City Council Staff Report Page 1 of 2 March 10, 2026
Staff Report
Agenda Item No. 4.3
DATE: March 10, 2026
TO: Honorable Mayor and Members of the City Council
FROM: Joan Malloy, City Manager
SUBJECT: Adopt a Resolution Approving and Authorizing the City Manager to Execute Amendment No. 1 to the Amended and Restated Franchise Agreement for Recycling Collection and Processing Services with Tri-City Economic Development Corporation (Tri-CED)
EXECUTIVE SUMMARY
As part of the Amended and Restated Franchise Agreement for Recycling Collection and Processing Services, Tri-City Economic Development Corporation (Tri-CED) must provide certain security to ensure the Contractor’s performance under the Agreement.
Tri-CED was initially unable to provide the letter of credit required under the Agreement and has subsequently proposed using certificates of deposit in its place, in an amount acceptable to City staff. Additionally, a further minor amendment is proposed regarding the monthly payments due to Tri-CED from the City to better reflect past practice going forward. Staff recommends that the City Council approve Amendment No. 1 to reflect these changes.
STRATEGIC PLAN ALIGNMENT
This report is in alignment with the following City Council priority:
Goal D: Environmental Sustainability and Infrastructure Strategy 13: Continue monitoring the Collection Services Franchise Agreement Contractors assistance with organics regulations and waste diversion compliance.
BACKGROUND
On March 26, 2024, the City Council provided staff direction to continue negotiating a tenyear extension to the Franchise Agreement and to explore additional cost savings. The new agreement, approved by the City Council on April 23, 2024, established the compensation paid to the companies, the rates charged to ratepayers for service commencing FY 2025-2026 on July 1, 2025, and all other business and operational terms.
DISCUSSION
On August 19, 2025, the City entered into an Amended and Restated Franchise Agenda Item No. 4.3
City Council Staff Report Page 2 of 2 March 10, 2026
Agreement (Agreement) with Tri-City Economic Development Corporation (Tri-CED).
Under Section 12.3 Performance Security of the Agreement, the Contractor is required to provide performance security, comprised of two (2) separate and distinct instruments in lieu of a performance bond, namely a $200,000 Certificate of Deposit and a $400,000 Letter of Credit.
The Contractor had been unable to provide a letter of credit in a form acceptable to the City and was therefore not in compliance with the existing security requirements. To address this issue and ensure adequate protection of the City’s interests, the Contractor initially provided a $200,000 Certificate of Deposit and subsequently provided an additional $400,000 Certificate of Deposit. The proposed amendment revises the performance security provisions to allow a combination of bonds and/or alternative security, including certificates of deposit, totaling $600,000, and clarifies that failure to provide sufficient security constitutes a default under the Agreement.
The amendment also revises Section 11.5 (B) Payment of Contractor’s Compensation, which outlines the compensation reconciliation provisions of the Agreement. Under the current structure, reconciliation is scheduled to begin in the first month of the second quarter. To improve accuracy and better reflect actual revenue collections, the amendment shifts reconciliation to the second month of each quarter, while maintaining the overall compensation methodology and ongoing adjustments for aging receivables and bad debt.
FISCAL IMPACT
There is no fiscal impact associated with the City Council taking the recommended action.
The proposed amendments incorporate practical adjustments to the performance security and compensation reconciliation provisions, which will further ease contract administration and mutual understanding by clarifying the terms and conditions under the Agreement.
RECOMMENDATION
Staff recommends that the City Council proceed with adopting a resolution approving and authorizing the City Manager to execute Amendment No. 1 to the Amended and Restated Franchise Agreement for Recycling Collection and Processing Services with Tri-City Economic Development Corporation (Tri-CED).
Prepared by: Jennifer Phan, Deputy City Manager
Submitted by: Jennifer Phan, Deputy City Manager
Attachments
1. Draft Resolution
2. Amendment No. 1 – Amended and Restated Franchise Agreement with Tri-City Economic Development Corporation