and Organic Materials are generated. Organic Materials collected at Residen�al Premises are limited to Yard Trimmings in accordance with the High Evalua�on Waiver.

Contractor shall prepare bills for all Customers that clearly and accurately list Rates in effect at the �me services were provided or for the �me period in which services will be provided. Bills shall fully explain and display all calcula�ons of each charge. Such charges shall not exceed the Rates established by the City. Any disputes related to charges shall be resolved by City. Contractor shall submit to City, sixty (60) days prior to its use, a dra� of bill format(s) and a line-item descrip�on for each charge, together with an example of a completed bill for an individually serviced Residen�al Premises, a centrally billed Homeowners Associa�on and a Commercial Premises with compactor and recycling collec�on services, for review and approval. Contractor shall also, at the same �me as submital of the dra� above, submit a dra� of a conveniently sized lis�ng of services and maximum Rates in effect that may be distributed to, and retained for reference by, all Customers.

1.2 Changes in Collec�on Services.

Contractor shall be responsible for: (A) establishing services for new Customers and (B) stopping services and preparing a final billing on a pro rata basis for a Customer permanently discon�nuing service.

Contractor shall, for approval of City, develop a procedure and confirma�on form to document requests for commencement and termina�on of, and changes in, service. Customers shall be provided a copy of the confirma�on form no�ng effec�ve date of start-up, change, suspension or termina�on in collec�on services and other per�nent details, such as data of issuance of refund for services not provided but for which Customer has paid.

1.3 Changes in Scheduled Days of Collec�on.

Once a schedule of collec�on days for Solid Waste, Recyclable Materials and Organic Materials has been established for Residen�al Premises, the schedule shall not be changed without the prior writen approval of City. Contractor shall request approval from City ninety (90) days prior to planned change in a scheduled day of collec�on for Residen�al Premises. As a condi�on of approval of such a change, City may require Contractor, at Contractor’s sole expense, to no�fy residents of the change by first-class postage. All details and scheduling of such no�ces shall be subject to approval by the City.

Scheduled collec�on days for Solid Waste, Recyclable Materials and Organic Materials may be changed at the request of the Occupant or property manager of any Commercial Premises without the approval of City. The City will determine the final schedule of collec�on days, in the event a disagreement arises between Contractor and a Customer or Solid Waste-generator at a Commercial Premises. 97 1.4 Containers for the Collec�on of Solid Waste, Recyclable Materials and Organic Materials.

Contractor shall be responsible for furnishing new or refurbished Containers as detailed in Sec�ons 1.4.1 and 1.4.2 below. All Containers will be consistently color-coded. The color-coding scheme shall be universal black body and black lids for Solid Waste, green for residen�al Yard Trimmings, green for nonresiden�al Food Scraps and Yard Trimmings, and blue for Single-Stream Recyclable Materials. Containers for Recyclable Materials and Organic Materials shall have messages/graphics on the exterior designed to prevent Customers from placing materials that would contaminate the Recyclables/Organics Containers and the text/graphics shall be approved by City before Containers are ordered.

1.4.1 Containers for Residen�al Premises.

Contractor shall furnish to each par�cipa�ng Residen�al Premises: (A) one Animal-Resistant Solid Waste Cart of ninety-five (95) or sixty-five (65) gallon capacity; (B) one Recycling Cart of ninety-five (95) gallon capacity; and (C) up to two Organic Material (Yard Trimmings only) Carts of ninety-five (95) gallon capacity. Each Cart will be equipped with a hinged or otherwise atached lid, and wheels for maneuverability. As to (A) above, Residen�al Premises that have Bear Boxes may elect to con�nue to provide their own Solid Waste Container(s) or sign up for the new Animal-Resistant op�on, but a combina�on of both Containers will not be allowed. Residen�al Customers that request an addi�onal Solid Waste Cart will be charged for the cost of the cart.

At any �me Contractor distributes a Cart to a Residen�al Premises, Contractor shall also deliver to the Premises an informa�onal brochure, describing the curbside recycling program, lis�ng in detail all types of Recyclable Materials that will be collected and how they are to be prepared, days of collec�on, Cart loca�on requirements, and other per�nent informa�on. This brochure shall be submited to City for approval ninety (90) days prior to the ini�al delivery of the Containers. City may direct that the brochure be periodically updated as needed, but not more o�en than once annually. All costs associated with the prepara�on of a professional, well-formated and designed brochure, including photographic examples of Recyclable Materials and Containers, costs of prin�ng, labeling, and mailing (first class postage) shall be borne by Contractor.

1.4.2 Containers for Commercial Premises and City Facili�es.

Contractor shall furnish 1-3 yard Bin(s) for Yard Trimmings, and/or Food Scraps, and ninety-five (95) gallon Carts on an as needed basis, to Commercial Premises and at City Facili�es and events, except that Customers located at any of the above Premises may, at their sole discre�on, lease and/or purchase Compactors from any Person, including, but not limited to, Contractor, for use at their Premises.

SECTION 2 - COLLECTION SERVICES
Contractor will provide Semi-Automated Residen�al Single-Stream Recycling and Organic Materials (Yard Trimmings only) Curbside Collec�on on the same day of the week as Solid Waste Collec�on. 98 2.1 Collec�on Methodology

The goal of the transi�on team is to minimize disrup�on to Customers while making an efficient transi�on to the new 3-Cart Semi-Automated Waste Collec�on. The Service Area will be divided into Collec�on areas that can each be serviced one day per week. In that way, the Customer will see trucks in their area only on one day per week. Environmental impacts are reduced, and Collec�on efficiency will be increased.

2.2 Single-Family Residen�al Basic Level of Service.

The basic level of service for a Single-Family Residen�al Premises includes Curbside Collec�on of: (A) once weekly Solid Waste provided by Semi-Automated Collec�on; (B) every other week Single-Stream Recyclable Materials, and (C) every other week Organic Materials (Yard Trimmings only). Disabled, frail and elderly Residen�al Customers shall be provided house service at no addi�onal cost once properly veted and confirma�on has been established by Contractor. Contractor will have eight (8) Collec�on vehicles, consis�ng of four (4) rear loader Semi-Automated 27 cubic yard, four-axle vehicles, and four (4) Ford 650, 14 cubic yard side-load manual vehicles, collec�ng Solid Waste daily Monday through Friday.

2.2.1 Shared Service Containers

Single-Family Residen�al Customers will be allowed to share Recyclables and Organic Materials Carts if space is an issue so long as both Customers are signed up for Solid Waste service.

2.2.2 Unlimited Recyclable Material and Yard Trimmings Drop Off

Throughout the year, Residents of the City showing proof of address will have unlimited drop-off rights for Single-Stream Recyclable Materials and Yard Trimmings at South Tahoe Refuse Transfer Sta�on free of charge.

2.3 Commercial Service

Commercial Solid Waste Collec�on will be Semi-Automated. Manual Collec�on will be reserved for loca�ons where Semi-Automated Collec�on vehicles are too large. Most Collec�on will be with a front loader. Contractor will encourage Commercial Customers to use a large Container and minimize the frequency of Collec�on to reduce traffic and environmental impact and increase Collec�on efficiency.

The basic level of service for a Commercial Customer includes:
• Regularly scheduled Semi-Automated Collec�on of Solid Waste based on a schedule that best serves the Customer’s needs and the Collec�on situa�on. For example, a restaurant with wet waste may be serviced with a smaller Container collected more frequently than an office building with dry waste.
• Semi-Automated Collec�on if the Customer can be served using Residen�al-sized Carts. • Front loader Collec�on, with Bins, if the business size of the Customer is larger.

As part of the Public Outreach Program, Contractor staff will meet individually with Commercial Customers genera�ng 2+ yards of Solid Waste per week to decide on appropriate levels of service. At 99 that �me, and in later public educa�on communica�ons, Customers will be encouraged to expand their Organic Materials Collec�on program.

Customers with excess Solid Waste will have the op�on to call twenty-four (24) hours before their next scheduled Collec�on day to request extra service. Contractor will no�fy the driver on a daily basis about all excess Collec�ons. If a driver encounters excess Solid Waste and it is not listed on their daily work papers, they will contact the office, who will contact the Customer to authorize Collec�on. Unless a Customer has requested that excess Solid Waste should never be collected, the driver will be instructed to collect excess without Customer approval.

2.4 Mul�-Family Residen�al Service

Mul�-Family Residen�al Premises may be serviced either as (A) Single-Family Residen�al Customers as described in Sec�on 2.2 above, or (B) as Commercial Customers as described in Sec�on 2.3 above, which include dwelling units in Mul�-Family Residen�al Premises that are not provided individual Collec�on service nor directly billed by Contractor, but are instead serviced through central Collec�on by Bin, roll-off Box and/or Compactor and billed through a Homeowners Associa�on or property manager.

Contractor shall offer Single-Stream Recycling service to all Mul�-Family Residen�al units. Contractor shall also provide Organic Materials Collec�on services (Yard Trimmings only) to all such units unless the City grants either a de-minimis waiver or space waiver under Sec�on 4.9.2 of the Agreement.

2.5 Recyclable Materials Collec�on
Single-Family Residen�al Recyclables Collec�on will be bi-weekly Semi-Automated on the same day as Solid Waste Collec�on. Customers will be instructed to place their Carts at the curb by 7 a.m. Collec�on will start at 7 a.m.

2.5.1 Collec�on Methodology
All Recyclables Containers will be SB 1383 color-coded and will be properly labeled. Customers will be given a blue Cart that will have a molded graphic indica�ng the Recyclable Materials that are to be placed inside. All will be given 95-gallon Carts for the ini�al roll-out. They will have the choice of a 65- or 95-gallon Carts therea�er.

2.5.2 Single-Family Residen�al Service
Similar to Single-Family Residen�al Solid Waste Collec�on, Contractor will have four vehicles collec�ng Recyclables and Organic Materials daily, with each truck equipped with Semi-Automa�c or manual Collec�on services. For bi-weekly Collec�on, the Customers in the en�re service area will receive Recyclables Collec�on for one week and Organic Materials Collec�on the following week.

2.5.3 Mul�-Family Residen�al Service

Services to Mul�-Family Residen�al Customers will parallel the Collec�on program for Solid Waste. For example, if the Mul�-Family Residen�al Premises manager has elected to have each unit receive individual Solid Waste service, each will also receive Single-Stream Recycling service, provided each unit has enough space. If the Mul�-Family Residen�al Premises manager has elected to have 100
centralized Solid Waste service, the complex will also have centralized Recycling Collec�on and Organic Materials Collec�on service. The Container will be a large Bin or mul�ple 95-gallon Carts, depending on the needs and space available in the complex. If they have Bin service, they will get weekly service.

2.5.4 Commercial Service

Recycling Collec�on service will con�nue to consist of Recyclables mixed with Solid Waste and separated at the Approved Recovery Facility.

2.5.5 Excess Recyclables

Excess Single-Stream Recyclable Materials from Single-Family Residen�al Premises and Mul�- Family Residen�al Premises will be picked up if contained in a 20-32-gallon plas�c Rubbermaid-type Customer Owned Container with a �ght-fi�ng lid and weighing less than 30 lbs. Customers will need to call in advance. If it becomes evident that a Customer con�nually generates excess materials, the Customer will be given addi�onal or increased sized Container(s).

2.6 Collec�on of Yard Trimmings / Food Waste.

2.6.1 Single-Family Residen�al Service

Semi-Automated Yard Trimmings collec�on will be bi-weekly on the same day as Solid Waste Collec�on. Customers will be instructed to place their Carts at the curb by 7:00 a.m. Collec�on will start at 7:00 a.m. Customers will be provided a green Cart that will have a molded graphic indica�ng the Yard Trimmings material be placed inside. They will have the choice of one or two 95-gallon Carts at no addi�onal charge. More than two Carts will be provided at Contractor’s cost. Similar to Recyclables Collec�on service, Contractor will have four vehicles Collec�ng Recyclables daily. For bi-weekly Collec�on, the Customers in the en�re service area will receive Recyclables Collec�on one week and Yard Trimmings Collec�on the following week.

2.6.2 Mul�-Family Residen�al Service

Services to Mul�-Family Residen�al Customers will parallel the Collec�on program for Solid Waste. The frequency of Yard Trimmings Collec�on service will be bi-weekly. The service will also use Carts. If the Mul�-Family Residen�al Premises manager has elected to have centralized Solid Waste service, the complex will also have centralized Recycling and Yard Trimmings Collec�on service. The Container will be a Bin or mul�ple 95-gallon Carts, depending on the needs and space available in the complex.

2.6.3 Commercial Service

Contractor will offer separate Collec�on service for Foods Waste, on the one hand, and Yard Trimmings and other Organic Materials suitable for Compos�ng, on the other hand, to all Commercial Customers that generate 2+ cubic yards of Solid Waste per week. Contractor shall charge Customers for Collec�on of Food Waste and Yard Trimmings as part of the Commercial Food Waste Collec�on program at the Rates in Exhibit G2, as may be adjusted in accordance with the Agreement. Contractor, in coordina�on with City, will offer training and instruc�on for all Commercial Premises par�cipa�ng in the Food Waste Collec�on program.
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Food Waste Collec�on will be by 95-gallon Cart or 1-3 cubic yard Bins and will accept all Food Waste, aside from Food-Soiled Paper. Separate Bins for Yard Trimmings will be provided upon request.

Commercial Premises can share Food Waste Bins if it is most efficient and is desired by the Customers. All Commercial Bins are equipped with a locking bar to help minimize Contamina�on and illegal dumping.

Ninety-five (95) gallon Carts for Food Waste will be available for those Customers that have adequate indoor storage.

2.6.4 Excess Yard Trimmings

In the event that a Residen�al Premises produces extra Yard Trimmings that do not fit in the Cart(s) provided, such material must be contained in a 20-32-gallon plas�c Rubbermaid-type Customer Owned Container with a �ght-fi�ng lid and weigh less than 30 lbs., and placed Curbside. Customers will need to call in advance. If it becomes evident that the Customer con�nually generates excess materials, the Customer will be given addi�onal or increased sized Container(s).

2.6.5 Compos�ng of Yard Trimmings / Food Waste

Food Waste and other Organic Materials suitable for Compos�ng Collected by Contractor shall be delivered to an Approved Organics Material Processing Facility for anaerobic diges�on and/or Compos�ng. If Contractor learns that an Approved Organics Material Processing Facility is no longer Compos�ng materials as agreed, or is out of compliance with local, state, or federal opera�ng permits, laws or regula�ons, or is processing and/or using Food Scraps materials in such a way that the Food Waste Collected from within the City will not count as materials diverted from the Solid Waste stream for purposes of SB 1383, Contractor shall no�fy the City within five (5) days.

2.6.6 Yard Trimmings Drop-Off at Approved Recovery Facility

Contractor shall provide free Residen�al drop-off for all Yard Trimmings on an unlimited basis, with proof of residency at the Approved Recovery Facility Monday to Friday 8 a.m. to 5 p.m.. Yard Trimmings must be free from all contamina�on by other materials to be accepted. Contaminated material will be charged current drop-off fees as described in Exhibit G2, as may be amended in accordance with the Agreement. Addi�onally, Contractor will annually hold four (4) free drop-off days for Commercial Customers. Yard Trimmings received by Contractor shall be delivered to an Approved Organics Material Processing Facility for Compos�ng.

2.6.7 Food Waste Drop-Off at Approved Recovery Facility Contractor shall provide free Residen�al drop-off for Food Waste for all Residen�al Customers at no cost on a weekly basis at the Approved Recovery Facility every Tuesday and Wednesday from 8 a.m. to 5 p.m. Drop-off days and �me can be adjusted annually as needed based on community demand, available space, and processing costs. Food Waste received by Contractor shall be delivered to an Approved Organics Material Processing Facility for Compos�ng. 102

2.7 Changes in Collec�on Service

Customers may, at any �me, decrease the frequency of Collec�on and/or the number of Containers for Solid Waste commensurate with the amount of Organic Materials diverted by any compos�ng programs, projects or ac�vi�es undertaken by Customer.

2.8 Coopera�ve Arrangements

The City currently allows Premises to share Organic Materials Bins if it is most efficient. City may permit Customers to form coopera�ve arrangements and enter into writen agreements with other Customers to aggregate Solid Waste, and/or Organics or some category thereof, and to share, in any manner mutually agreed to by such Customers, the reduced Collec�on charges, therefor. All services will occur at the paying Customer’s address only.

2.9 Consulta�ons and Technical Assistance

Contractor will provide Compos�ng Training and assistance, upon request, for on-site Compos�ng programs and other Solid Waste and Compos�ng-related ac�vi�es to assure Customers reduce contamina�on and increase diversion.

2.10 No�ce to Commercial Customers

Contractor shall make annual site visits to each Commercial Customer that ranks in the largest 25 Solid Waste generators in the City. The site visits are to no�fy the occupants thereof of alterna�ve methods of source reduc�on and Recycling and other suppor�ve services available. Such contact shall include a brochure as described in Exhibit C. Contractor shall work with the City to provide waste stream audits, as requested, and provide Compost training and report to Customer on opportuni�es available to start up or increase Diversion. Contractor shall addi�onally make phone and/or email contact with each Commercial Customer annually to ensure that Solid Waste service is adequate and provide informa�on that is provided in site visits.

2.11 Temporary Bin

Contractor shall provide, on a temporary basis, Containers for the purposes of collec�on of Solid Waste, Recyclable Materials, and Organic Materials at the request of Customers. Services shall be provided at Rates in Exhibit G2, as may be adjusted in accordance with the Agreement. Such temporary service shall be provided, by way of example but not limita�on, to sites where construc�on and /or demoli�on ac�vity, replacement of roofs or paved areas, or replacement or maintenance of landscape materials is occurring. Collec�on shall occur on an as-needed, on-call basis, within seventy-two (72) hours of a request, or may be regularly scheduled, as determined by the Customer.

Contractor shall use commercially reasonable efforts to inform Customers u�lizing Bins on a temporary basis that materials being generated may be Recycled and/or Composted. Such efforts include contac�ng the Customer, comple�ng a waste audit, preparing a cost analysis, and demonstra�ng any costs savings (if applicable) due to lower Collec�on charges and adjus�ng services as selected by Customer. The City may require at any �me, and Contractor shall provide in the quarterly report to the City in a form approved by the City, the results of such efforts, including writen communica�ons, list of persons contacted, Recycling and Compos�ng training provided, and results achieved.
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2.12 New 3-Cart Program Cost and Opera�onal Data
Contractor shall record the tons collected, number of stops, number of par�cipa�ng Customers, number of routes, labor hours, cost, and other per�nent data, as may be required by the City, in a format approved by City and shall submit said data on a quarterly basis, beginning one month a�er incep�on of the 3-Cart program. The City may require submission of addi�onal informa�on from Contractor as necessary or desirable in order to evaluate the produc�vity, cost, benefits and poten�al diversion opportunity of the program and to report data to state and federal agencies.

SECTION 3 – CITY FACILITIES AND EVENTS COLLECTION SERVICES

3.1 Collec�on Services at City Facili�es.

Contractor shall provide Collec�on of all Solid Waste, Recyclable Materials, Organic Materials, E-Waste, �res, Bulky Items, and metals generated at any Premises owned and/or operated by the City at Collec�on service Rates established in Exhibit G2, as may be adjusted in accordance with the Agreement. Collec�on shall be at a �me convenient for the City. Occasionally, the City may direct Contractor to change frequency of Collec�on, number and/or type of Container(s) provided, or method of Collec�on. The City shall receive all the Recyclable Materials and Organic Materials Collec�on services as well as Self-Haul opportuni�es, provided to Commercial Customers, with the excep�on of disaster wastes for which Contractor may charge the City the current Commercial Rate (to the extent that the City directs Contractor to collect disaster wastes).

3.2 Collec�on Services at City Events.

Each year the City may sponsor or co-sponsor, host or otherwise organize a special event, such as a parade, public building dedica�on, conference of public officials, art show, cultural event or organized recrea�onal ac�vi�es at any of the City’s parks or venues. Contractor shall provide Containers for Collec�on service for up to and including five (5) special events per calendar year. The current list of events is shown in Table 3-1. Contractor shall provide Solid Waste, Recyclable Materials, and Organic Materials Collec�on services for such events, including Containers for the general public to dispose of Solid Waste, Recyclable Materials, Food Scraps, and Yard Trimmings, as well as larger size Bins. Contractor shall also provide Containers for Organic Materials at the Rates in Exhibit G2, as may be adjusted in accordance with the Agreement.

Table 3-1
List of City Sponsored Special Events
Current City Events:

Fourth of July Parade
Mul�-cultural Fes�val
Winter Fes�val of Lights
Earth Day Fes�val
The above list is representa�ve of the types of events the City sponsors. The specific events may be changed and/or increased up to a maximum total of 5 events per year at no charge. 104
SECTION 4 - SPECIAL SERVICES

4.1 Bulky Item Collec�on Services.

Contractor shall provide two (2) Bulky Item Collec�ons per year to each Single-Family Residen�al Customer at no charge, with the follow limita�ons:
• Weight limit of 150 lbs.
• Must be placed on the road.
• None of the following allowed – electronics, Freon containing items, hot tubs, wood burning stoves, boats, and vehicles.
• Customers will be charged a fee for each additional item over the allotted allowed per residence January – December, as described in Exhibit G2, as may be amended in accordance with this Agreement.

Customers will be required to call and schedule a pickup. The number of pickups will be tracked internally using Contractor’s EnCore Waste Management So�ware. Customers will be informed via quarterly billing statements and local outreach (i.e., website and newsleters). All Bulky Items collected will be brought to the Approved Recyclable Materials Processing Facility.

Contractor shall provide addi�onal Bulky Item Collec�ons to Single-Family Residen�al Customers, and Bulky Item Collec�ons to Mul�-Family Residen�al Customers and Commercial Customers, at a Rate in Exhibit G2, as may be adjusted in accordance with the Agreement.

Any Customer or the City may request Collec�on of one Bulky Item forty-eight (48) hours in advance and Collec�on shall occur on or before the Customer’s next regularly scheduled Solid Waste Collec�on day.

Bulky Items shall be Collected at, or reasonably near, Curbside, giving due considera�on to circumstances of access points, vehicular and pedestrian safety, and the like, in accordance with the scheduled appointment �me established by Contractor, which shall in no case be earlier than 7 a.m. local �me.

All Bulky Items Collected will be disposed of with the following hierarchy:

1. Reuse as is (where energy efficiency is not compromised)

2. Recycle

3. Disposal

4.2 Hours of Collec�on.

Collec�on of Solid Waste, Recyclable Materials and/or Organic Materials are set forth in Sec�on 5.2A of the Agreement.

4.3 Special Events.

From �me to �me, the occupant of a Premises or the coordinator, manager or sponsor of a special event, such as a wine tas�ng, marathon or bike race or other spor�ng event, a grand opening of a Commercial Premises, concerts, art shows, trade fairs, conven�ons, and the like, may require the services 105
of Contractor in Collec�ng, Disposing, Recycling, Processing, and Compos�ng of Solid Waste, Recyclable Materials, and Organic Materials. Contractor shall assist each event in designing and implemen�ng services to provide for the containment, Collec�on, Recycling, Compos�ng and/or Disposal of Solid Waste, Recyclable Materials, and Organic Materials preceding, during and a�er the special event.

Contractor shall work with the City to ensure Recycling and Compos�ng are maximized at these events to the greatest extent feasible. Contractor shall charge the occupant, coordinator, manager, or sponsor of a special event a Rate in Exhibit G2, as may be adjusted in accordance with the Agreement.

Within thirty (30) days of the end of the event, Contractor shall provide a writen report to occupant, coordinator, manager or sponsor of the event with a copy to the City Event Coordinator and Sustainability Coordinator, lis�ng total tons of Solid Waste, Recyclable Materials and Organic Materials, by individual category, Collected as well as the facili�es to which the Solid Waste, Recyclable Materials and Organic Material were delivered, together with copies of weight �ckets and other per�nent suppor�ng cost documents.

4.4 Holiday Greenery Collec�on and Recycling.

Contractor shall accept Christmas trees and other holiday greenery for free at the Approved Recovery Facility on regular opera�ng hours for Residen�al Customers from December 26 through January 15.

Residen�al Customers shall be instructed on how to prepare holiday greenery for Recycling and/or Compos�ng. Trees and greenery that have been flocked or contaminated by �nsel shall be delivered to the Approved Disposal Facility.

4.5 Contamina�on No�ces.

If Prohibited Container Contaminants exceed twenty (20) percent in a Single-Stream Recyclable Materials Container or an Organic Materials Container, Contractor shall work with the Customer or onsite property manager to reduce Contamina�on. Drivers of Collec�on trucks shall have tablets and shall take pictures of loads exceeding the twenty (20) percent Contamina�on limit. Contractor shall record Contamina�on incidents on Customer accounts to include date of incident, record of picture taken, and type of Contamina�on. Contractor shall send Customers a leter sta�ng date and nature of Contamina�on and shall include a copy of the picture(s). Contractor shall charge for three or more Contamina�on incidents a�er Customer receives two writen warnings for Contamina�on within one calendar year at a Contamina�on Processing Fee established by the City.

Contractor shall no�fy Customers of failure to properly separate materials or to minimize Contamina�on.

This no�ce shall be pre-approved by the City. No�ces shall also include ac�ons that may be taken by Customers to correct the iden�fied problem and a telephone number to contact to arrange for Collec�on.

Contractor shall Collect within twenty-four (24) hours, once the reason or reasons for ini�al nonCollec�on are cured. Contractor shall provide a quarterly list of accounts receiving a Contamina�on no�ce to the City for follow-up.

The following table lists various Recycling streams to be Collected. This list includes items to be accepted in the Single-Stream Recycling stream and items that are considered a contaminant in the Recycling stream.

Table 4-1
Recycling Streams and Contaminants
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Recycling Material
Stream
Acceptable Materials Unacceptable Materials
(Contamination)
Single-Stream
Recycling
Newspaper, phonebooks, Paper �ssues, paper towels, paper catalogs, magazines, brown with plastic coating (i.e.
paper bags, packaging, egg photographs, label paper), paper cartons, white paper, colored with food, wax paper, foil lined paper, envelopes (windows are paper, Tyvex (non-tearing) not contamina�on), junk mail, envelopes, plas�c and non-paper glossy paper, shredded paper bags, non-rigid plas�c packaging, (in clear bags), carbonless plas�c liners (i.e. cereal bags), paper, chipboard/boxboard, Windows, mirrors, dishware,
cardboard, wrapping paper, ceramics, light bulbs, florescent Empty aluminum cans, empty tubes, wood furniture, Styrofoam, �n cans, juice containers, beer Solid Waste, Hazardous Waste, hard
containers, sauce containers, cover books/manuals, Pyrex Soda cans, tuna cans, soup materials, fiberglass materials, cans, loose jar lids, empty Universal Wastes such as
aerosol, empty glass beverage household bateries, fluorescent containers, empty glass food lamp and ballasts, bubble wrap, containers, all glass colors, tarps, tex�les, clothes, shoes, Eempty CRV and non-CRV Waste and small manufactured plas�c containers, trays and goods (e.g. purses, handbags and botles #1 through #7, soft backpacks)
cover books/manuals, milk/juice
cartons, plas�c toys, plas�c
irriga�on or PVC pipe, rigid
plas�c sheets or panels, empty
plas�c buckets and baskets, empty
plas�c flower pots, plas�c crates
and carts
107
Yard Trimmings Loose green material from the
yard, grass clippings, leaves, weeds,
tree prunings, bush prunings, plant
material, vineyard clippings, tree
trunks/stumps/branches 3” or less
in diameter
Rocks, dirt, plas�c bags, Solid Waste,
Single-Stream Recyclables, pet waste,
Hazardous Waste, tree
trunks/stumps/branches greater than
3” in diameter
Food Scraps All food, fruits, vegetables, meat,
poultry, seafood, shellfish, bones,
rice, beans, pasta, bread, cheese,
eggshells, wood crates, sawdust,
Solid Waste, Single-Stream
Recyclables, liquids, Hazardous Waste,
rocks, dirt, pet waste, cloth or plas�c
diapers, napkins, paper towels , �ssue
products, paper napkins, paper plates
and cups, coffee filters, tea bags,
waxed paper, butcher paper, paper
take-out boxes and containers, greasy
pizza boxes, soiled paper bags and
cardboard, waxed cardboard.,
packaged organics,
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Wood (C&D) Non-treated wood, stained wood,
wood with nails, wood with small
metal items, tree
trunks/stumps/branches (free from
leaf and brush material)
Painted wood, lacquered wood,
creosote treated wood, railroad �es,
telephone poles, excessive nails, large
metal items, Hazardous Waste
Chipped Wood (C&D) Pre-chipped tree
trunks/stumps/branches or prechipped untreated wood with no metal items
Chipped wood with metal items,
chipped Yard Trimmings, chipped
treated or stained wood
Concrete (C&D) Clean concrete, concrete with
rebar, asphalt not exceeding 5% of
incoming load by weight, bricks,
ceramic �les, baselite blocks,
concrete roof �les, concrete pipe
without asbestos
All Solid Waste, all other non-concrete
materials such as stucco, Hazardous
Waste including concrete pipe with
asbestos, asphalt exceeding 5% of
incoming load by weight
Asphalt (C&D) Clean broken asphalt pavement
with dirt not exceeding 5% of
incoming load by weight
All Solid Waste, all other non-asphalt
materials, Hazardous Waste, dirt
exceeding 5% of incoming load by
weight
109
Metal (C&D) Ferrous metal, non-ferrous metal Items less than 90% metal, fluids, Hazardous Waste, all Solid Waste
Dry Wall (C&D) Clean dry wall (gypsum) All Solid Waste, all other non-dry-wall materials such as stucco, Hazardous
Waste
Carpet Clean and dry carpet from
residen�al and Commercial
buildings; can be Carpet 6, Carpet
66, and carpet made from all other
materials including PET, wool, and
other natural and synthe�c fibers
All Solid Waste and other materials,
Hazardous Waste, dirt, astroturf,
carpet padding
Carpet Pad Clean and dry carpet pad from
residen�al and Commercial
buildings
All Solid Waste and other
materials, Hazardous Waste, dirt
Cardboard Clean cardboard, chipboard Wax cardboard, all Solid Waste, all non- cardboard items, Hazardous
Waste
Mixed Construction
and Demolition
All concrete materials, all metal
materials, all wood materials, all
cardboard materials, all Yard
Trimmings materials, drywall, dirt,
soil, asphalt
Solid Waste, all food waste,
Hazardous Waste
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4.6 Website.

Contractor shall create and maintain a website with informa�on on all the City’s Solid Waste, Recycling, and Compos�ng programs.

4.7 Seminars, Workshops, Presenta�ons, Mee�ngs.

Contractor shall ensure the atendance of qualified and knowledgeable employees of Contractor, on an as-requested basis, at local seminars, workshops, presenta�ons, mee�ngs, and the like, to provide informa�on or discuss maters related to Solid Waste management and Recycling.

4.8 Proposals for New Diversion Program.

In accordance with Sec�on 3.5 of the Agreement, Contractor shall, at no addi�onal cost, within thirty (30) days of a request by City, submit a writen proposal on providing addi�onal or expanded Diversion services. The proposal shall contain a complete descrip�on of the following: (A) Collec�on methodology to be employed; (B) equipment to be used and staffing requirements by number and classifica�on; (C) type of Container(s) to be used; (D) informa�onal/promo�onal campaign; and (E) projec�on of annual opera�ng costs, including documenta�on of and support for key assump�ons underlying projec�ons.

Sec�on 5: Transi�on Plan

A well-managed transi�on is cri�cal to establishing the founda�on for a successful franchise. During transi�on, the people, systems, procedures, and resource applica�ons crucial for a smooth-running franchise will be put in place. During the transi�on period, all aspects of Collec�on will be addressed including customer service, worker health and safety, work quality, staffing, skills, vehicles, and equipment. Contractor’s team will priori�ze the resolu�on of any start-up issues. Contractor will u�lize the transi�on period to iden�fy and make service improvements. Contractor will work diligently with all par�es to accomplish a seamless transi�on.

5.1 Implementa�on Plan For Collec�on
Collec�on services will con�nue to operate during the transi�on of the replacement of Customer owned cans with the new 3-Cart Collec�on Program. Vendors for this equipment have commited to meet the �me frame with the current overall Implementa�on Schedule (Exhibit B8).

Contractor has placed orders for new vehicles and equipment and will be tracking the progress of these deliveries and installa�ons over the next year. To date, the nine new vehicles scheduled had been ordered and will be arriving early 2024. Contractor will update City staff during monthly mee�ngs regarding delivery and deployment of these vehicles and other equipment installa�ons.

Beginning June 1, 2024, weather permi�ng, Contractor will begin delivering Solid Waste, Recyclable Materials, and Organic Materials Carts to all Single-Family Residen�al Customers. Contractor will con�nue normal Residen�al and Commercial Collec�on un�l all Carts are delivered. The new 3-Cart Collec�on Program will begin by September 15, 2024. Contractor may request an extension from the City based on good cause, which the City may grant or deny within its reasonable discre�on. 111

5.2 Contractor Transi�on Timeline
By September 15, 2024, Contractor will start Collec�on service with the 3-Cart Collec�on Program.

Contractor Managers will work with the City through all aspects of the transi�on, which can be categorized as follows:
• Transi�on Management
• Personnel hiring and training
• Detailed collec�on rou�ng
• Educa�on and outreach campaign development and implementa�on • Customer service coordina�on
• Customer Collec�on assurance
• Carts/Bins acquisi�on and delivery
Beginning in the fourth quarter of 2023, Contractor will begin working closely with the City to review and update the overall service Implementa�on Plan (Exhibit B8), and confirm the transi�on period for the Public Outreach and Educa�on Program (Exhibit C). This will include, but may not be limited to, the following:
• Coordinate with the City to finalize the Public Outreach and Educa�on Program to be inclusive and consistent across all service areas.
• Conduct early surveys to beter understand community needs and begin the process of gathering more demographic data.
• Develop and confirm new Cart design and labeling.
• Implement other ac�vi�es to extend the reach of the transi�onal public outreach and educa�on program as determined by Contractor and City Staff.

Contractor will work closely with the City to establish accountability throughout the transi�on effort.

Regular check-in mee�ngs will be established between the two par�es, ensuring fluid communica�on and maximum efficiency.

During the transi�onal period, the team will establish contact with Customers in the City, preparing them for the change in service and sharing �ps for sor�ng Residen�al and Commercial waste, per the Educa�on and Outreach Plan (Exhibit C).

5.2.1 New Collec�on Services Implementa�on Tasks
• The City approves and executes the Agreement with Contractor. • Container mobiliza�on for Carts and Commercial Bins.
• Contractor will direct the Container manufacturers to ship Carts to a central staging area.

The local distribu�on company will deliver Containers prior to the determined start-up service date.
• Driver and support staff training: Contractor will provide training on new service requirements and assignments. Drivers will be trained to use the Collec�on vehicles and equipment. Training will start at least 90 days prior to the start-up of the new services. • Begin new services: Contractor will launch new Single Stream Recycling and Organics Collec�on and other services on schedule by September 15, 2024. 112

5.2.2 Carts and Bins

Contractor will place binding orders with the manufacturer(s) soon a�er the City approves the Agreement. The manufacturer, Rehrig, will provide firm produc�on and delivery �melines and personnel training. Contractor will work with Rehrig to engage a subcontractor for Cart delivery. The ini�al order will be adequate to distribute Containers throughout the City.

Benchmark dates for manufacturing, prin�ng, and shipping will be agreed to by all par�cipants and submited to the City for approval. To ensure �mely arrival, Contractor will conduct weekly update calls with Rehrig.

Cart deliveries to City residents will begin by June 1, 2024 and be completed by September 15, 2024. This schedule ensures complete delivery of Containers before the new Collec�on service begins on September 15, 2024.

Contractor will work directly with Customers to “right size” their Carts by conduc�ng surveys and providing recommenda�ons. This effort will:
• Op�mize collec�on services and minimize expense for each Customer • Maximize Solid Waste Diversion and Recycling
• Conserve Collec�on and Processing resources
Rehrig will record Cart and Container distribu�on with Customer name, address, Cart or Container size, Container distribu�on date, Container iden�fica�on and serial number, that will be uploaded to Contractor’s EnCore Waste Management So�ware to use in billing, rou�ng, repor�ng, and for service monitoring.

Cart delivery will be performed in all areas to the full sa�sfac�on of every Customer.

Contractor’s maintenance staff will work closely with Contractor management and Rehrig personnel to sufficiently train personnel on Cart repair, Cart inventory and asset control best prac�ces, and work-order protocol.

5.2.3 Vehicle Maintenance and Support

Contractor will con�nue to use its fully equipped and modern facili�es and yard for equipment maintenance and repair for the new Collec�on fleet, as well as other ac�vi�es. The facili�es are capable of providing all maintenance requirements of the new vehicles and accommodates other ac�vi�es including:
• Truck maintenance and repair
• Container maintenance and repair
• Vehicle cleaning
• Container cleaning
• Vehicle fueling
• Truck yard
• Dispatch, driver training, rou�ng
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• Large and bulky item recycling
• Used motor oil & filter recycling

5.2.4 Route Collec�on Staff
Contractor’s Commercial Collec�on drivers are a main link to the business community. How their daily du�es are performed contributes to business community percep�ons of Contractor. Contractor will con�nue to provide a successful, mul�faceted driver educa�on program that stresses safety and Commercial customer service. Specific training of route personnel includes:
• Familiarity with Contractor company procedures and prac�ces • Familiarity with the truck equipment
• Use of personal protec�ve gear
• Defensive driving training
• Spill response training
• Hazardous waste material iden�fica�on
• Injury and illness preven�on
• Customer service procedures and prac�ces
• Thorough understanding of new Commercial Collec�on and Recycling Program Sec�on 6: Route Opera�ons
All Collec�ons will occur between the hours specified in Sec�on 5.2A. of the Agreement. Contractor plans for on-route and on-board video recording and transmission to broaden the involvement of other colleagues and quicken our customer response, as though�ul and quick responses result in higher customer sa�sfac�on levels.

Collec�on drivers will report opera�onal issues to a central dispatcher, who in turn will provide instruc�on or issue an electronic work order to customer service and the appropriate route supervisor.

Should immediate ac�on be required, the crew member will be able to connect with the supervisor directly. All supervisors will monitor communica�ons and communicate directly with collec�on personnel. All vehicles and personnel will be assigned a mobile communica�ons device and an on-board computer. On route GPS systems allow communica�on between supervisors, crews, dispatch, customer service, maintenance, and customer outreach personnel on a real-�me basis.

Contractor’s integra�on of Collec�on and Processing ac�vi�es will enable rou�ng changes to be suggested by the Approved Recovery Facility management team, which plays an important role in evalua�ng the quality and preserva�on of Collected materials quality. Recommenda�ons from the Transfer Sta�on management team will enhance material Collec�on, as well as how the material is �pped at the facili�es.

In addi�on, Contractor u�lizes EnCore Waste Management So�ware which will help Contractor to track the loca�ons of Collec�on stops, automa�cally associate Collec�on stops with Customers, and observe it all with system-managed �me stamps. Drivers can easily log the precise ac�vi�es that account for the full day, as they happen, with the easy-to-use Driver Display Terminal. The system will allow Contractor to output end-of-day paperless driver logs that immediately update real route history, by day, week, and month - for every Customer and every route. All daily opera�ons are managed cleanly from inside the 114
back-office system. Routes are pushed to vehicles using dispatch screens, and at the end of day routes are updated automa�cally.

Sec�on 7: Opera�ons Plan
Commercial routes will be carefully planned so that Collec�on drivers follow assigned routes designed to op�mize �me in the field, personal safety, and responsiveness to Customer needs and concerns.

The numbers of Commercial Cart and Bin stops per route depend on the loca�on of that route within the City, street geometry, car parking, geography, and distance to the Approved Facility. Collec�on methods may be different at each stop, a circumstance that will be factored into each day’s route and Customer service load. Based on future �me and rou�ng studies smaller Bins (1- to 2-yards) may take slightly longer to service due to their smaller size, low profile, and tendency to be overloaded compared to 3- to 6-yard Containers, which are typically located in such a posi�on that the Contractor driver can directly access the larger Bins and li� and load them more efficiently. While the average �me to li� and empty a Bin can be as litle as 26 seconds, the range of �me per Commercial stop can range from under a minute to 3-10 minutes, depending on Customer access and weather condi�ons.

In general, each Commercial Collec�on vehicle will be operated by one (1) FTE employee driver. Specific routes with difficult access may have a helper with the driver to get out of the truck cab and move a Cart or Bin into posi�on for more efficient use of �me and mo�on. In all Commercial collec�ons, the Contractor driver ensures the lid of the Cart/Bin is closed before leaving the area and will clean up any liter as a result of the Collec�on ac�vity.

Contractor will u�lize its EnCore Waste Management So�ware system for each vehicle, recording driver, route, and Collec�on service data, and respond to on-route disrup�ons and addi�onal service requests origina�ng from Contractor offices, ensuring opera�onal connec�vity. 115
Activity Details Target Audience Responsible Party Frequency Target Completion Date
Approval of new cart models and order new solid waste,
recycling, and organic carts. All Residential STR / City One time event 10/1/2023 Order 9 new collection trucks to service new 3 cart program. All Residential STR One time event: Ordered March 2023 4/1/2024
Conduct customer survey to determine cart size. All Residential STR One time event 9/1/2023 Hire Staff (Drivers, CSR, Community Development Manager). All Customers STR One time event 3/31/2024 Conduct staff training on new 3-cart program collection protocol and reporting requirements.

All Residential, Commercial,
and Multi-family Accounts STR Ongoing (initial training to begin 90 prior to roll out) 2/31/2024
Develop/Update collection route data. All Residential, Commercial, and Multi-family Accounts STR Ongoing 4/1/2024
Deliver and stage new residential carts All Residential Rehrig / STR 2 weeks before delivery of carts. 6/30/2024
Roll out all three carts: Deliver 65 and/or 95-gallon garbage cart to all accounts that do not have a bear box. Deliver 95 gallon recycling and organics carts to all accounts.

All Residential Rehrig/STR/City
One time event: Start
after Snow 6/1 or 7/15
take 4-6 weeks to
complete
9/15/2024
Deliver organic bins and/or carts (size depending on location set up and need) to all accounts that generate > 2yds of solid waste per week and do not have an applicable waiver.

Commercial/ Multi-Family STR Weekly 12/31/2024
Assure that all containers meet SB 1383 cart/ bin color requirements (recycling = blue, organics = green, and
garbage/landfill = black). All containers will include compliant labels.

All Residential, Commercial,
and Multi-Family Accounts. STR One time event 12/31/24
Compliance Review:

Identify covered generators not participating
All Residential, Commercial,
and Multi-Family Accounts.

No Self Haulers.

STR Quarterly Ongoing
Contamination monitoring: daily driver inspections of all three collection containers, followed up by STR staff via direct contact via phone, email, and/or direct mailer.

All Residential, Commercial,
and Multi-Family Accounts. STR Daily Ongoing
Contamination reports Residential, Commercial, and
Multi-Family Accounts. STR Quarterly Ongoing
Waiver report: STR will provide any recommended waiver
request for City approval.

All Commercial, and MultiFamily Accounts. City Quarterly Ongoing STR IMPLEMENTATION PLAN: MANDATORY COMMERCIAL ORGANICS RECYCLING (SB 1383) Monitoring Mandatory 3-Cart Program for Residential, Commercial, and Multi-family Covered Generators Mandatory Service to All Covered Generators
116
Annual Route Reviews
25 Accounts for each
Residential, Commercial, and
Multi-Family route.

STR Annually October 31st
Service Notice: STR will send out Education / Resource
packet to all service recipients detailing all local collection service options and local diversion programs.

All Residential, Commercial,
and Multi-Family Accounts. STR Annually 1/31/2024
City-specific website: regular maintenance and updates
including newsletters and local program specific info.

All Residential, Commercial,
and Multi-Family Accounts. STR Annually Ongoing
Provide a commercial and multi-family tool kit to assist property owners / managers, staff and residents with onsite set up, training and tips to avoid contamination.

Commercial / Multifamily STR Annually 12/1/2024
Newsletters All Residential, Commercial,
and Multi-Family Accounts. STR Quarterly
January, April, July,
October: some
accounts are on a
rolling basis.

Design and Develop Service Brochure Residential/ Commercial / Multi-family STR One time event 4/31/2024
Staff training: STR annual training materials STR Staff STR Annually 1/31/2024 Customer Participation Survey All Residential, Commercial, and Multi-Family Accounts. STR One time event 9/1/2023
Site visits: 30 in person commercial site visit per quarter Commercial / Multifamily Accounts STR Quarterly Ongoing
Quarterly service reports Residential, Commercial and
Multifamily Accounts STR Quarterly Ongoing
Annual reports Residential, Commercial and
Multifamily Accounts STR Annually Ongoing
Reporting
Education and Outreach
Follow-up with Non-Compliant Businesses and MFDs
117

EXHIBIT C

PUBLIC EDUCATION AND OUTREACH PLAN
118
Exhibit C
Public Educa�on and Outreach Plan
Sec�on 1: General Services

Working together with the City, Contractor will use commercially reasonable efforts to meet the challenges of Diversion with �reless new ideas and technology, and by u�lizing what works. Our landfill Diversion programs will con�nue to expand as our processing improves, our outreach succeeds, and we change waste generators’ behavior. All the while, we will consistently work to operate efficiently and with our environment in mind.

1.1 Public Educa�on Plan
In order to work toward zero waste, Contractor’s approach will be to priori�ze paperless outreach efforts whenever feasible. Contractor will educate the public on our comprehensive services, as well as provide informa�on about increased Recycling op�ons and resources. This public educa�on will be accomplished through direct contact with Customers, effec�ve marke�ng and PR material, adver�sing in the local media, involvement in community events, and diverse Recycling ac�vi�es. Contractor will use the recent public educa�onal experiences regarding the services in El Dorado County, as well as the experiences of both the City and Contractor, to help effec�vely educate the public.

Contractor’s public educa�on will include:
• Informational brochures, posters, signs, and toolkits • Expanded single-stream Recycling educational information and outreach • Quarterly newsletters
• Outreach to Single-Family Residential Customers through email, mailings, advertising, social media and community events
• Direct outreach to all Commercial and Multi-Family accounts • Recycling educational programs and tours
• Yard Trimmings / Food Waste education and composting classes • Information about the expanded Source Separated Temporary Bin Collection • School presentation and tours
The combina�on of these methods should increase Diversion in South Lake Tahoe/El Dorado County, as well as provide comprehensive informa�on about all of Contractor’s services. We fully expect that Curbside Recycling Collec�on, expanded Commercial Customer outreach and Recycling, Yard Trimming / Food Waste Collec�on, and increased Source Separated debris box service will keep Diversion rates above 50 percent.

Contractor will use a variety of public outreach methods to assure that all Residen�al and Commercial Customers receive all the informa�on about the service change and new Recycling op�ons. Contractor 119
will begin adver�sing, atending community events, distribu�ng literature, and e-mailing service informa�on immediately upon execu�on of the Agreement. These comprehensive public educa�on programs will con�nue through the en�re Agreement Term.

1.2 Presenta�ons
Contractor will conduct Recycling outreach and public educa�on presenta�ons at various community events, schools, businesses, and more. Contractor will build on already established presenta�on plans and experience and conduct frui�ul outreach to the South Lake Tahoe / El Dorado County community.

Contractor will work with the City to iden�fy community groups and will contact the community groups directly to schedule presenta�ons. Service informa�on and Recycling outreach will be given at the presenta�ons, ques�ons will be fielded, and various informa�on brochures and handouts will be distributed. A�er the transi�on to the 3-Cart system, Contractor will con�nue to contact groups and businesses regarding presenta�ons, as well as gran�ng any presenta�on requests from the public.

Addi�onally, Contractor will work with schools and teachers to conduct Recycling educa�on and tours with student groups. Informa�onal material will be con�nuously created and updated in order to provide the most effec�ve informa�on to the public.

1.3 Par�cipa�on at City Events
Contractor will provide informa�onal materials and face-to-face educa�on and support at ongoing community events. Contractor will work with the City to provide public outreach and Solid Waste, Recycling, and Organic Materials Collec�on service at City public events. Addi�onally, Contractor will have a comprehensive special event Recycling program that provides Recycling and Organic Materials consul�ng and Solid Waste, Recycling, and Organic Materials services to all special events, fairs, and fes�vals. Contractor will work with event producers, vendors, and the public to Divert a significant amount of special event waste and educate the public on waste reuse, reduc�on, and Recycling.

Contractor will also organize several community events, including an annual free �re drop-off event and four Yard Trimmings Collec�on and Compos�ng events. All events will be adver�sed through the quarterly newsleter, billing inserts, and other adver�sing mediums. Contractor will work together with the City to organize successful events and to promote the year-round drop-off op�ons at Contractor’s Household Hazardous Waste and medical waste program. Contractor will provide service and support for addi�onal community cleanup events throughout the year.

1.4 Recycling Outreach and Waste Characteriza�on
Contractor will conduct Recycling outreach in order to increase Recycling rates, decrease Contamina�on and educate the public on all facets of the Recycling/Organic Materials program. This will include informa�on about our Collec�on services, as well as expanded informa�on about reduc�on, reuse, and Recycling op�ons. Outreach materials will be designed and distributed to Single-Family Residen�al, Mul�-Family Residen�al, and Commercial Customers.

Contractor will conduct site visits of all Commercial Premises in advance of any service changeover.

These visits will include service level recommenda�ons and �ps on increased Recycling and Organic Material Diversion. Commercial Customers will be encouraged to increase Recycling and Organic Materials services as an environmental saving ini�a�ve. Contractor will provide personalized onsite training service in order to maximize Diversion rates. Contractor will con�nue to visit at least 20 percent of the Commercial and Mul�-Family Residen�al Customers annually and conduct waste assessments and 120
audits as needed. Contractor will also conduct on-site assessments and trainings for any Commercial Customer upon request. This service will be announced through the website, e-mail, billing inserts, and other outreach. Contractor will partner with South Lake Tahoe Chamber of Commerce and other business groups to connect with all area businesses.

1.5 Number of Employee Hours
Contractor will have a full �me Environmental Compliance Manager. This sustainability professional will promote and maintain the public outreach program, work closely with the City, and strive to increase Diversion throughout the City.

1.6 No�ce to Residents
Contractor shall annually no�fy each Single-Family Residen�al Customer of the opportunity to par�cipate, at no addi�onal charge, in the Curbside Recycling program, how to obtain a Container, or addi�onal Containers if already par�cipa�ng, how to replace a lost, stolen or damaged Container, how to secure backyard service for disabled persons wishing to par�cipate, shared Cart service, the benefits of Recycling to the community, and other informa�on as may be appropriate. Contractor shall submit to the City by November of each year a no�ce for review and approval. All costs associated with the prepara�on of a professional, well formated, and designed no�ce, as a pamphlet or brochure, costs of prin�ng, labeling, mailing (first class postage) shall be borne by Contractor.

1.7 No�ce to HOAs and Property Managers
Contractor shall annually no�fy each homeowner associa�on (HOA) and property manager of every Mul�-Family Residen�al Premises or mobile home park of each alterna�ve method of Recycling and/or Organic Materials Collec�on service available to its residents. This no�ce shall include the following: (A) Collec�on from backyard, side-yard, closet, or other place of enclosure; (B) provision of a Bin or Bins in a central loca�on, such as a work yard, for drop-off of Recyclable Materials; (C) community drop-offs available for use by residents; and (D) other available methods.

Contractor shall submit a dra� no�ce to City for review and approval. All costs associated with the prepara�on of a professional, well formated, and designed no�ce, as a pamphlet or brochure, costs of prin�ng, labeling and mailing (first class postage) shall be borne by the Contractor.

Contractor’s Environmental Compliance Manager will meet with every Mul�-Family Residen�al Premises manager at least once per year and atend Mul�-Family Residen�al related community mee�ngs as requested by property managers. Contractor shall develop and provide the City with the collec�on plan for all new Mul�-Family Residen�al Premises prior to commencement of service. Contractor shall provide literature and educa�onal materials and communicate directly and in-person with par�cipa�ng Premises, and alert property or on-site managers where Contamina�on issues arise.

1.8 Billing Inserts, Website.

Contractor shall use either paper or electronic bill inserts to adver�se programs and to distribute coupons for free processing of used �res and Bulky Items delivered to the Materials Diversion Facility by a Customer. Contractor shall make public educa�on materials available to the City for placement on the City website. Contractor shall pay for adver�sing, development and prin�ng for the programs listed in Table 1.

Table 1
121
Contractor Adver�sed Programs
Christmas Tree/Holiday Greenery Collec�on – First Saturday in January.

Earth Day Fes�vi�es. – April. Various ac�vi�es. On or around April 22.

E-waste & Appliance Recycling Informa�on – General informa�on, distribu�on throughout the year.

Used �re Amnesty Coupon – Summer The City and Contractor have partnered to provide a “free disposal coupon” for self-hauling up to 9 �res per trip.

Commercial Free Green Waste Drop Off – 4 �mes a year
Special Event Brochure – Developed for those individuals who are planning a special event.

1.9 Brochure
Annually, at Contractor’s sole expense, Contractor shall prepare a professional, well- formated and designed brochure that describes, at a minimum, the services available, benefits and cost savings that may result from par�cipa�on in Recycling and Organic Materials Collec�on programs, availability of technical assistance from Contractor or other recycling companies and persons. Contractor shall submit to City for review and approval the brochure not later than ninety (90) days a�er the beginning of the Term. Contractor shall distribute the brochure via email, website, a first-class postage mailing, or inperson. Contractor is responsible for repor�ng to the City the results of phone and in-person contacts on an annual basis.

1.10 Non-Bill Mailing Lists
Contractor shall create and maintain a mailing list of all accounts that are not directly billed, so called “non-bill” Customers. Contractor may elect to u�lize the services of a direct mailing service for these “non-bill” Customers. Examples of non-bill Customers are apartments, duplexes, mobile homes, condominiums, assisted living facili�es, and other lease term/tenant situa�ons such as a business park or strip mall. The mailing list shall be updated on an annual basis at a minimum and shall iden�fy the number of non-bill Customers who are “on service” through a central billing or property owner/property manager. The programs requiring an annual mailing to non-bill Customers will include outreach and educa�on materials. Addi�onally, Customers who prepay their bill annually and do not receive monthly bills shall be included on this mailing list (iden�fied as “prepay” Customers) and shall also receive the outreach and educa�on materials. It is the Contractor’s discre�on to do a single mailing once a year or mul�ple mailings to disseminate the outreach and educa�on materials.

Sec�on 2: Public Educa�on and Outreach for 3-Cart Program Transi�on Contractor will partner with the City to develop public educa�on and outreach materials and campaigns.

In consulta�on with City staff, a Public Educa�on Plan (PEP) will be developed during the transi�on planning period and presented to the City for approval. 122

2.1 Goals of Transi�on Educa�on and Outreach Program
• Prepare Single-Family Residen�al Customers for changes in the new program, such as different trucks and/or mul�ple Collec�on vehicles on their route, as well as other opera�onal changes such as pickup �mes, etc.
• Educate Customers about simple ways to move toward zero waste and create a personal connec�on to citywide goals.
• Develop look and feel for materials and key messages. • Provide key news media with background on Contractor team and 3-Cart Program. • Develop partnerships with organiza�ons, corpora�ons, etc. for full implementa�on of outreach programs during contract.
• Finalize outreach details and budgets.

To achieve these goals, the team proposes a highly visual and innova�ve outreach program to ensure significant behavior changes and the real-world success of the new Recycling Materials and Organic Materials Collec�on program. Ongoing route reviews and facility audits will measure Organic Materials Diversion and waste reduc�on and monitor the efficacy of outreach programs, allowing the team to con�nuously adjust programs and messages for maximum impact.

This will be an innova�ve and highly strategic outreach program that takes advantage of all available media and builds a connec�on to neighborhoods and communi�es in the City. Using mo�va�onal and culturally relevant techniques that prompt consumers to take ac�on, the outreach program will u�lize the latest research in behavioral economics to create las�ng changes on the habits of the City’s residents and business owners. We will weave in messages designed to prompt behavioral changes, using both cu�ng edge and tradi�onal media elements that will earn consumer aten�on.

Contractor team members will work closely with the City to establish accountability throughout the transi�on effort. Regular check-in mee�ngs will be established between the two par�es, ensuring fluid communica�on and maximum efficiency.
123

EXHIBIT D

REPORTING
124
Exhibit D
Repor�ng
The City reserves the right to require reasonable changes to the content and/or format of any and all reports that the Contractor is required to provide to the City under the Agreement or this Exhibit D. The City also reserves the right to require the Contractor to provide any other informa�on that it reasonably deems necessary for effec�vely administering its franchise with the Contractor in a complete and �mely manner, with the understanding that determina�on of addi�onal informa�on does not impose addi�onal costs on the Contractor. Reports shall be submited in electronic format, with all numeric informa�on submited in MS Excel.

Contractor must furnish City with any addi�onal reports as may reasonably be required, such reports to be prepared within a reasonable �me following the repor�ng period. Contractor will provide reasonable assistance to City in preparing annual reports to CalRecycle (the “Electronic Annual Report” or EAR), including but not limited to supplying required data for prepara�on of the reports, and comple�ng all required data input in the waste repor�ng so�ware system. In the event that CalRecycle requires City to report an Implementa�on Schedule to comply with AB 341, AB 1826, SB 1383, SB 1594 and other Applicable Laws, Contractor will provide assistance to City in preparing a report, including Contractor’s policies and procedures related to compliance with AB 341, AB 1826, SB 1383, and other Applicable Laws and how Recycling or Organic Materials are Collected, a descrip�on of the geographic area, routes, list of addresses served and a method for tracking Contamina�on, copies of route audits, copies of no�ces of Contamina�on, copies of no�ces, viola�ons, educa�on and enforcement ac�ons issued, and copies of educa�onal materials, flyers, brochures, newsleters, website, and social media.

Annual Reports
Annual reports are to include the informa�on listed under the headings “Monthly/Quarterly Reports” and “Annual Reports – Addi�onal” below, at a minimum, compiled and reported for each month of the year, and as an annual total. Annual totals are also to be provided for all previous years of the Agreement for purposes of comparison. The informa�on listed below shall be the minimum reported for each service. To the extent that the requested informa�on is not tracked directly by the Contractor or cannot be specifically established due to the nature of the Contractor’s opera�ons, the Contractor shall present to the City a proposed method for es�ma�ng the required informa�on, the reasonableness of which shall be subject to the approval of the City.

Monthly/Quarterly Reports

1. Compliance Reviews. Contractor shall report the date that compliance reviews were conducted, and the name and �tle of each person that conducted the reviews. Contractor shall report the results of the review (i.e., Contractor’s findings as to whether the Service Recipients reviewed are subscribed for Organic Materials collec�on service, have an applicable waiver, or neither) and any relevant evidence suppor�ng such findings (e.g., account records). Contractor shall provide copies of any educa�onal materials issued pursuant to such reviews. Contractor shall report to the City all Customers discovered to be out of compliance with the SB 1383 Regula�ons, including a list of the Customers, the type of 125
viola�on, ac�ons taken to educate those Customers, and contact informa�on for those Customers. This includes iden�fying Residen�al and Commercial Customers that are subscribed to Solid Waste Collec�on service but that are not subscribed Organic Materials Container Collec�on service. Contractor must also provide the following informa�on:
• The total number of Non-compliance complaints
• Total number of waiver requests

2. Contamina�on. To the extent required by Applicable Law, the quarterly report must include a summary of all instances of qualifying Contamina�on under the procedures in Sec�on 4.10 of the Agreement. This summary must include the total number of accounts where Contamina�on occurred, the total number of Contamina�on Viola�on No�ces issued by Contractor to Customers, a list of accounts where such no�ces occurred, and the total number of instances where Container size or Collec�on frequency was increased specifically due to Contamina�on. Within twenty (20) Work Days of request by City, Contractor will provide copies of the Contamina�on Viola�on No�ces and the digital documenta�on of Contamina�on. The quarterly report must include each Customer incurring a charge for Contamina�on in the previous quarter. Contractor shall provide a descrip�on of Contractor’s process for determining the level of Container Contamina�on under the Agreement. Contractor shall provide documenta�on rela�ng to observed Prohibited Container Contaminants, whether observed during route reviews or otherwise. Contractor shall provide copies of the form of each no�ce issued to Customers for Prohibited Container Contaminants, as well as, for each such form, a list of the Customers to which such no�ce was issued, the date of issuance, the Customer’s name and service address, and the reason for issuance (if the form is used for mul�ple reasons). This informa�on will also be provided monthly to any other government en�ty approved by the City. Contractor shall report the number of �mes no�ces were issued to Customers for Prohibited Container Contaminants and the number of Containers where the contents were disposed due to observa�on of Prohibited Container Contaminants.

3. Collec�on Overage Charges. The quarterly report must include each Customer incurring a fee charge for an overage in the previous quarter.

4. Service Recipient Complaints Log. The quarterly report must include the Customer call log collected from the previous quarter, including a summary of the type and number of complaints and their resolu�on.

5. Missed Pickups. The quarterly report must include a summary of each Customer experiencing a missed pickup in the previous quarter along with a descrip�on or the reason for the missed pickup.

6. Non-Collec�on. The quarterly report must include a summary of each Customer receiving a NonCollec�on No�ce in the previous quarter along with a descrip�on for the Non-Collec�on No�ce.

7. On-hold Accounts. The quarterly report must include each Customer that was not billed in the previous quarter due to vaca�on hold, vacancy, etc.

8. Waiver Requests. The quarterly report must include the total number of waiver requests received and the total number of waivers approved.

9. Special Events. The quarterly report must include the number of special events and disposal tonnage, including a summary of the services provided and educa�onal materials distributed. 126
Annual Reports - Addi�onal
Annual reports to City must also include:

1. Compliance. Contractor must document educa�on and outreach conducted, public event par�cipa�on, school visits, compliance no�ces mailed, site visits to meet the requirements of SB 1383, service level audits completed, informa�on distributed, and media used, and community events hosted. This must include public educa�on ac�vi�es undertaken during the year, including distribu�on of bill inserts, collec�on no�fica�on tags, community informa�on and events, tours and other ac�vi�es related to the provision of Collec�on services. Contractor shall also provide copies of all outreach and educa�on informa�on (including flyers, brochures, newsleters, invoice messaging, website and social media pos�ngs, emails, and other electronic messages), including the date the informa�on was disseminated or the direct contact made. For website and social media pos�ngs, this shall be the date posted. Contractor must report the total number of Commercial Customers serviced and the number of Containers, Container sizes and frequency of Collec�on for Solid Waste and Organic Materials for each non-exempt Commercial Customer.
• The total number of non-exempt Commercial Customers that fall under the AB 341 or AB 1826 thresholds, and the total number of those non-exempt Commercial Customers that are not subscribed to Commercial Organic Materials Collection Service.
• A summary of the type of follow-up outreach that was provided to those nonexempt Commercial Customersthat are not subscribed to Commercial Organic Materials Collection Service.

2. Route Reviews. Contractor shall report the date that Contamina�on route reviews were conducted, the name and �tle of each person that conducted the reviews, a list of the account names and addresses covered by the review, and a descrip�on of each route reviewed, including Contractor’s route number. Contractor shall also provide details regarding the results of the reviews (i.e., the addresses where any Prohibited Container Contaminants were found), and any photographs taken.

3. Tonnage and Service Data. Contractor must annually report the number of unique Residen�al Customer accounts serviced and the number of unique Commercial Customer accounts serviced, tonnage of Solid Waste and Organic Materials collected and processed for diversion broken down by Container type. Quan��es should be broken down by Residen�al, Commercial, and City Service Collec�on Services.

4. Edible Food Recovery: Contractor will annually report the number of all Tier One Commercial Edible Food Generators and Tier Two Commercial Edible Food Generators known to Contractor, a list of Food Recovery Organiza�ons opera�ng in the City and known to Contractor, the annual dona�on totals for each such Generator, and verify that all SB 1383 required agreements are in place.
127

EXHIBIT E

RATE SETTING POLICIES AND PROCEDURES
MANUAL
128
South Lake Tahoe Basin
Waste Management Authority
Version 2.0
Solid Waste Rate Setting
Policies and Procedures Manual
March 30, 2012
129
South Lake Tahoe Basin
Waste Management Authority
Solid Waste Rate Setting
Policies and Procedures Manual
March 30, 2012
130
Table of Contents
Section

1. Rate Setting Goals and Objectives ................................................ 1-1 A. Introduction .................................. ............................................................. 1-1 B. Rate Setting Goals ...................................................................................... 1-2 C. Rate Setting Policies .............................................. ..................................... 1-3 D. Rate Application Process ............................................................................ 1-6 E. Allowable and Non-Allowable Costs .......................................................... 1-8

2. Base Year Rate Setting Process ....................................................... 2-1 A. Step 1 - Prepare and Submit Rate Application ........................................... 2-1 B. Step 2 - Verify Completeness of Rate Application ...................................... 2-8 C. Step 3 - Review Rate Application and Prepare Response ............................ 2-8 D. Step 4 - Prepare Draft Report and Final Report.. ..................................... 2-10 E. Step 5 - Present Final Report to JPA Board ............................................. 2-12 F. Step 6 - Notify Customers of Rate Hearing ............................................. 2-12 G. Step 7 - Receive Approval from City Council and County Boards ........... 2-12 H. Step 8 - Implement New Rates ................................................................ 2-13

3. Interim Year Rate Setting Process ................................................... 3-1 A. Step 1 - Prepare and Submit Rate Application ............................. .............. 3-1 B. Step 2 - Prepare Draft Report and Final Report ............. ............................ 3-2 C. Step 3 - Receive Approval from City Council and County Boards ............. 3-6 D. Step 4 -Implement New Rates ................................................................... 3-6 Appendix
A. Blank Forms and Worksheets ........... .. .................... .. ....................... A-1 131
[This page intentionally left blank.]
ii Solid Waste Rate Setting Policies and Procedures Manual 132
8 .
.

Section l
Rate Setting Goals and O~jectives
133
l . Rate Setting Goals
and Objectives
This section of the manual provides an overview of the rate setting process. The section includes five subsections:

A. Introduction
B. Rate Setting Goals
C. Rate Setting Policies
D. Rate Application Process
E. Allowable and Non-Allowable Costs.

A. Introduction
This manual is a step-by-step guide for the South Lake Tahoe Basin Waste Management Authority QPA), and its franchise hauler, to prepare and approve changes in solid waste collection rates. The manual establishes rate change policies, provides application forms, specifies reporting formats, identifies required supporting documentation, and describes the procedure for requesting, reviewing, and adopting rate changes. The following three (3) jurisdictions make up the JPA:
• City of South Lake Tahoe, California
• El Dorado County, California
• Douglas County, Nevada.

In 1996, the JPA developed a "Solid Waste Collection, Recycling, and Transfer Station Operations Rate Setting Policies and Procedures Manual' ( 1996 Manual) as a tool to use to regulate solid waste rates. This version (version 2.0) represents the first update to the 1996 Manual since that time.

The franchise hauler for the three (3) jurisdictions is South Tahoe Refuse Company, Inc. (STR). Each jurisdiction has a franchise agreement with STR for collection and disposal of refuse as follows:
• Collection Franchise Agreement between El Dorado County and South Tahoe Refase Company, Inc., dated February 13, 1995 • Solid Waste Services Agreement between City of South Lake Tahoe and South Tahoe Refase Company, Inc., dated August 21, 2001 • Solid Waste Services Agreement between Douglas County and South Tahoe Refuse Company, Inc., dated October 2006. ' ' The franchise agreement has been amended three times. On March 15, 2007, the franchise was amended to reflect the correct franchise fee (First Amendment). On October 15, 2009, the franchise was amended to update indices used in the cost-of-living adjustment (COLA, Second Amendment). The most recent amendment was signed on December 21, 2009, again revising the COLA, to account for negative rate changes (Third Amendment). 134
Table 1- 1
South Tahoe Refuse Company, Inc.

Business Divisions
-- Divisions Service Areas
I. South Tahoe • City of South
Refuse Company Lake Tahoe
• Unincorporated
El Dorado County
• Douglas County,
Nevada

2. American River • Unincorporated
Disposal El Dorado County

3. Sierra Disposal • Unincorporated
Service El Dorado County
Covered
by Manual
Yes
No
No
Each franchise agreement currently has slightly
different terms and conditions for how rates are
set. The intent of this manual update is to replace
these varied rate setting terms and conditions with
common rate setting terms and conditions that the
JPA, and the three (3) jurisdictions, can agree to,
and apply. The intent of this manual update is
for each jurisdiction to incorporate this updated
version 2.0 of the manual, by reference, into their
respective franchise agreements with STR.

This manual is meant as a tool for setting rates
for the three (3) jurisdictions, combined. The JPA
will be responsible for reviewing rate applications
submitted by the franchised hauler. The JPA will
recommend percentage rate changes to apply to the
three (3) jurisdictions.' Each jurisdiction, however,
will have the ultimate authority to approve the
JPA's rate change recommendation (i.e., at the city
council or board of supervisor level).
3 2 For base year reviews, there would be one recommended rate change for the City of South Lake Tahoe and Douglas County, and one recommended rate change for El Dorado County. For interim year reviews, there would be one recommended rate change for the City of South Lake Tahoe and El Dorado County, and one recommended rate change for Douglas County.
3 Interim year rate setting for the City of South Lake Tahoe and Douglas County is procedural and does not require a rate hearing. Interim year rate setting for El Dorado County does require a rate hearing.

The franchised hauler, South Tahoe Refuse
Company, Inc. , has three (3) divisions as shown
in Table 1-1, left. T he South Tahoe Refuse
Company represents the division covered by
this manual.

The JPA intends for this manual to be revised
over time, as needed, to reflect changes in objectives
or modifications to the franchise agreements. 4
B. Rate Setting Goals
The primary goal of the rate setting process and
methodology is to determine solid waste collection
rates which are fair to customers and which provide
a fair return to the franchise hauler. A total of six
(6) rate setting process goals were considered in
developing this rate setting methodology:

1. The JPA and franchised hauler should start
with a strong and committed partnership.

The JPA and franchised hauler should view
this franchise as a business partnership where
both parties commit to use the formal rate
setting methodology, and plan continuous
communication on rate setting
throughout the franchise term.

2. Rates requested by the franchise hauler must
be justifiable and supportable. A formal
request to change rates, submitted by the
franchise hauler, should provide the basis for
all rate changes, include only allowable and
necessary costs, and provide accountability
for expenditures. In determining rates, the
JP A shall consider both the need for fairness
to the ratepayer and the need to compensate
the franchise hauler fairly and consistently
with the methodology.

3. The estimated costs of service, and resulting
solid waste rates, should be reasonable.

The JPA acknowledges that maintenance
• Should the JPA dissolve at any time in the future, the three jurisdictions have indicated a preference to continue to use this manual on a jurisdictional basis. Jurisdiction-specific rate setting would require some modifications to the methodology in that STR would have to allocate its revenues and costs to each jurisdiction.
1-2 Solid Waste Rate Setting Policies and Procedures Manual 135
of quality service is related to providing
adequate compensation, and financial
incentives, for continued good performance.

Revenues generated should be adequate
to fully meet reasonable costs-of-service.

The resulting monthly fees for solid waste
collection service should be comparable
to those charged in other jurisdictions for
providing similar services.

4. The process should be kept as simple as
possible, while ensuring that any rate
request is justifiable and reasonable. The
process should be easy to explain and not
place an undue cost on either the JPA,
the jurisdictions, or the franchise hauler
to implement. The process also should
minimize administrative efforts of the JPA,
and its jurisdictions.

5. The rate setting process should provide
mechanisms for ongoing rate review
and rate stability. A periodic, formal, and
thorough JPA review (every three years)
of financial and operating data will set an
expectation for the hauler and ultimately
will protect the ratepayer. These reviews
should be conducted consistently and in
accordance with set schedules in the
manual. The process should prevent large,
unexpected fluctuations in rates due to
changes in costs or from the need to fund
a broadening scope of waste management
services. This formal process also serves to
meet the fiduciary responsibility of the JPA,
and individual jurisdictions, to its ratepayers.

6. The JPA and franchised hauler should
strive to maximize opportunities to
improve performance and service quality
while maintaining cost competitiveness in
the marketplace. In a "cost-plus-profit"
contract such as exists between the
jurisdictions and franchised hauler, there
can be less incentive for the hauler to
decrease costs because increases in allowable
costs actually result in increases in allowable
operating profit levels. Ideally, the JPA, and
the hauler, should set rates in a base year,
and the hauler should attempt to reduce its
costs in subsequent years.

C. Rate Setting Policies
The JPA will use the following eight (8)
policies when setting rates:

1. Use the Operating Ratio Method to
Determine Profit - The JPA will use the
operating ratio (OR) method to establish
revenue requirements for setting rates.

The operating ratio establishes revenue
requirements based on allowable expenses
and is defined as follows:

Operating = Allowable expenses
ratio Allowable expenses + Profit
The operating ratio effectively determines
the profit allowed to the franchise hauler on
operating costs. Total revenue requirements
then are determined as the sum of:
(1) allowable operating costs, (2) allowable
profit, and (3) pass-through costs (for which
the franchise hauler receives no profit).

Specific operating ratios are provided in
Exhibit 1-1 on page 1-10.

2. Do Not Allow Retroactive Rate Increases -
There will be no allowance for a retroactive
increase in rates, except by special
agreement, or by party default. Retroactive
reimbursements can move rates out of
alignment with the actual costs of providing
service. This process and methodology
codifies strict rate review timelines and
responsibilities. If the JPA, jurisdictions,
and hauler adhere to these timelines for
submission and rate change approval, and
no party defaults on these timelines, all
future rates should be established such that
there is no need for retroactive rate increases.

3. Do Not Allow Balancing Accounts -
This rate setting process is based on projecting
results during base years. Thus, actual base
year results likely will differ from base year
projections. In some regulatory environments,
these differences are "balanced" in subsequent
years by using a balancing account.

Balancing accounts are occasionally used in
the waste industry as an accounting-based
approach to true up a previous year's
1-3
136
projections to actual financial results. A
balancing account can then be used to address
differences between actual and projected
results. A balancing account requires
substantial administration, reporting, and
control measures which determine how funds
in the account are invested and managed.

When a balancing account is established,
terms and conditions related to these accounts
are clearly documented as part of a rate
setting process and methodology manual.

Also, terms and conditions are specifically
incorporated by reference into contractual
agreements between the respective parties.

The problem with balancing accounts is
that by funding surpluses and deficits using
rate revenues, rates charged to customers
ultimately do not reflect the true cost of
providing service to customers because they
include retroactive components. Over time,
current ratepayers can end up ultimately
subsidizing, or beneficing from, prior
generations of ratepayers. For example,
if rates are raised to pay off a balancing
account, then current ratepayers bear the
responsibility of what previous ratepayers
should have paid for initially.

Municipal finance principles generally
require a strong nexus between (1) cost-ofservice and benefits and (2) cost-of-service and rates. Use of a balancing account
generally breaks down this nexus and
results in rate inequalities.

A balancing account also frequently is less
useful when a long-term franchise exists.

With a long-term business partnership,
there is less need to recover variances
between actual and projected results on
a year-to-year basis. These variances can
often be absorbed over the course of a long
term franchise, such as is the case between
the jurisdictions and franchise hauler.

Balancing accounts are not designed to
account for differences between "rates asked
for" and "rates received." They also are not
designed for accounting for differences
between "rates received" and "a fair rate of
return. " Balancing accounts, by their very
nature, result in retroactive rates, which do
not reflect cost-of-service based rates.

4. Do Not Allow Fuel Surcharges - There
will be no separate "fuel surcharges" added
to rates to account for increases in fuel
costs. Fuel surcharges create accounting
problems (e.g., which fuel index to use,
over what time period to use the index,
and determining what portion of the rate
that fuel costs represent). Fuel surcharges
require separate accounting from allowable
rate changes which may already reflect
compensation to the franchise hauler for
changes in fuel costs (e.g., as part of a CPIbased rate change during interim years).

Fuel surcharges lag actual changes in fuel
prices (by as much as one year), so changes
in the fuel surcharge are disconnected
from current changes in fuel prices. Fuel
costs typically represent a relatively small
portion of the overall rate charged (less
than ten (10) percent), minimizing the
impact of fluctuating fuel prices on overall
rates. Finally, once established, fuel
surcharges can linger within rates during
periods when fuel prices are stable and
when a fuel surcharge is not necessary.

5. Analyze Related Party Transactions -
The company has certain related-party
transactions with affiliates. The company
must disclose all related party transactions
as part of the rate setting process.

The JPA will allow only those transactions
with these related parties which are "market
based." The JPA will assess whether related
party transactions are conducted on an
"arms length" basis, equivalent to terms as
with an unrelated party in the conditions
of a competitive, free market, environment.

STR related parties are identified in
Table 1-2, on the next page.

During its review, the JPA may request that
STR provide the following information in
support of related party transactions:

D Allocation methods used, if applicable
1-4 Solid Waste Rate Setting Policies and Procedures Manual 137
Table 1-2
STR Related Parties and Transactions
Related Company Relationship/Transaction
Douglas Disposal, • Owned by same ownership
Inc. (DOI) group as STR
• STR leases facility space to DOI
• STR leases office space to DOI
• STR leases computers to DOI
• STR loans money to DOI
Tahoe Basin • Owned by same ownership
Container Service group as STR
(TBC) • STR leases facility space and
equipment to TBC
• ST R leases office space to TBC
• STR rents computers to TBC
• STR loans money to TBC
American River • Owned by same ownership
Disposal (ARD) group as STR
• STR leases office space to ARD
• STR leases computers to ARD
• STR provides office contract
labor to ARD
Sierra Disposal • Owned by same ownership
Service (SOS) group as STR
• ST R leases office space to SOS
• STR leases computers to SOS
0 Nature, extent, and magnitude of
the relationship
0 Terms of the related parry transaction
(e.g., timing of payments, term length)
0 Historical information (e.g., ownership)
0 Dace of acquisition (if applicable)
0 Purchase price of item (if applicable)
0 Financing terms for item (if applicable).

The JPA may require STR to provide up
to three (3) comparable lease races for
leases of facilities and equipment. For
related parry company leases, the JPA may
require STR to identify financing charges,
or profit components, within these lease
rates. STR should be prepared to support
the business purpose for each related
parry transaction.

The JP A will examine how related parry
transactions are created for rate setting
purposes in the Base Year Rate Application.

The JPA will assess whether related
parry transactions already have a profit
component on chem, and if so, treat these
related parry transactions as pass-through
costs (without a profit component)
to avoid a "double counting" of profit.

The JPA will consider all of the above
factors in determining whether the related
parry transaction is an allowable cost and
is charged at a reasonable amount.

6. Account for Prior Resource Recovery
Facility (RRF) Rate Funding - For each of
the three consecutive years of 2005, 2006,
and 2007, each of the three jurisdictions
approved a nine (9) percent race increase
for STR. The first of these three nine (9)
percent race increases, implemented in 2005,
was provided to fund general STR cost
increases. For the second nine (9) percent
race increase implemented in 2006, a total of
six (6) percent of chis nine (9) percent rate
increase was provided to fund operating
and capital costs of the Resource Recovery
Facility (RRF) project. For the third nine (9)
percent rate increase, implemented in 2007,
a total of six ( 6) percent of chis rate increase
also was provided to fund operating and
capital costs of the Resource Recovery
Facility (RRF) Project.

For 2006, and 2007, El Dorado County
and Douglas County required chat STR
pay the six ( 6) percent race increase, which
was provided to cover the RRF, to the JPA.

The JPA then released these amounts back
to STR upon completion of certain RRF
project milestones.

For 2006, and 2007, the City of South
Lake Tahoe required chat STR pay the
six (6) percent rate increase, which was
provided to cover the RRF, to the City
of South Lake Tahoe. The City of South
Lake Tahoe then released these amounts
back to STR upon completion of certain
RRF project milestones.
1-5
138
Table 1-3
Recycling Revenue Bonus Amounts
For Extraordinary Diversion
(2012 to 2018)
-
Minimum Minimum
Diversion Rate Diversion Rate
Years To Achieve 25% To Achieve 50%
of Recycling of Recycling
Revenue Share Revenue Share
2012 to 2014 38 44
2015 to 2016 40 47
201 7 co 2018 43 50
STR received these RRF-related funds and
collected project revenues in excess of
project expenses totaling $4,722,285. The
RRF project was completed in April, 2010.

Beginning at the next base year (2012),
STR will include a credit to JPA
jurisdiction ratepayers of $787,048 each
year through the end of 2017. This
amount was determined by dividing the
credit of $4,722,285 by six years. The
credit amount of $787,048 will be applied
to the base year rate in 2012 and 2015.

This means that in each base year, the
$787,048 amount will be reset as a credit
line item in the base year rate application.

7. Use Recycling Materials Sales Revenue
Sharing - There will be a recycling revenue
bonus which is tied to STR diversion levels.

In addition to the calculation of allowed
profit, STR is allowed the recycling revenue
bonuses shown in Table 1-3, below. For
years 2019 and beyond, the JPA will reassess
whether the recycling diversion rates, which
trigger revenue sharing, remain sufficient
to meet State of California diversion
requirements. For 2019 and beyond, the
JPA may adjust the diversion rates, which
trigger revenue sharing, upward by up to
three (3) percent per year to achieve greater
State of California diversion requirements.

8. Eliminate Annual Summary Report -
Beginning in 2010, STR will no longer be
required to submit an Annual Summary
Repon as had been the required practice dating
back to the original 1996 Manual version.

9. Unforeseen Circumstances - The JPA
and/or the three jurisdictions shall consider
a proposed revision in STR's rates whenever
STR establishes to the satisfaction of the
JPA and/or each jurisdiction that unforeseen
circumstances have arisen that have or will
materially affect STR's costs or revenues
under this rate manual.

D. Rate Application Process

1. Base Year Process
The JPA requires that the franchise hauler
submit a detailed Base Year Rate Application once
every three (3) years. With the Base Year Rate
Application, the franchise hauler provides detailed
financial and operating information which is
carefully reviewed and analyzed by the JP A.

These detailed reviews are referred to as "base
year reviews" in the methodology.

With the Base Year Rate Application, the franchise
h~uler submits audited financial statements for the
previously completed fiscal year. These statements
serve as the base documents for the application.

The franchised hauler should reconcile financial
information contained in the Base Year Rate
Application with the audited financial statements
to provide assurance that all of the company's
activities are accounted for.

The timing of the base year process is shown
in Figure 1-1, on the next page. The schedule
is expected to start with submission of the Base
Year Rate Application on May 31" of the year
proceeding each base year. The process targets
an implementation date of January 1" of the
base year. 5
5 For Douglas County, the maximum rate increase is 9.9 percent before the County must take the increase to the County citizens for a vote of approval.
1-6 Solid Waste Rate Setting Policies and Procedures Manual 139
Figure 1-1
Timing of Base Year Process
2 Verify Completeness of Rate Application
3 Review Rate Application and Prepare Response
4 5
6 7
8 Prepare Draft Report and Final Report
Prepare Final Report to JPA Board
Notify Customers of Rate Hearing
Receive Approval from City Council and
County Boards
Implement New Rates
Table 1-4
Base Year Financial Statement Requirements
(Fiscal Year Ending June 30)
Base Prior Current Base
Year Year Year Year
(Audited) (Estimated) (Projected)
2012' 2010 2011 2012
2015 2013 2014 2015
2018 2016 2017 2018
2021 2019 2020 2021
2024 2022 2023 2024
2027 2025 2026 2027
The Base Year Rate Application requires three
(3) years of data, including a year of actual data
(based on audited information), a year of
estimated data (based on year-to-date information
available at the time the application is submitted),
and the projection, or base year. The required
years, and types, of data for upcoming base year
reviews are displayed in Table 1-4, above. For
• Represents the fiscal year ending June 30, 2011 .
example, for the 2012 base year, STR would
prepare the Base Year Rate Application using
audited 2010 data, estimated year-to-date 2011
data, and entirely projected 2012 data.

STR operates on a fiscal year ending June 30.

Thus, for the current year, STR should have
available the first three quarters of compiled,
not audited, fiscal year data to use for its current
year estimate (i.e., data through March of the
current year).

2. Interim Year Process
In each of the "interim" two (2) years between
"base" years, should the franchised hauler want to
increase rates, the JPA requires that the franchise
hauler submit an Interim Year Rate Application
for an interim year rate change. The scope and
content of the Interim Year Rate Application is
much more limited than a base year request. The
franchised hauler is not obligated to request an
increase in rates and can instead request to leave
rates unchanged.
1-7
140
Figure 1-2
Timing of Interim Year Process
2 Prepare Draft Report and Final Report
3 Receive Approval from City Council and County Boards. 4 Implement New Races
During the interim years, STR shall be entitled to
increase its rates based upon the following formula:
(1) eighry-five (85) percent of the annual
percentage change in the most recent actual,
not forecasted, change in the Consumer
Price Index, All Urban Consumers,
U.S. Ciry Average - Garbage and Trash
Collection (December 1983= 100, series
CUUROOOOSEHG02) ("CPI") applied to
costs other than landfill disposal costs, plus
(2) projected changes in landfill disposal costs.
7 For the first part of the calculation (noted as
(1) above), the JPA and franchised hauler will use
the percentage change in the CPI for the prior
June to June twelve-month period. This June to
June CPI data will be available at the time the
franchised hauler submits the Interim Year
Application in August (see Exhibit A-4, for sample
of CPI percent change calculation).

Interim year rate adjustments are subject to a
"floor" and 'a "cap." During interim years, rates
shall not be greater than six ( 6) percent nor less
than one (1) percent, regardless of the rate
change calculated by the interim year formula.

The timing of the interim year process is
shown in Figure 1-2, above. The schedule is
expected to start with submission of the Interim
7 These landfill disposal costs are currently set by a non-related party to STR, under a long-term disposal agreement.

Year Rate Application on August 31" of the year
proceeding the interim year. The process targets
an implementation date of January 1" of the
interim year.

E. Allowable and
Non-Allowable Costs
Rates are established for each base year based
on the hauler's projected revenue requirement.

The revenue requirement is defined as the sum
of the following: ,
• Allowable costs
• Allowable operating profits
• Pass through costs.

For purposes of computing the revenue
requirement, it is necessary to determine which
of the franchise hauler's costs are (1) allowable
costs, (2) pass through costs, and (3) nonallowable costs.

1. Allowable Costs
When a cost is said to be "allowable," that
cost, plus a profit component associated with
that cost, is included in rates charged to the
ratepayers. Allowable costs are often those costs
that are integral to the hauler's operation and/or
are associated with actual activiry performed by
the hauler.
1-8 Solid Waste Rate Setting Policies and Procedures Manual 141
Table 1-5
Allowable Depreciation Methods and Useful Lives
for STR Assets Purchased After January 1 , 201 O - -
Category Method Useful Life
(Years)
Carts SL' 5
Office Equipment SL 5
Vehicles and Equipment SL 8
Buildings and Leasehold SL 20 Improvements
The hauler is allowed to earn a profit on certain
costs. The majority of allowable costs are direct
labor, equipment costs and facility costs, landfill
disposal costs, office salaries, and general and
administrative costs. These allowable costs are
defined in Exhibit 1-1, on the following page.

Exhibit 1-2, following Exhibit 1-1, includes a
chart of expense accounts (based on current STR
financial statements) for allowable costs, which
serves to further clarify categories of allowable costs.

The following costs are clarified because of
their special treatment for rate setting:
• Depreciation - Table 1-5, above, shows
depreciation methods and useful lives, by
asset type, recommended for rate setting
purposes. Current methods used to
depreciate capital items, which were in use
prior to this version 2.0 of the manual, are
allowed to continue. Useful lives in Table
1-5 are for new capital purchases (i.e.,
those made during and after 2010).
• Officer's Salaries - Reasonable officer's
salaries are considered an allowable cost.

Officers are employees fully performing
management functions identified in the
franchise agreement. Officer's salaries
include base compensation plus bonuses
and do not include profit distributions
to owners. The JPA shall set the total
combined officer's salaries for the franchise
• Represents straight-line depreciation.
hauler, at a reasonable level, during each
base year. For purposes of establishing
base year rates, the total amount of
officer's salaries of six ( 6) percent of gross
revenues is deemed reasonable.
9 • Materials Recovery Facility and Resource
Recovery Facility Capital Costs - The
rate treatment of equipment and building
costs associated with the STR Materials
Recovery Facility (MRF) and Resource
Recovery Facility (RRF) is summarized in
Table 1-6, on page 1-13. These rate
treatment provisions are based on the
agreed upon terms and conditions at the
time the MRF and RRF were constructed.
• Blue and Green Bag Program Costs -
STR currently provides blue bag curbside
recycling services to JP A customers. STR
collects these blue bags with the refuse
container and sorts the materials at its
Materials Recovery Facility (MRF). Blue
bags are, however, currently paid for by
the jurisdictions themselves and not STR.

For the blue bag program, the costs for
blue bags are not included in current rates
charged to JPA customers.

STR plans to roll out a yardwaste program,
with or without the green bags also
collected with the refuse container.

Materials from the yardwaste program will
be sorted at STR' s Resource Recovery
Facility (RRF). For the yardwaste program,
the costs for green bags are not included in
current rates charged to JPA customers.

During the next rate review, blue bag and
yardwaste program revenues and costs will
be fully reflected in the rates charged to
JPA customers. The full costs of the blue
bag and yardwaste programs will be
9 Currently, officer salaries have been limited to an agreed upon amount specified in the franchise agreements to be adjusted annually by a CPI. STR distributes the officer salaries, under its discretion, within the limit allowed under the current franchise agreements for the City of South Lake Tahoe, El Dorado County, and Douglas County. Providing for officer salaries of 6 percent of gross revenues will provide about the same limit for officer salaries as the allowable amount specified in the franchise agreements.
1-9
142
Exhibit 1- 1
Definition of Financial Terms Page I of2
Application Line Number/Item Definition
Allowable Operating Costs
I. Direct Labor Wages, and related benefits, paid to refuse collection staff, including wages, overtime, payroll taxes, health and welfare benefits, workers compensation, and pension benefits.

2. Equipment Costs Includes cost of equipment depreciation, equipment leases, equipment insurance, equipment and Facility Costs repair and maintenance, fuel, and other miscellaneous equipment expenses. Facilities expenses consist of building rent, building depreciation, and building repair /and maintenance.

3. Landfill Disposal Costs Costs to dispose of solid waste at landfills.

4. Office Salaries Wages, and related benefits, paid to office and administrative staff, including wages, overtime, payroll taxes, health and welfare benefits, workers compensation, and pension benefits.

5. General and General and administrative coses including:

Administration Costs • Advertising
• Colleccion fees
• Contract labor
• Dues and subscriptions
• Employee education
• General insurance
• Office repair and maincenance
• Officer salaries and benefits (less chan or equal to six (6) percent of gross revenues) • Professional fees
• Property caxes
• Office expense
• Licenses
• Supplies
• Travel
• Utilities.
1-1 O Solid Waste Rate Setting Policies and Procedures Manual 143
Exhibit 1-1
Definition of Financial Terms , tir ~""J) Page2 f2
Application Line Number/Item Definition
Operating Ratio (OR)
Allowable Operating Profit
MRF and RRF Principal
Payments
Interest Expense
Franchise Fees
Resource Recovery Facility Fund
Credit
Allowable Operating Profit
For the City of South Lake Tahoe and Douglas County, a profit is allowed based on a sliding scale which varies with STR's recovery percentage as follows:

Operating Ratio Recovery Percentage

94.34 0-15%

93.90 16

93.46 17

93.02 18

92.59 19

92.17 20

91.74 21

91.32 22

90.90 23

90.50 24
89 25-28
88 29-32
87 33-100
For El Dorado County, a profit is allowed, based on a targeted operating ratio ranging betweer 87 and 91 percent. For El Dorado County, in the base year, if rates remain unchanged at an operating ratio within the range of 87 to 91 percent, and the franchise hauler actually realized an operating ratio within this range, then that same operating ratio resulting in no rate change is used, and no rate change occurs. Otherwise, an 89 percent operating ratio is used for the bas year calculation. For El Dorado County, the operating ratio for the first base year (2012) will be set at 89 percent.

Established by the allowable operating ratio and equal to total allowable costs divided by the allowable OR, less total allowable costs.

Pass Through Costs
For the City of South Lake Tahoe and Douglas County, principal payments on debt used to finance the Materials Recovery Facility (MRF) and Resource Recovery Facility (RRF). For El Dorado County, principal payments on the debt used to finance the MRF and RRF will be allowed with profit.

For the City of South Lake Tahoe and Douglas County, interest on debt used to finance all STR operations. For El Dorado County, interest on the debt used to finance the MRF and RRF will be allowed with profit.

Equal to five (5) percent of gross residential, commercial, and recycling revenues for the City of South Lake Tahoe and El Dorado County, and three (3) percent of gross residential, commercial, and recycling revenues for the Douglas County. 10 Rates will be reduced by an amount of$288,121 (plus afcer tax interest) for each year between 2012 and 2024
10 This franchise fee amount is subject to change by any of the three (3) JPA jurisdictions. 1- 11
144
Exhibit 1-2
Chart of Accounts
for Allowable Operating Costs
Category Description
Direct Labor • Direct Labor
• Direct Labor Benefits
• Direct Labor Insurance
• Direct Labor Workers Compensation
• Direct Labor Pension
• Direct Labor Payroll TaJCes
Equipment Costs and Facility Costs • Equipment and Facility Depreciation • Property Rent
• Equipment Rent
• Fuel
• Repairs and Maintenance
Landfill Disposal Costs • Dump Fees
Office Salaries • Office Scaff Salaries
• Office Scaff Benefits
• Office Scaff Insurance
• Office Scaff Workers Compensation
• Office Scaff Pension
• Office Staff Payroll T aJCes
General and Administrative Costs • Advertising
• Contract Labor
• Dues and Subscriptions
• Employee Education
• General Insurance
• Office Expense
• Officer Salaries
• O cher Administrative Costs
• Licenses and Fees
• Property T aJCes
• Supplies
• Travel
• Ucilicies
1-12 Solid Waste Rate Setting Policies and Procedures Manual 145
Table 1-6
Materials Recovery Facility and Resource Recovery Facility Capital and Operating Cost Treatment -
Description
Materials Recovery Facility and Resource Recovery Facility Depreciation Equipment Depreciation II
Building Depreciation
Materials Recovery Facility and Resource Recovery Facility Building Financing Interest
Principal
12 Materials Recovery Facility and Resource Recovery Facility Equipment Financing Interest
Principal
- Rate Setting Treatment
Allowable with Profit
Non-Allowable Cost
Pass-Through Expense
Pass-Through Expense
Pass-Through Expense
Non-Allowable Cost
11 Includes reasonable depreciation on equipment used in the Materials Recovery Facility and Resource Recovery Facility. 12 Includes debt financing on loans provided by the South Lake Tahoe Basin Waste Management Authority. For El Dorado County's portion of the debt financing, these MRF and RRF financing amounts will be treated as an allowed cost. 1-13
146
considered an allowable cost (with profit) for
rate setting purposes. STR will then thereafter
purchase and provide the blue and/or green
bags to its customers as determined by the
JPA. The individual jurisdictions will no
longer be required to purchase and provide
blue and/or green bags to their customers.

2. Pass Through Costs
Pass through costs are costs included in rates
charged to customers, however these costs do not
have an associated profit component. Pass through
costs are generally transactional in nature and
often are thought of as costs not associated with
any significant effort performed by the hauler.

The following pass through costs do not earn
a profit, but are included in determining total
revenue requirements to establish solid waste rates:
• MRF principal payments (City of South
Lake Tahoe and Douglas County) 13
• RRF principal payments (City of South
Lake Tahoe and Douglas County) 13
• I 14 nterest expense
• Franchise fees
• RRF fund credit
• Franchise fees.

3. Non-AJlowable Costs
Non-allowable costs are not allowed in rates
charged to ratepayers. These costs are disallowed
because (1) they may not be associated with the
core business, (2) they may be included implicitly
in the profit level allowed by the JPA, or (3) they
may unnecessarily complicate rate regulation
(e.g., income taxes). Costs shown in Exhibit 1-3,
on the next page, are not allowable for rate setting,
and as a result will not be passed onto ratepayers.
13 For El Dorado County, principal payments on the MRF and RRF financing are allowable costs.
14 For El Dorado County, interest on the MRF and RRF financing is an allowable cost.

Table 1-7
Recommended STR Allocation Methods For Costs
Shared with Other Non-JPA Serviced Jurisdictions
Cost Category Allocation Method
Billing costs Number of bills processed
Disposal costs Actual tonnage
Equipment costs (e.g., rental, Truck usage (over
leases, parts, fuel, supplies, representative period)
tires, repair and maintenance,
licenses, permits)
Franchise fees Revenues multiplied by
fee percentage
General and administrative Direct labor hours
costs, management fees
Loans Revenues

4. Cost AJlocations and Methodologies
The franchised hauler should provide
supporting documentation and rationale for the
allocation of expenses between the franchised
areas covered by this manual and non-JPA areas
serviced by South Tahoe Refuse Company .

Examples of the types of expenses which may
require justification for allocations may include:
• Billing costs
• Disposal costs
• Equipment costs
• General and administrative costs
• Loans to or from affiliates
• Loans to or from officers
• Management fees.

The franchised hauler should be prepared to
provide a reasonable and supportable methodology
for these cost allocations. Table 1-7, above,
provides recommended allocation methods for
various costs which may be shared between JPA
and non-JP A jurisdictions.
1-14 Solid Waste Rate Setting Policies and Procedures Manual 147
Exhibit 1-3
Non-Allowable Costs
Category
Amortization of Franchise Purchases
Charitable and Political Donations
Entertainment Expenses
Fines and Penalties
Income Taxes
Cost of Repairs Due to Operator Negligence
Costs Incurred to Serve Other Jurisdictions
(i.e., for non-JPA areas served by STR
(e.g., Forest Service areas))
-- Description
Consistent with the waste management industry, the JPA disallows amortization of franchise purchases because the operating ratio is designed to provide a return to the company sufficient to compensate for the company's investment in the business. • Costs associated with attempting to influence the outcome of any federal, state, or local election, referendum, initiative, or similar procedure, through in-kind or cash contriburions, endorsements, publicity, or similar activities. • Establishing, administering, contributing to, or paying the expenses of a political parry, campaign, political action committee, or other organization established for the purposes of influencing the outcomes of elections.

Costs incurred in hosting social events for clients or suppliers. Examples include costs of tickets, concerts, athletic events, or other performances; room rentals; cruises; entertaining guests at athletic, social, or sporting clubs and on vacation or other similar trips.

Costs associated with violations of, or failure of, the hauler to comply with federal, state, local, or foreign laws and regulations. This category of non-allowable costs can also include costs in connection with alteration or destruction of records, or other false or improper charging or recording of costs.

The operating ratio is provided on a pre-tax basis. To allow income tax expense would unnecessarily add complexity to the rate review process.

Costs of negligence on the part of the hauler which could include accidents or property damage.

The franchised hauler will be compensated for only those costs that can be directly attributable to operations within the franchised boundaries. The franchised hauler should have a clear basis for allocating shared costs to the franchise areas covered by this manual, and those franchised areas not covered by this manual.

The JPA will assess reasonableness of the revenue
and cost projections provided by the franchised
hauler in its Base Year Rate Application. Examples
of rypes of factors the JPA will consider when
assessing reasonableness of projected revenues and
costs are shown in Table 1-8, on the next page.
1-15
148
Table 1-8
Base Year Rate Review
Revenue and Cost Projection Factors ~
Description Factors to Consider in Developing Revenue and Cost Projections Revenues
RC5idential and commercial revenue5 • Projected account growth based on historical account trends, or population trends • Historical changes in tonnage (particularly for the industrial sector) Recycled materials sales revenue5 • Historical changes in recycled materials volumes • Recycled commodity pricing trends (may be highly volatile) Costs
Direct labor • Projected increases in wage rates
• Planned changes in insurance races
• Planned changes in benefit races
Equipment costs and facility costs • H istorical average trends in costs (last three years) • Inflation rates
• Fuel price history
• Depreciation schedules
• Equipment replacement plans
Landfill disposal fee5 • H istorical changes in refuse tonnage • Tipping fee rate increases, per contract
Office salaries • Projected increases in wage rates
• Planned changes in insurance rates
• Planned changes in benefit rates
General and administrative costs • Historical average trends in coses (lase three years) • Inflation rates
MRF principal payments • Loan documents
lntere5t expense • Borrowing rates
• Loan documents
Franchise fees • Projected changes in revenues multiplied by the fee amount 1-16 Solid Waste Rate Setting Policies and Procedures Manual 149
Section 2
Base Year Rate Setting Process
150

2. Base Year Rate
Setting Process
This section describes each of the eight (8) steps of the base year rate setting process.

Each step includes an overview of the seep and a detailed description of the casks required co complete the step. The section includes eight (8) subsections:

A. Step 1 - Prepare and Submit Rate Application
B. Step 2 - Verify Completeness of Rate Application
C. Step 3 - Review Rate Application and Prepare Response D. Step 4 - Prepare Draft Report and Final Report
E. Step 5 - Present Final Report to ]PA Board
F. Step 6 - Notify Customers of Rate Hearing
G. Step 7 - Receive Approval from City Council and County Boards H Step 8 - Implement New Rates.

A. Step 1 - Prepare and Submit Rate Application
Responsibility: Franchise hauler
Timing: Completed seven (7) months prior to the dace new races become effective Tasks: a.
b.
c.
d.
e.
f.
g.
h.

I.

Overview
Prepare Cost Information
Prepare Revenue Information
Prepare Operating Information
Calculate Allowable Operating Profit
Determine Franchise Fee
Calculate Revenue Requirement
Calculate Net Surplus/Shortfall and Percent Change in Rates Calculate New Percentage Race Change and Races
Prepare and Submit Race Application.

During chis seep, the franchise hauler prepares the Base Year Rate Application. This three-page form includes detailed financial and operating information and is used to determine the actual costs and revenues of the franchise hauler. Blank copies of the Base Year Rate Application are provided in Appendix A (Exhibit A-1).

Several lines in the application contain four columns. These columns are intended to show the relationship between the most recently completed year, the current year, and projections for the new "base" year. These columns are organized as follows:
151
• Column one includes actual audited
information for the franchise hauler's prior
fiscal year. This is the most recent year that
financial information is available and that
actual costs and revenues can be verified.
• Column two is for estimating performance
during the current fiscal year. The "current
year" is the franchise hauler's fiscal year prior
to the new base year. The Base Year Rate
Application is prepared during the course
of the current year. Data in this column
should include year-to-date performance
plus estimated performance during the
remaining months of the current fiscal year.
• Columns three and four are used to report
projected performance during the new base
year. This information is entirely a
projection and is utilized to determine any
rate changes. Projected information should
be developed by estimating anticipated
service levels during the base year, and
determining the revenues and expenses
which will be incurred to provide these
services. Each cost element in the application
should be reviewed and any anticipated
change in specific line items should be
included in the base year projection. For
example, if labor rates are scheduled to
change, or if landfill disposal costs are
expected to change, these changes should be
included in projections for the base year.

The relationship between these four (4) columns
for any given line item should be consistent. Any
substantial difference between each of the three (3)
years should be explained by the franchise hauler and
considered by the JPA during the review process.

The franchise hauler should provide a copy of
audited financial statements for the prior fiscal
year. Financial information from the audit is
consolidated into specific categories identified in
the application. All financial information shall be
in accordance with generally accepted accounting
principles. The franchise hauler should prepare
supplemental documentation which reconciles
the financial audit for the most recently
completed fiscal year to information provided in
the application. This documentation should be
included in the application package.
a. Prepare Cost Information
Cost information from the franchise hauler is
provided in the Base Year Rate Application. Cost
information is reported for the most recently
completed fiscal year, the current fiscal year, and the new base year. Information reported in each line item
represents the total combined costs for residential,
curbside recycling, yardwaste, commercial, transfer
station, and RRF services. Segregation of costs by
residential, curbside recycling, yardwaste, commercial, transfer station, and RRF services is not required.

Cost information includes:
• Allowable Costs
D Direct Labor (Line 5)
D Equipment Costs and Facility Costs (Line 6)
D Landfill Disposal Costs (Line 7)
D Office Salaries (Line 8)
D General and Administration Costs (Line 9)
D MRF Principal and Interest Payments
(El Dorado County) (Line 1 O)
D RRF Principal and Interest Payments
(El Dorado County) (Line 11)
• Pass Through Costs
D MRF Principal Payments (Line 15)
D RRF Principal Payments (Line 16)
D MRF and RRF Interest Expenses (Line 17)'
D Franchise Fees (Line 59)
D RRF Fund Credit (Line 18)
D Recycling Revenue Bonus (Line 19).

Definitions and specific components of these cost
categories are described in Exhibits 1-1 and 1-2,
in Section 1.
' For El Dorado County, interest on the MRF and RRF financing is an allowable cost.
2-2 Solid Waste Rate Setting Policies and Procedures Manual 152
By aggregating costs into these line items, the
JPA, and franchised hauler, can focus on major
changes without becoming distracted by large
changes in insignificant cost components. For
example, if licenses and fees doubled from
$10,000 in the current year to $20,000 in the base
year (i.e., a 100 percent increase), this might only
cause General and Administrative Costs to
increase by one percent, resulting in little impact
on the overall rate. Minor components of General
and Administrative Costs may decrease between
the current year and the base year, while others
may increase.

If one of the major cost line items in the
application changes at an unusual rate, then the
franchise hauler should be able to explain the
change. An unusual change in cost is any change
which is greater than the change in the U.S. City
Average Garbage and Trash Collection CPI. The
CPI used in the analysis should be based on the
most current actual information for the U.S. City
Average Garbage and Trash Collection CPI. This
information is available from the United States
Department of Labor, Bureau of Labor Statistics.

Cost information for the current year, and base
year, must account for any increases or decreases
in the number of customers served, or tons of
waste and recyclable material collected. Actual
increases in costs also must be included. For
example, if health benefit costs will increase in
the base year as a result of increases in premiums,
this additional cost should be included.

Cost information provided in the application
is used with operating profit to calculate the
franchise hauler's revenue requirement. The
revenue requirement is equal to the sum of the
following three categories:
• Total allowable operating costs
• Allowable operating profit
• Total pass through costs.

This revenue requirement is compared to
anticipated revenues. The JPA uses the operating
ratio (OR) method to establish revenue
requirements for setting rates.
b. Prepare Revenue Information
Revenue information is provided in this task.

Similar to cost information, revenues are reported
for the most recently completed fiscal year, the
current fiscal year, and the projected base fiscal year.

Revenues are reported in four (4) separate categories:
• Residential
• Commercial
• Transfer station and RRF revenues
• Recycled material sales.

Revenues in the base year are projected without
any changes in rates. Revenue projections are
prepared based on existing rates and the number
of customers which the franchise hauler
anticipates serving in the base year.

1. Determine Residential Revenues.

To calculate projected residential revenues
for the base year, enter the current monthly
rates by service type in the first column of
cells in lines 22 to 48, on page 2 of 3. Then
enter the projected number of accounts by
service type in the second column of cells
in lines 22 to 48, on page 2 of 3. Total
revenues for each service type are calculated
based on the following:

Multiplied lzJ
Equals
Current rate per month
Twelve months
Rate per year
Multiplied lzJ Projected residential accounts
Equals Revenues by service type.

Revenues by service type then are entered in
the third column of cells in lines 22 to 48,
on page 2 of 3. These values then are added
together, entered, and totaled in line 49.

Residential revenues should reflect all revenues
2-3
153
generated for providing curbside collection
services of refuse, recyclables, and yardwaste.

The number of accounts in each service
category may change throughout the year.

For example, some customers may request
one can service part of the year and an
additional can during the remainder of the
year. The average number of accounts by
service type should be used in these
calculations. In addition, the number of
accounts identified for these calculations
must agree with operating data provided in
Section VIII (page 3) of the application.

Multi-family can, cart, and bin services, and
mobile home park can, cart, and bin services,
should be included in residential revenues.

2. Determine Commercial Revenues.

Commercial revenue information is entered
in line 54 of page 2 of 3 of the application.

In the first column of this line, actual
revenues generated by commercial accounts
during the prior year are reported. This year
amount must reconcile with the financial
audit for that same year. Commercial
revenues for the current year are based on
actual revenue to-date plus an estimate of
the revenues that will be received through
the end of the fiscal year. Commercial
revenues in the current year should be
comparable to revenues in the prior year,
after taking into changes in accounts and
service levels.

Projected commercial revenues for the new
base year are entered in the third and fourth
columns. These amounts, net of any projected
uncollectible accounts, are based on the
estimated annual revenues received during
the current fiscal year plus any additional
revenues generated from additional accounts.

Operating data provided in Section VIII
(page 3) of the application should support any
service level changes.

In order to analyze changes in commercial
rates, rate information must be provided for
specific commercial services. These services are:

Bin Service (Compacted
and Uncompacted)
D 2 Yard Bin-once per week
D 3 Yard Bin - once per week
D 4 Yard Bin - once per week
D 5 Yard Bin - once per week
D 6 Yard Bin - once per week.

In the columns of lines 74 through 78, the
franchise hauler enters the rate for these
services for the prior year, the current year,
and the base year, respectively. Percentage
changes then are entered in columns 3 and

6. This information substantiates previously
approved changes in commercial rates.

3. Determine Allowance for Uncollectible
Accounts. The franchise hauler likely will
not be paid by all customers served. While
this amount is expected to be relatively
small, it must be accounted for in the
calculation of base year net revenues. These
amounts are reported in two places for each
service type: on line 50 for the allowance
for uncollectible residential accounts, and
line 53 for the allowance for uncollectible
commercial accounts.

These amounts can be calculated based on a
formula, such as one percent of anticipated
revenues, or based on actual experience.

Assumptions related to the projection of
uncollectible accounts must be documented and
included as a supplement to the application.

4. Determine Transfer Station and RRF
Revenues. Transfer station and RRF
revenues are included in the total revenue
calculation. In the first column of line 55,
actual revenues received during the most
recently completed fiscal year are reported.

In the second column of line 55, estimated
revenues for the current year are reported.

For the base year, transfer station and RRF
revenues are determined by the best estimate
of transfer station and RRF operations
during the new base year. The projected
revenues are reported in the third and fourth
columns of line 5 5 of the application.
2-4 Solid Waste Rate Setting Policies and Procedures Manual 154

5. Determine Revenues from Recycled
Material Sales. In addition to revenues
generated through residential and
commercial services, and from the transfer
station and RRF, additional revenues are
generated by selling recyclable materials
collected through the curbside re_cycling
program. The amount of recycling revenues
generated through the sale of these
materials is dependent upon the quantity
of material collected and the market price
for these materials. Both of these factors
are outside direct control of the franchise
hauler. Therefore, revenues generated by
recycled material sales are not subject to
an across-the-board rate changes. Revenues
generated from charging residential
customers for curbside recycling services
should not be included here, but should
be included as part of residential revenues
(#1 above).

In the first column of line 56, actual
revenues received during the most recently
completed fiscal year are reported. In the
second column of line 56, estimated
revenues for the current year are reported.

For the base year, revenues from recycled
material sales are determined by projecting
scrap prices for recycled materials and the
anticipated quantity of materials sold. The
projected scrap prices are multiplied by the
projected volume of materials to be sold
to determine projected recycled materials
sales revenues. These projected revenues are
reported in the third and fourth columns of
line 56 of the application.

6. Calculate Total Revenues. The calculation
of total revenue is as follows:

Total residential revenues (Line 51)
Plus Total commercial revenues (Line 54)
Plus Transfer station and
RRF revenues (Line 55)
Plus Recycled material sales (Line 56)
Equals Total revenues.

Total revenues are entered on line 57.
c. Prppare Operating Information
During this task, non-financial operating
information is compiled by the franchise hauler.

Operating information, requested in the application,
provides an important indicator of the franchise
hauler's performance. If costs are changing at an
unusual rate, operating data may provide some
explanation of these changes. For example, cost
increases could be attributed to the increased level of service provided (i.e., accounts served). The franchise hauler should provide the following information:
• Number of accounts
• Quantity of refuse tonnage collected
• Quantity of recycling tonnage collected
• Quantity of yard waste tonnage collected
• JPA bins provided.

Similar to cost data, the first year is "historical,"
the second year is the "current" year, and the third
year is the "base" year. Historical data are based
on actual annual operating statistics during the most
recently complete fiscal year and reflect the same
year used in the financial sections of the application.

Current year performance is based on performance
to-date plus estimated performance for the
remaining months of the current year. Projected
base year data represents the franchise hauler's best
projection of service levels during the new base year.

Year-to-year percentage changes then are
determined for each set of operating metrics. The
franchise hauler should be able to explain any
significant changes. A significant change in an
operating characteristic is an increase or decrease
of more than two (2) percent.

This information allows both the JPA, and the
franchise hauler, to monitor changes in the service
characteristics, estimate total revenues at existing
rates, and compare these to changes in total costs.

The franchise hauler should identify to the JPA
any operating information submitted as part of the
application that it considers confidential.
2-5
155
d. Calculate Allowable Operating Profit
For the historical year of actual data, the
franchise hauler will calculate the actual operating
ratio based on the formula below:

Divided bv
- Equals
Total allowable costs
Total allowable costs plus
Operating profit
Operating ratio.

These actual operating ratios on allowable costs
will reveal how well past base year projections
corresponded to actual results. Similarly, the
formula estimated above is used to calculate the
operating ratio for the current year (column 2).

The actual operating profit received by the
franchise hauler in the most recently completed
fiscal year is entered on line 13, column 1. The
estimated operating profit for the current fiscal
year also is entered on line 13, column 2.

To calculate the allowable operating profit in
the base year, the equation below is utilized:

Allowable operating costs
Divided by Operating ratio
Equals Allowable operating revenues
Minus Allowable operating costs
Equals Allowable operating profit.

The allowable operating profit is entered on line
13, columns 3 and 4 of the application.

In each base year, the operating ratio will range
as shown in Exhibit 1-1, which will help stabilize
rate changes and afford the franchise hauler an
incentive to reduce costs.
e. Determine Franchise Fee
The calculation of the franchise fee is not a
straightforward exercise because as revenue is
increased (e.g., via a rate change), so does the
amount of franchise fees increase because
franchise fees are based on a percent of gross
revenues. To calculate the franchise fee for the
base year requires the hauler to calculate the
franchise fee to be paid to each jurisdiction based
on the revenues after a rate change is applied.

Projected franchise fees should be entered on
line 59, columns 3 and 4 of the application.
f. Calculate Revenue Requirement
The revenue requirement establishes the level
of revenues needed to meet all allowable costs
and operating profit. This includes residential
and commercial waste and recycling costs, and
assumes a reasonable profit margin based on the
operating ratio calculation.

Total revenue requirement (without franchise
fees) is determined as the sum of:
• Allowable operating costs (Line 12)
• Allowable operating profit (Line 14)
• Pass through costs (Line 20).

The revenue requirement (without franchise fees)
is entered on line 21 of the application.
g. Calculate Net Surplus/Shortfall
and Percent Change in Rates
The net surplus/shortfall is determined based
on the following calculation:

Revenue requirement (Line 21)
Less Total revenues (Line 57)
Plus Residential and Commercial
Franchise Fees (Line :!2)
Equals Net surplus/shortfall (Line 60).

The projected amount of revenue generated
during the base year from the sale of recycled
materials was calculated in Step 1, #5 of
subsection b.; therefore, any increase or decrease
in revenues required must come from an increase
or decrease in rates.
2-6 Solid Waste Rate Setting Policies and Procedures Manual 156
If applicable, the percent change in existing
rates is calculated as follows:

Net surplus/shortfall (Line 60)
Divided by Total revenues without change
(Line 61)
Equals Percent change in rates (Line 62).

The percent change in rates is entered on line 62
of the application.
h. Calculate New Percentage
Rate Change and Rates
If applicable, the percentage rate change
identified on page 2 of 3, line 62 should be
entered on page 1 of 3, line 1 of the Base Year Rate
Application. Current residential rates for solid
waste collection should be entered on page 1 of 3.

The adjusted rates for each jurisdiction then are
calculated by multiplying the current rate by one
plus the rate change identified in line 1.

To determine new residential rates on page 1
of 3, column one should be added to column two
and the result should be entered in column three.

This column provides the new rate schedule.

Complete current and revised commercial rate
schedules should be provided by the hauler as an
attachment to the application.

1. Prepare and Submit Rate Application
The franchise hauler submits the completed Base
Year Rate Application to the JPA. The application
should include the following items:
• Management Representation Letter.

The management representation letter
transmits the application to the JPA, and
should provide a listing of included
documents. The letter should identify the
requested adjustment in rates and include
a discussion of specific issues which impact
new rates (e.g., significant increases in
labor costs). The letter should state that:

D Management reviewed and accepts
responsibility for the rate application
D The application is based upon
management's judgment of the most likely
set of conditions and course of action
D All significant relevant information
are made available
D Assumptions are reasonable and
are accurate.

An authorized representative from the franchise
hauler should sign and date the application.

This signature provides a certification of the
franchise hauler that the application is
complete, accurate, and consistent with the
instructions provided in this manual.
• Base Year Rate Application. The franchise
hauler should provide a Base Year Rate
Application, including completed application
forms and supporting documentation.

Supporting documentation includes the
current and proposed rate schedules for
residential and commercial customers.
• Supplemental Audited Financial
Information. For applications received after
2010, audited financial statements for the
most recently completed fiscal year should
be included, as well as other documentation
which support operating and financial data
provided in the application. Because audited
financial statements serve as base documents
for the application, statements of revenues,
expenses, and other reports contained in the
application shall be reconciled to the audited
financial statements to provide assurance
that all activities are accounted for.

Once the application materials have been
prepared, the franchise hauler submits
three (3) reproducible hard copies and
one disk copy formatted to the JPA's
specifications. They are submitted to
the JPA. The thirty (30) day review for
completeness will begin upon receipt of
the application.
2-7
157
B. Step 2 - Verify Completeness
of Rate Application
Responsibility: JPA
Timing: Completed within thirty (30) days
after the rate application is submitted
Tasks: a. Verify Financial Data and Format
b. Verify Supporting Documents
and Schedules
c. Notify Franchise Hauler.

Overview
During this step, the JPA ensures that the
application has been fully completed by the
franchise hauler and that the data provided are
consistent. During the 30-day period, the JPA will
obtain from the franchise hauler any information
necessary to complete the application.
a. Verify Financial Data and Format
The JPA staff reviews the application package
to determine if it is complete and ready for
analysis. Detailed analysis of the contents of the
application occurs during Step 3.

The JPA reviewer should determine the following:
• Has the applicant included all required forms?
• Are all forms complete?
• Are audited financial statements included?
• Are all financial calculations
mathematically correct?
b. Verify Supporting Documents
and Schedules
Various documents may be included in the
application package to support the rate change.

The purpose of these supporting documents
should be clearly identified by the franchise hauler.
c ~otify Fnnchise Hauler
If the application is complete, the JPA will notify
the franchise hauler that it will begin the process of
evaluating the application. If incomplete, the JPA
will attempt to obtain from the hauler additional
required information within the 30-day verification
period. A revision of rates shall not be authorized
until the l " day of the first calendar month
following a six (6) month period from the date
that an application is verified to be complete.

C. Step 3 - Review Rate Application
and Prepare Response
Responsibility: JP A
Timing: Completed within one and one half
(1 Yz) months after determining that
the application package is complete
Tasks: a. Review Actual and Projected
Revenue Requirements
b. Review Actual and Projected Revenues
c. Review and Verify Operating Ratio
d. Determine Components of
Requested Change in Rates
e. Review Performance Data
f. Request Additional Data and
Clarification, if Necessary
g. Document Staff Review.

Overview
During this step, JPA staff evaluates the entire
rate application. This review includes examining
significant changes in costs or operating
performance and evaluating explanations of
these changes provided by the franchise hauler.
a. Review Actual and Projected
Revenue Requirements
In this task, costs and operating profits are
reviewed and analyzed for reasonableness.

Reconciliations of costs to audited financial
statements are checked for consistency. Explanations
2-8 Solid Waste Rate Setting Policies and Procedures Manual 158
are sought from the franchise hauler for items
significantly different than would otherwise 1
normally be expected.

Percentage changes in costs for the three years
identified on the application should be calculated
and reviewed. Projections prepared from previous
years in prior Base Year Rate Applications are
compared with actual results. Costs are correlated
with operating collection efficiency statistics
provided by the franchise hauler.

Any unusual trends or variances in aggregate
areas should be explained by the franchise hauler.

An unusual increase would be a change in cost
which is greater than the change in the Trash and
Garbage Collection CPI, published by the Bureau
of Labor Statistics, and which cannot be attribured
to changes in the number of customers serviced or
tons of waste or recyclable materials collected. If
these unusual changes are not adequately explained
in the application, the JPA should request
additional clarification from the franchise hauler.

The JPA should review the allocation
methodology used by the franchise hauler to
allocate costs between ( 1) franchise areas that are
the subject of this manual, and (2) non-JPA areas
serviced by STR. At a minimum, the JPA should
check that allocations used to assign costs to
franchise area customers are reasonably consistent
with other operating metrics such as average
number of accounts and tons collected.
b. Review Actual and Projected Revenues
The JPA should review actual and projected
revenues in this task. Current rates provided in
the application are verified. Any changes in the
number of customers serviced should be identified
and explained by the franchise hauler.

The application requires the franchise hauler
to report three years of revenues: (1) actual prior
year, (2) estimated current year, and (3) projected
"base" year. For applications received after 2010,
the JPA should reconcile the most recent year
revenues with audited financial statements.

Revenues for the current year are compared with
year-to-date un-audited financial statements and
documentation supplied by the franchise hauler.

Projected revenues for the third, or "base" year,
are evaluated by the JPA for reasonableness.

Assumptions made by the hauler in preparing these
projections are reviewed. Revenues reported by the
franchise hauler should not include any rate changes
in the base year (year 3). Account information
included in the application is reviewed to determine
changes in the number of accounts served.

Allowances for uncollectible accounts also are
reviewed. These figures should be deducted from
total revenue projections. These allowances may
be based on a fixed percentage of total revenues
or on actual experience. Assumptions related to
allowances for uncollectible accounts should be
reviewed with the franchise hauler.

Revenues from recyclable material sales are
provided in the application. Amounts identified
in the prior (first) year provided should reconcile
with the financial audit. Amounts identified in
the current (second) year, the base (third) year
should be documented by the franchise hauler.

The JPA will review these projections to ensure
they are consistent with trends in recycling
collection costs, scrap values, processing costs,
as well as estimated diversion rates and tonnage.
c. Review and Verify Operating Ratio
The operating profit must be determined for the
base year. The JPA should calculate the projected
operating profit for the base year using the first
formula provided in Exhibit 1-1. For El Dorado
County, if the operating ratio is outside the 87 to 91
percent range, then the operating ratio should be
reset to 89 percent. If there are any errors by the
hauler in calculating the operating ratio, or allowable operating profits, these deficiencies are noted.
2-9
159
d. Determine Components of
Requested Change in Rates
The ]PA evaluates all costs, revenues, and
operating profits provided in the application to
determine components of the requested adjustment
in rates. This would include determining the
proportion of the requested adjustment in rates
which is due to changes in each of the following:
• Costs
• Residential revenues
• Commercial revenues
• Transfer station and RRF revenues
• Recyclable material sales revenues
• Operating profit (or loss).
e. Review Performance Data
The ]PA reviews and analyzes performance data,
which are included in the application (the number
of accounts and tons collected). Operating statistics
are reviewed to explain past historical trends and
justify future expenses. Both actual and percentage
increases are examined and any unusual changes
in performance are investigated to determine
their cause and effect on future cost performance.

Changes in accounts served, the number of routes,
tons collected, or direct labor hours generally
should correspond to changes in costs and revenues.
f. Request Additional Data and
Clarification, if Necessary
Throughout the analysis of the application, The
]PA may request clarification and/or additional
data from the franchise hauler to explain any
unusual changes in costs or operating performance.

The ]PA may have identified missing information,
or changes in the financial or operating data
between the three years which require clarification
or further explanation. The franchise hauler
should respond to the JPA's request for additional
information within two weeks. Responses will vary
depending on the specific requirements of the JP A.
g Document Staff Review
During this task, the ]PA prepares workpaper
documentation of the review of the Base Year
Rate Application.

D. Step 4 - Prepare Draft Report
and Final Report
Responsibility: JPA
Timing: Completed approximately three (3)
months after determining the
application package is complete
Tasks: a. Prepare Draft Report
b. Provide Franchise Hauler
with Copy of Draft Report
and Receive Comments
c. Prepare Final Report.

Overview
A draft report with recommendations from ]PA
staff is prepared and submitted to the franchise
hauler for review. The franchise hauler will review
the draft report. The franchise hauler will have
an opportunity to provide written comments
regarding the draft report. The ]PA will address
these comments and prepare a Final Report.
a. Prepare Draft Report
In this step, the ]PA prepares a Draft Report
including recommendations for a rate change.

The draft report includes the following sections:
• Executive Summary. This is a one or twopage summary of the review process and may include a chart showing current and proposed
rates, and the recommended rate change.
• Introduction and Background. The
section identifies any proposed changes in
services provided by the franchise hauler.

The section also identifies the review goals,
objectives, scope, and other relevant
background information. This section
of the report may provide a brief overview
2- 10 Solid Waste Rate Setting Policies and Procedures Manual 160
of the rate change process and a discussion
of significant historical rate issues. If
applicable, this report will document the
rate change proposed by the JPA.
• Analysis and Discussion of Rate
Application. This section of the report
will include a review of the analysis work
completed by JPA staff. This section
might include the following subsections:

D Review of Rate Changes, including a
discussion of interim year rate changes
since the last base year, the relationship
of these changes to changes in the
Garbage and Trash Collection CPI, and
an analysis of the significant components
of the change in rates (e.g., changes in
labor costs.)
D Analysis of Projected Costs, including a
discussion of any unusual changes in
costs which were discovered and
unresolved during the review process.

D Discussion of Service Issues, including
changes in frequency or type of curbside
service. If significant service issues are
not involved with a rate change, this
subsection would be omitted.
• Recommendations. JPA staff would
present its recommendations regarding
specific changes in rates in this section of
the document.
• Appendices. Appendices to the report
would include:

D Rate application
D Revised rate schedule
D Audited financial statements of the
franchise hauler
D Other relevant supporting materials
provided by the franchise hauler.
b. Provide Franchise Hauler with Copy of
Draft Report and Receive Comments
During this task, the franchise hauler will
review the drafr report. Each section of the report
should be reviewed to ensure that correct data are
included, the JPA's analysis is consistent with the
methodology, and if applicable the proposed rate
change is determined accurately.

If any issues are identified during this step,
the franchise hauler works with JPA staff to fully
explore and resolve these outstanding issues.

The franchise hauler then will prepare a written
response to the draft report. The response may
cover one or more of the following topics:
• If data discrepancies exist in any of the
areas noted in the prior task, the JPA
should be notified of these discrepancies.
• If the analysis conducted by the JPA can
be clarified or considered differently, this
information should be provided to the JPA.
• If the report is acceptable and no
clarification or comments can be offered,
this should be relayed to the JPA.

If no written response is received by the JPA
within two weeks of delivering the JPA's Draft
Report, then the JP A will assume that the
franchise hauler has no issues with the report.
c. Prepare Final Report
Any additional or outstanding comments or
issues raised during the franchise hauler's review
of the draft report are addressed. If necessary,
meetings are conducted with representatives from
the JPA and the franchise hauler. Final solutions
to outstanding issues are included in the report.

After final comments from the franchise hauler
have been considered, the Final Report package is
prepared. A copy of the Final Report is submitted
to the franchise hauler.
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161
E. Step 5 - Present Final Report
toJPABoard
Responsibility: JPA
Timing: Completed two (2) months prior to the
expected implementation of new rates
Tasks: a. Distribute Final Report and
Summary to JPA Board
b. Obtain JPA Board Recommendation.

Overview
During this step, the Final Report is presented
to the JPA Board for review, comment, and for a
recommendation to the three jurisdictions.
a. Distribute Final Report and
Summary to JPA Board
In this task, the Final Report is provided to
members of the JPA Board. The report is included
as an agenda item for JPA Board consideration
at a regular JPA Board meeting. The rate change
may be placed on either the regular or consent
calendar. The JPA Board Clerk should be notified
four ( 4) weeks prior to the meeting at which the
rate change will be considered and reports should
be provided two (2) weeks prior to the meeting.

The JPA Board Clerk should follow applicable
public noticing requirements, so affected customers
can participate at the Board meeting.
b. Obtain JPA Board Recommendation
The JPA Board members review the report
and proposed rate changes. If the JP A Board
agrees with the recommendations of JPA staff,
the JPA Board recommends the rate change and
rares to the three jurisdictions. If the JPA Board
does not agree with staff recommendations, the
report is returned to JPA staff for additional
analysis. If the JPA Board does nor recommend
the report and rates, the JPA Board should
specifically identify deficiencies.

F. Step 6 - Notify Customers of
Rate Hearing
Responsibility: City and Counties
Timing: Completed 10 days prior to City
Council and County Board meetings
Tasks: a. Prepare Notification of Public
Hearing for Rate Change.

Overview
During this step, the City and Counties notify
customers of the rare setting hearing.
a. Prepare Notification of Public Hearing
for Rate Change
Once the JPA Board has recommended the
report and rares, the jurisdictions will notify
customers chat a rate hearing will occur. This
notification will occur prior to the City and
County rate hearing(s) where each jurisdiction
will consider whether to approve the JPA
recommended rates.

G. Step 7 - Receive Approval from
City Council and County Boards
Responsibility: City and Counties
Timing: Completed one (1) month prior to
expected implementation of new rates
Tasks: a. Distribute Final Report to City
and Counties
b. Obtain City and County Approvals.

Overview
During chis step, the respective cities and
counties within the JPA present the Final Report
for review and approval by their respective city
council and county boards.
2-12 Solid Waste Rate Setting Policies and Procedures Manual 162
a. Distribute Final Report to
City and Counties
In this task, the Final Report is provided to
the City of South Lake Tahoe, El Dorado County,
and Douglas County for review and approval.

The report is included as an agenda item for
consideration at a regular public meeting. The
clerk of each respective jurisdiction should follow
applicable public noticing requirements.
b. Obtain City and County Approvals
The City of South Lake Tahoe City Council,
the El Dorado County Board of Supervisors, and
the Douglas County Board of Commissioners
review the report and recommended rate
changes. If the rate changes are approved, they
are implemented. 2
2 Douglas County's rates are subject to a voter-passed initiative that requires the approval of the voters if the rate will increase by ten percent or more. The rate adjustments provided for in this manual are therefore subject to the Douglas County Code and Douglas County will not be in violation of its agreement with STR if a rate adjustment is not approved because it fails to obtain the required voter approval.

H. Step 8 - Implement New Rates
Responsibility: Franchise hauler
Timing: Conducted following City Council
and County Board approval of the
new rates
Tasks: a. Implement Rate Change.

Overview
During this final step, the franchise hauler
implements new rates, if applicable.
a. Implement Rate Change
During this final task, the new rates are
entered into the franchise hauler's billing system
and included in the billing cycle. If a rate change
occurs during the middle of a billing cycle,
unbilled or overbilled amounts are calculated
and included in the next billing cycle.
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163
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2-14 Solid Waste Rate Setting Policies and Procedures Manual 164
Section 3
Interim Year Rate Setting Process
165

3. Interim Year Rate
Setting Process
This section describes each of the four (4) steps of the interim year rate setting process. Each step includes an overview of the step and a detailed description of the tasks required to complete the step. The section includes four (4) subsections:

A. Step 1 - Prepare and Submit Rate Application
B. Step 2 - Prepare Draft Report and Final Report
C. Step 3 - Receive Approval from City Council and County Boards D. Step 4 - Implement New Rates.

A. Step 1 - Prepare and Submit Rate Application
Responsibility: Franchise hauler
Timing: Completed four (4) months prior to the implementation of the new rates Tasks: a. Prepare an Interim Year Rate Application
b. Submit Application to JPA.

Overview
During this first step, the franchise hauler prepares the Interim Year Rate Application.

Blank application forms are provided in Appendix A (Exhibit A-2). Similar to the base year forms, these forms identify all areas to be completed with double outlined boxes. If data are to be entered in the form, the box has no shading. If a calculation is required, the box has light shading.
a. Prepare an Interim Year Rate Application

1. Report Changes in Landfill Disposal Costs. The first task is to provide prior year landfill disposal costs. Prior year landfill tipping fees per ton should be entered on line 1. Prior year landfill tonnage should be entered on line 2. The values entered on lines 1 and 2 should then be multiplied together and entered on line 3.

The franchise hauler estimates what landfill tipping fees and landfill tonnage will be for the next interim year. Projected interim year landfill tipping fees, per ton, are entered on line 4, and projected interim year landfill tonnage is entered on line 5.

The values entered on lines 4 and 5 then are multiplied together and entered on line 6.

The percent change in landfill disposal costs is determined as follows:
line 6 - line 3
line 3.

The result of this equation, rounded to the nearest one decimal place, is entered on line 7.
166

2. Explain Changes in Landfill Disposal
Costs. Any changes in either landfill tipping
fees or tonnage should be fully explained
in this task. For example, if a landfill closes
and the franchise hauler begins using a new
landfill with higher tipping fees, this
information should be disclosed.

Documents which suppon or further explain
any change in costs are provided, as
appropriate. This might include formal
announcements of tipping fee increases
provided by the landfill operator, which will
be paid directly by the franchise hauler.

3. Certify Application. An authorized
representative from the franchise hauler
should sign and date the application.

This signature provides certification by
the franchise hauler that the application
is complete, accurate, and consistent with
the instructions provided in this manual.

At this point, the application should be
complete. The application is submitted
to the JPA for review and calculation of
the rate change, as described in the
following subsection.
b. Submit Application to JPA
The completed application is sent to the JPA
for review and calculation of new rates. The
franchise hauler's application does not include
any new rates; these are determined by the JPA
during Step 2.

B. Step 2 - Prepare Draft Report
and Final Report
Responsibility: JPA
Timing: Completed within two (2) months
of receiving a completed Interim Year
Rate Application
Tasks: a. Identify Consumer Price Index
b. Complete Interim Year Rate Change
Worksheet and Determine New Rates
c. Request Additional Data and
Clarification, if Necessary
cl. Prepare Draft Report
e. Receive Comments from
Franchise Hauler
f. Prepare Final Report.

Overview
The Interim Year Rate Change Worksheet is
used to calculate new interim year rates. This
document is prepared by the JPA after the
franchise hauler has submitted an Interim Year
Rate Application. Interim year rate changes .are
based on a weighted increase in operating and
landfill disposal costs. Inflators for this process
include changes in the Consumer Price Index
(Garbage and Trash Collection CPI) and changes
in landfill disposal costs (documented by the
franchise hauler in the Interim Year Rate
Application). Exhibit A-3 in Appendix A
includes a sample of the two-page worksheet to
be completed by JPA staff.
a. Identify Consumer Price Index
The annual change in the U.S. City Average,
Garbage and Trash Collection, Consumer Price
Index (CPI) provides the single largest factor for
determining new rates during interim years.

Eighty-five (85) percent of the actual change in this
index during the twelve months prior to the date
the Interim Year Rate Application is submitted
to the JPA is used for the actual change in the
methodology. Because a projected change in the
3-2 Solid Waste Rate Setting Policies and Procedures Manual 167
CPI is not produced, eighty five (85) percent of the
actual change in CPI for the prior twelve months is
used as the CPI for the interim year. The period
used by the J PA and franchise hauler will be June
to June. This information is available from the
United Scates Department of Labor, Bureau of
Labor Statistics.
b. Complete Interim Year Rate Change
Worksheet and Determine New Rates
JPA staff prepares the Interim Year Rate
Change Worksheet and calculates new rates during
this task. This worksheet requires information
from the most recent Base Year Rate Application
and the current Interim Year Rate Application.

This worksheet also requires the U.S. City Average
Garbage and Trash Collection CPI information
collected in task a. The worksheet is used to
calculate the new rate change.

1. Identify Prior Base Year Operating Costs
(Other Than Landfill Disposal). Operating
costs, excluding landfill disposal costs, are
those items which can be reasonably
managed by the franchise hauler in order to
minimize future rate increases. Changes in
these costs should approximate the change
in the U.S. City Average Garbage and Trash
Collection CPI.

In order to streamline the interim year
process, operating costs are adjusted based
on an annual change in the CPI instead of
projected changes in each cost item. This
eliminates the need to conduct a derailed
review of the franchise hauler's audited
financial statements.

Landfill disposal costs are included in total
allowable costs (line 1). Because of chis, landfill
disposal costs must be deducted to determine
total operating costs (ocher than landfill
disposal) in the base year (line 1 plus line 2
plus line 3 minus line 4). This total then is
entered on line 5 of the worksheet and is used
to calculate the weighted change in operating
costs (ocher than landfill disposal).

2. Identify Prior Base Year Landfill Disposal
Costs. Landfill disposal coses are chose items
over which the franchise hauler has liccle or
no control. Adjustments to landfill disposal
costs during an interim year are based on the
franchise hauler's projections, not projected
changes in the CPI. Total landfill disposal
costs in the prior base year must be
calculated to determine the weighting of
operating costs to landfill disposal coses.

Landfill disposal coses from the base year are
entered in line 6.

3. Calculate Weightings. Total operating costs
(other than landfill disposal) (line 5) plus
total landfill disposal costs (line 6) equals the
total base year revenue requirement. This
total is entered on line 7 of the worksheet.

A weighting for both operating costs (other
than landfill disposal) and landfill disposal
costs is calculated as follows:

Operating Costs
(Other Than Landfill Disposal):

Divided by
Total operating costs (Line 5)
Base year revenue
requirement (Line 7)
Equals Operating costs (other than
landfill disposal), as a percentage of
base year revenue requirement.

This percentage figure is entered on line 5,
column 2, and line 17.

Landfill Disposal Costs:

T oral landfill disposal costs (Line 6)
Divided by Base year revenue
requirement (Line 7)
Equals Landfill disposal costs, as a percentage
of base year revenue requirement.

This percentage figure is entered on line 6,
column 2, and line 20.

4. Calculate Projected Change in Consumer
Price Index. The percent change in the
prior year June to June U.S. City Average
Garbage and Trash Collection, CPI is entered
3-3
168
on line 8. This change in CPI then is adjusted
by multiplying the figure on line 8 by 85
percent and the result entered on line 9.

This adjusted projection of the change in CPI
also is entered on line 18 of the worksheet.

5. Enter Landfill Disposal Cost Information
from Application. The figures on lines 1
through 7 of the application (actual and
projected landfill disposal costs) are entered
in lines 10 though 16, respectively, of the
worksheet. Any significant changes in these
costs are documented by the franchise
hauler. A significant change would be any
increase greater than the change in the CPI,
or a decrease of any amount. If a significant
change has not been adequately explained,
additional information is requested from the
franchise hauler.

6. Review Mathematical Accuracy. The
mathematical accuracy of the franchise
hauler's totals for T oral Prior Year Landfill
Disposal Costs (line 12), and Total Projected
Interim Year Landfill Disposal Costs (line
15) are checked during this task. The percent
change in landfill disposal costs should be
calculated as follows:
line 15 - line 12
line 12.

After the percentage change in landfill
disposal costs has been verified, this figure is
entered in lines 16 and 21 of the worksheet.

7. Calculate Weighted Change in Operating
Costs (Other Than Landfill Disposal).

Figures should have been entered on line 17,
operating costs (other than landfill disposal) as
a percent of base year revenue requirements,
and line 18, the adjusted projected change in
CPI, based on calculations completed in
previous tasks. To obtain the weighted change
in operating costs (other than landfill disposal),
line 17 is multiplied by line 18 and the result
entered on line 19.

8. Calculate Weighted Change in Landfill
Disposal Costs. Line 20, landfill disposal
costs, as a percent of base year revenue
requirements, and line 21, projected change
in landfill disposal costs, should now have
an entry based on calculations completed
in previous tasks. To obtain the weighted
change in landfill disposal costs, line 20 is
multiplied by line 21 and the result entered
on line 22.

9. Calculate Total Change in Cost. To
calculate the total percentage change in costs,
line 19, the weighted change in operating
costs (other than landfill disposal), is added
to line 22, the weighted change in landfill
disposal costs, and the result entered on lines
23 and 26, total percent change in costs.

10. Calculate Franchise Fee Adjustment. In
order to account for changes in the franchise
fee resulting from a change in rates, an
adjustment is made to the percentage change
in total costs which was entered on lines 23
and 26. The adjustment factor is equal to
one minus the franchise fee (1.00 - __ =
__ ).These values should be entered on
lines 24 and 27.

11. Calculate Percent Change in Existing Rates.

The final task in this step is to calculate the
percent changes in existing rates. To determine
these changes, line 23 (total percent change
in costs) is divided by line 24 (franchise fee
adjustment), line 26 (total percent change
in costs) is divided by line 27 (franchise fee
adjustment), and the results are entered on
lines 25 and 28. The values on lines 25 and 28
should be greater than the value on lines 23
and 26. The difference accounts for the
change in franchise fees.

12. Enter Rate Change. The rate change
identified in lines 25 and 28 should be
entered on Page l , line 1 of the worksheet.

13. Calculate New Residential Rates. Current
jurisdiction-specific rates for residential solid
waste collection are entered in column one
on page 1. The new rates (in column three)
then are calculated by multiplying the current
rate by one plus the percentage rate change
identified on line 1. The rate adjustment (or
the difference between the rate in column one
and the rate in column three) is entered in
column two.
3-4 Solid Waste Rate Setting Policies and Procedures Manual 169
To verify new rates, column one, lines 2
through 4, should be added to column two
and the result should equal the rate in
column three. This third column provides
the new schedule of residential rates.

The JPA should separately calculate new
commercial rates using the percentage
change in rates.
c. Request Additional Data, and
Clarification, if Necessary
If necessary, JPA staff requests clarification
and/or additional data from the franchise hauler.

The request is to clarify the franchise hauler's
assumptions for projected changes in landfill disposal
costs and to indicate the expected change in rates.
d. Prepare Draft Report
The JPA staff prepares a high level draft report
with recommendations of new rates for JPA
Board consideration. This report should be brief
and include the following sections:
• Executive Summary. This is a summary
of the review process and includes a chart
showing current and proposed rates, and
the recommended rate change.
• Background. This section of the report
provides a brief overview of the rate
change process and discussion of any
significant historical issues.
• Analysis and Discussion oflssues. This
section includes a review of the analysis
work completed by JPA staff. This section
also includes a discussion of any significant
changes in landfill disposal costs and an
identification of the change in CPI
assumed by the JPA.
• Recommendation. The JPA staff presents
its recommendation regarding any change
in rates in this section.
• Attachments. Attachments to the report
would include:

D Rate application
D Revised rate schedule(s)
D Interim Year Rate Change Worksheet.

After the draft report and recommendations
have been prepared, the document should be
submitted to the franchise hauler for comment
and review.
e. Receive Comments from
Franchise Hauler
The franchise hauler reviews the draft report
to ensure that any calculations and analyses
completed by JPA staff are fair, reasonable, and
justified. The franchise hauler reviews the draft
report to ensure the following:
• Correct data are included
• JPA staff analysis is accurate and fair
• Rate changes are reasonable and acceptable.

If any issues are identified during this step,
the franchise hauler works with JPA staff to fully
explore and resolve these outstanding issues.

A written response to the draft report is then
prepared. The response may cover one or more
of the following topics:
• Data discrepancies in any of the areas
noted in the prior task
• Clarification for the JPA or alternative
analysis of the application
• Responses to the JPA's request for
additional information.
f. Prepare Final Report
The JPA prepares the Final Report incorporating
comments from the franchise hauler, as
appropriate. Any comments or issues raised during
the franchise hauler's review of the draft report are
addressed. If necessary, representatives from the
JPA and the franchise hauler should meet to resolve
issues. The report should reflect final solutions to
outstanding issues.
3-5
170
After final comments from the franchise hauler
have been considered, the JPA prepares the Final
Report. The JPA should submit a copy of the
Final Report to the franchise hauler.

C. Step 3 - Receive Approval from
City Council and County Boards
Responsibility: City and Counties
Timing: Completed one month prior to
expected implementation of new rates
Tasks: a. Distribute Final Report to City
and Counties
b. Obtain City and County Approvals.

Overview
During this step, the respective cities and
counties within the JPA present the Final Report
for review and approval by their respective city
council and boards.
a. Distribute Final Report
to City and Counties
In this task, the Final Report is provided to the
City of South Lake Tahoe, El Dorado County,
and Douglas County for review and approval.

The report is included as an agenda item for
consideration at a regular public meeting. The
clerk for each applicable jurisdiction should follow
applicable public noticing requirements so affected
customers can participate at the public meetings.
b Obt· in City and ( ounty Approv·tls
The City of South Lake Tahoe City Council,
the El Dorado County Board of Supervisors, and
the Douglas County Board of Commissioners
review the report and recommended rate
changes. If the rate changes are approved, they
are implemented. If the rate changes are not,
deficiencies are noted, and the report is returned
to the JPA. Step 3 is then repeated. '
D. Step 4- Implement New Rates
Responsibility: Franchise hauler
Timing: Conducted following the approval
of the new rates by the City Council
or County Boards
Tasks: a. Implement Rate Change.

Overview
After new rates have been approved by City
Council and County Boards, the final step in the
process is to implement the new rates.
a. Implement Rate Change
During this final task, the franchise hauler
enters the new rates into their billing system and
includes the new rates on the next appropriate
customer invoice. If a rate change occurs during
the middle of a billing cycle, unbilled or
overbilled amounts are calculated and included in
the next billing cycle.
' Douglas County's rates are subject to a voter-passed initiative that requires the approval of the voters if the rate will increase by ten percent or more. The rate adjustments provided for in this manual are therefore subject to the Douglas County Code and Douglas County will not be in violation of its agreement with STR if a rate adjustment is not approved because it fails to obtain the required voter approval.
3-6 Solid Waste Rate Setting Policies and Procedures Manual 171
Appendix A
Blank Forms and Worksheets
172
Appendix A
Blank Forms and Worksheets
Exhibits A-1 through A-4, on the following pages, include blank base year rate application forms, interim year rate application forms, interim year rate change worksheets, and Consumer Price Index (CPI) percent change calculation example.

This appendix is organized as follows:
• Exhibit A-1 - Base Year Rate Application
• Exhibit A-2 - Interim Year Rate Application
• Exhibit A-3 - Interim Year Rate Change Worksheet.
• Exhibit A-4 - Consumer Price Index (CPI) Percent Change Calculation Example. 173
Exhibit A-1
Sample Bose Year Rote Application
Base Year Rate Application
Summary

1. Rate Ch:snq<'
Percent Rate Change Requested (City of South Lake Tahoe and Douglas County) Percent Rate Change Requested (El Dorado County)
Ram Schedule
(per a.mlomer, per morth) Current Ram Ram AdJU!!!!!Ont New Rate 2 Crty of Sou1h Lake Tahoe
2 1 Unlimil8d M<Vic:e

2.2 Mandabld pockup pet' 321111llon can/bag

2.3 Mandabld ptekup per cubic yard
2 4 Ouaified •nor ram
2 5 HouM •rvice • I can

26. HouseMrvice · 2cana
2 7 House service ~ 3 cans

2.8 Residential · Al other aerv!Cff
3 Oouglas Courrty

3. 1 I , 3211111on can
3 2 2. 321111lon cans

3.3 3, 321111lon cans

3.4 4, 321111lon cans
3 5 One exn 321111lon ctn (aloo the ... oonal Mrvlc<t rate)

3.11 On-cal 3211111on can biled monthly/01Teara

3. 7 Per aJbtc yard
3, 8 1, "5-galon can

3. 9 2, "5-galon cans

3.10 3, "5-galon cans
3 11 One exn 45-galon can (aloo the Maoorml Mnnce ram)
3 12 On-cal 45-galon can biled monthly/arrears

3. 13 Residenoal · Al otlltr Mrvoces
El Dorado County
s •
•
p 'QE
41 4.2 u--Mandated pockup pet' 32.galon can/bag
4 3 Manctabld ptekup P« cubic yard

4.4 Qualifiedaenornne
4 5 HouM •rvice Pef'Cln

4.6 R-noal · Al otlltr aervoces r I' I' I To tilt best of my knowledge, the data and 1nforma1JOn in 1h1t appficallOn 10 compltm. accurate, and consktent Wllh tilt 1nslruciions provided by the Soulh Lake Tahoe BaS1n Wasm Management Authonty Name nt1o
Date
Fiscal Year:

A-2 Solid Waste Rate Setting Policies and Procedures Manual