HomeMy WebLinkAboutItem 6b. Notice of Intent to Restate the Solid Waste Franchise Agreements and Authorization to Release Prop 218 Notice for Integrated Solid Waste Rates Item 6b
Department: Utilities
Cost Center: 6107
For Agenda of: 1/21/2025
Placement: Business
Estimated Time: 60 minutes
FROM: Aaron Floyd, Utilities Director
Prepared By: Meg Buckingham, Solid Waste and Recycling Program Manager
SUBJECT: RESOLUTION OF INTENT TO RESTATE THE SOLID WASTE,
RECYCLING, AND ORGANICS FRANCHISE AGREEMENTS AND
REVIEW THE PROPOSED 2025 SOLID WASTE RATES
RECOMMENDATION
1. Adopt a Resolution of Intent entitled, “A Resolution of the City Council of the City of
San Luis Obispo, California, declaring the City’s intent to adopt an Ordinance restating
its existing franchise agreements with San Luis Garbage Company and set a Public
Hearing for March 18, 2025” pursuant to the provisions of Article X of the City Charter;
2. Direct the publication and mailing of a notice consistent with Article XIIID of the
California Constitution and the Proposition 218 Omnibus Implementation Act
(Proposition 218) as it relates to solid waste rates; and
3. Set a Public Hearing date of March 18, 2025, to consider the adoption of the solid
waste rates if there is no majority protest in accordance with Proposition 218.
REPORT-IN-BRIEF
In alignment with the City of San Luis Obispo's (City) 1994 Rate Setting Process and
Methodology Manual for Integrated Solid Waste Management Rates (Rate Setting
Manual), the franchised waste hauling company can request a cost-based rate increase
every three years, with interim years adjusted by the Consumer Price Index (CPI). In July
2024, Waste Connections (dba San Luis Garbage Company) submitted a Base Rate
Application proposing a 2025 rate adjustment to continue pr oviding environmentally
sound solid waste, recycling, and organics collection and processing services to City
customers.
The City holds three Franchise Agreements (Agreements) with San Luis Garbage
Company for solid waste, recycling, and organics service s respectively. The solid waste
and recycling Agreements will expire in August 2025 and the organics Agreement will
expire in 2038. To ensure continuity, City staff and San Luis Garbage Company
negotiated a consolidated Agreement that combines all services under one contract with
a unified expiration date of 2038 and introduces service improvements, including a
discounted rate for qualified low-income residential customers, an annual no cost
residential cart swap, and a few no cost bulky/large item collecti ons for residential
customers. Feedback from residents and stakeholders informed these updates, reflecting
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Item 6b
shared goals of sustainability, operational efficiency, and value for ratepayers. Staff and
San Luis Garbage Company leveraged the timing of negotiat ing the Agreement to also
replace the outdated Rate Setting Manual with a new rate adjustment methodology. San
Luis Garbage Company amended its 2025 Base Rate Application and utilized the new
methodology to develop the proposed 2025 rate adjustment, which aims to bring greater
transparency, predictability, and fairness to future rate adjustments. If directed by Council,
the Public Hearing for the 2025 solid waste rate adjustment and for consideration of the
new Agreement will be scheduled for March 18, 2025 , following Proposition 218 noticing
to all ratepayers.
POLICY CONTEXT
Pursuant to Article X of the City Charter, prior to adopting the hauler franchise
agreements, the City Council must first pass a Resolution (Attachment A) declaring its
intention to do so, stating the character of the franchise and the terms and conditions
upon which it is proposed to be granted, hold a noticed Public Hearing at which the
Ordinance restating the franchise agreements will be introduced, and c onduct a second
reading of the Ordinance. The Public Hearing must be held 20 to 60 days after the
passage of the Resolution and notice for it must be published in the local newspaper.
Below is a summary of the proposed schedule:
DISCUSSION
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Item 6b
Background
The City holds three Franchise Agreements with San Luis Garbage Company for the
collection, transportation, and disposal of solid waste, recycling, and organics. Each
Franchise Agreement outlines the obligations of both parties in areas like service delivery,
record keeping, landfill diversion goals, outreach responsibilities, and regulatory
compliance. In accordance with the Agreements, the City's solid waste, recycling, and
organic materials are collected for processing by San Luis Garbage Company once each
week for residential customers and up to seven days per week for commercial customers.
The solid waste and recycling agreements expire on August 25, 2025, and the organics
agreement expires on December 18, 2038 . The organics agreement was approved for
extension in 2015 to establish funding for the development and operation of the
KOMPOGAS SLO Anaerobic Digestion Facility1, which processes the City's curbside
food and yard waste and turns it into organic compost. Given the forthcoming
expiration of the solid waste and recycling agreements, the City must make
arrangements for solid waste and recycling collection, disposal, and processing
services. These services have historically been provided by San Luis Garbage
Company, which continues to provide high-quality collection and customer service to
the residents of San Luis Obispo. Table 1 below shows San Luis Garbage Company’s
current collection and disposal rates for 32-gallon residential cart service for the City
of San Luis Obispo compared to other jurisdictions serviced by Waste Connections.
Table 1: Monthly 32-Gallon Cart Rate Comparison2
1 The KOMPOGAS SLO Anaerobic Digestion Facility is commonly known as Hitachi Zosen Inova,
however, the facility is under new ownership of Kanadevia Inova.
2 The rates shown in Table 1 are the current and projected 2025 rates of the most common
residential cart size for the jurisdictions in the County serviced by Waste Connections.
$-
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Oceano
CSD
Pismo
Beach
San Luis
Obispo
Grover
Beach
Arroyo
Grande
Nipomo
CSD
Avila
Beach
CSD
Cayucos
SD
Los
Osos
CSD
Cambria
CSD
Proposed Current
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Item 6b
Negotiation of Restated Agreement and Proposed Changes
Consolidation of Solid Waste, Recycling, and Organics Agreements
With two of the City’s three Agreements with San Luis Garbage Company set to expire
on August 25, 2025 – and given the need for the City to make arrangements for the
continuation of solid waste and recycling collection, disposal, and processing services –
City staff and San Luis Garbage Company set o ut to negotiate the terms and conditions
of a new Agreement incorporating all three existing collection services into a single
Agreement with one expiration date3. Merging the three agreements into one, restated
agreement provides streamlined and consisten t oversight for staff and is typical practice
in the solid waste industry.
New Service Enhancements
Negotiating a new, consolidated agreement with San Luis Garbage Company has allowed
City staff to develop an agreement that formalizes new service improvements benefitting
solid waste ratepayers. Throughout the term of the current Agreement and while attending
local community events, staff monitored customer satisfaction from community members
and local businesses via complaints on services and improvements they would like
included in the future Agreement. Additionally, staff interacted with local businesses
before the April 2, 2024, City Council meeting, which introduced a change to the Municipal
Code incorporating an enforcement mechanism for single-use foodware in compliance
with Assembly Bill 1276 as well as authorizing staff the ability to require locking
mechanisms on commercial bins if the premises were found to have litter and overage
issues. During this time, staff gathered details on customer satisfaction. Requested
enhancements from stakeholders were considered, and many incorporated, during
negotiations.
Table 2 below summarizes the new, community-driven service enhancements that City
staff secured via negotiations with San Luis Garbage Company in addition to their already
scheduled collection of solid waste, recycling, and organics materials. Staff believes these
new service enhancements provide good value to the City and to ratepayers.
Table 2: Secured Franchise Agreement Service Enhancements
Current New/Proposed
Customer
Assistance
Program
None. 20% discount for qualifying low-
income residential customers
following the same eligibility
requirements as the City’s water
and sewer Customer Assistance
Program.
3 Pursuant to California Public Resources Code Section 40059, a competitive bidding process for
solid waste handling services is not required. It is within the public interest to authorize and require
local agencies to make adequate provisions for solid waste handling within their jurisdiction,
including but not limited to, the discretion to perform a competitive bidding process.
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Item 6b
Current New/Proposed
Bulky/Large
Item
Collection
Bulky/large item collection
paid by customers. Discount
available during the semi-
annual Clean Up Weeks.
Collection of up to three scheduled
bulky/large items for single-family
residential customers and up to
twelve for multi-family complexes
annually. Services will be included
in the rates at no additional cost to
customers. Some collections must
occur during semi-annual Clean
Up Weeks.
Annual Cart
Exchange
Cart exchange provided as
paid service or discretionary
customer courtesy only – not
available at no cost to all
customers.
One annual cart exchange for
residential customers for any of the
carts due to cleanliness, odor, or
damage. The service will be
included in the rates at no
additional cost to customers. If a
cart is broken due to normal wear
and tear or from servicing, it will be
replaced at no cost and will not
count toward the no cost
exchange.
Holiday Tree
Collection
Program
Old holiday trees must be cut
up and placed in green bin.
No cost curbside collection of
whole holiday trees within two
weeks after Christmas Day. No
stands, ornaments, or flocking
permitted.
Collection
Service at City
Events
The City pays the cost of solid
waste, recycling, and organics
collection at events.
No cost collection and disposal of
materials for up to 12 community
or clean-up events.
Illegal
Dumping
Removal
Services currently provided
but not formalized in
agreement.
No cost collection of illegally
dumped items on sidewalks or in
the public right-of-way. Excludes
hazardous materials.
Delinquent
Solid Waste
Lien Process
Annual Public Hearing held to
authorize delinquent solid
waste fees be placed on tax
roll as lien against the
property.
Public Hearing no more frequent
than every 5 years, or when
delinquent amounts exceed
$50,000, whichever is sooner, to
authorize delinquent fees be
placed on the tax roll4. The Public
Hearing will follow abundant
outreach efforts from City staff and
San Luis Garbage Company.
4 An annual lien process is currently described in Section 8.04.070 of the City’s Municipal Code.
A recommended change extending this frequency will require a Municipal Code amendment and
will be brought to Council for consideration during the March 18, 2025, Public Hearing.
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Item 6b
To continue cultivating a strong partnership with San Luis Garbage Company, the
Company requested a few other changes be incorporated into the restated Agreement to
assist with the public health, safety, and efficiency of their operations. These requests
include:
1. Earlier Collection Time: San Luis Garbage Company currently provides
residential collection service after 6:30 a.m. in accordance with Section 9.12.080
of the City’s Municipal Code. They have requested the City allow residential
collection service to start 30 minutes earlier in high-traffic areas in an effort to
eliminate encounters with pedestrian traffic. This request would be consistent with
other cities in the County but requires further analysis to identify the actual effects
on residential customers. Staff will identify the potential impacts and may return to
Council at a later date with a developed recommend ation to update the Municipal
Code. In the meantime, San Luis Garbage Company will continue to provide
services per the requirements set forth in the Municipal Code.
2. Adjustment to Profit Allowance: San Luis Garbage Company requested an
increase to their seven percent profit allowance on collection costs to be more
consistent with industry standard. The specifics of this request are discussed in
greater detail below.
3. Growth Cap on Sidewalk Litter Containers: San Luis Garbage Company
currently provides no cost collection and disposal services for all City sidewalk and
bus stop litter containers. The Company requested capping the number of services
that it provides (via number of containers and/or frequency). The proposed
Agreement addresses this request by providing that additional service levels
requested above ten percent of the currently provided service will become a paid
service.
4. Post-Collection (Tipping Fees): Third-party costs for the KOMPOGAS SLO
Anaerobic Digestion Facility have doubled since 2022. The change in price is a
result of changes in the facility capital and operating costs. Additionally, landfill
waste disposal costs for the Cold Canyon Landfill have increased, however, the
cost charged to customers has remained the same since 2016 for municipal solid
waste. The 2025 rate adjustment reflects a market adjustment from $41 to $70 per
ton. San Luis Garbage Company provided a market comparison demonstrating the
applicability of the tipping fee adjustment (provided in Table 3 below).
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Item 6b
Table 3: Landfill Tipping Fee Comparison for Garbage Trucks (per ton)
New Rate Adjustment Methodology
Within the current solid waste Agreement, solid waste rates are adjusted annually in
accordance with the Council-adopted Rate Setting Manual. The Rate Setting Manual
states the franchised waste hauling company can apply for a cost-based rate adjustment5
every three years in a Base Rate Adjustment with two interim years adjusted by CPI. The
last cost-based adjustment occurred on April 19, 2022, meaning the next Base Rate
Adjustment year is 2025. On July 3, 2024, the City received San Luis Garbage Company’s
2025 Base Rate Application proposing adjustments to the solid waste rates due to
increased collection and processing costs. Details on the increase are explained further
below.
Staff and San Luis Garbage Company leveraged the timing of negotiating the restated
Agreement to also negotiate a replacement to the outdated Rate Setting Manual , which
was adopted prior to the passage of Proposition 218. Ten agencies in the county, which
all franchise their solid waste service with Waste Connections, partnered with the garbage
company to develop a new rate adjustment methodology (Exhibit A in Attachment B). A
third-party consultant, R3 Consulting Group, Inc., was hired to meet with Waste
Connections and the ten jurisdictions and develop a methodology that prioritizes rate
stability, predictability, fairness, transparency, ease of administration, cost -effectiveness,
compliance with the noticing requirements of Proposition 218, and is consistent with
standard practices within the solid waste industry. The new methodology was used to
develop the proposed 2025 rate adjustment s for all ten agencies and fulfills the critical
objectives. Eight of the ten agencies have successfully introduced their 2025 rates with
the new methodology to their respective Councils and Boards, receiving unanimous
direction to release Proposition 218 noticing and hold a Public Hearing. Of the two
remaining agencies, one does not participate in the Proposition 218 Public Hearing
process and the other is the City of San Luis Obispo.
5 A cost-based rate adjustment requires thorough review of the garbage company’s financial
statements and rate increase requests are based off a recovery of net costs.
$90
$189
$53 $64.75 $74
$100 $70
SANTA
MARIA
LANDFILL
TAJIGUAS -
FRANCHISE
PASO
ROBLES
LANDFILL
JOHNSON
CANYON
LANDFILL
REGEN
MONTEREY
CITY OF
LOMPOC
LANDFILL
COLD
CANYON
LANDFILL
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Item 6b
The key features of the new methodology include:
1. Capped CPI Adjustments: Starting in 2026, rate adjustments during the interim
years between the cost-based adjustments will be based on the Garbage and
Trash CPI, with a floor of 2% and a cap of 5%. Amounts under 2% or over 5% will
carry forward to be applied to future year adjustments, and the CPI adjustment will
apply to San Luis Garbage Company’s collection and post-collection cost centers.
Actual rate adjustments may be slightly above or below the cap or floor, depending
on other factors listed below. Overall, the cap on the annual CPI adjustment to San
Luis Garbage Company’s collection and post-collection cost centers will result in
more even and consistent annual rate adjustments in most years. The purpose of
this approach is to avoid the unpredictable rate spikes that have been experienced
in the past (i.e., 13.72 percent in 2019 and 17.75 percent in 2022) and provide
more consistent and stable increases in future years.
2. Updated Depreciation Lifespan for Trucks: The 1994 Rate Setting Manual
identified a 7-year depreciation schedule for solid waste collection trucks. Modern
solid waste collection trucks have a 10-year lifespan, and the depreciation
schedule was adjusted accordingly.
3. Profit Allowance: The proposed Agreement and revised rate methodology
includes an adjustment to the profit allowance to address San Luis Garbage
Company’s request for a fair and reasonable profit increase. The proposed
Agreement increases the allowed profit on identified costs from seven percent to
nine percent for solid waste collection services in 2025. This increase in profit
allowance brings the percentage closer to the industry standard, which is typically
10-15 percent for solid waste collection. In 2026 and thereafter, the profit
allowance would increase to ten percent of collection costs.
4. Removal of Limitation on Corporate Overhead: The 1994 Rate Setting Manual
limited the amount of rate that could be used to fund corporate overhead, such as
company leadership salaries. However, since then, San Luis Garbage Company
was acquired by Waste Connections, making it a national company and corporate
overhead costs have broadened to fund legal, tax, payroll, human resources,
engineering, compliance, IT, training, and recruiting programs. These services are
pertinent and valuable in contributing to efficient and safe opera tions in San Luis
Obispo, and the costs are limited to less than four percent of the total cost
projection.
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Item 6b
5. Revenue Balancing Mechanism: Starting in 2027, rate adjustments will account
for shortfalls or surpluses in San Luis Garbage Company’s actual reve nues
compared to projected revenues from prior years. For example, suppose San Luis
Garbage Company’s 2025 revenues exceed projections. In that case, the surplus
revenues will be credited to the rates in 2027 (and vice versa), achieving fairness
in compensation and rates for the company and ratepayers. Such adjustments
would occur annually and independent of the CPI cap and floor noted above.
Historically, no balancing metric was in place, resulting in higher rate increases
during cost-based adjustment years.
6. Less Frequent Cost-Based Adjustments: Currently, solid waste rates are
adjusted based on the 1994 Rate Manual every three years and are based on San
Luis Garbage Company’s costs. Via the new methodology, cost -based
adjustments would occur a maximum of every five years, only if requested by San
Luis Garbage Company or the City. The first opportunity for a cost -based
adjustment will be for the 2030 rate year. If neither San Luis Garbage Company
nor the City requests a cost-based adjustment, then the CPI adjustment approach
will be applied. Cost-based adjustments will be based on San Luis Garbage
Company’s consolidated audited financial statements for the region.
7. Extraordinary Adjustments: Consistent with the 1994 Rate Manual, during CPI
adjustment years, San Luis Garbage Company may request extraordinary rate
adjustments due to changes in law affecting collection operations, including the
California Air Resources Board (CARB) Advanced Clean Fleets (ACF) regulation
requiring all solid waste collection trucks to have zero emissions by 2042 6 (which
may necessitate a change to depreciation schedules). The City may, but is not
obligated to, consider requests for extraordinary rate adjustments due to changes
in law effective post-collection operations. Requests for extraordinary changes are
subject to good faith meet and confer negotiations between the City and San Luis
Garbage Company.
8. Timing of Requested Adjustments: If San Luis Garbage Company requests a
cost-based adjustment after the five-year minimum index-based years, they must
submit the intention to apply by January 15 of the year preceding the proposed
rate implementation. A formal application must be submitted by April 30, which
allows the City ample time to review, introduce the proposed rate adjustment to
Council, perform Proposition 218 noticing, and conduct a Public Hearing by the
end of summer before rate implementation on January 1.
6 CARB’s ACF regulation includes a phased-in plan to get the percentage of the fleet to be zero
emission vehicles with 10 percent by 2030, 25 percent by 2033, 50 percent by 2036, 75 percent
by 2039, and 100 percent by 2042.
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Item 6b
9. Delayed Rate Implementation: Rate adjustments shall be effective on January 1
of each year unless otherwise agreed to in writing by the City and San Luis
Garbage Company. Similar to the 1994 Rate Manual, any delay in rate change
approval that is caused by San Luis Garbage Company shall not result in additional
adjustments corresponding with the delay in approval. Conversely, delay in rate
change approval not caused by San Luis Garbage Company will result in additional
adjustments so that all required revenues are billed within the rate year.
The terms outlined within the new rate adjustment methodology, including adjustments to
profit allowance and corporate overhead, were heavily negotiated over multiple months
to arrive at the above outcomes. The new rate adjustment methodology will be detailed
as an exhibit to the proposed restated Agreement, will replace the current 1994 Rate
Setting Manual in its entirety, and was incorporated into San Luis Garbage Company’s
2025 proposed rate adjustment.
Proposed 2025 Rate Adjustments
After San Luis Garbage Company submitted their initial 2025 Base Rate Application
calculated using the 1994 Rate Manual, Staff hired R3 Consulting Group, Inc. to review
the rate application for accuracy and help the City and San Luis Garbage Company
negotiate a new Agreement with updated service enhancements and a new rate
adjustment methodology. Table 4 below shows the development of the proposed 2025
rate with the new methodology, which is being introduced now and if directed, presented
at the Public Hearing on March 18, 2025, after a 45-day Proposition 218 written notice to
solid waste ratepayers with information about the proposed rate adjustments and details
about how ratepayers may submit written protests to the proposed rate adjustment.
Table 4: Negotiated 2025 Rate Adjustment Request
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Item 6b
The above table shows the development of the 2025 rate negotiations. The original 2025
Base Rate Application utilized the 1994 Rate Setting Manual and did not incorporate new
service enhancements or paid commercial bin recycling. The middle rate increase shows
the negotiated rate to incorporate the new services and methodology. However, due to a
delay in implementation from the January 1, 2025, effective date to allow proper noticing
and outreach to the community, the proposed rate increase is 7.98 percent, and would
become effective March 19, 2025, after the Public Hearing. Even with the retroactive
adjustment to offset the delay in effective date, the total amount paid by ratepayers will
be the same if the new rates are adopted as proposed.
Paid Commercial Bin Recycling:
A key factor affecting the proposed rate adjustment is a recommended change to the
payment structure for commercial customers who are subscribed to recycling bin
(dumpster) service. Currently, in the City, recycling bin service is offered at no cost to
commercial customers for collection once and twice a week. Any additional recycling bin
service over base level can be provided at 25 percent of the trash service rate. No change
would occur for ratepayers subscribed to recycling cart (wheeler) service or comm ercial
bin customers subscribed in service more than twice a week because as they are already
paying a bundled rate in their trash bill to include recycling service.
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Item 6b
To promote equity amongst customers and to maintain consistency with other cities, the
recommended rate structure will require all commercial recycling bin customers receiving
service once or twice a week to start paying for recycling services at 25 percent of the
trash rate. For reference, other comparable cities charge their commercial recycling bin
customers at 50 percent of the trash rate. San Luis Garbage Company’s current cost to
provide free recycling bin service to commercial customers is being offs et by overall
customer rates. Outreach to impacted commercial customers has been sent out via email,
informational session hosted by staff from the City and San Luis Garbage Company, and
on the City’s website.
Table 5 below shows the different components of the proposed 7.98 percent rate
increase. Each key factor was developed after numerous negotiation meetings with staff,
San Luis Garbage Company, and R3 Consulting Group, Inc.
Table 5: Key Rate Adjustment Factors
Key Factor
Proposed Rate Adjustment
Labor & Benefits
0.93%
Insurance, Fuel, Maintenance, &
General/Administrative Costs
1.07%
Depreciation (from 7 to 10 years)
-1.13%
Corporate Overhead
1.33%
Profit Allowance
1.07%
Post-Collection Services (Tipping Fees at Anaerobic
Digestor, Landfill, and Materials Recovery Facility)
5.36%
Service Enhancements
0.42%
AB 939/SB 1383 City Fees
0.96%
Paid Commercial Recycling
-3.75%
Effective Date Delay from 1/1/25 to 3/19/25
1.72%
Total Proposed 2025 Rate Increase 7.98%
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Item 6b
Table 6 below shows the proposed changes to popular residential subscription levels.
The proposed changes to all residential and commercial subscription levels and the new
cost for commercial bin recycling for collection once and twice a week is listed in
Attachment D.
Table 6: Proposed Monthly Rate Increase by Residential Service Level
Garbage Container
Size 2024 (Current) 7.98% Change Proposed 2025 Rates
20-gallon $14.74 $1.18 $15.92
32-gallon $23.53 $1.88 $25.41
Garbage Container
Size 2024 (Current) 7.98% Change Proposed 2025 Rates
64-gallon $47.05 $3.75 $50.80
96-gallon $70.60 $5.63 $76.23
Next Steps
If directed by Council, staff will:
1. Set a Public Hearing date of March 18, 2025, for the proposed 2025 rates and
Agreements.
2. Release Proposition 218 noticing at least 45-days prior to the Public Hearing.
3. Provide outreach of the proposed changes to the 2025 rates and franchise
agreement via email, e-notifications, and a Solid W aste Informational Session.
4. After the first reading of the Agreement Ordinance at the Public Hearing, hold a
second reading and adoption of the Ordinance on April 1, 2025.
Additionally, staff will evaluate the potential impacts to residential customers if collection
time is adjusted 30 minutes earlier to 6:00 a.m. for premises with high pedestrian traffic.
Depending on the results of this evaluation, staff may return to Council at a future meeting
with a recommendation to amend the City’s Municipal Code noise ordinance Section
9.12.080.
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Item 6b
Previous Council or Advisory Body Action
Franchise Agreements
At the July 20, 2010 City Council Meeting, after considering the performance by San Luis
Garbage Company, the three existing solid waste, recycling, and organics Agreements
were extended for a contract duration of 15 years. At the October 20, 2015 City Council
Meeting, the organics agreement was approved for a 20 year extension to commence
once construction of the KOMPOGAS SLO Anaerobic Digestion Facility was completed.
Construction of the facility was completed in 2018, which initiated the approved 20 year
extension of the expiration of the organics franchise agreement to 2038. On May 3, 2022,
the three existing Agreements were amended to implement Senate Bill 1383 (organics
recycling) requirements, and no changes to the expiration dates were made. The solid
waste and recycling Agreements expire in 2025, thus presenting the opportunity to restate
and merge with the organics Agreement.
Solid Waste Rates and Rate Setting Methodology
Every three years, Waste Connections applies for a cost-based rate adjustment from
each agency they service in the County per the 1994 Rate Setting Manual. San Luis
Garbage Company requested their last base rate adjustment in 2021, which was
approved at the April 19, 2022 City Council meeting following a Proposition 218 Public
Hearing process. Eight of the ten agencies serviced by Waste Connections and
participating in the regional-scale rate adjustment methodology update have successfully
introduced their 2025 rates with the new methodology to their respective Councils and
Boards, receiving unanimous direction to release the Proposition 218 noticing and hold a
Public Hearing.
Public Engagement
Staff gathered feedback from community members t o identify which service
enhancements are most impactful and which priorities should be negotiated into the
Agreement through customer complaints and while attending local community events
such as Farmers Market and Earth Day. Additionally, staff met with the Chamber of
Commerce to partner on coordinating effective outreach and messaging to the
commercial customers impacted by the recycling bin service change. An Informational
Session was held by City and San Luis Garbage Company staff for commercial customers
to ask questions and another Informational Session for all customers will be held in
February.
If directed, the public will be notified of the proposed changes by a mailed Proposition
218 notice (available in English and online in Spanish), in-person outreach at Farmers
Market, a Solid Waste Informational Session, emails from San Luis Garbage Company,
City e-notifications, Frequently Asked Questions on the City’s website, and a notice of the
Public Hearing will be published in a local newspaper in accordance wit h Section 1002,
Article X of the City’s Charter.
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Item 6b
If directed by Council and in compliance with Proposition 218 noticing requirements for
the Public Hearing on March 18, 2025, a public notice will be mailed to every residential
and commercial property in the City of San Luis Obispo at least 45-days prior to the Public
Hearing date. The notice includes the proposed rate increase, a summary of the purpose
of the increase, a fee schedule, and instructions on how to protest the proposed increase.
The notices are also posted to the City’s and San Luis Garbage Company’s websites.
CONCURRENCE
The City Attorney’s Office has reviewed and approved the draft restated Agreement and
Proposition 218 notice as to form. The main principles contained in the proposed restated
Agreement were negotiated with San Luis Garbage Company and input on the rate
setting methodology was gathered from ten local agencies, including the Cit ies of San
Luis Obispo, Arroyo Grande, Pismo Beach, Grover Beach, and the Los Osos, Avila
Beach, Cayucos, Oceano, Cambria, and Nipomo Community Services Districts, who
have an exclusive franchise agreement with Waste Connections.
ENVIRONMENTAL REVIEW
Restating the existing Agreement and adoption of solid waste rates are exempt from the
California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines
Sections 15308 (Actions by Regulatory Agencies for Protection of the Environment) and
15061(b)(3) (common sense exemption). The collection and disposal of solid waste is an
essential service for public health, safety, and welfare. The Agreement with San Luis
Garbage Company includes mandates for compliance with state law for the disposal of
multiple waste streams in a manner that ensures the protection of the environment. In
addition to the protection of the environment, it can be seen with certainty that there is no
possibility that the restatement of the franchise agreement and adoption of solid waste
rates would have a significant effect on the environment; therefore, the actions would
meet the standard for the “common sense exemption”. Following Council’s final action at
the subsequent Public Hearing, which would include a CEQA determination, City staff will
file a Notice of Exemption.
FISCAL IMPACT
Budgeted: N/A Budget Year: N/A
Funding Identified: N/A
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State
Federal
Fees
Other:
Total $0 $0 $0 $0
Page 309 of 486
Item 6b
There is no fiscal impact to the City from the recommendation to restate the franchise
agreement. However, the Agreement will incorporate a new rate setting methodology,
which will lead to a 2025 integrated solid waste rate adjustment. This proposed increase
would impact the City as a commercial customer receiving solid waste collection services
from San Luis Garbage Company. Additionally, ten percent of the Company’s gross
revenues is paid to the City as a franchise fee, which increases as gross revenues
increase.
As part of San Luis Garbage Company’s proposed rate adjustment, 0.96 percent includes
an increase, passed directly to the ratepayer and receiving no profit, to continue to fund
the City’s waste diversion programs associated with California Assembly Bill 939 and
Senate Bill 1383. Section 41901 of the California Public Resources Code authorizes a city
or county to impose fees in amounts sufficient to pay the costs of preparing, adopting,
and implementing an integrated waste management plan. Section 41902 adds that a local
agency may directly collect the fees authorized by this chapter or may, by agreement,
arrange for the fees to be collected by a solid waste hauler providing solid waste collection
for the city or county.
If adopted, the proportionate adjustment will continue to fund the City's growing Solid
Waste and Recycling Program and are restricted for use directly related to waste diversion
and reduction efforts, which will fund the necessary staffing and resources to oversee the
program. The program oversees solid waste and recycling outreach to the community,
compliance and enforcement of local and state laws, and implementation of Major City
Goal initiatives directed by Council.
ALTERNATIVES
1. Council could decide not to approve a Resolution of Intention to adopt a
restated franchise agreement with San Luis Garbage Company and direct
staff to open a competitive bidding process for only the solid waste and
recycling franchise agreements. This is not a recommended action because,
although the City could theoretically conduct a competitive procurement process
for solid waste and recycling services only since the organics agreement does not
expire until 2038, doing so would potentially mean facilitating operations of two or
more haulers in the community with different routing operations, outreach and
education, customer services, customer rates, and billing. Additionally, San Luis
Garbage Company continues to be a key partner within the City, abides by the
performance metrics listed within their agreement, and continues to provide
collection and disposal service at a competitive rate. Pursuant to Public Resources
Code Section 40059, the City may elect to not go through a competitive bidding
process to determine the franchised hauler for solid waste handling services.
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Item 6b
2. Council could decide not to direct staff to release Proposition 218 noticing
for the proposed 2025 solid waste rate adjustment, not set a Public Hearing
date of March 18, 2025, and continue consideration of proposed solid waste
rates. If Council does not direct staff to release the Proposition 218 notice or set a
Public Hearing date, then staff could either b ring San Luis Garbage Company’s
original 9.29 percent Base Rate Adjustment derived from the 1994 Rate Manual to
Council for consideration or continue to negotiate a 2025 Base Rate Adjustment
and methodology. This alternative is not recommended because the proposed
rates include a regional-scale rate adjustment methodology with service
enhancements for customers that the original request does not. Any further delay
in rate implementation could result in an additional rate increase due to lost
revenues. The proposed rates were prepared in compliance with Proposition
218 and reflects the cost of providing collection and disposal service to the
community. The level of service provided by San Luis Garbage Company meets
the terms stated in the Agreements and R3 Consulting Group, Inc. has verified
and confirmed the proposed rates are justifiable and accurate.
ATTACHMENTS
A - Resolution – Notice of Intent to Restate the Franchise Agreements
B - Draft Restated Franchise Agreement
C - R3 Report – 2025 Rate Adjustment and New Methodology
D - Draft Solid Waste Rate Notice
Page 311 of 486
Page 312 of 486
R ______
RESOLUTION NO. _____ (2025 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, DECLARING THE CITY’S INTENT TO ADOPT
AN ORDINANCE RESTATING ITS EXISTING FRANCHISE
AGREEMENTS WITH SAN LUIS GARBAGE COMPANY AND SET A
PUBLIC HEARING FOR MARCH 18, 2025
WHEREAS, the City of San Luis Obispo ("City") adopted Ordinance No. 1551
on August 20, 2010, granting a franchise to San Luis Garbage Company ("San Luis
Garbage") for a term of 15 years for the collection and disposal of solid waste,
recycling, and organics within the City (collectively referred to as the "Franchise
Agreements"); and
WHEREAS, public health and safety demand the orderly and periodic
collection and safe disposal and/or processing of solid waste, recyclables, and green
waste; and
WHEREAS, it has been determined that an exclusive franchise granted to a
private company is the most effective and efficient way to collect and remove solid
waste, recyclables, and organics within the City; and
WHEREAS, San Luis Garbage has provided a high level of service and
reasonable rates for solid waste, recyclables, and organics collection in the City for
the terms of the Franchise Agreements; and
WHEREAS, the City adopted Ordinance No. 1624 on October 20, 2015,
amending the green waste franchise agreement to incorporate food waste and
approve the extension to the term of the agreement until December 18, 2038 – to
establish funding for the development and operation of the KOMPOGAS SLO
Anaerobic Digestion Facility – formerly Hitochi Zosen Inova – which processes the
City's curbside food and yard waste and turns it into organic compost; and
WHEREAS, Senate Bill 1383, Chapter 395, Statutes of 2016 (SB 1383)
establishes methane emissions reduction targets in a statewide effort to reduce
emissions of short- lived climate pollutants by reducing disposal of organic waste in
landfills and is California's most comprehensive change to solid waste regulations in
over thirty years; and
WHEREAS, the City adopted Ordinance No. 1711 on May 3, 2022, amending
the Franchise Agreements to implement organic waste diversion programs to meet
the goals of SB 1383 and allows a jurisdiction to designate a public or private entity
to fulfill, in whole or in part, its responsibilities under SB 1383 through contracts with
its waste haulers; and
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Resolution No. _____ (2025 Series) Page 2
R ______
WHEREAS, the solid waste and recycling agreements expire on August 25,
2025; and
WHEREAS, to maintain continuity, the material terms and conditions for the
solid waste and recycling franchise agreements are being proposed to be merged
into a restated Franchise Agreement with organics set forth below in compliance with
Section 1002 of the City Charter of the City of San Luis Obispo, thereby extending
the term of the solid waste and recycling agreements to align with the green waste
expiration date of December 18, 2038; and
WHEREAS, the Legislature of the State of California, by enactment of the
California Integrated Waste Management Act of 1989 (AB 939), set forth in Public
Resources Code Sections 40000 et seq., declares that it is within the public interest
to authorize and require local agencies to make adequate provision for solid waste
handling within their jurisdiction, including but not limited to, the discretion to perform
a competitive bidding process; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Pursuant to Section 1002 of the City Charter of the City of
San Luis Obispo, the City Council hereby declares its intent to grant a restated
franchise to San Luis Garbage for the collection and disposal of solid waste,
recycling, and organics in the City with the following key terms:
a) Merged solid waste, recycling, and organics agreements into one, restated
agreement.
b) Contract expiration of December 18, 2038 – aligning with the organics
agreement.
c) San Luis Garbage Company to provide updated enhancements within the
agreement for residential customers such as residential no cost
large/bulky item collection, Customer Assistance Program for qualified
low-income residents, holiday tree collection, and annual cart exchange.
d) Revised agreement language to increase duration between Public
Hearings for delinquent solid waste customers to up to five years.
e) San Luis Garbage Company to continue to provide public education and
outreach assistance and compliance reporting.
f) Revised rate setting methodology to replace the current 1994 Rate Setting
Process and Methodology Manual for Integrated Solid Waste Management
Rates.
SECTION 2. A public hearing will be held on March 18, 2025, beginning at
5:30 p.m. in the City Council Chambers, at which time any persons having any
interest in the amendments to the Franchise Agreements may appear before the
Council to be heard thereon.
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Resolution No. _____ (2025 Series) Page 3
R ______
SECTION 3. The City Clerk shall publish this resolution at least once within
fifteen (15) days of its passage in a newspaper in the City of San Luis Obispo.
Upon motion of Council Member ___________, seconded by Council Member
___________, and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _______________ 2025.
_________________________
Mayor Erica A. Stewart
ATTEST:
______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of
the City of San Luis Obispo, California, on ______________________.
_________________________
Teresa Purrington
City Clerk
Page 315 of 486
Page 316 of 486
RESTATED FRANCHISE AGREEMENT BETWEEN
THE CITY OF SAN LUIS OBISPO
AND
SAN LUIS GARBAGE COMPANY
For Collection and Disposal of Solid Waste, Recyclable Materials,
and Organic Materials Within the City of San Luis Obispo
This Agreement between the City of San Luis Obispo and San Luis Garbage Company for Collection,
Transportation, Diversion, Processing, marketing, and Disposal of Solid Waste, Recyclable Materials, and
Organic Materials (the “Restated Franchise Agreement” or the “Agreement”), is made and entered into on
____________ (as the “Effective Date”) in the State of California by and between the City of San Luis
Obispo, a political subdivision of the State of California (hereafter “City”) and San Luis Garbage
Company, a California corporation (hereafter “Franchisee”), each of which may be referred to individually
as a “Party” or together as the “Parties".
RECITALS
This Agreement is made and entered into on the basis of the following facts, understandings, and intentions
of the Parties:
1. WHEREAS: The Parties entered into an Amended and Restated Franchise Agreement for Collection,
Transportation, and Disposal of Solid Waste on June 3, 2022 (the “Solid Waste Agreement”); and
2. WHEREAS: The Parties entered into a second, separate Amended and Restated Agreement for
Collection and Disposal of Recyclable Materials on June 3, 2022 (the “Recyclable Materials
Agreement”); and
3. WHEREAS: The Parties entered into a third, separate Amended and Restated Agreement for
Collection and Disposal of Organic Materials on June 3, 2022 (the “Green Waste Agreement”); and
4. WHEREAS: The Solid Waste, Recyclable Materials, and Green Waste Agreements provide the City
with the right to direct Franchisee to modify the scope of one or more types of services, or to otherwise
modify its performance under the Agreement, subject to providing additional compensation; and
5. WHEREAS, the Legislature of the State of California, by enactment of the California Integrated
Waste Management Act of 1989 (AB 939), set forth in Public Resources Code Sections 40000 et
seq., declares that it is within the public interest to authorize and require local agencies to make
adequate provision for Solid Waste Handling within their jurisdiction: and,
6. WHEREAS: 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 landfill Disposal 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; and
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Agreement for Collection of Discarded Materials
7. WHEREAS: 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; and
8. WHEREAS: SB 1383 requires the City to implement Collection programs for Organic Waste and
Recyclable Materials, 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
Franchisee, acting as the City’s designee, through this Agreement; and
9. WHEREAS: The Parties have agreed to merge the Solid Waste, Recyclable Materials, and Green
Waste Agreements enumerated above into one single franchise agreement through this Restated
Franchise Agreement, which includes all agreements between City and Franchisee regarding Solid
Waste, Recyclable Materials, and Organic Materials; and
10. WHEREAS: this Agreement is intended to restate and supersede all prior Franchise Agreements for
Solid Waste, Recyclable Materials, and Green Waste Collection between City and Franchisee; and
NOW, THEREFORE, in consideration of the mutual promises, covenants, and conditions herein
contained, CITY and FRANCHISEE do hereby agree as follows:
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TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS .......................................................................................................................... 1
ARTICLE 2 – GRANT AND ACCEPTANCE OF AGREEMENT ....................................................... 171
2.1 GRANT AND ACCEPTANCE OF AGREEMENT …………. .......................................................... 11
2.2 EFFECTIVE DATE …………. .............................................................................................................. 11
2.3 TERM OF AGREEMENT …………. ................................................................................................... 11
2.4 OPTION TO EXTEND …………. ......................................................................................................... 11
2.5 CONDITIONS TO THE EFFECTIVENESS OF AGREEMENT …………. ................................... 12
2.6 RESPONSIBILITES OF CITY …………. ........................................................................................... 12
ARTICLE 3 – REPRESENTATION AND WARRANTIES OF THE FRANCHISEE ............................ 182
3.1 FRANCHISE STATUS …………. ......................................................................................................... 12
3.2 FRANCHISE AUTHORIZATION…………........................................................................................ 12
3.3 COMPLIANCE WITH LAWS AND REGULATIONS …………. .................................................... 13
3.4 SERVE WITHOUT INTERRUPTION …………................................................................................ 13
3.5 PERMITS AND LICENSES …………. ................................................................................................ 13
3.6 PRESERVATION OF CITY PROPERTY …………. ......................................................................... 13
3.7 FINANCIAL REPRESENTATION…………. ..................................................................................... 13
3.8 FRANCHISEE AS ARRANGER …………. ........................................................................................ 13
ARTICLE 4 - SCOPE OF AGREEMENT…………. ..................................................................................... 13
4.1 SCOPE OF AGREEMENT…………. ................................................................................................... 13
4.2 LIMITATIONS TO SCOPE…………. ................................................................................................. 13
4.3 ADMINISTRATION OF AGREEMENT…………. ............................................................................ 15
4.4 USE OF CITY STREETS…………....................................................................................................... 15
4.5 ANNEXATION…………........................................................................................................................ 15
4.6 NEW PROGRAMS AND CITY'S RIGHT TO REQUEST CHANGES…………. .......................... 15
4.7 OWNERSHIP OF DISCARDED MATERIALS………. ..................................................................... 16
ARTICLE 5 - DIRECT SERVICES…………. ................................................................................................ 16
5.1 GENERAL…………. .............................................................................................................................. 16
5.2 THREE-CONTAINER COLLECTION SYSTEM…………. ............................................................. 17
5.3 COLLECTION SERVICE…………. .................................................................................................... 17
5.4 MATERIALS TO BE COLLECTED………….................................................................................... 18
5.5 PUBLIC CONTAINER COLLECTION…………. ............................................................................. 19
5.6 MISSED PICKUPS…………. ................................................................................................................ 19
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5.7 BULKY/LARGE ITEM COLLECTION SERVICE………. .............................................................. 20
5.8 SEMI-ANNUAL CLEAN-UP WEEKS…………. ................................................................................ 21
5.9 HOLIDAY TREE COLLECTION AND DIVERSION PROGRAM………..................................... 21
5.10 ACCUMULATION OF SOLID WASTE………................................................................................ 22
5.11 PROCESSING AND DISPOSAL OF DISCARDED MATERIALS…………. ............................... 22
5.12 GENERATOR WAIVERS………. ...................................................................................................... 26
5.13 PROCUREMENT OF RECOVERED ORGANIC WASTE PRODUCTS………. ........................ 27
5.14 MARKETING AND SALE OF RECYCLABLE MATERIALS………. ......................................... 27
5.15 HAZARDOUS WASTE HANDLING AND DISPOSAL………. ..................................................... 27
ARTICLE 6 - COLLECTION SERVICE AND DIVERSION STANDARDS…………. ............................ 28
6.1 OPERATIONS…………. ....................................................................................................................... 28
6.2 REFUSAL TO PROVIDE COLLECTION SERVICES…………. .................................................... 33
6.3 CUSTOMER SERVICE…………. ........................................................................................................ 34
6.4 DIVERSION STANDARDS…………. .................................................................................................. 35
6.5 PERIODIC PERFORMANCE OR BILLING AUDIT…………. ...................................................... 36
6.6 PERFORAMCNE HEARING…………. .............................................................................................. 36
ARTICLE 7 - OTHER SERVICES: BILLING, REPORTING, RECORD-KEEPING, AND PUBLIC
EDUCATION…………. ........................................................................................................ 37
7.1 BILLING…………. ................................................................................................................................. 37
7.2 OWNER RESPONSIBLE FOR PAYMENT…………. ....................................................................... 38
7.3 COLLECTION OF BILLS FROM DELINQUENT CUSTOMERS…………. ................................ 38
7.4 CUSTOMER ASSISTANCE PROGRAM AT FRANCHISEE'S GOOD WILL…………. ............. 38
7.5 RECORDS…………. .............................................................................................................................. 38
7.6 WASTE GENERATION, CHARACTERIZATION STUDIES, AND CONTAINER AUDITS ..... 39
7.7 REPORT FORMATS AND SCHEDULE…………. ............................................................................ 40
7.8 QUARTERLY REPORTS ..................................................................................................................... 40
7.9 ANNUAL REPORTS AND FINANCIAL AUDIT ............................................................................... 42
7.10 MAINTENANCE OF ACCOUNTING RECORDS……. ................................................................. 43
7.11 RIGHT TO AUDIT RECORDS .......................................................................................................... 43
7.12 INSPECTION BY CITY ...................................................................................................................... 44
7.13 REGULATORY REPORTING ........................................................................................................... 44
7.14 UPON-REQUEST REPORTING ........................................................................................................ 44
7.15 FACILITY CAPACITY PLANNING INFORMATION .................................................................. 44
7.16 PUBLIC EDUCATION AND OUTREACH ....................................................................................... 45
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7.17 RECORDS RETENTION .................................................................................................................... 46
ARTICLE 8 - PAYMENTS TO THE CITY…………. ................................................................................... 46
8.1 QUARTERLY FEES AND PAYMENT…………................................................................................ 46
ARTICLE 9 - SERVICE RATES AND REVIEW…………. ......................................................................... 48
9.1 GENERAL…………. .............................................................................................................................. 48
9.2 SERVICE RATES……. .......................................................................................................................... 48
9.3 RATE REVIEW…………. ..................................................................................................................... 48
9.4 PUBLICATION OF RATES…………. ................................................................................................. 48
9.5 ROUNDING…………. ............................................................................................................................ 48
ARTICLE 10 - INDEMNITY, INSURANCE, AND PERFORMANCE BOND…………. ......................... 48
10.1 INDEMNIFICATION…………. .......................................................................................................... 48
10.2 INSURANCE…………. ........................................................................................................................ 49
10.3 PERFORMANCE BOND…………. .................................................................................................... 51
ARTICLE 11 - CITY'S RIGHT TO PERFORM SERVICE…………. ........................................................ 51
11.1 GENERAL…………. ............................................................................................................................ 51
11.2 TEMPORARY POSSESSION OF FRANCHISEE'S PROPERTY…………. ................................ 52
11.3 BILLING AND COMPENSATION TO CITY DURING CITY'S POSSESSION…………. ........ 52
11.4 CITY'S RIGHT TO RELINQUISH POSSESSION…………. ......................................................... 52
11.5 DURATION OF CITY'S POSSESSION…………. ............................................................................ 53
ARTICLE 12 - DEFAULT, REMEDIES, AND LIQUIDATED DAMAGES…………. ............................. 53
12.1 EVENTS OF DEFAULT…………. ..................................................................................................... 53
12.2 RIGHT TO TERMINATE UPON DEFAULT…………. .................................................................. 54
12.3 POSSESSION OF PROPERTY AND BILLING RECORDS AND SYSTEMS UPON
TERMINATION…………. ................................................................................................... 54
12.4 CITY'S REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE………. .............................. 54
12.5 EXCUSE FROM PERFORMANCE………. ...................................................................................... 55
12.6 LIQUIDATED DAMAGES. ................................................................................................................. 55
12.7 NOTICE, HEARING, AND APPEAL………. ................................................................................... 58
12.8 FINANCIAL MATERIAL ERRORS, OMISSIONS, OR IRREGULARITIES ............................. 58
ARTICLE 13 - ASSIGNMENT…………. ....................................................................................................... 59
13.1 ASSIGNMENT…………. ..................................................................................................................... 59
ARTICLE 14 - OTHER AGREEMENTS OF THE PARTIES…………. .................................................... 60
14.1 RELATIONSHIP OF PARTIES…………. ........................................................................................ 60
14.2 GOVERNING LAW………. ................................................................................................................ 61
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14.3 JURISDICTION…………. ................................................................................................................... 61
14.4 SUBCONTRACTING……. .................................................................................................................. 61
14.5 INTERESTS OF FRANCHISEE…. .................................................................................................... 61
14.6 BINDING ON SUCCESSORS. ............................................................................................................ 61
14.7 TRANSITION TO NEXT FRANCHISE……. ................................................................................... 61
14.8 PARTIES IN INTEREST ..................................................................................................................... 61
14.9 WAIVER……. ....................................................................................................................................... 61
14.10 CONDEMNATION ............................................................................................................................. 62
14.11 CITY FREETO NEGOTIATE WITH THIRD PARTIES………. ................................................. 62
14.12 IMMIGRATION ACT OF 1386…………. ....................................................................................... 62
14.13 NON-DISCRIMMINATION……. ..................................................................................................... 62
14.14 PUBLIC AND EMPLOYEE SAFETY…. ........................................................................................ 62
14.15 RECYCLED PRODUCTS. ................................................................................................................ 62
14.16 NOTICE……. ...................................................................................................................................... 62
14.17 REPRESENTATIVES OF PARTIES ............................................................................................... 63
14.18 ENTIRE AGREEMENT……. ........................................................................................................... 63
14.19 SECTION HEADINGS....................................................................................................................... 63
14.20 REFERENCE TO LAWS…. .............................................................................................................. 63
14.21 INTERPRETATION. ......................................................................................................................... 63
14.22 AGREEMENT……. ............................................................................................................................ 63
14.23 SEVERABILITY ................................................................................................................................. 63
14.24 COUNTERPARTS. ............................................................................................................................. 63
14.25 USE OF "WILL" ................................................................................................................................ 64
14.26 INVESTIGATION .............................................................................................................................. 64
EXHIBIT A…………. ........................................................................................................................................ 66
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1
ARTICLE 1.
DEFINITIONS
For purposes of this Agreement, unless a different meaning is clearly required, the following terms shall have the
following meanings:
1.1 “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.
1.2 "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.
1.3 “AB 1594” means State of California Assembly Bill No. 1594 approved September 28, 2014.
AB 1594 provides that as of January 1, 2020, the use of green material as Alternative Daily
Cover does not constitute diversion through recycling and would be considered disposal.
1.4 “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.
1.5 "Affiliate" means all businesses (including corporations, limited and general partnerships and sole
proprietorships) which are directly or indirectly related to Franchisee by virtue of direct or indirect
common ownership interest or common management shall be deemed to be "Affiliated with"
Franchisee and included within the term "Affiliate" as used herein. An Affiliate shall include a business
in which Franchisee owns a direct or indirect ownership interest, a business which has a direct or
indirect ownership interest in Franchisee, and/or a business which is also owned, controlled, or
managed by any business or individual which has a direct or indirect ownership interest in Franchisee.
For purposes of determining whether an indirect ownership exists, the constructive ownership
provisions of Section 318(a) of the Internal Revenue Code of 1986, as in effect on the date of this
Agreement, shall apply; provided, however, that (i) "ten percent (10%)" shall be substituted for "fifty
percent (50%)" in Section 318(a)(2)(C) and in Section 318(a)(3)(C) thereof; and (ii) Section
318(a)(5)(C) shall be disregarded. For purposes of determining ownership under this paragraph and
constructive or indirect ownership under Section 318(a), ownership interest of less than ten percent
(10%) 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, whichever is greater.
1.6 "Agreement" means this agreement between City and Franchisee arranging for the Collection,
Transportation, Processing, Diversion, marketing, and Disposal of Residential and Commercial Solid
Waste, Recyclable Materials, and Organic Materials, as well as other services related to meeting the
Diversion goals and requirements of AB 939 and SB 1383, and any future amendments hereto.
1.7 “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.
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2
1.8 “Approved Disposal Facility” means the Cold Canyon Landfill, owned and operated by Cold Canyon
Land Fill, Inc. and located at 2268 Carpenter Canyon Rd, San Luis Obispo, CA, 93401, as the
primary, and Chicago Grade Landfill located at 2290 Homestead Rd, Templeton, CA, 93465, or the
Santa Maria Landfill located at 2065 E Main St, Santa Maria, CA, 93454, as alternatives. All three of
these have been selected by the Franchisee and approved by the City. Franchisee shall notify City
before using an alternative Facility.
1.9 “Approved Organic Materials Processing Facility” means the Hitachi Zosen lnova (HZI)
Kompogas Facility located at 4300 Old Santa Fe Rd, San Luis Obispo, CA, 93401, and Engel & Gray
Inc. Regional Compost Facility, located at 745 West Betteravia Road, Santa Maria, CA, 93455, which
have been selected by the Franchisee and approved by the City.
1.10 “Approved Recyclable Materials Processing Facility” means the Materials Recovery Facility at
Cold Canyon Landfill, owned, and operated by Cold Canyon Land Fill, Inc. and located at 2268
Carpenter Canyon Rd, San Luis Obispo, CA, 93401, which has been selected by the Franchisee and
approved by the City.
1.11 “Arranger” means any person that arranges for the Collection, Diversion, Transfer, burning,
Disposal, or Processing of any Solid Waste.
1.12 "Billings" means any and all statements or charges for services rendered by Franchisee
pursuant to this Agreement.
1.13 “Bin” means a metal or plastic waste Container with capacity of approximately one (1) to eight
(8) cubic yards, with a hinged lid that allows for proper closure, and with wheels (where
appropriate), that is serviced by a front end-loading and/or rear-end loading Collection vehicle,
including Bins with Compactors attached to increase the capacity of the Bin.
1.14 "Bulky/Large Item(s)” or “Bulky/Large Waste” means discarded, bulky/large household
appliances, furniture, tires, carpets, mattresses, and similar bulky/large items which require
special handling due to their size, but can be Collected without the assistance of special loading
equipment (such as forklifts or cranes) and without violating vehicle load limits. It does not
include abandoned automobiles.
1.15 “Bulky/Large Item Collection Program” means the Contractor’s Collection service for Bulky Items,
including bulky Green Waste.
1.16 “Business Days” mean days during which the City offices are open to do business with the
public.
1.17 “California Code of Regulations” or “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).
1.18 "California Integrated Waste Management Act of 1989" means Public Resources Code§§ 40000 et.
seq.
1.19 “CalRecycle” means California's Department of Resources Recycling and Recovery.
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3
1.20 “Cardboard” means corrugated fiberboard consisting of a fluted corrugated sheet and one (1) or
two (2) flat linerboards, as is often used in the manufacture of shipping containers and corrugated
boxes. Cardboard is a subset of Recyclable Materials.
1.21 “Cart” means a plastic Container with a hinged lid and wheels that is provided by the Franchisee,
approved by the City, used by the Waste Generator, serviced by an automated or semi-automated
Collection vehicle, and used for collection, accumulation, and removal of solid waste from
commercial or residential Premises. A Cart has capacity of 20, 35, 64 or 96 gallons (or similar
volumes).
1.22 "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C Section 9601, et seq.
1.23 "City" means the City of San Luis Obispo, a municipal corporation and charter city, and all
the territory lying within the municipal boundaries of the City as presently existing or as
such boundaries may be modified during the Term of this Agreement. The City may
designate responsibilities to one or more third parties, in writing, between the City Manager
and the designee.
1.24 "Collect" or "Collection" (or any variation thereof) means to take physical possession, Transport, and
remove Discarded Materials in the form of Solid Waste, Recyclable Materials, Organic Materials (Food
and Green Waste), Bulky/Large Items, and other material at the place of generation in the City.
1.25 “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.
1.26 “Compactor” means a mechanical apparatus that compresses materials together with the Container that
holds the compressed materials or the Container that holds the compressed materials if it is detached
from the mechanical compaction apparatus. Compactors include two (2) to eight (8) cubic yard Bin
Compactors serviced by front-end loader Collection vehicles and ten (10) to fifty (50) cubic yard Drop
Box Compactors serviced by Roll-Off Collection vehicles.
1.27 “Complaint” shall mean each written or orally communicated statement made by any Person, whether
to City or Franchisee, alleging: (1) non-performance, or deficiencies in Franchisee’s performance of its
duties under this Agreement; (2) a violation by Franchisee of this Agreement; or (3) an SB 1383 Non-
Compliance Complaint as required under 14 CCR Section 18995.3.
1.28 “Compost” (or any variation thereof) includes a controlled biological decomposition of Organic
Materials yielding a safe and nuisance free Compost product.
1.29 "Construction and Demolition Debris" or “C&D” means used or discarded construction
materials removed from a Premises during the construction, repair, demolition, or renovation
of a structure.
1.30 "Container" means Bins, Carts, Compactors, and Franchise Roll-Offs that are provided by
the Franchisee.
1.31 “Contaminant” or “Contamination” means any material or substance placed into or found
in a Collection Container other than the type of Source Separated material for which that
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Collection Container is intended or reserved. For example, anything that is not Recyclable
Materials is a Contaminant if placed into or found in a Recyclable Materials Collection
Container. Similarly, anything that is not Organic Materials is a Contaminant if placed into or
found in an Organic Materials Collection Container.
1.32 “County” means the County of San Luis Obispo, a political subdivision of the State of California.
1.33 “Customer” means the Person whom Franchisee submits its billing invoice to and collects payment
from for Collection services provided to a Premises. The Customer may be either the Occupant or
Owner of the Premises.
1.34 “Customer Notice” means the Franchisee’s notice to Customer(s) as described in Section 6.2.
1.35 "Designated Collection Location" means the place an authorized Recycling agent or a Solid Waste
Collector has contracted with either the City or a private entity to Collect Solid Waste, Recyclable
Material, or Organic Material.
1.36 “Designated Disposal Facility” means the landfill or Transfer Station, selected by City, where Solid
Waste and/or Processing Residue under this Agreement is sent for final Disposal. The Designated
Disposal Facility is subject to the City's right of direction. The Designated Disposal Facility is the Cold
Canyon Landfill, and located at 2268 Carpenter Canyon Road, San Luis Obispo, CA, 93401, as the
primary, and Chicago Grade Landfill or the Santa Maria Landfill are alternatives.
1.37 “Designated Processing Facility" means any properly licensed and permitted plant or site used for the
purpose of sorting, cleansing, treating, reconstituting, Processing, and marketing Recyclable and/or
Organic Materials, which has been arranged by Franchisee after consultation with City.
1.38 “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.
1.39 “Discarded Materials” means Solid Waste, Recyclable Materials, and/or Organic Materials, including
Bulky/Large Items but excluding Excluded Waste, placed by a Generator in a Container and/or at a
location for the purposes of Collection.
1.40 “Disposal Facility” means a landfill or other Facility for ultimate Disposal of Solid Waste.
1.41 “Disposal Site(s)" means any properly licensed and permitted Solid Waste Facility or Facilities arranged
by Franchisee after consultation with City for the ultimate Disposal of Solid Waste collected by
Franchisee.
1.42 “Dispose” or “Disposal” (or any variation thereof) means the ultimate disposition of Solid Waste or
Processing Residue at a Disposal Facility.
1.43 “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
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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.
1.44 “Dwelling Unit” means any individual living unit in a: Single-Family Dwelling Unit or Multi-Family
Dwelling Unit or building, a mobile home, or a motor home located on a permanent site intended for, or
capable of being utilized for, Residential living other than a Hotel or Motel.
1.45 “Effective Date” means the date on which the latter of the two Parties signs this Agreement, as specified
in Section 2.2 of this Agreement.
1.46 "Environmental Laws" means all Federal and State statutes as well as county, local, and City
ordinances and regulations concerning public health, safety, and the environment, including, by way of
example and not limitation, the comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 USC 9601 et seq.; the Resource Conservation and Recovery Act, 42 USC 6902 et seq.;
the Federal Clean Water Act, 33 USC 1251 et seq.; the Toxic Substances Control Act, 15 USC 1601 et
seq.; the Occupational Safety and Health Act, 29 USC 651 et seq.; the California Hazardous Waste
Control Act, California Health and Safety Code 25100 et seq.; the California Toxic Substances Account
Act, California Health and Safety Code 25300 et seq.; and the Safe Drinking Water and Toxic
Enforcement Act, California Health and Safety Code 25249.5 et seq., as currently in force or as hereafter
amended, and all rules and regulations promulgated thereunder.
1.47 “Excluded Waste” means Hazardous Substance, Hazardous Waste, Infectious Waste, Designated
Waste, volatile, corrosive, biomedical, infectious, biohazardous, and toxic substances or material, waste
that Franchisee 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 Franchisee’s reasonable opinion would present a
significant risk to human health or the environment, cause a nuisance or otherwise create or expose
Franchisee 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.
1.48 "Facility" means any plant or site utilized by Franchisee (or a Subcontractor of Franchisee) for the
purposes of performing the duties under this Agreement, including but not limited to Transfer,
Processing, or Disposal of Discarded Materials Collected in the City.
1.49 "Facility Operation Date" means December 18, 2018, the date on which, following its start-up, testing,
and commissioning, the Facility began Processing Commercial quantities of Food and Green Waste.
1.50 “Federal” means belonging to or pertaining to the Federal government of the United States.
1.51 "Fiscal Year" means the period commencing January 1 and concluding December 31 for Franchisee.
For City it means the period commencing July 1 of one year and concluding June 30 of the subsequent
year.
1.52 "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).
1.53 “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
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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.
1.54 “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, napkins, and pizza boxes. Food-Soiled
Paper is a subset of Food Waste.
1.55 "Food Waste" means Source-Separated Food Scraps and Food-Soiled Paper. Food Waste is a subset
of Organic Materials.
1.56 “Franchise” means the special right granted by the City of San Luis Obispo to operate a company
providing Collection, Transportation, Diversion, Processing, marketing, and Disposal of Discarded
Materials within the City.
1.57 “Franchise Fee” means the fee paid by Franchisee to the City as described in Article 8, Payments To
City, and as set forth in Exhibit A.
1.58 "Franchisee" means San Luis Garbage Company, a corporation organized and operating
under the laws of the State of California, and its officers, directors, employees, agents,
companies, related-parties, Affiliates, and Subcontractors where applicable.
1.59 “Generator” or “Waste Generator” means any Person whose act or process produces Discarded
Materials, or whose act first causes Discarded Materials to become subject to regulation.
1.60 "Green Waste" means those Discarded Materials that will decompose and/or putrefy, including but
not limited to green trimmings, tree trimmings, grass cuttings, weeds, dead plants, pruning, leaves,
branches, brush, dead trees, small pieces of untreated and unpainted wood, and other types of Organic
Waste resulting from normal yard and landscaping maintenance that may be specified in City
Legislation for Collection and Processing as Organic Materials under this Agreement. Green Waste
does not include items herein defined as Excluded Waste. Green Waste is a subset of Organic
Materials. Green Waste placed in Organic Materials for Collection may not exceed six (6) inches in
diameter. If Green Waste is more than six (6) inches in diameter, it shall be Collected in the
Bulky/Large Item Collection program.
1.61 "Gross Revenues" means the sum of the cash receipts derived by Franchisee from Customer Billings
for Collection of Discarded Materials and orange bag sales provided in the City.
1.62 “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 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
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limitation, friable asbestos, polychlorinated biphenyl’s (PCBs), petroleum, natural gas, and synthetic
fuel products, and by-products.
1.63 "Hazardous Waste" means any Discarded Material or mixture of materials, which is toxic, corrosive,
flammable, radioactive or which, because of its quantity, concentration, physical, chemical, or
infectious characteristics may do harm to either humans, animals, or the environment, or as defined in
Article 2, Chapter 6.5 25117 of the Health and Safety Code and Public Resources Code 40141.
1.64 “Holidays” are defined as New Year’s Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
1.65 “Household Hazardous Waste" means Hazardous Waste generated at Residential Premises.
1.66 “Liquidated Damages” means the amounts due by Franchisee for failure to meet specific quantifiable
standards of performance as described in Article 12.
1.67 "Materials Recovery Facility" means a permitted Facility where Discarded Materials are sorted or
separated for the purposes of Recycling, Composting, Processing, or Reuse.
1.68 “Maximum Service Rate” means the maximum amount that the Franchisee may charge Customers
for Solid Waste Collection and as may be adjusted in accordance with the provisions of this
Agreement.
1.69 “Medical Waste" means biohazardous waste, sharp wastes, waste which is generated or produced as
a result of the diagnosis, treatment or immunization of human beings or animals, in research
pertaining thereto, or in the production or testing of biological products, pursuant to California Health
and Safety Code, Section 25023.2.
1.70 “Mixed-use Development” or “MXD” means a mix of Commercial Premises and five (5) or greater
Dwelling Units utilizing any combination of Collection Containers for the accumulation of and set out
of Solid Waste.
1.71 "Multi-Family Dwelling Unit” or “Multi-Family” or “MFD” means, notwithstanding any contrary
definition in the City Municipal Code, any Premises, other than a Single-Family Dwelling Unit, used
for Residential purposes, irrespective of whether residence therein is transient, temporary, or
permanent, that receive centralized, shared, Collection service for five (5) or more 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
centralized, shared, Collection service for all units on the Premises which are billed to one (1)
Customer at one (1) address shall be considered Multi-Family.
1.72 “Occupant” means the Person who occupies a Premises.
1.73 “Occupied" means when a person or persons has taken or is/are holding possession of a Premises for
temporary or permanent use. For the purpose of determining whether a Premises was Occupied during
periods when Collection of Discarded Materials was available to such Premises, the Premises shall be
presumed to have been so Occupied unless evidence is presented that no gas, electric, telephone or
water utility services were consumed on such Premises during such periods, or such other evidence is
presented to the satisfaction of the City Manager.
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1.74 “Organic Materials” means Green Waste and Food Waste, individually or collectively. No Discarded
Material shall be considered to be Organic Materials, however, unless it is separated from Recyclable
Materials and Solid Waste. Organic Materials are a subset of Organic Waste.
1.75 “Organic Waste” means wastes containing material originated from living organisms and their
metabolic waste products, including but not limited to food, Yard Trimmings, 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.
1.76 “Overage” means Discarded Materials set out for Collection either on top of or outside of a Container
or in any manner that prevents the Container lid from completely closing or potentially cause Discarded
Materials to spill during Collection by Contractor’s vehicles.
1.77 "Owner" means the Person or Persons holding legal title to real property, and/or any improvements
thereon, constituting the Premises to which Collection of Discarded Materials is to be provided under
this Agreement, and shall include the Person(s) listed on the latest equalized assessment roll of the
County Assessor.
1.78 “Party” or “Parties” refers to the City and Franchisee, individually or together.
1.79 "Person" means any individual, firm, association, organization, partnership, corporation, business
trust, joint venture, Commercial entity, governmental entity, public entity, the United States, the State
of California, the County of San Luis Obispo, local agencies, cities, special purpose districts, or any
other legal Person.
1.80 "Premises" means any land or building in the City where Discarded Materials are generated
or accumulated.
1.81 “Process” or “Processing” means to prepare, treat, or convert through some special method.
1.82 “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.
1.83 “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.
1.84 "Recyclable Materials" means residential by-products or discards of economic value set aside, handled,
packaged, or offered for Collection in a manner different from Solid Waste, including but not limited to
aluminum, newspaper, clear and colored glass, tin and bi-metal, High density Polyethylene (HDPE),
Polyethylene Terephthalate (PET), Cardboard, chipboard, and mixed paper.
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1.85 “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. The Collection, Transfer,
Transportation or Disposal of Recyclable Materials not intended for, or capable of, reuse is not
Recycling.
1.86 "Related Party Entity" means any Affiliated entity which has financial transactions with Franchisee.
1.87 “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,
and cooperative apartments.
1.88 “Residential Property" means property used for residential purposes, irrespective of whether such
Dwelling Units are rental units or are Owner-Occupied and includes both single family and multi-family
Dwelling Units.
1.89 “Residue” or “Residual” 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.
1.90 “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.
1.91 “Roll-Off” means an open-top or lidded Container with a capacity of seven (7) to forty (40) cubic yards
that is serviced by a Franchise Roll-Off Collection vehicle.
1.92 “Source reduction and recycling element (SRRE)” means plans prepared by all jurisdictions in
accordance with Public Resources Code Section 41000 et seq. The SRRE sets forth a jurisdiction’s basic
strategy for management of Solid Waste and Divertable materials generated within its borders, with
emphasis on implementation of source reduction, Recycling, and Composting programs.
1.93 “Service Area” means that area within the corporate limits of the City of San Luis Obispo, California, as
the same may be modified from time to time through annexation or otherwise.
1.94 “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,
establishing methane emissions reduction targets in a statewide effort to reduce emissions of short-lived
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.
1.95 “Self-Haul” or “Self-Hauler” means a Person who hauls Discarded Materials, recovered material, or any
other material, to another Person, or as otherwise defined in 14 CCR Section 18982(a)(66). Self-Hauler
also includes a Person who back-hauls waste, as defined in 14 CCR Section 18982(a)(66)(A).
1.96 “Service Level” refers to the size of a Customer’s Container and the frequency of Collection service.
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1.97 "Single-Family Dwelling Unit" or “Single-Family” or “SFD” means, notwithstanding any contrary
definition in the City Municipal Code, any detached or attached house or residence with fewer than five
(5) units on the 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 that
maintain individual Collection service regardless of whether each unit is separately billed for their
specific Service Level. Single-Family also includes duplex, tri-plex, or four-plex Residential structures
regardless of whether each unit maintains individual Collection service or is separately billed for their
specific Service Level.
1.98 "Solid Waste" means Solid Waste as defined in California Public Resources Code, Division 30, Part 1,
Chapter 2, §40191 and regulations promulgated thereunder. 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.
1.99 “Source-Separated” means the segregation, by the Generator, of materials designated for
separate Collection for some form of Recycling, Composting, recovery, or reuse.
1.100 “State” means the State of California.
1.101 “Subcontractor” means a Party who has entered into a contract, express or implied, with the
Franchisee for the performance of an act that is necessary for the Franchisee’s fulfillment of its
obligations for providing service under this Agreement. Vendors providing materials and
supplies to Franchisee shall not be considered Subcontractors.
1.102 "Term" means the term of this Agreement, including extension periods if granted, as provided
for in Article 2, Grant and Acceptance of Agreement.
1.103 “Ton” or “Tonnage” means a unit of measure for weight equivalent to two thousand (2,000)
standard pounds.
1.104 “Townhouse” means an attached or semi-attached Dwelling Unit within a group of attached or
semi-attached Dwelling Units. A Townhouse shall be considered a Single-Family Dwelling
Unit if each unit maintains individual Collection service subscription. A Townhouse shall be
considered a Multi-Family Dwelling Unit if the Premise receives centralized, shared, Collection
service for all units on the Premise. These shall be the designations regardless of whether the
Premises are billed individually or through a central account (e.g., homeowner association,
property manager).
1.105 “Transfer” means the act of transferring the Discarded Materials Collected by Franchisee in its
route vehicles into larger vehicles for Transport to other Facilities for the purpose of Processing,
Recycling, or Disposing of such Discarded Materials.
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1.106 "Transfer Station" includes those Facilities used to receive Solid Wastes, temporarily store, separate,
convert, or otherwise Process the materials in the Solid Wastes, or to Transfer the Solid Wastes directly
from smaller to larger vehicles for Transport and those Facilities used for transformations.
1.107 “Transport” or “Transportation” 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.
1.108 "Waste Generator" or “Generator” means any Person whose act or process produces Discarded
Materials, or whose act first causes Discarded Materials to become subject to regulation.
1.109 "Working Days” means days on which the Franchisee is required to provide regularly scheduled
Collection services under this Agreement.
ARTICLE 2.
GRANT AND ACCEPTANCE OF AGREEMENT
2.1 Grant and Acceptance of Agreement
Subject to Section 2.5 (Conditions to the Effectiveness of Agreement), City hereby grants to Franchisee
an exclusive Franchise to Collect, Transport, Divert, Process, market, and Dispose of Solid Waste,
Recyclable Materials, and Organic Materials accumulating at Single-Family, Multi-Family, Mixed-Use,
and Commercial Premises in the City in accordance with the City’s Municipal Code and this Agreement,
except where otherwise precluded by Applicable Law.
Franchisee hereby accepts the grant of the Franchise on the terms and conditions set forth in this
Agreement. Franchisee agrees to perform and be bound by each of the conditions proposed in the grant
and by procedural ordinance and the requirements of Acceptance on file with the City Clerk’s office
(Article X of the City Charter, Section 1006, Duties of Grantee).
2.2 Effective Date
The Effective Date of this Agreement shall be April 2, 2025 (“Effective Date”).
2.3 Term of Agreement
The Term of this Agreement shall commence at 12:01 a.m. on the Effective Date, and expire at midnight
on December 18, 2038, subject to extension as provided in Section 2.4 (Option to Extend).
2.3.1 Term Contingency
In the event of a change of law or technology which would render the Collection, Transportation,
Diversion, Processing, marketing, or Disposal services to be implemented under this Agreement
obsolete, unnecessary, impractical, undesirable, or illegal, the City reserves the right to terminate this
Agreement upon the giving of a six (6) month prior written notice of City's election to so terminate this
Agreement. It is understood between Franchisee and City that this Agreement is motivated by the
passage of AB 939 and SB 1383, and that subsequent legislation could make this Agreement
unnecessary and/or adverse to the best interests of the City. In particular, City and Franchisee
acknowledge the possibility of future legislation changing the requirements of AB 939 and SB 1383,
and/or requiring a coordination of the Collection of Solid Waste, Recyclable Materials, and/or Organic
Materials by and through entities other than the Franchisee.
2.4 Option to Extend
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The City, by written authorization of the City Manager and upon written mutual consent by the
Franchisee, shall have the option to extend this Agreement up to three, five (5) year term extensions to
the initial term. If City elects to exercise this option, it shall give written notice not later than ninety
(90) days prior to the initial termination date, or, if one or two extensions have been exercised, ninety
(90) days prior to the extended termination date.
City shall consider performance standards and the results of performance audits, as outlined in Section
6.4 (Diversion Standards), in decisions regarding extension of term.
2.5 Conditions to the Effectiveness of Agreement
The obligation of City to permit this Agreement to become effective and to commence performing its
obligations under this Agreement is subject to the satisfaction of each and all of the conditions set out
in this Section 2.5 below, each of which may be waived in whole or in part by City, in its sole direction.
A. Accuracy of Representations. The representations and warranties made by Franchisee
throughout this Agreement are true and correct on and as of the Effective Date of this
Agreement.
B. Furnishing of Insurance and Bonds. Franchisee has furnished evidence of the
insurance and bonds required by Article 10 (Indemnity, Insurance, and Performance
Bond).
C. Effectiveness of City Council Action. The City's Ordinance No. ____, approving this
Agreement, shall have become effective pursuant to California law on or prior to the
Effective Date of this Agreement.
2.6 Responsibilities of City
The City does not assume any responsibility for, nor shall it be held liable for, damages for the failure on
the part of any Person producing Food or Green Waste material within the City to deliver the same to
Franchisee; provided, however, it is mutually understood and agreed that the City and its officers will at all
times during the period of this Agreement cooperate to enforce the terms of this exclusive Agreement and
the Franchise within the City.
ARTICLE 3.
REPRESENTATION AND WARRANTIES OF THE FRANCHISEE
3.1 Franchisee Status
Franchisee is duly organized, validly existing and in good standing under the laws of the State of
California and has the financial ability to perform its obligations set forth in this Agreement.
Additionally, the Franchisee has no suits or threatened suits which would impair the financial ability of
the Franchisee to perform its obligations under this Agreement, and entering into this Agreement by
Franchisee will not in any way constitute a breach of any other agreements entered into by Franchisee
with other parties or constitute a violation of any law.
3.2 Franchisee Authorization
Franchisee has the authority to enter into and perform its obligations under this Agreement. The Board
of Directors of Franchisee (or the shareholders, if necessary) have taken all actions required by law, its
articles of incorporation, its bylaws or otherwise to authorize the execution of this Agreement. The
persons signing this Agreement on behalf of Franchisee have the authority to do so.
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3.3 Compliance with Laws and Regulations
Franchisee shall comply with all existing and future City, County, state, and Federal laws, including all
Environmental Laws, with particular note of SB 1383, Article X of the City Charter and any Chapter
within the City’s Municipal Code. Franchisee shall be entitled to an adjustment in its compensation in
accordance with Exhibit A (Annual Rate Adjustment Methodology), for providing additional or
modified services due to changes to the City’s Municipal Code, it being specifically agreed that changes
in the City’s Municipal Code are a “Change in Law” as that term is defined in Exhibit A.
3.4 Serve Without Interruption
Franchisee shall Collect, Process, and market (if applicable) Commercial and Residential Solid Waste,
Recyclable, and Organics Materials throughout the Term of this Agreement without interruption except
as described in Section 12.5 (Excuse from Performance).
3.5 Permits and Licenses
Franchisee shall procure and keep in full force and affect all permits and licenses, pay all charges and
fees, and give all notices as necessary.
3.6 Preservation of City Property
Franchisee shall pay to the City, on demand, the cost of all repairs to public or private property made
necessary by the willful or negligent conduct of Franchisee employees under this Agreement.
3.7 Financial Representation
Franchisee represents that it has the financial ability to full perform its obligations as set forth in this
Agreement.
3.9 Franchisee as Arranger
The City and Franchisee mutually agree that the City's granting of this Franchise shall not be construed
as the City "arranging for" the Collection and Disposal of Solid Waste, Recyclable, or Organic
Materials within the meaning of CERCLA. The parties further mutually agree that the granting of the
Franchise by City shall be construed as an action whereby the Franchisee is granted, and accepts the
rights, responsibilities, benefits, and liabilities of Collection and Disposal of Solid Waste, Recyclable
Materials, and Organic Materials. Commencing on the Effective Date of this Agreement and, to the
extent that Franchisee's performance under this Agreement requires the Collection and Disposal of
Solid Waste, Recyclable Materials, and Organic Materials, may be construed as "arranging for"
Collection and Disposal of Solid Waste, Recyclable Materials, and Organic Materials within the
meaning of CERCLA, such actions shall be the sole responsibility of Franchisee and Franchisee
expressly agrees to be solely responsible for all such actions with respect to CERCLA.
ARTICLE 4:
SCOPE OF AGREEMENT
4.1 Scope of Agreement
Subject to Section 4.2 (Limitations to Scope), the Franchise granted to Franchisee shall be exclusive for
Discarded Materials, except where otherwise precluded by Applicable Law.
4.2 Limitations to Scope
The Franchise for the Collection, Transportation, Diversion, Processing, marketing, and Disposal of
Discarded Materials granted to Franchisee shall be exclusive except as to the following categories of
Discarded Materials listed in this Section. The granting of this Franchise shall not preclude the categories
of Discarded Materials listed below from being delivered to and Collected and Transported by others,
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provided that nothing in this Agreement is intended to or shall be construed to excuse any Person from
obtaining any authorization from City which is otherwise required by law:
A. Construction and Demolition Debris which is not offered by Persons performing the work and
which may be legally Collected and Disposed of by some alternate means;
B. Solid Waste Self-Hauled by Generators to Disposal Facilities;
C. Animal waste and remains from slaughterhouse or butcher shops;
D. By-products of sewage treatment, including sludge, sludge ash, grit, and screening;
E. Excluded Waste, Hazardous Waste, liquid waste, and Medical Waste;
F. Source-Separated Recyclable Materials separated from other Discarded Materials by the Waste
Generator and for which Waste Generator sells or is otherwise compensated by a collector in a
manner resulting in a net payment to the Waste Generator for such Recycling or related services;
G. Source-Separated Recyclable Materials which are separated at any Premises, and which are (1)
Self-Hauled by the Owner or Occupant of such Premises (or by their employee) to a charitable,
environmental, or other non-profit organization or (2) Collected and Transported directly by such
organization;
H. Source-Separated Recyclable Materials which are separated at any Premises, and which are Self-
Hauled by the Owner or Occupant of such Premises (or by their employee) to a Facility;
I. Containers delivered for Recycling under the California Beverage Container Recycling Litter
Reduction Act, 14500, et seq. California Public Resources Code;
J. Organic Materials which are separated at any Premises, and which are Self-Hauled by the Owner
or Occupant of such Premises (or by their employee) to a Facility; and/or
K. Green Waste removed from Premises by a gardening, landscaping, or tree trimming company as
incidental part of a total service offered by that company.
L. Any other Discarded Materials determined by the City as mutually agreed upon between the City
and Franchisee.
Franchisee shall additionally cooperate with and shall not impede, interfere, or attempt to impede or
interfere with the implementation, expansion, or operation of Food Recovery efforts in the City.
Franchisee acknowledges and agrees that City may permit other Persons beside Franchisee to Collect any
or all types of the Discarded Materials listed in this Section 4.2, without seeking or obtaining approval of
Franchisee under this Agreement.
This Franchise to Collect, Transport, Process, and market Solid Waste, Recyclable Materials, and
Organic Materials shall be interpreted to be consistent with Applicable Law, now and during the Term
of the Agreement, and the scope of this Agreement shall be limited by current and developing
Applicable Law with regard to Discarded Materials handling, Discarded Materials flow control, and
related doctrines. In the event that future interpretations of current law, enactment or developing legal
trends limit the ability of the City to lawfully provide for the scope of services as specifically set forth
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herein, Franchisee agrees that the scope of the Agreement will be limited to those services and
materials which may be lawfully provided for under this Agreement.
Further, the Franchisee agrees that the City shall not be responsible for any lost profits and/or damages
claimed by the Franchisee to arise out of further limitations of the scope of the Agreement set forth
herein. It shall be the responsibility of Franchisee to minimize the financial impact to other services
being provided.
4.3 Administration of Agreement
The City Manager shall administer this Agreement and the City's Utilities Director shall supervise
Franchisee compliance with the Agreement terms and conditions.
4.4 Use of City Streets
Such grant of Franchise shall give Franchisee the right and privilege to operate Solid Waste, Recycling,
and Organic Materials Collection vehicles and equipment on such streets, public ways, rights-of-way, or
easements of the City as reasonably appropriate for Franchisee to provide the services herein.
4.5 Annexation
Franchisee shall automatically extend all services herein described to any area annexed to the City,
except that the City may permit a firm franchised by the County of San Luis Obispo before the
annexation to continue service the area for a period not less than five (5) years.
4.6 New Programs and City’s Right to Request Changes
4.6.1 General
City may request Franchisee to perform additional services (including new Diversion programs, billing
services, etc.) or modify the manner in which it performs existing services. Pilot programs and innovative
services which may entail new Collection methods, different kinds of services, and/or new requirements
for Waste Generators are included among the kinds of changes which City may request. Franchisee shall
present, within forty-five (45) days of a request to do so by City, a proposal to provide additional or
expanded Diversion services pursuant to the terms of Section 4.6.2 (New Programs). Franchisee shall be
entitled to an adjustment in its compensation in accordance with Exhibit A (Annual Rate Adjustment
Methodology), for providing such additional or modified services.
4.6.2 New Programs
Franchisee shall present, within forty-five (45) days of a request to do so by City, a proposal and action
plan to provide additional or expanded services not otherwise listed in Section 5.5 (Public Container
Collection). The action plan shall contain a complete description of the following:
A. Collection methodology to be employed (equipment, workforce, etc.),
B. Equipment to be utilized (vehicle number, types, capacity, age, etc.),
C. Labor requirements (number of employees by classification),
D. Type of Containers to be utilized,
E. Provision for program publicity/education/marketing,
F. A projection of the financial results of the program's operations for the remaining Term of the
Agreement in a balance sheet and operating statement format, including documentation of the
key assumptions underlying the projections and the support for those assumptions, and
G. Facility(ies) to be utilized.
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4.6.3 City's Right to Acquire Services
Franchisee acknowledges and agrees that City may permit other Persons besides Franchisee to provide
additional services not otherwise contemplated under Section 4.6 (New Programs and City's Right to
Request Changes). If, pursuant to Section 4.6.2 (New Programs), Franchisee and City cannot agree on
terms and conditions of such services in ninety (90) days from the date when City first requests a
proposal from Franchisee to perform such services, Franchisee acknowledges and agrees that City may
permit Persons other than Franchisee to provide such services.
4.6.4 Implementing New Services
If the Franchisee is capable of performing or developing the requested service or modifying an existing
service and the City has agreed to have the Franchisee provide such additional service in accordance
with the agreed upon proposal and action plan; then the Franchisee shall commence service within
ninety days (90) days from the date the proposal was agreed upon. Adjustment in the Franchisee's
compensation shall be implemented during the next rate adjustment period outlined in Exhibit A
(Annual Rate Adjustment Methodology).
4.7 Ownership of Discarded Materials
Once Solid Waste, Recyclable Materials, and/or Organic Materials are placed in Containers and
properly presented for Collection, ownership and the right to possession shall transfer directly from the
Generator to Franchisee by operation of this Agreement. Title to and liability for any Excluded Waste
shall remain with the Generator of such Excluded Waste. Franchisee is hereby granted the right to
retain, Recycle, Process, reuse, Compost, Divert, Dispose of, and otherwise use such Solid Waste,
Recyclable Materials, and Organic Materials, or any part thereof, in any lawful fashion or for any lawful
purpose consistent with the hierarchy and goals of AB 939, AB 341, AB 1594, SB 1383, AB 1826 and
other Applicable Law.
Subject to the provisions of this Agreement, Franchisee shall have the right to retain any benefit
resulting from its right to retain, Recycle, Process, reuse, Compost, Divert, or Dispose of the Solid
Waste, Recyclable Materials, and Organic Materials which it Collects.
Solid Waste, Recyclable Materials, and Organic Materials, or any part thereof, which are delivered to a
Facility (whether landfill, Processing Facility, transformation Facility, Transfer Station, or Material
Recovery Facility) shall become the property of the owner or operator of the Facility(ies) once
deposited there by Franchisee. The City may obtain ownership or possession of Solid Waste, Recyclable
Materials, and/or Organic Materials placed for Collection upon written notice of its intent to do so.
ARTICLE 5.
DIRECT SERVICES
5.1 General
The work to be done by the Franchisee pursuant to this Agreement shall include the furnishing of all
labor, supervision, equipment, materials, supplies, and all other items and tasks necessary to
perform the services required.
It is mandatory that the work to be done by Franchisee pursuant to this Agreement shall be
accomplished in a thorough and professional manner so that all Occupied developed properties
within the City are provided reliable, courteous, prompt, and high-quality Collection of Discarded
Materials at all times. All Collection activities shall be conducted in such a manner that public and
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private property will not be damaged. Franchisee shall deliver Containers with closed lids in designated
Collection locations and shall not place them in the street or on adjoining property.
The enumeration of, and specification of requirements for, particular items of labor or equipment, or
aspects of service quality, shall not relieve Franchisee of the duty to furnish / accomplish all others, as
may be required, whether enumerated or not.
The City reserves the right to revise its laws and regulations pertaining to Collection and Disposal of
Discarded Materials in order to protect public health, safety and welfare. The Franchise Agreement is
subject to any such future revisions of the City's laws and regulations, and Franchisee agrees to comply
with any such changes in said laws and regulations as if incorporated into the Agreement.
5.2 Three-Container Collection System
Franchisee shall provide Collection of Discarded Materials as part of the City’s three-Container
Collection program to all Single-Family Customers, Multi-Family Dwelling Units, Mixed-Use, and
Commercial, industrial, and institutional properties for the Collection of Source-Separated
Recyclable Materials, Source-Separated Organic Materials, and Solid Waste. Franchisee shall ensure
that the Collection of Discarded Materials services provided under this Agreement are at all times
performed in accordance with Applicable Law. Franchisee shall Transport the Solid Waste,
Recyclable Materials, and Organic Materials to Designated Disposal or Processing Facilities that are
appropriate for each material type, as outlined herein.
5.3 Collection Service
5.3.1 Single-Family Residential Collection of Discarded Materials
For all Single-Family Customers, Franchisee shall Collect Solid Waste, Recyclable Materials, and
Organic Materials placed in Franchisee-provided Containers at the curbside at a minimum of once a
week, Monday through Friday, except as specified below. The Franchisee-provided Containers shall
comply with the requirements of Section 6.1.3 (Collection Containers) of this Agreement. Franchisee
shall Transport all Solid Waste , Recyclable Materials, and Organic Materials Collected to a
Designated Disposal or Processing Facility.
Single-Family Customers with a disability or unique circumstance shall have the option of placing
their Containers near their dwelling, visible and within reasonable distance from the curb, and
without obstacles (i.e., uneven surfaces, steep inclines/declines, behind gates) that cause a safety
concern. The Franchisee will Collect t heir Containers at this location and return Container s to same
location. Franchisee will notify residents annually, beginning within thirty (30) days of execution of
this Agreement, of this Collection option. To be eligible for this Collection option, resi dents must
either present proof of a disability or receive approval from the Franchisee on a case by case basis. In
no event will the Franchisee perform any modified service that is deemed unsafe by Franchisee or
City.
5.3.2 Multi-Family Collection of Discarded Materials
Franchisee shall Collect Solid Waste, Recyclable Materials, and Organic Materials from all Multi-
Family Dwelling Units within the City, using Franchisee -provided Containers, not less than once per
week. The Containers shall comply with the requirements of Section 6.1.3 (Collection Containers) of
this Agreement. Franchisee shall Transport all Solid Waste , Recyclable Materials, and Organic
Materials Collected to a Designated Disposal or Processing Facility.
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The Franchisee and each Customer shall agree on the Designated Collection Location. Special
consideration shall be given when determining the Designated Collection Location for Multi-
Family accounts to ensure that the flow of traffic is not impeded and that it does not result in
aesthetic degradation of an area. The Designated Collection Location, if disputed by Customer or
Franchisee, shall be determined by the City. Additionally, if, in the City’s opinion, the location of
an existing Collection location for a particular Multi-Family Dwelling Unit is inappropriate, the
City may direct the Customer or Franchisee to relocate the Collection location. If a Customer
refuses to comply with said directive, Franchisee may decline to Collect Discarded Materials f rom
said mis-located Containers and the Customer may be subject to fines in accordance with the City’s
Municipal Code.
5.3.3 Commercial Collection of Discarded Materials
Franchisee shall Collect Solid Waste, Recyclable Materials, and Organic Materials from all
Commercial, MXD, industrial, and institutional properties within the City, using Containers of a
size and shape acceptable to Franchisee and the Customer, not less than once per week. The size
and shape of the Container, if disputed by Customer, shall be determined by the Franchisee and
mutually agreed upon by the City. The Containers shall comply with the requirements of Section
6.1.3 (Collection Containers) of this Agreement. Franchisee shall Transport all Solid Waste,
Recyclable Materials, and Organic Materials Collected to a Designated Disposal or Processing
Facility.
The Franchisee and each Customer shall agree on the Designated Collection Location. Special
consideration shall be given when determining the Designated Collection Location for Commercial
accounts to ensure that the flow of traffic is not impeded and that it does not result in aesthetic
degradation of an area. The Designated Collection Location, if disputed by Customer or Franchisee,
shall be determined by the City.
Additionally, if, in the City’s opinion, the location of an existing Collection location for a particular
Commercial, industrial, or institutional property is inappropriate, the City may direct the Customer or
Franchisee to relocate the Collection location. If a Customer refuses to comply with said directive,
Franchisee may decline to Collect Discarded Materials from said mis-located Containers and the
Customer may be subject to fines in accordance with the City’s Municipal Code.
5.4 Materials to be Collected
5.4.1 Solid Waste
Franchisee shall Collect all Solid Waste, as defined in Article 1, that is properly set out for
Collection. Franchisee may allow carpets and textiles to be placed in the Solid Waste Containers ,
unless a textile/carpet recovery program has been established following the Effective Date of this
Agreement. Containers shall comply with the requirements of Section 6.1.3 (Collection Containers).
Materials prohibited for Collection in the Solid Waste Containers include Source -Separated
Recyclable Materials, Organic Materials, Excluded Waste, C&D, and other Prohibited Container
Contaminants.
5.4.2 Recyclable Materials
Franchisee shall Collect all types of Source-Separated Recyclable Materials, as defined in Article 1,
that are properly set out for Collection. Recyclable Materials to be Collected are to include, but are
not limited to, newspaper, aluminum, tin and bi- metal cans, clear and colored glass containers, High
Density Polyethylene (HDPE), Polyethylene Terep hthalate (PET), polystyrene, corrugated
Cardboard, and mixed paper (including white and colored ledger paper, chipboard, junk mail,
magazines, and phone books). Containers shall comply with the requirements of Section 6.1.3
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(Collection Containers). Materials prohibited for Collection in the Recyclable Materials Containers
include Solid Waste, Organic Materials, Excluded Waste , and other Prohibited Container
Contaminants.
5.4.3 Organic Materials
Franchisee shall Collect all types of Organic Materials, as defined in Article 1 and including Food
Waste, Food Scraps, Food-Soiled Paper, and Green Waste, that are properly set out for Collection .
The Parties agree that accepted types of Organic Materials may be added to or removed from this
list from time to time at the sole discretion of the City. Franchisee shall not add or remove materials
to or from this list without written approval from the City or signed amendment to the Agreement,
and such approval shall not be unreasonably withheld. Carpets, non-Compostable paper, textiles,
and Prohibited Container Contaminants shall not be Collected in the Organic Materials Containers.
The Containers shall comply with the requirements of Section 6.1.3 (Collection Containers).
Materials prohibited for Collection in th e Organic Materials Containers include Source-Separated
Recyclable Materials, Solid Waste, Excluded Waste, and other Prohibited Container Contaminants .
5.5 Public Container Collection
Franchisee shall provide, at City’s direction, services related to the Collection and Disposal of
Discarded Materials and consulting services at no cost to City, including:
A. Collection of Discarded Materials from all sidewalk of City -owned Solid Waste, Recycling,
and Organics litter Containers, not less than once per week, Mon day through Friday, on
Saturdays following non-working Holidays, or Sundays where mutually agreed upon by the
City and Franchisee. Collections shall be scheduled at a time mutually agreed upon by
Franchisee and the City.
As of the Effective Date of this Ag reement, the number of collection services at no cost to
the City, include 697 total solid waste and recycling services per week. Should the City
request additional service locations and/or increase frequencies for the Solid Waste,
Recycling, or Organics c ontainers, the Franchisee shall allow up to a ten (10) percent
increase in these services at no additional cost. Any service exceeding the ten (10) percent
cap shall be addressed via a good faith meet and confer to identify payment details.
B. Collection of Discarded Materials for up to twelve (12) special events per Calendar year as
directed by the City, dropped off and Collected at a date, time, and location requested by the
City and mutually agreed upon by the City and Franchisee.
C. Review of plans for land use or property developments with regard to Collection of
Discarded Materials service issues;
D. Residual Solid Waste remaining from temporary Household Hazardous Waste Collection
events.
E. Additional services as mutually agreed upon by the City and Franchisee.
5.6 Missed Pickups
Upon notification by Customer or City, Franchisee shall Collect any missed pickup which had
been properly and timely placed for Collection within 24 hours of said notice.
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5.7 Bulky/Large Item Collection Service
Franchisee shall perform Collection of Bulky/Large Items to Customers in accordance with the following
terms and conditions:
5.7.1 Frequency of Service
Franchisee shall provide Bulky/Large Item Collection on an on-call basis to Customers requesting
service. The City or Customer will notify the Franchisee of a request for Bulky/Large Item Collection and
Collection shall be made from the curbside of SFDs and an agreed upon location for MFDs, MXDs, and
Commercial Customers within five (5) scheduled Collection days of notification or an alternate mutually
agreed upon date between the Customer and Franchisee.
5.7.2 Conditions of Service
Subject to the limitations set forth in this section, Franchisee must provide Bulky/Large Item Collection
service to all Customers whose Bulky/Large Items have been placed three (3) feet off the curb, swale, or
paved surface of the public roadway, closest accessible roadway, or other such location agreed upon by
the Franchisee and Customer, that will provide safe and efficient accessibility for Collection.
Commercial Customers may schedule a Bulky/Large Item removal through the Franchisee for a fee
established by the City and updated by resolution when the City adjusts rates.
Each SFD Customer is allowed up to three (3) Bulky/Large Item Collections per Calendar Year and each
MFD Customer is allowed up to twelve (12) Bulky/Large Item Collections per Calendar Year. Two (2) of
the previously mentioned Bulky/Large Item Collections for SFD Customers must occur during the semi-
annual clean-up weeks explained in Section 5.8 (Semi-Annual Clean-Up Weeks) and one (1)
Bulky/Large Item Collection may be scheduled at any time during the Calendar Year. Eight (8) of the
previously mentioned Bulky/Large Item Collections for MFD Customers must occur during the semi-
annual clean-up weeks explained in Section 5.8 (Semi-Annual Clean-Up Weeks) and four (4)
Bulky/Large Item Collection may be scheduled at any time during the Calendar Year. Each item
scheduled and placed on the curb for Collection shall be considered a single Collection and each item is
not to exceed 200 pounds each. For subsequent collection in any Calendar Year, the Customer shall
receive Bulky/Large Item Collection for a fee established by the City, paid to the Franchisee, and updated
by resolution when the City adjusts rates.
Franchisee shall Collect bulky Green Waste separately from other Bulky/Large Items placed for
Collection, and shall handle such acceptable material as Organi c Waste in accordance with SB 1383
regulations.
5.7.3 Non-Collection of Bulky/Large Items
Franchisee shall not be required to collect more Bulky/Large Items than specified by the Customer or
items that are Excluded Waste. In the event of non-collection, Franchisee shall affix a Non-Collection
Notice to the uncollected Bulky/Large Item(s) explaining why Collection was not made or make contact
with the customer if a Non-Collection Notice cannot be placed on the item. Prior to non-collection of
additional Bulky/Large Items, the Franchisee shall make a good faith effort to contact the Customer to
offer the option to Collect the additional Bulky/Large Item(s) for a fee established by the City, paid to the
Franchisee, and updated by resolution when the City adjusts rates.
5.7.4 Maximum Reuse and Recycling of Bulky/Large Items
The Franchisee will make every effort to process Bulky/Large Items in accordance with the
following hierarchy:
1. Reuse as is
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2. Disassemble for reuse or Recycling
3. Recycle
4. Disposal
5.8 Semi-Annual Clean-up Weeks
At least twice per year throughout the Term of this Agreement, Franchisee shall provide, in addition to
regularly scheduled Collection service and scheduled Bulky/Large Item Collections pursuant to Section
5.7 (Bulky/Large Item Collection), two clean-up events for Residential Customers pursuant to guidelines
established by the Franchisee and approved by the City. Solid Waste and Bulky/Large Items can be
placed at the curb by SFD Customers and at pre-arranged locations for MFD Customers. The dates for
each event shall be proposed by the Franchisee and approved by the City prior to September 1st of each
year.
5.8.1 Conditions of Service
All Residential Customers are entitled to participate in semiannual clean up events. All residential
Customers may:
a. Discard up to six (6) 32 gallon bags of solid waste and/or bundled green waste in addition to their
regular Collection. Bags and bundled green waste must be placed next to the Customer’s Collection
Containers on Collection day during the semiannual clean up week and the Franchisee will collect at
no cost to the Customer or the City.
b. Place Bulky/Large Item(s) on the curb for SFD Customers and at pre-arranged locations for MFD
Customers during the semiannual clean up week for Collection by the Franchisee. The Customer
must call the Franchisee to schedule the Bulky/Large Item Collection. Each SFD Customer is allowed
up to one (1) no cost Bulky/Large Item Collection per clean-up week and each MFD Customer is
allowed up to four (4) no cost Bulky/Large Item Collections for MFD per clean-up week. Customers
are allowed to schedule their additional Bulky/Large Item Collection as defined in Section 5.7
(Bulky/Large Item Collection) during the semi-annual clean-up weeks. Any subsequent item(s) will
be collected at a discounted rate. Items may not be Excluded Waste and cannot exceed 200 pounds
each.
Franchisee shall Collect Green Waste separately from other materials, and shall Process such material as
Organic Waste in accordance with SB 1383 regulations at no cost to the Customer or the City.
Franchisee shall record by class and weight (in Tons) the Solid Waste, Bulky/Large Items, white goods,
etc., Collected during the clean-up events. Franchisee shall record the kinds and weights (in Tons) of
Solid Waste Diverted during these clean-ups from the landfill through Recycling, Composting, reuse, or
other means of Diversion.
5.9 Holiday Tree Collection and Diversion Program
Franchisee shall operate an annual Holiday Tree Collection and Diversion program. The program
shall include curbside Collection of Holiday Trees targeting all SFD and MFD Customers and shall
Divert these Holiday Trees from landfill Disposal and Process the materials as Organic Waste in
accordance with SB 1383 and this Agreement.
5.9.1 Conditions of Service
Franchisee must Collect Holiday Trees set out on the curb for Collection for two-weeks beginning
December 26 and ending two weeks thereafter during the Term of this Agreement at no charge to
the Customer or the City. The Holiday Tree Collection will not count towards the Customer’s no
cost Bulky/Large Item Collection. Franchisee shall deliver the Collected Holiday Trees to the
appropriate Organics Materials Processing Facility for Diversion through uses other than Alternative
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Daily Cover. Franchisee is not required to Collect or Divert Holiday Trees with tinsel, flocking, or
ornaments.
5.10 Accumulation of Solid Waste
5.10.1 Unauthorized Dumping
Franchisee shall direct its drivers or other personnel to take a photo if possible and report the
address of any Premises at which they observe Discarded Materials or abandoned Bulky/Large
Items that are accumulating or dumped in an unauthorized manner. Franchisee shall report the
address or description and photo to the City within twenty-four (24) hours of such observation.
5.10.2 City-Directed Removal of Solid Waste
Franchisee shall arrange for the removal of all accumulated Discarded Materials and
Bulky/Large Items on streets, roads, sidewalks and right-of-way in the City as directed by the
City Utilities Director, or designee, within two (2) Working Days from the date contacted by the
City. The Franchisee shall have the opportunity to make a good faith effort to recover the cost
of Disposal from the Waste Generator, and the costs of this effort, as well as the cost of
Disposal, shall be chargeable to the Waste Generator. Franchisee shall contact the Waste
Generator via phone or email to confirm waste generation before any charges are billed. The
Franchisee shall be entitled to include the costs incurred and not collected under this Section
as an operating expense for purposes of rate setting.
5.11 Processing and Disposal of Discarded Materials
5.11.1 Designated Disposal Facility (ies) for Solid Waste
A. General. Franchisee shall Transport all Solid Waste Collected within the City and not separated
for Recycling to a Designated Disposal Facility for Disposal in accordance with Applicable Law
and this Agreement.
B. Compliance with Regulatory Requirements and Applicable Law. The Franchisee is required
to notify the City if one of Designated Disposal Facilities has their permit to accept Solid Waste
revoked by the regulatory agency. Upon request, Franchisee shall provide copies of Facility
permits, approvals, and/or notices of violations (obtained from the Designated Disposal Facility
operator if necessary) to the City.
C. Capacity. Franchisee has secured sufficient Disposal Facility capacity commitment, including
landfill Disposal site capacity commitment, to adequately serve the reasonably anticipated Solid
Waste Disposal needs of the City and its Customers during the Term of this Agreement,
including any extensions provided for herein. City reserves the right to review said Disposal
capacity commitments. Prior to entering into any capacity commitment, Franchisee shall give
prior written notice to the City concerning negotiations.
D. Alternative Facility(ies). If Franchisee receives notice from the landfill operator or otherwise
expects, during the Term of this Agreement, to be prevented from delivering Solid Waste to a
Designated Disposal Facility, Franchisee shall immediately notify in writing the City’s Utilities
Director, stating the reason(s) Franchisee is prevented, or expects to be prevented, from
Disposing of Solid Waste in a Designated Disposal Facility. Franchisee shall in good faith
expeditiously identify and evaluate alternative Disposal Facilities. An alternative Disposal
Facility(ies) shall be arranged for and secured by Franchisee, after consultation with the City’s
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Utilities Director. Franchisee shall provide City with adequate written notice prior to contracting
for any alternate Disposal Facility.
In addition, the City reserves the right to direct the Solid Waste stream to any Disposal Facility
or alternate location/site. Absent such direction by the City, nothing contained herein shall be
construed to mean that the City has arranged for site selection or waste Disposal.
Section 12.5 (Excuse From Performance) does not relieve Franchisee from the good faith
obligation to find and secure alternate Disposal Facilities. Absent a Section 12.5 event,
Franchisee shall be responsible for any increased costs, including Transportation, with respect to
the alternate Disposal Facility.
5.11.2 Processing and Disposal of R ecyclable Materials
A. General
Franchisee shall Transport all Collected Recyclable Materials to the Approved Recyclable
Materials Processing Facility, and shall Transfer, Process, and Dispose of Discarded Materials
in accordance with this Section. The Approved Facilities shall comply with the following
requirements.
B. Status of Approved Recyclable Materials Processing Facility
Any Processing Facility used by Franchisee must be designed and constructed in accordance
with all Applicable Law (CEQA, California Code of Regulations, etc.). The Processing Facility
must have all permits from Federal, State, regional, County, and City agencies necessary for it
to operate as a Material Recovery Facility and must be in full regulatory compliance with all
such permits. The Approved Recyclable Materials Processing Facility must be authorized to
accept, under its existing permit, and have sufficient uncommitted capacity to accept, all
Recyclable Materials delivered to it by, or on behalf of, the City for the Term of this
Agreement. Franchisee shall immediately notify City of any notice of breach or default received
from Approved Recyclable Materials Processing. Franchisee shall, directly or through similar
obligations in its subcontract(s) with Facility operators, keep active all existing permits and
approvals necessary for use of the Approved Processing Facility in compliance with regulatory
requirements and Applicable Law. Upon request, Franchisee shall provide copies of Facility
permits and/or notices of violations (obtained from its Processing Facility Subcontractor if
necessary) to City.
C. Alternative Processing Facility
If Franchisee becomes unable to deliver the City’s Recyclable Materials to the Approved
Processing Facility due to causes within its control and which could have been avoided by the
exercise of due care, the Franchisee shall arrange for it to be accepted at another Processing
Facility, in which case Franchisee shall pay for any increased Transportation costs, any
differences in the fees charged at such Processing Facility, and the fees then in effect under this
Agreement.
If Franchisee’s inability to deliver the City’s Recyclable Materials to the Approved Recyclable
Materials Processing Facility is not due to causes within its control or which could have been
avoided by the exercise of due care, then Franchisee shall propose alternative Processing
Facilities including all related costs to the City and City shall select the alternative to be used.
Within forty-eight (48) hours of an emergency or sudden and unforeseen closure at the
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Approved Recyclable Materials Processing Facility, the Franchisee shall provide a written
description of the reasons the use of the Approved Facility is not feasible, and the period of time
Franchisee proposes to use an alternative Processing Facility. Such a change in Processing
Facility shall be temporarily permitted until such time as the City is able to consider and
respond to the use of the proposed alternative Processing Facility. If the use of the proposed
Alternative Processing Facility is anticipated to or actually does exceed thirty (30) days in a
consecutive twelve (12) month period, the use of such Processing Facility shall be subject to
approval by the City. The City may, in its sole discretion, approve, conditionally approve,
temporarily approve, or disapprove of the use of the proposed Alternative Processing Facility. If
the City disapproves the use of the proposed Alternative Processing Facility, the Parties shall
meet and confer to determine an acceptable Processing Facility.
D. Disposition of Unauthorized Waste
Franchisee shall ensure that procedures to identify and reject materials delivered to the
Approved Recyclable Materials Processing Facility which are Hazardous Waste, Excluded
Waste, or which otherwise may not be legally accepted at the Approved Recyclable Materials
Processing under their permits, are in place. Franchisee may, in the course of implementing
such procedures, refuse to accept Recyclable Materials deposited from a Generator if they
constitute Hazardous Waste, or otherwise may not be legally accepted at the Approved
Recyclable Materials Processing Facility, and Franchisee shall be solely responsible of the
materials which are accepted. If Franchisee discovers Hazardous Waste, or other material which
may not be legally accepted, among materials which it has accepted, it shall Dispose of such
waste at its own expense. Franchisee may pursue all legal rights and remedies it may have
against the Waste Generator(s) of such Solid Waste if the Waste Generator(s) can be identified.
E. Subcontracting
Franchisee shall not engage any Subcontractors for Collection, Transportation, Diversion, or
Processing of Recyclable Materials without the prior written consent of City. Franchisee must
obtain written agreements with Processing Subcontractors to guarantee capacity to Process
Discarded Materials. If the Franchisee plans to engage other Affiliated or Related Party Entities
in the provision of services, Franchisee shall provide City with thirty (30) days written
notification of its plans and provide an explanation of any potential impacts related to the scope,
quality, timeliness, or cost of providing services under this Agreement. All insurance
documents must be reviewed and approved by the City’s Risk Manager prior to City
acceptance. Franchisee shall require that all Subcontractors file insurance certificates with the
City, name City as an additional insured, and comply with all material Terms of this
Agreement.
F. Disposal
Franchisee shall ensure that the Residue from a Generator’s Recyclable Materials, delivered to
the Approved Recyclable Materials Processing Facility by the Franchisee, are Disposed of at the
Approved Disposal Facility in full regulatory compliance.
5.11.3 Processing and Disposal of Organic Materials
A. General
Franchisee shall Transport all Organic Materials Collected to the Approved Organic Materials
Processing Facility. Franchisee’s Approved Organic Materials Processing Facility shall be a
Facility that Processes Single-Family, Multi-Family, and Commercial Source-Separated Organic
Materials to recover Organic Waste.
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B. Status of Approved Organic Materials Processing Facility
The Approved Organic Materials Processing Facilities used by Franchisee must be designed and
constructed in accordance with all Applicable Laws (e.g., CEQA, California Code of
Regulations, etc.). The Facility must have all permits from Federal, State, regional, County and
City agencies necessary for it to operate as a Food and/ or Green Waste Facility and must be in
full regulatory compliance with all such permits. Franchisee shall, keep active all existing
permits and approvals necessary for use of the Approved Organic Materials Processing Facilities
in full regulatory compliance. Upon request, Franchisee shall provide copies of Facility permits
and/or notices of violations (obtained from its Processing Facility Subcontractor, if necessary) to
the City Manager.
The Approved Organic Materials Processing Facilities must be authorized to accept, under its
existing permit, and have sufficient uncommitted capacity to accept, all Organic Materials
delivered to it by, or on behalf of, the City for the Term of this Agreement. Franchisee shall
immediately notify City of any notice of breach or default received from Approved Organic
Materials Processing Facilities.
C. Alternative Processing Facility
If Franchisee becomes unable to deliver the City's Organic Materials to an Approved Organic
Materials Processing Facility due to causes within its control or which could have been avoided
by the exercise of due care, the Franchisee shall arrange for it to be accepted at another
Processing Facility, provided that the Franchisee provides written notice to the City, in which
case Franchisee shall pay for any increased Transportation costs, any differences in the fees
charged at such alternative Processing Facility and the fees then in effect under this Agreement.
If Franchisee's inability to deliver the City's Organic Materials to the Approved Organic
Materials Processing Facility is not due to causes within its control or which could have been
avoided by the exercise of due care, then Franchisee shall propose alternative Processing
Facilities including all related costs and City shall select the alternative to be used. In the event
of an emergency or sudden unforeseen closure of the Approved Organic Materials Processing
Facility, Contract shall, within forty-eight (48) hours of the emergency or sudden and unforeseen
closure, provide a written description of the reasons the use of the Approved Facility is not
feasible, and the period of time Franchisee proposes to use the alternative Processing Facility.
Such a change in Processing Facility shall be temporarily permitted until such time as the City is
able to consider and respond to the use of the proposed alternative Processing Facility. If the use
of the proposed Alternative Processing Facility is anticipated to or actually does exceed thirty
(30) days in a consecutive twelve (12) month period, the use of such Processing Facility shall be
subject to approval by the City. The City may in its sole discretion, approve, conditionally
approve, temporarily approve, or disapprove of the use of the proposed Alternative Processing
Facility. If the City disapproves the use of the proposed alternative Processing Facility, the
Parties shall meet and confer to determine an acceptable Processing Facility.
D. Disposition of Unauthorized Waste
Franchisee shall ensure that procedures to identify and reject materials delivered to the Approved
Organic Materials Processing Facility which are Excluded Waste, Hazardous Waste, or which
otherwise may not be legally accepted at the Approved Organic Materials Processing Facility
under their permits, are in place. Franchisee may, in the course of implementing such
procedures, refuse to accept Organic Materials deposited from a Generator if they constitute
Hazardous Waste, or otherwise may not be legally accepted at the Approved Organic Material
Processing Facility, and Franchisee shall be solely responsible of the materials which are
accepted. If Franchisee discovers Hazardous Waste, or other material which may not be legally
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accepted, among materials which it has accepted, it shall Dispose of such waste at its own
expense. Franchisee may pursue all legal rights and remedies it may have against the
Generator(s) of such Solid Waste if the Generator(s) can be identified.
E. Subcontracting
Franchisee shall not engage any Subcontractors for Collection, Transportation, or Processing of
Organic Materials without the prior written consent of City. Franchisee must obtain written
agreements with Processing Subcontractors to Facilities’ capacity to Process Discarded
Materials. If the Franchisee plans to engage other Affiliated or Related Party Entities in the
provision of services, Franchisee shall provide City with thirty (30) days written notification of
its plans and provide an explanation of any potential impacts related to the scope, quality,
timeliness, or cost of providing services under this Agreement. All insurance documents must be
reviewed and approved by the City Manager prior to City acceptance. Franchisee shall require
that all Subcontractors file insurance certificates with the City, name City as an additional
insured, and comply with all material terms of this Agreement.
F. Disposal
Franchisee shall ensure that the Residue from the Organic Materials Collected in the City and
delivered to the Approved Organic Materials Processing Facility by the Franchisee are Disposed
of at the Approved Disposal Facility.
5.12 Generator Waivers
5.12.1 General
The City or its designee may grant waivers described in this Section to Commercial or Multi -Family
Generators that impact the scope of Franchisee’s provision of service for those Customers; provided,
the Generator shall continue to subscribe with Franchise e for Franchised Collection services to the
extent such services are not waived by the City. Waivers issued shall be subject to compliance with
SB 1383 requirements, pursuant to 14 CCR Section 18984.11, or other requirements specified by the
City.
5.12.2 Generator Waiver Types
A. De Minimis Waivers. The City or its designee may waive a Multi-Family’s, Commercial
Business’, or its Property Owner’s obligation to comply with some or all of the Source-
Separated Recyclable Materials and/or Organic Materials Collection requirements set
forth in this Agreement, SB 1383 Regulations, and the City’s Municipal Code, all as may
be amended from time to time, if the Multi -Family, Commercial Business, or its Property
Owner provides documentation, or the City has evidence dem onstrating one of the
following de minimis conditions:
1. The Multi-Family’s or Commercial Business’ total Solid Waste Collection service
is two (2) cubic yards or more per week, and Organic Waste subject to Collection
comprises less than twenty (20) gallons per week, per applicable Container, of the
Multi-Family’s or Commercial Business’ total waste; or
2. The Multi-Family’s or Commercial Business’ total Solid Waste Collection service
is less than two (2) cubic yards per week, and Organic Waste subject to Colle ction
comprises less than ten (10) gallons per week, per applicable Container, of the
Multi-Family’s or Commercial Business’ total waste.
B. Space Constraint Waivers. The City or its designee may waive a Multi-Family’s,
Commercial Business’, or its Property O wner’s obligation to comply with some or all of
the Source-Separated Recyclable Materials and/or Organic Materials Collection service
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requirements set forth in this Agreement, SB 1383 Regulations, and the City’s Municipal
Code, in the event that the Genera tor qualifies for a space constraint waiver under the
City’s Municipal Code.
5.12.3 Waiver Requests
Generators may submit requests for de minimis waivers and physical space waivers to the City or its
designee. If a Generator submits a request for a waiver to the Franchisee, the Franchisee shall refer
the Generator to the City or its designee. Upon request of the City, the Franchisee shall support the
City in the waiver review process by providing requested Customer information. If the City or its
designee grants a waiver to a Generator, the City shall notify the Franchisee and Franchisee shall
update the Customer’s information and Service Level in accordance with record-keeping and
reporting requirements presented in Article 7 (Other Services: Billing, Reporting, Record -Keeping,
and Public Education).
5.13 Procurement of Recovered Organic Waste Products
5.13.1 Compost Give -Away Events and City Use
Franchisee shall make available for distribution an annual total of at least one hundred (100) cubic
yards of Compost, or other mutually agreed upon amount, at two (2) public events held within the
City or for other City use. The location, date, and time of such events shall be determined by the
City, with adequate notice to the Franchisee, an d may be held in conjunction with other City-
approved events. Franchisee shall deliver the Compost to the agreed -upon event location at no cost
to City. Franchisee shall provide at least one (1) attendant for at least six (6) hours per event.
5.13.2 Compost and/or Mulch Procurement Credit for City
In the event a public compost or mulch give-away event is held at the Designated Processing
Facility, and to the extent that such distribution qualifies for City ’s procurement credit under SB
1383, the City shall be allocated its proportional share of such qualified procurement based on the
inbound Tonnage of Organic Materials Collected by Franchisee from City divided by the total
inbound Tonnage of the Approved Organic Materials Processing Facility to which Franchisee
delivered such City Tonnage during the applicable measurement period.
5.14 Marketing and Sale of Recyclable Materials
Franchisee shall be responsible of the marketing and sale of all Recyclable Materials Collected
pursuant to this Agreement. Revenu es from the sales of these materials shall be applied to the cost of
service under the Agreement to reduce Franchisee ’s compensation. Franchisee shall sell all
Recyclable Materials Collected pursuant to this Agreement at not less than fair market value as
described in Article 9, Service Rates and Review.
5.15 Hazardous Waste Handling and Disposal
If the Franchisee determines that Discarded Materials placed in any Container for Collection are
Excluded Waste, or other Solid Waste that may not be legally Disposed of at the designated Disposal
or Processing site or presents a hazard to the Franchisee’s employees, the Franchisee shall have the
right to refuse to accept such Discarded Materials. The Franchisee will contact the Waste Generator
and request that the Waste Generator arrange for proper Disposal.
If the Waste Generator cannot be reached immediately, the Franchisee shall, prior to leaving the
Premises, leave a tag at least two inches by six inches indicating the reason for refusing to Collect the
Discarded Materials, in which case, a copy of the tag, along with the address of the Premises (and
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the name of the Waste Generator, if known) shall be delivered to the City on the following Business
Day.
If the Excluded Waste, or other unauthorized waste is Collected before its presence is detected by
Franchisee, and if the Waste Generator cannot be identified or fails to remove the Discarded Materials
after being requested to do so, the Franchisee shall arrange for its legal Disposal. The Franchisee shall
make a good faith effort to recover the cost of Disposal of such waste from the Waste Generator, and
the costs of this effort, as well as the cost of Disposal shall be chargeable to the Waste Generator.
Provided the failure to detect the Excluded Waste, or other unauthorized wastes prior to Collection
and/or their delivery to the designated Disposal or Processing site is not due to the negligence of
the Franchisee or its employees or due to failure of the Franchisee to have an adequate in place
inspection program, the Franchisee shall be entitled to include the costs incurred under this paragraph
as an operating expense for purposes of rate setting.
ARTICLE 6.
COLLECTION SERVICE AND DIVERSION STANDARDS
6.1 Operations
6.1.1 Schedules
Franchisee shall provide Collection of Solid Waste, Recyclable Materials, and Organic Materials
for all Customers not less than once each week, and Collection for all three streams of Discarded
Materials shall take place on the same day of the week for any given Customer. Collection time
shall follow the requirements set forth in Chapter 9 of the City’s Municipal Code, as may be
amended from time to time. When the regularly scheduled Collection day falls on a Holiday,
Collection shall take place on the following regularly scheduled Collection day. The Franchisee
will notify Customers of Holiday Collection schedules. Franchisee will promptly resolve any
complaints of noise to the satisfaction of the City Manager or the City Manager’s designee. In the
event the Franchisee misses the Collection of set out of Discarded Materials, the Franchisee shall
Collect the missed pickups within one (1) Business Day of notification.
6.1.2 Vehicles
A. General. Franchisee shall keep a fleet of Collection trucks sufficient in number and
capacity to efficiently perform the work required in the Agreement in strict accordance
with the terms of this Agreement. Franchisee shall provide a detailed description
concerning the number and type of vehicles necessary for performance. Franchisee shall
have available on Collection days sufficient back-up vehicles for each type of
Collection vehicle (i.e., rear loader, front loader, and roll-off) used to respond to
complaints and emergencies. The fleet shall be m aintained according to the
requirements of Municipal Code 8.04.030.
B. Specifications. All vehicles used by Franchisee in providing Collection of Discarded
Materials shall comply with all Federal, State, and local requirements for such vehicles as
they now exist or may be amended in the future; and be registered with the California
Department of Motor Vehicles. All such vehicles shall have water-tight bodies designed to
prevent leakage, spillage, or overflow. All such vehicles shall comply with U.S.
Environmental Protection Agency noise emission regulations and other applicable noise
control regulations.
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C. Condition.
1. Franchisee shall maintain all of its properties, facilities, and equipment used in
providing service under this Agreement in a safe, neat, clean and operable condition
at all times.
2. Franchisee shall inspect each vehicle daily to ensure that all equipment is operating
properly. Vehicles which are not operating properly and represent a safety hazard shall
be taken out of service until they are repair ed and do operate properly and safely.
Franchisee shall perform all scheduled maintenance functions in accordance with the
manufacturer’s specifications and schedule. Franchisee shall keep accurate records of
all vehicle maintenance, recorded according to date and mileage, and shall make
such records available to City upon request.
3. Franchisee shall repair, or arrange for the repair of, all of its vehicles and equipment
for which repairs are needed because of accident, breakdown or any other cause so
as to maintain all equipment in a safe and operable condition. Franchisee shall
maintain accurate records of repair, which shall include the date/mileage, nature of
repair and the signature of a maintenance supervisor that the repair has been properly
performed.
D. Vehicle Identification. Each truck shall display in a prominent place a sign as
required in Municipal Code 8.04.090.
E. Operation. Vehicles shall be operated in compliance with the California Vehicle Code,
and all applicable safety and local ordinances. Fra nchisee shall not load vehicles in
excess of the manufacturer’s recommendations or limitations imposed by State or local
vehicle weight restrictions.
F. Renewable Natural Gas (RNG) Vehicles Under this Agreement, Franchisee shall make
a best effort for all Collection Vehicles to be powered by SB 1383-compliant RNG
generated by a local facility or powered by SB 1383-compliant RNG that is purchased
through a wheeling agreement with a party(ies), provided that the wheeling agreement is
for purchase of gas derived from Organic Waste that has been Diverted from a Landfill
and Processed at an in-vessel digestion Facility that is permitted or otherwise authorized
by Title 14 of CCR to recover Organic Waste and meets the requirements of 14 CCR
Section 18993.1(h). Upon the City’s request, Franchisee shall obtain and provide the City
with a written certification by an authorized representative of the publicly owned
treatment works or the wheeling agreement under which Franchisee purchased SB 1383-
compliant RNG certifying that the in-vessel digestion Facility produces the SB 1383-
compliant RNG consistent with the requirements of 14 CCR Section 18993.1(h).
Franchisee shall maintain records of the amount of SB 1383-compliant RNG purchased
and shall report this information in accordance with Article 7. Franchisee shall agree to
the City the right to report this SB 1383-compliant RNG usage toward the City’s
fulfilment of its annual recovered Organic Waste product procurement target in
accordance with 14 CCR Section 18993.1.
6.1.3 Collection Containers
A. General.
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1. Franchisee shall supply all Generators with Containers for Collection of Solid Waste, Recyclable
Materials, and Organic Materials, in accordance with this Section. Franchisee shall use the
Franchisee-provided Collection Containers that are currently located at Customers’ Premises, if
applicable. If Customer is currently utilizing Collection Containers that were not provided by the
Franchisee, Franchisee shall provide Containers from current inventory.
2. Franchisee shall provide Customers (including Single-Family, Multi-Family, Commercial, and
City facility Customers) with new Collection Containers as requested by the Customer to meet
its desired Service Level within five (5) Working Days of Franchisee’s first receipt of the
Customer request.
3. On and after the Effective Date, any new Containers provided by the Franchisee shall comply
with the Container standards set forth in this Section. All Containers shall display the
Franchisee’s name, logo, telephone number, website, capacity (yards or gallons), and some
identifying inventory or serial number.
4. If an existing Container breaks or is otherwise rendered non-functional on or after Effective Date
the Franchisee shall replace the non-functional Container with a Container that complies with
the color requirements of this Section Notwithstanding this Section, the Franchisee is not
required to replace functional Containers purchased prior to January 1, 2022, that do not comply
with the color requirements of this Section prior to the end of the useful life of those Containers,
or prior to January 1, 2036, whichever comes first.
5. Not more than once per Calendar Year, any Customer with Cart service may request up to one
(1) Cart replacement at no charge to the Customer or the City. Franchisee shall replace the Cart
within five (5) Working Days and remove the old cart from the Premises.
B. Container Types and Sizes
1. Single-Family Containers. Franchisee shall supply each Single-Family Dwelling Unit with
one (1) Solid Waste Container, one (1) Recyclable Materials Container, and one (1) Organic
Materials Container, each in a size consistent with the City-approved Collection program
Container size options.
2. Multi-Family Containers. Franchisee shall supply each Multi-Family complex with the
appropriate number and type of Solid Waste, Recyclable Materials, and Organic Materials
Containers to adequately service the needs of the complex. Franchisee agrees to provide
additional appropriate Containers, as required.
3. Commercial Containers. Franchisee shall furnish to all Commercial Customers appropriate
Containers to Collect Solid Waste, Recyclable Martials, and Organic Materials at Commercial
Premises. Containers with a capacity of one (1) cubic yard or more shall be available in standard
sizes. The kind, size, and number of Containers furnished to particular Customers shall be as
determined mutually by the Customer and Franchisee. Containers which are front-loading Bins
shall have lids.
Notwithstanding this Section, Franchisee shall not be required to provide Recyclable Materials
Container(s) to a Commercial Customer that is exempted from Recyclable Materials services by
the City or has demonstrated to the City that it is Diverting Recyclable Materials through another
City-approved method, for the duration of the approved exemption. Similarly, Franchisee shall
not be required to provide Organic Materials Container(s) to a Commercial Customer that is
exempted from Organic Materials services by the City or has demonstrated to the City that it is
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Diverting Organic Materials through another City-approved method, for the duration of the
approved exemption.
4. Other Solid Waste Containers. Franchisee shall not be obligated to provide Customers with
Compactor units, but will be obligated to charge the rates set by the City for the Collection of
compacted Solid Waste.
C. Container Colors. Container colors shall be as follows:
1. Solid Waste Cart lids shall be black/grey. Solid Waste Bin, Compactor, and Franchise Roll-Off lids
or bodies shall be black/grey.
2. Recyclable Materials Cart lids shall be blue. Recyclable Materials Bin, Compactor, and Franchise
Roll-Off lids or bodies shall be blue.
3. Organic Materials Cart lids shall be green. Organic Materials Bin, Compactor, and Franchise Roll-
Off lids or bodies shall be green.
No later than December 31, 2035, Contractor shall provide all Customers with Collection Containers
that comply with the Container color requirements specified in this Section or as otherwise specified in
14 CCR Section 18982; 14 CCR, Division 7, Chapter 12, Article 3; or other Applicable Law.
D. Container Labels
Containers for Solid Waste shall be identified as for Solid Waste only and clearly labeled in accordance with
this Section. Containers for Recyclable Materials shall be identified as for Recyclable Materials only and
clearly labeled in accordance with this Section. Containers for Organic Materials shall be identified as for
Organic Materials only and clearly labeled in accordance with this Section.
1. Labels on Existing Containers or Lids. Franchisee shall ensure a label has been provided to
Customer on the body or lid of each existing Container, and that such label includes language or
graphic images, or both, that indicate the primary materials accepted and the primary materials
prohibited in that Container. Labels shall clearly indicate items that are Prohibited Container
Contaminants for each Container.
2. Imprinted or In-Mold Labels for New Containers or New Lids. On or before Effective Date,
Franchisee shall imprint new Container bodies or lids with text or graphic images that indicate
the primary materials accepted and the primary materials prohibited in that Container. Labels
shall clearly indicate items that are Prohibited Container Contaminants for each Container. Prior
to ordering any Containers or lids with in-mold labels, Franchisee shall submit a sample of its
proposed label, proposed location(s) for placement of labels on each type of Container, and its
labeling plan to City for approval.
E. Containers with Capacity of One Cubic Yard or More. All Containers with a capacity of one (1)
cubic yard or more shall meet applicable regulations for Bin safety, shall be maintained in good repair
with neatly and uniformly painted surfaces, and shall prominently display the name and telephone
number of Franchisee. Additionally, one-cubic-yard or larger Bins in the public right-of-way shall
have reflectorized markings. Bins shall be clearly marked and identified as belonging to Franchisee.
F. Replacement of Damaged or Broken Containers. City and Franchisee acknowledge that, from time
to time, a Customer may damage or destroy a Container. City and Franchisee also acknowledge that,
from time to time, Containers may be stolen from the curb or damaged due to normal use. When
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notified of such occurrence, Franchisee shall replace the Container, at no charge to the Customer or
City, pursuant to the guidelines established by the Franchisee and approved by the City. Each
Customer shall be responsible for excess damage to any such Containers not caused by Franchisee.
Replacement of a broken Container does not count towards the Customer’s free Container
replacement described in Section 6.1.3.A.5.
G. City Purchase of Containers. Upon expiration or early termination default of Agreement, City may
purchase all Containers put into service at Customer Premises during the Term of the Agreement , and
said Containers shall become property of the City at a value negotiated with the City, factoring the
depreciation and scrap value. All Containers and Compactors purchased and put into service at
Customer Premises during the Term of the Agreement that have not been fully depreciated shall be
available to the City, at the City’s option, at a cost reflecting the net book value, plus scrap.
6.1.4 Spillage and Litter Abatement
Franchisee shall use due care to prevent Discarded Materials, equipment oil, hydraulic fluids, or any other
liquid from being spilled or scattered during the course of Collection or Transportation process. If any
Discarded Materials or fluids are spilled during Collection, Franchisee shall clean up all spilled materials
promptly. Each Collection vehicle shall carry a broom and shovel at all times for this purpose. Franchisee
shall notify the City of such spillage. Should Discarded Materials, equipment oil, hydraulic fluids, or any
other liquid exist prior to Franchisee collection, the customer shall be notified and potentially not serviced
if the spillage was not the fault of the Franchisee.
6.1.5 Personnel
A. General. Franchisee shall furnish such qualified drivers, mechanical, supervisory, clerical,
and other personnel as may be necessary to provide services required by this Agreement in a
safe and efficient manner.
If Franchisee needs to provide additional personnel, Franchisee shall be responsible for all
costs related to provision of such additional personnel. Franchisee may only reduce the number
and type of personnel required with prior approval of City. If quality of service declines
following such reduction in type and number of personnel, the City, at its discretion, may
require the Franchisee to increase the number and type of personnel utilized, at no
additional cost to the City.
B. Identification. Franchisee shall ensure that while on duty each Collection worker wears a
clean uniform with conspicuous insignia displaying Franchisee’s company name and the
worker’s name or identification number.
C. Fees and Gratuities. Franchisee shall not, nor shall it permit any agent, employee, or
Subcontractors employed by it, to request, solicit, demand, or accept, either directly or
indirectly, any compensation or gratuity for any services performed under this Agreement,
except as provided in Article 9, Service Rates and Review.
D. Training. All drivers shall be trained and qualified in the operation of vehicles they operate,
and must possess a valid license of the appropriate class, issued by the California
Department of Motor Vehicles.
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Franchisee shall provide adequate operations, health an d safety, and Hazardous Waste
identification and handling training for all of its employees who use or operate equipment or
who are otherwise directly involved in Collection or other related operations.
E. Customer Courtesy. Franchisee shall train its employees in customer courtesy; shall prohibit
the use of loud or profane language; and shall instruct Collection crews to perform the work
quietly. Franchisee shall use its best efforts to ensure that all employees present a neat
appearance and conduct themselv es in a courteous manner. If any employee is found to be
discourteous or not to be performing services in the manner required by this Agreement,
Franchisee shall take all necessary corrective measures. If City has notified Franchisee of a
Complaint related to a discourteous or improper behavior, Franchisee will reassign the
employee to duties not entailing contact with the public while Franchisee is pursuing its
investigation and corrective action process. Such behavior will be penalized in accordance
with the Liquidated Damages Section of this Agreement.
6.2 Refusal to Provide Collection Services
6.2.1 Contamination
Franchisee must offer the Customer the correct combination of Cart and Bin sizes and collection
frequency beyond the minimum bundled service requirements as necessary, that matches their
unique service needs to reduce contamination of Recyclable Materials and Organic Materials. To
support the City’s diversion goals, the Franchisee is only required to collect and process Recyclable
Materials if they have been separated by the Customer from the Solid Waste and Organic Materials
Containers, and will only be required to collect Organic Materials if it has been Source Separated by
the Customer from Solid Waste and Recyclable Materials Containers.
If the Franchisee observes twenty percent (20%) or more of Prohibited Container Contaminants, the
Container shall be considered contaminated. For the first and second occurrence within any one Calendar
Year of contamination for a particular container (i.e., Recyclable Materials or Organic Materials),
Franchisee may refuse to Collect Recyclable Materials and Organic Materials Containers for
Customers who fail to properly sort and set out Recyclable Materials and Organic Materials. The
Franchisee must affix a Contamination Violation Notice, subject to City’s approval, to the contaminated
Container which contains instructions on the proper procedures for sorting Recyclable Materials or
Organic Materials. Upon request from the Customer, Franchisee shall Collect Containers that
received Customer Notices specifying non -Collection within one (1) Working Day of Customer’s
request. Upon rectification from the Customer, Franchisee must Collect the Recyclable Materials or
Organic Materials and Transport the material to the appropriate Approved Facility for Processing. If
the Container is still contam inated during the rescheduled Collection, the Discarded Materials will
be serviced as Solid Waste, provided that the contaminants may safely and lawfully be Collected as
Solid Waste. Franchisee shall Collect contents of the Discarded Materials Container at no charge to
the Customer or the City for the first and second occurrences within a Calendar Year of
contamination for a particular container (i.e., Recyclable Materials or Organic Materials) and must
notify the Customer by phone, U.S. mail, e-mail, or in person (which may be a container tag), that for the
third and subsequent incidents of excess contamination, the Customer may be charged a contamination
fee for the missed pickup.
The Franchisee must also contact the Customer by phone, U.S. mail, e-mail, or in person (which may be a
container tag) to ensure that they have the appropriate level of service for proper collection of Recyclable
Materials and/or Organic Materials. Franchisee must provide (or have provided) digital/photographic
documentation to the Customer that clearly documents the Customer’s on-going contamination problems
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and written notices of contamination as described above. After receiving approval from the City, the
Franchisee may increase the Container size or collection frequency for the Customer. Franchisee shall
report quarterly to City any warning notices issued and documentation, in accordance with record-
keeping and reporting requirements presented in Article 7.
6.2.2 Overage
If a Generator is found to habitually overflow their Collection Container(s), i.e., lid will not close, and/or
material not contained within Container, Franchisee shall provide the Customer with the correct
combination of Collection Containers and collection frequency that matches the Customer’s unique
service needs to enable clean, efficient, and cost-effective collection of Solid Waste, Recyclable
Materials, and Organic Materials. City and Franchisee agree that overflow of Discarded Materials that is
not properly in the Customer’s Collection Containers negatively impacts public health and safety.
Franchisee or designee has also agreed to conduct recycling audits and provide outreach and support to
Customers receiving the correct service level.
6.2.3 City Actions Upon Identification of Prohibited Container Contaminants.
The City or its designee shall perform SB 1383 activities required for the identification of Prohibited
Container Contaminants which include , but are not limited to, record-keeping, provision of
educational notices, and reporting.
6.3 Customer Service
6.3.1 Office
Office hours shall be, at a minimum, from 8:00 AM. To 5:00 P.M., Monday through Friday,
exclusive of Holidays. A responsible and qualified representative of the Franchisee shall be
available during office hours for communication with the public. Telephone numbers shall either be
a local or a toll free call to residents and businesses of the City. Franchis ee’s telephone system shall
be adequate to handle the volume of calls typically experienced on the busiest days. Franchisee
shall also maintain a local or toll free telephone number for use during other than normal business
hours. Franchisee shall have a r epresentative, answering or message providing/receiving
(voicemail) service available at said after hours telephone number.
6.3.2 Service Complaint Documentation
All service Complaints related to Collection of Discarded Materials shall be directed to Franchisee.
Daily logs of Complaints concerning Collection of Discarded Materials shall be retained for a
minimum of twenty-four (24) months and details shall be provided within the Franchisee’s
Quarterly Reports submitted to the City . The log shall include the date and time the Complaint was
received, name, address, and telephone number of complainant to the extent that such information is
provided by complainant, description of Complaint, employee recording Complaint and the action
taken by Franchisee to respond to and remedy Complaint. All Complaints received shall be
responded to within twenty-four (24) working hours of receipt.
All Customer service records and logs kept by Franchisee shall be available at all times during this
Agreement to City upon twenty-four (24) hour notice and at no cost to City. City shall, at any time
during regular Franchisee business hours, have access to Franchisee ’s Customer service department
for purposes of monitoring the quality of Customer service or researching Customer Complaints
assessing Liquidated Damages or other matters related to Franchisee ’s performance under this
Agreement.
6.3.3 Resolution of Customer Complaints
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Franchisee shall notify Customers of this Complaint procedure at the time Customers apply for or
are provided service, and subsequently, annually.
A Customer dissatisfied with Franchisee ’s decision regarding a Complaint may ask the City to
review the Complaint. The City’s Utilities Director shall determine if the Customer’s Complaint is
justified, and if so, what remedy, if any shall be provided. The remedy under this Section shall be
limited to a rebate of Customer charges related to the period of breach of any of the Terms of this
Agreement. Any resolution of these Customer Complaints shall not affect the City’s rights to
Liquidated Damages.
6.3.4 Government Liaison
Franchisee shall designate in writing a “Government Liaison” who shall be responsible for working
with the City Manager, Utilities Director , and/or one of their designated representatives to resolve
Customer Complaints.
6.4 Diversion Standards
6.4.1 Warranties and Representations.
Franchisee warrants that it is aware of and familiar with City's waste stream, and that it has the ability,
and shall use commercially reasonable efforts to provide and employ, sufficient programs and services
to ensure City will meet or exceed City’s Diversion goals requirements (including, without limitation,
amounts of Solid Waste to be Diverted, timeframes for Diversion, and any other requirements) as set
forth in this Article, Applicable Law, and CalRecycle Regulations, and that Franchisee will do so
without imposing any costs or fees other than those set forth in Exhibit A (Annual Rate Adjustment
Methodology). Franchisee hereby agrees to assist the City to meet or exceed, on an annual basis, the
Diversion Compliance, by undertaking the actions set forth in this section.
6.4.2 Franchisee Required Actions.
Franchisee shall take all of the following actions to assist the City in meeting, on an annual basis,
Diversion Compliance:
1. Deliver all material set out for Collection in Cart, Bins, or Roll-Off Containers identified as
containing Source Separated Recyclable Material to the Materials Recovery Facility for
processing and Diversion.
2. Deliver all material set out for Collection in Cart, Bins, or Roll-Off Containers identified as
containing Source Separated Organic Materials to the Organic Waste Processing Facility for
processing and Diversion.
3. Only material in Garbage Carts or Garbage Bins will be delivered to the Disposal Facility for
Disposal. All other material must go to the appropriate facility for full processing and
Diversion.
4. Franchisee must take all commercially reasonable and lawful actions to maximize Diversion of
materials from landfills.
5. Franchisee must develop and provide sufficient accurate information and data as necessary to
ensure that Franchisee and City annually demonstrate Diversion Compliance to CalRecycle.
6. Franchisee must implement public education and outreach programs as required under this
Agreement.
6.4.3 Failure of Recyclables Market.
Notwithstanding any other provision of this Agreement to the contrary, where CalRecycle has
determined that there are no commercially viable markets for a specific type of Recyclable Materials,
or with written notice to City, Franchisee is unable to identify a market for one or more Recyclable
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Materials despite the exercise of commercially reasonable efforts to process and market the material,
and determines to Dispose of the Recyclable Material(s), such a determination shall not constitute a
failure to implement service, a failure to implement a program, or an event of default hereunder.
6.4.4 Failure to Meet Franchised Diversion Rate.
If CalRecycle determines that City has failed to meet the Diversion Compliance due to Franchisee’s
failure to undertake the actions described in this Section, Franchisee must prepare, at Franchisee’s cost
and expense, and submit a corrective action plan to City sufficient to demonstrate good faith efforts by
City to comply with Diversion Compliance and that is otherwise acceptable to CalRecycle.
Franchisee’s corrective action plan must specify all actions Franchisee will take to ensure it will meet
Diversion Compliance Rates in the future and shall be subject to the review and approval by the City.
Franchisee must implement all measures identified in the corrective action plan at its sole cost and
expense, unless the failure to meet Diversion Compliance was due to a Change in Law or due to the
negligent acts or omissions of the City. If Contractor fails to submit an adequate corrective action plan
or to fully implement a City-approved corrective action plan, it shall subject Franchisee to Liquidated
Damages as allowed under Article 12 in addition to any other remedies available to the City.
6.5 Periodic Performance or Billing Audit
The City shall have the right to periodically, not less than annually, request a performance audit or
billing audit be completed by the Franchisee, the City, or an independent third party. The City shall be
entitled to select the type of consultant that it deems qualified to conduct said audits. The cost of such
audits will be an allowable cost under the rate setting methodology unless there are fin dings
pursuant to Section 12.5 (Financial Material Errors, Omissions, or Irregularit ies).
6.6 Performance Hearing
A. The City maintains the right to hold a public hearing at any time, not more than once
each year, at which the Franchisee shall be present and shall participate, to review
Franchisees services and performance. The purpose of the hearing shall be, in part, to
provide for a discussion and review of technological, economic, and regulatory changes
and quality of service provided to date. The goal of the performance hearing is to strive for
an ever-advancing Discarded Materials management system, and to ensure services are
provided with adequate quality, efficiency, and economy.
Sixty (60) days after receiving notice from City of a performance review hearing,
Franchisee shall, at a minimum, submit a report to City indicating the following:
1. Changes recommended and/or new services to improve City’s ability to
meet the goals of AB 939, SB 1383, and other Applicable Law s, and to
contain costs and minim ize impacts on rates; and
2. Any specific plans for provision of changed or new services by Franchisee.
B. The reports required by this Agreement regarding Customer Complaints shall be used as
one basis for review. Franchisee may submit other relevant performance information and
reports for consideration. City may request Franchisee submit specific information for the
hearing. In addition, any Customer may submit comments or Complaints during or before
the hearing, either orally or in writing, and these shall be considered.
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C. Topics for discussion and review at the performance review hearing shall include, but shall
not be limited to, quality and adequacy of services provided, feasibility of providing new
services, application of new technologies, Customer Complaints, amendments to this
Agreement, developments in the law, new initiatives for meeting or exceeding SB 1383 and
AB 939’s goals, regulatory constraints, and Franchisee performance. City and Franchisee
may each select additional topics for discussion at any performance review hearing.
D. Not later than sixty (60) days after the conclusion of each performance review hearing, City
may issue a report. As a result of the review, City may request Franchisee to provide
expanded or new services. Franchisee shall present, within thirty (30) days of a request to
do so by City, a proposal to provide additional or expanded Diversion services. The
proposal shall contain a complete description of the following:
1. Collection methodology to be employed (equipment, workforce, etc.).
2. Equipment to be utilized (vehicle number, types, capacity, age, etc.).
3. Labor requirements (number of employees by classification).
4. Type of Containers to be utilized.
5. Provision for program publicity/education/marketing.
6. A projection of the financial results of the program’s operations for the
remaining Term of the Agreement in a balance sheet and operating statement
format including documentation of the key assumptions underlying the
projections and the support for those assumptions.
7. Facility to be utilized.
ARTICLE 7.
OTHER SERVICES: BILLING, REPORTING, RECORD-KEEPING,
AND PUBLIC EDUCATION
7.1 Billing
By resolution of the City Council, the City shall establish an integrated rate for Solid Waste,
Recyclable Materials, and Organic Materials Collection services. Franchisee shall bill and collect
these rates. Franchisee billing format and billing frequency shall be subject to approval of the
City, and City shall have the right to revise the billing format to itemize certain charges.
The City may also direct Franchisee to insert mailers relating to Franchisee provided service with the
Billings at no additional cost to the City. The mailers must fit in standard envelopes and not increase
the required postage. The City will provide not less than thirty (30) days’ notice to Franchisee prior to
the mailing date of any proposed mailing to permit Franchisee to make appropriate arrangements for
inclusion of City materials.
Franchisee shall maintain copies of said Billings and receipts, each in chronological order, for a period
of three (3) years after the date of service for inspection by the City, or for such longer term as the City
directs. Franchisee may, at its option, maintain those records in computer form, on microfiche, or in
any other manner, provided that the records cannot be altered, and can be preserved and retrieved for
inspection and verification in a timely manner. Franchisee shall, in addition, provide an adequate
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backup system for billing records, regardless of the form in which the records are maintained. Any
such backup system shall be subject to approval by the City.
7.2 Owner Responsible for Payment
The Owner of Occupied developed property shall be responsible and liable for paying the fees for
Collection and Disposal of Discarded Materials for that property, although the franchisee will bill a
tenant if requested by the owner .
7.3 Collection of Bills from Delinquent Customers
Bills shall be considered delinquent if not paid within thirty (30) days of the date due. Franchisee
reserves its right to and may take such action as is legally available to Franchisee, to collect or cause
collection of past due invoice amounts; provided, however, that the Franchisee shall not discontinue
Solid Waste Collection to any Customer. If such past due invoice amounts are more than sixty (60) days
delinquent, the Franchisee may (a) discontinue Recyclable Material or Organic Material Collection
and/or (b) downsize the Customer’s Service Level for Solid Waste Collection, until payment is made.
Franchisee is solely responsible for collecting all delinquent charges and the City shall not be responsible
for paying Franchisee for said delinquent charges.
Every five (5) years, or when the rolling total of delinquent fees equals $50,000, whichever comes first,
the Franchisee may take actions pursuant to Chapter 8.04 of the Municipal Code to collect on delinquent
solid waste accounts.
7.4 Customer Assistance Program at Franchisee’s Good Will
In exchange for the good will of the City and the general public, Franchisee voluntarily agrees to
offer a low-income discount for Collection to eligible, low income Customers (the “Discount”) and
that the Discount shall neither impact the service rates nor be otherwise paid for or subsidized by
any other Customer, City, or rate payer. Franchisee shall make the Discount available to any person
enrolled in 19, 32, or 64 gallon trash service who demonstrates through appropriate documentation
that they are eligible to receive the Discount using the City’s existing methodology for utility
services, as amended from time to time.
Franchisee shall provide all current Custom ers with information explaining how to qualify for and
receive the Discount. Franchisee shall thereafter advertise the availability of the Discount on its
website throughout the Term of this Agreement and at least once per year by direct notice to all
Customers. The Discount shall be no less than twenty (20) percent of the Collection rate.
7.5 Records
A. Franchisee shall maintain records required to conduct its operations, to support requests it
may make to City, and to respond to requests of the City. Adequate record security shall be maintained
to preserve records from events that can be reasonably anticipated such as a fire, theft , and earthquake.
Electronically maintained data and records shall be protected and an adequate backup system shall be
provided for such data and records. The protection and backup systems shall be subject to approval
by the City.
B. The following records shall be maintained for the City in form and detail satisfactory to
the City, relating to:
1. Customer contact data, Customer services, and billing;
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2. Weight of Discarded Materials, especially as related to reducing and Diverting
Solid Waste. Information is to be separated by kind of account (Single-Family,
Multi-Family, and Commercial) and by type of material (e.g., Solid Waste,
Recyclable Materials, Organic Materials, Bulky /Large Items);
3. Results from special semi-annual clean-up events;
4. Routes;
5. Facilities, equipment, and personnel used;
6. Facilities and equipment operations, maintenance, and repair;
7. Processing and Disposal of Discarded Materials;
8. Complaints; and
9. Missed pick-ups.
C. Franchisee shall maintain records of Transfer, Diversion, and Disposal of all
Discarded Materials Collected in the City for the period of this Agreement and all extensions to this
Agreement or successor Agreements. In the event Franchisee discontinues providing Collection of
Discarded Materials to City, Franchisee shall provide all records of Diversion and Disposal of all
Discarded Materials Collected within the City to City within thirty (30) days of discontinuing
service. Records shall be in chronological order and organized in a form readily and easily
interpreted.
D. Records for other programs shall be tailored to specific needs. In general, they shall
include:
1. Plans, tasks, and milestones; and
2. Accomplishments in terms such as dates, activities conducted, quantities of
products used, produced, or distributed, and numbers of participants and
responses.
E. Unless otherwise required in this Agreement, Franchisee shall retain all records and data
required to be maintained by this Agreement for the Term of this Agreement plus five (5) years after
its expiration or earlier termination. Franchisee’s records shall be stored in one central location,
physical or electronic, that can be readily accessed by Franchisee. Upon request, any such records shall
be retrieved in a timely manner, not to exceed ten (10) Working Days of a request by the City and
made available to the City; including any record or documentation that the City, requires to fulfill
obligations under Applicable Law, including but not limited to AB 939, AB 341, AB 1826, AB 876,
AB 901, SB 1383, and other current or future Federal, State, or local regulations, as amended.
F. All financial records related to the services performed under this Agreement shall be
separated from any and all other types of business and operations conducted by the Franchisee.
7.6 Waste Generation, Characterization Studies , and Container Audits
Franchisee acknowledges that the City must perform Discarded Materials generation and Disposal
characterization studies periodically to comply with AB 939 requirements. Franchisee agrees to
participate and cooperate with the City and its agents, at no cost to the City, to accomplish studies
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and data collection, and prepare reports, as needed, to determine weights and volumes of Discarded
Materials and characterize Discarded Materials generated, Diverted, Disposed, transformed, or
otherwise handled or Processed to satisfy AB 939 requirements.
7.7 Report Formats and Schedule
A. Records shall be maintained in forms and by methods that facilitate flexible use of data
contained in them to structure reports, as needed. Reports are intended to compile recorded data into
useful forms of information that can be used to, among other things:
1. Determine and set rates, and evaluate the financial efficacy of operations; and
2. Evaluate past and expected progress towards achieving goals and objectives; and
3. Determine needs for adjustment to programs; and
4. Evaluate Customer service and Complaints.
B. The City may at no cost to itself request that Franchisee provide such additional
information in the reports set forth below as the City deems necessary or appropriate to meet its
needs, including provision of information needed for the City’s compliance with Applicable Law,
including but not limited to AB 939, AB 1826, AB 341, and SB 1383 report information.
E. Franchisee shall maintain records and reports in accordance with Article 7 and shall allow
the City to audit and inspect records as described in Article 7.
F. At the City’s option, the City may require that Franchisee provide the City with the
aggregate Tonnage data related to AB 901 reporting that the City needs for its SB 1383 reporting to the
extent available to Franchisee, within five (5) Working Days of City’s request.
G. Failure of Franchisee to comply with the reporting requirements as set forth in this Section
may result in an assessment of Liquidated Damages in accordance with the Liquidated Damages
provision in Section 12.6 of this Agreement. Franchisee’s repeated failure to submit reports, and/or
failure to submit reports on time, may be deemed an event of default and may result in the termination
of the Agreement at the discretion of the City Manager, in accordance with Article 12 of this
Agreement.
7.8 Quarterly Reports
A. Timeline
Quarterly reports shall be submitted no later than 5:00 p.m. PT on the last day of the month following
the end of Quarter in which the receipts are collected. Quarters end on March 31, June 30,
September 30, and December 31. All reports shall be submitted to City electronically via e-mail,
or by an alternative method mutually agreed upon by the City and Franchisee . The City reserves
the right to require the Franchisee to maintain records and submit the reports required herein
through use of a web-based software platform provided or designated by the City and/or through
use of Microsoft Excel spreadsheet, at the Franchisee’s expense.
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B. Tonnage and Customer Subscription
The Franchisee must report, to the extent reasonably practicable, the number of unique SFD and MFD
accounts serviced, the number of unique Commercial and MXD accounts serviced, number of
Bulky/Large Items collected, tonnage of Garbage, Recyclable Materials, and Organic Materials
collected and processed for diversion broken down by Container type, tonnage of Bulky/Large Items
collected, and Residual amounts (where applicable) from Recycling and Organic Materials Diversion
operations that are landfilled. Quantities should be broken down by SFD, MFD, MXD, and
Commercial Collection Services. MXD properties must have tonnage assigned appropriately to
Residential and Commercial generators.
C. Contamination Monitoring Report
The Franchisee shall submit the following information regarding Franchisee conducted contamination
monitoring and issuance of Prohibited Container Contaminant Notices conducted pursuant to Section
6.2 (Refusal to Provide Collection Services):
1. Description of the Franchisee’s Process for determining the level of contamination.
2. Summary report of Customer Notices issued, which for each notice shall include the date of
issuance, Customer name, and service address.
3. A record of each inspection and contamination incident, which shall include, at a minimum:
a. Name of the Customer,
b. Address of the Customer,
c. The date the contaminated Container was observed,
d. The staff who conducted the inspection,
e. The total number of violations found, and a description of what action was taken for each,
f. Copies of all notices issued to Generators with Prohibited Container Contaminants, and
g. Any photographic documentation or supporting evidence.
4. Any other information reasonably requested by the City or specified in contamination monitoring
provisions of this Agreement.
D. SB 1383 Non-Compliance Complaints
Franchisee shall maintain a record of all SB 1383 non-compliance Complaints as defined in 14 CCR
Section 18995.3 and responses and submit the following information:
1. Total number of SB 1383 non-compliance Complaints received, and total number of SB 1383 non-
compliance Complaints investigated
2. Copies of documentation recorded for each SB 1383 non-compliance Complaint received, which shall
at a minimum include the following information:
a. The SB 1383 non-compliance Complaint as received;
b. The name and contact information of the complainant, if the SB 1383 non-compliance Complaint
is not submitted anonymously;
c. The identity of the alleged violator, if known;
d. A description of the alleged violation; including location(s) and all other relevant facts known to
the complainant;
e. Any relevant photographic or documentary evidence submitted to support the allegations in the SB
1383 non-compliance Complaint; and
f. The identity of any witnesses, if known.
3. Copies of all SB 1383 non-compliance Complaint reports submitted by Franchisee to the City.
4. Copies of all investigation reports submitted to the City which shall include at minimum:
a. The SB 1383 non-compliance Complaint as received;
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b. The date the Franchisee investigated the SB 1383 non-compliance Complaint;
c. Documentation of the findings of the investigation;
d. Any photographic or other evidence collected during the investigation; and
e. Franchisee’s recommendation to the City on whether or not the entity investigated is in violation
of SB 1383 Regulations based on the Franchisee’s investigation.
E. Narrative summary of problems encountered and actions taken, with recommendations for the City
as appropriate.
F. The quarterly status of activities identified in the annual public education described in Section 7.16
(Public Education and Outreach).
G. Status report on applications for renewals of existing permits or any new permits which may be
required to continue operations at the designated Disposal site within existing permitted areas.
H. Quantities each of Solid Waste, Recyclable Materials, and Organic Materials Collected, Diverted,
and Disposed of, in Tons, during the semi-annual Residential clean-up weeks, if applicable.
I. For each new program, provide activity related and narrative reports on goals and milestone and
accomplishments. Describe problems encountered, actions taken, and any recommendations to facilitate
progress.
J. Provide a summary assessment of the overall program for the Collection of Discarded Materials
from Franchisee's perspective relative to financial and physical status of program. The physical status is to
relate to how well the program is operating for efficiency, economy, and effectiveness relative to meeting all
the goals and objectives of this Agreement. Provide recommendations and plans to improve. Highlight
significant accomplishments, problems, and proposed solutions.
7.9 Annual Reports and Financial Audit
7.9.1 Financial Audit.
Franchisee shall submit to the City annual audited financial statements prepared at Franchisee’s
expense by an independent Certified Public Accountant not later than 180 days following the
expiration of the Franchisee’s Fiscal Year. Pursuant to Exhibit A (Annual Rate Adjustment
Methodology), at the time a rate application request is submitted to City, the financial forms
contained in the rate application must be reconciled to the audited financial statements.
7.9.2 Annual Report.
In addition to the Quarterly reporting requirements, the Franchisee shall provide an Annual
Report, covering the most recently completed Calendar Year, in accordance with the format and
submittal requirements of this section. Annual reports shall be submitted no later than 5:00 p.m. PT
on the last day of the month following the end of the calendar year. The Annual Report shall include
the following:
A. Collection and Subscription Report
1. A summary of all data provided in the Quarterly Tonnage reports, including annual totals
and averages.
2. The type(s) of Collection service(s) provided, a list of all hauler routes serviced, and a
record of the SFD, MFD, MXD, and Commercial addresses served on each hauler route.
3. To the extent reasonably practicable, a summary of Customer subscription data, including
the number of accounts; the total number of Generators enrolled with Franchisee for
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service, listed separately by Service Level and Container type , as well as separately by
SFD, MFD, MXD, and Commercial Customers, and separately for each type of Discarded
Material; and the number of Bulky/Large Item Collections performed.
4. A detailed list of SFD, MFD, MXD, and Commercial Customer information, including
Solid Waste, Recyclable Materials, an d Organic Materials Service Levels, Customer type,
Customer Name, and Customer service addresses reflecting Customer Service Levels as
of December 1 (for the year in which the report is submitted).
B. Compliance Monitoring and Enforcement Report
1. A summary of the total number of SB 1383 Regulatory non -compliance Complaints that
were received and forwarded to the City or their designee.
2. The total number of Contamination Notices issued, categorized by type of Generator.
3. Copies of all Prohibited Container Contami nant Courtesy Pick-Up and Non-Collection
Notices and educational materials issued to non -compliant Generators.
C. Public Education and Outreach Report
1. A copy of all education and outreach materials provided to Customers or otherwise used
for education and outreach efforts in accordance with this Agreement, including but not
limited to flyers, brochures, newsletters, invoice messaging/billing inserts, website
postings, mobile applications, and social media postings.
2. A record of the date and to whom the information was disseminated or with whom direct
contact was made, in the form of a list that includes: the Customer’s name or account
name, the type of education or outreach received , the distribution date, and the method of
distribution.
3. For any mass distribution through mailings or bill inserts, the Franchisee shall maintain a
record of the date, a copy of the information distributed, and the type and number of
accounts that received the information.
4. A copy of electronic media, including the date of posting, for social media posts, e-mail
communications, and other electronic messages.
5. A summary of the status of the annual education of the reporting year, including activities
conducted and the quantitative and/or qualitative results of those activities.
6. The annual public education required by Section 7.16 of the Agreement for the upcoming
then-current calendar year. For example, Franchisee submittal of a 202 4 annual report in
January 2025 shall include Franchisee submittal of the annual public education planned
for calendar year 202 5.
7.10 Maintenance of Accounting Records
Franchisee shall maintain accounting records in accordance with generally accepted standards and
principles of accounting. In its accounting records, Franchisee shall discreetly maintain and clearly
identify all items of revenue and expense pertaining to the City's Franchised operations. Cost and
revenue information for the City shall be segregated from other geographical areas served by
Franchisee. Cost and revenue information for the City, in addition, shall be segregated from other
business activities of the Franchisee. Separate detailed records shall be maintained by Franchisee
with respect to all transactions with Affiliated entities that affect the cost and revenue of Franchisee in
providing the Franchise Collection services.
7.11 Right to Audit Records
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In addition to other reporting requirements in this Agreement, the City may review, test, and audit the
books and records of the Franchisee or may engage a Certified Public Accountant for this purpose.
The cost of such inspection or review will be an allowable cost under the rate setting
methodology unless there are findings pursuant to Sectio n 12.8 (Financial Material Errors,
Omissions, or Irregularities).
7.12 Inspection by City
The designated representatives of the City shall have the right to observe and review Franchisee
operations and enter Franchisee's premises for the purpose of such observation and review at all
reasonable hours with reasonable notice.
7.13 Regulatory Reporting
Franchisee shall promptly provide the City copies of each adverse report from, and each regulatory
action from, local, State, and Federal regulatory agencies. In addition, Franchisee shall send copies to
City of any reports that Franchisee submits to regulatory agencies with respect to performance of this
Agreement.
Franchisee shall provide City promptly with copies of any notices and correspondence from other
Facilities, including Disposal sites, utilized by Franchisee in performance of this Agreement,
concerning any breach of agreement with such Facility or violation of regulations, including delivery
of unauthorized wastes. Franchisee shall direct such Facilities to at all times simultaneously send
copies of such notices and correspondence to City.
Franchisee shall promptly provide City with copies of any reports and correspondence concerning the
status of permits with respect to Franchisee and such Disposal sites and Facilities referenced above.
7.14 Upon-Request Reporting.
City reserves the right to require Franchisee to provide additional reports or documents as City
reasonably determines to be required for the administration of this Agreement or compliance with
Applicable Law.
7.15 Facility Capacity Planning Information.
To the extent such information is available to Franchisee, City may require Franchisee to provide
City with information of available Organic Waste Processing capacity for any Approved Processing
Facilities, where available capacity may include identification of monthly Tons of additional
Organic Waste such Approved Facilities have the ability to receive within permitted limits.
Franchisee shall respond to City within sixty (60) days of City’s request for information regarding
available new or expanded capacity, to the extent such information is available to Franchisee and, at
City’s option, may be required to submit reports on a more regular basis (such as monthly,
quarterly, or annually). If Franchis ee uses a Subcontractor to perform some or all of the Facility -
related services required by this Agreement, Franchisee shall use commercially reasonable efforts to
secure any City-requested Facility capacity planning information from its Subcontractor(s). The
annual Facility capacity planning report shall comply with the following:
Include reports of current throughput and permitted capacity and available capacity for Organic
Materials Processing for any Facility in the City that Processes Organic Materials. Existing capacity
may include identification of monthly Tons of additional S ource-Separated Recyclable Materials,
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Source-Separated Organic Materials, and/or Solid Waste capacity such Facility has the ability to
receive within permitted limits.
Include description of potential new or expanded Processing capacity at those Facilitie s, operations,
and activities for Processing of Organic Materials, including information about throughput and
permitted capacity necessary for planning purposes.
Be submitted using a form or format approved by the City Manager.
7.16 Public Education and Outreach
7.16.1 Franchisee Cooperation and Support for City Educational Efforts.
Franchisee acknowledges and agrees that education and public awareness are critical, key, and
essential elements of any efforts to achieve compliance with AB 939, SB 1383, and other Applicable
Law. Accordingly, Franchisee agrees to take direction from City to exploit opportunities to expand
public and Customer knowledge concerning needs and methods to reduce, reuse, and Recycle Solid
Waste and to cooperate fully with City in this regard. Franchisee acknowledges that they are part of a
multi-party effort to operate and educate the public about the regional integrated waste management
system. Franchisee shall cooperate and coordinate with the City on public education activities to
minimize duplicative, inconsistent, or inappropriately timed education campaigns. The Franchisee
shall cooperate with and shall not impede, interfere, or attempt to impede or interfere with the
implementation, expansion, or operation of public education and outreach programs or campaigns
conducted by the City.
7.16.2 Service Brochure
Franchisee shall prepare and keep current a service brochure acceptable to the City which summarizes
Solid Waste regulations, all services provided by Franchisee, Collection and Disposal rates, telephone
numbers, special Collection events, Collection schedules, Complaint procedures, and other pertinent
information. Franchisee shall have copies of this flyer available at all times in Franchisee's office
and on their website; shall mail copies to all new Customers; shall annually provide copies to all of
its current Customers via email or written within their bill; and shall mail updated copies to all
Customers as notification of changes in service or rates, prior to such changes.
7.16.3 Franchisee Supplemental Education Materials.
Franchisee shall perform all necessary public education activities related to the Recyclable Materials
and Organic Materials Collection services as directed by the City. This shall include, but not be limited
to, annual mailings to all Customers explaining the Recyclable Materials and Organic Materials
Collection program, mailings prior to the start of services, flyers handed out with Container delivery
and follow-up mailings or handouts related to the Collection of new materials or upon report of
Contamination. Franchisee shall obtain approval from the City on all Franchisee-provided public
education materials outside of the City’s education plan, including but not limited to print, radio,
television, internet media, Franchisee’s website, or mobile application before publication, distribution,
and/or release. The City shall have the right to request that Franchisee include identification and
contact information for the City on public education materials, and approval of such requests shall not
be unreasonably withheld.
7.16.4 Billing Inserts.
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Franchisee shall maintain its own program of providing information relevant to billing and Collection
services, issues, and needs with its bills. Franchisee shall also include in Customer bills additional
information, including information on any and all programs, as directed by the City. Franchisee shall
bear all labor costs with respect to inserting public education materials with the Billings. City shall
bear any additional postage expense resulting from the City's inserts and shall bear other expenses
related to the inserts to the extent said expenses are clearly in excess of the Franchisee's normal billing
costs. All public education materials shall be approved in advance by the City. Franchisee shall be
responsible for printing single-sheet, double-sided bill inserts at least annually. Inserts shall be
provided in English and Spanish and printed on recycled paper. Franchisee shall provide electronic
bill inserts (or separate email attachments) to Customers who are billed electronically, and paper bill
inserts to Customers who receive paper bills. Upon City request for such inserts, Franchisee shall
comply with such request during its next billing cycle for the targeted Customer group. Franchisee
shall perform this service with no additional requirement for compensation.
7.16.5 Annual Notice of Requirements.
Franchisee shall, not less than once per year, prepare and distribute to each Generator in the City a
mailer that includes information specified in 14 CCR Section 18985.1(a). Such mailer shall be
distributed by Franchisee to all Residential and Commercial mailing addresses, including individual
MFDs and tenants of multi-tenant Commercial locations. Franchisee shall also make this notice
available in an electronic format through the Franchisee’s website.
7.16.6 Other Outreach.
At the direction of the City, Franchisee shall participate in and promote AB 939 activities, SB 1383
programs, and other Discarded Materials management and waste reduction techniques at community
events and local activities. Such participation would include providing, without cost, educational and
publicity information promoting the goals of the City's Discarded Materials Collection and Diversion
programs.
7.17 Records Retention
Franchisee shall maintain the above records, reports , and data set forth in this Article for such
time as City may direct. Franchisee agrees to make all such records, reports , and data available for
inspection by City or City's authorized representatives, upon reasonable notice by City.
ARTICLE 8.
PAYMENTS TO CITY
8.1 Quarterly Fees and Payment
The following quarterly fees and payments shall be due on the last day of the month following the end of
each Quarter for which Collection was provided. Quarters end on March 31, June 30, September 30,
and December 31. The Quarterly Fees shall be accompanied at the time of payment by a written report,
in a format acceptable to the City, setting forth the calculations the Franchisee used to determine the
amount due and the basis for those calculations. If any fees are not paid on or before the last day of the
month following the end of each Quarter for which Collection was provided, Franchisee shall pay to City
a late payment penalty in an amount equal to one percent (1%) of the amount owing for that month.
Franchisee shall pay an additional late payment penalty of one percent (1%) owing on any unpaid balance
for each following thirty (30) day period the fee remains unpaid. Late payment penalty amounts shall not
be included in any revenue requirement.
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8.1.1 Franchise Fee
The City Council may establish and impose, by ordinance or resolution, fees or charges for benefits
conferred, privileges granted, or services or products provided to the Franchisee, or for the City’s
reasonable regulatory costs, related to or involving Franchisee’s responsibilities under this Agreement.
The Franchisee shall pay to the City a Franchise Fee, AB 939 Fee, and other fees, as determined by the
Parties or the City Council, to compensate the City for its solid waste-related costs, the impacts to City
property, and the value of the Company’s use of City property for solid waste related services. The fees
are set forth in Exhibit A (Annual Rate Adjustment Methodology).
8.1.2 AB 939/SB 1383 Fee
Franchisee shall pay an AB 939/SB 1383 fee to the City quarterly. The City shall retain the sole
right to set priorities for the use of its AB 939/SB 1383 fee. In addition, if the City’s designee
implements an AB 939, SB 1383, or Solid Waste Management fee, Franchisee shall pay that fee
directly to the designee. Said fees shall be an allowable cost in Franchisee’s rate application. All AB
939/SB 1383 fees and Solid Waste Management fees paid to the City or its designee shall be
considered a pass -through cost for purposes of rate setting, and, as such, changes to these fees shall
be adjusted accordingly, subject to all applicable laws and regulations. The City or its designee shall
have the right to establish and adjust the AB 939, SB 1383, or Solid Waste Management fe e at any
time, provided that any changes are considered a pass -through cost for the purposes of rate setting,
at the time of the change in the AB 939, SB 1383, or Solid Waste Management fee.
8.1.3 Other Fees
The City shall reserve the right to set such other fees, as the City deems necessary. These fees will be
treated as a pass-through expense. The amount, time, and method of payment shall be similar to that
described in Section 8.1.
8.1.4 Adjustment of Fees
The City may adjust the amount of fees annually. Such adjustment shall be reflected in the rates that the
Franchisee is allowed to charge and collect from Customers.
8.1.5 Review of Fee Payments
The City, or its agent, reserves the right to annually perform an independent review of fee payments
to verify that fees are being paid in accordance with this Agreement. The cost of such inspection or
review will be an allowable cost under the rate setting methodology unless there are findings pursuant to
Section 12.8 (Financial Material Errors, Omissions, or Irregularities).
8.1.6 Business License Tax
Franchisee shall pay each year the annual business license tax.
ARTICLE 9.
SERVICE RATES AND REVIEW
9.1 General
In addition to any compensation specified elsewhere in the Agreement, Franchisee’s compensation
provided for in this Article shall be the full, entire, and complete compensation due to Franchisee
pursuant to this Agreement for all labor, equipment, materials and supplies, taxes, insurance, bonds,
overhead, Transfer and Transport, Processing, Diversion, Disposal, profit, and all other things
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necessary to perform all the services required by this Agreement in the manner and at the times
prescribed. Franchisee will not be entitled to any further rate adjustments as a result of Customer
delinquencies and other bad debt issues.
Franchisee does not look to the City for payment of any sums, except for Collection of Discarded
Materials services provided to the City, under this Agreement in consideration of the right to charge
and collect from Customers for services rendered at rates fixed by the City from time-to-time.
9.2 Service Rates
Service rates are those established by Resolution adopted by City Council. Franchisee shall provide
the services required by this Agreement and charge no more than the rates authorized by City
Resolution.
9.3 Rate Review
Rates will be established the Annual Rate Methodology, hereby incorporated by reference and
attached hereto as Exhibit A.
9.4 Publication of Rates
Pursuant to Section 6 of Article XIII D of the California Constitution and California Government
Code Sections 53755-56, as may be amended from time to time, on years outside of the Proposition
218 public hearing process, the Franchisee must notify Customers of increases to their solid waste
rates not less than thirty (30) d ays prior to the effective date of such increase. Franchisee shall
provide the information in the regular billing statement or by any other mailing by the Franchisee to
the address to which the Franchisee customarily mails the billing statement for the sol id waste fees
and charges.
9.5 Rounding
Adjustments to the overall Service Rates shall be made only in units of one cent ($0.01). Fractions of
less than one cent ($0.01) shall not be considered in making adjustments. All CPI indices shall be
rounded at two (2) decimal places for the adjustment calculations.
ARTICLE 10.
INDEMNITY, INSURANCE, AND PERFORMANCE BOND
10.1 Indemnification
10.1.1 General.
Franchisee shall indemnify and hold harmless City, its officers, Directors, employees, and agents from
and against any and all loss, liability, penalty, forfeiture, claim, demand, action proceeding or suit of any
and every kind and description (including, but not limited to, injury to and death of any Person and
damage to property, or for contribution or indemnity claimed by third parties) to the extent arising or
resulting from and in any way connected with (1) the negligence or willful misconduct of Franchisee, its
officers, employees agents and/or sub Contractors in performing services under this Agreement; (2) the
failure of Franchisee, its officers, employees, agents and/or subcontractors to comply in all respects with
the provisions of this Agreement, applicable laws (including, without limitation, the Environmental
Laws) and regulations, and/or applicable permits and licenses; (3) the acts of Franchisee, its officers,
employees, agents and/or subcontractors in performing services under this Agreement for which strict
liability is imposed by law (including, without limitation, the Environmental Laws). Franchisee further
agrees to and shall, upon demand of City, at Franchisee's sole cost and expense, defend (with attorneys
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acceptable to City) the City, its officers, directors, employees, and agents against any claims, actions,
suits or other proceedings, whether judicial, quasi-judicial or administrative in nature, arising or
resulting from any events described in subclauses (1) through (3) in the immediately preceding sentence
to the extent arising from or related to alleged or actual violations of Proposition 218 and/or its
implementing legislation.
10.1.2 CERCLA.
Franchisee agrees to defend and indemnify the City, Council members, officers, employees, and agents
for all actions of the Franchisee associated with the Franchisee's role as the Arranger of Solid Waste
service, or as a "potentially responsible party" within the meaning of CERCLA in performing Solid
Waste service under any Federal, State , or local laws, rules, or regulations. The Franchisee shall
further defend and indemnify City from any and all legal actions against City on the basis of the
assertion that the City is an Arranger of Solid Waste services as a result of this Agreement.
10.1.3 AB 939 and SB 1383 Indemnification.
Franchisee agrees to indemnify and hold harmless City, its officers, Directors, employees, and agents from
and against all fines and/or penalties imposed by the CalRecycle in the event the source reduction and
Recycling goals or any other requirement of AB 939 or SB 1383 are not met by City with respect to the
waste stream Collected under this Agreement but only to the extent that such failure is due to the failure of
Franchisee to meet its obligations under this Agreement or for delays in providing information that
prevents City from submitting reports required by AB 939 or SB 1383 in a timely manner.
10.3 Insurance
Franchisee shall procure and maintain, for the duration of the Franchise, insurance against claims for
injuries to persons or damages to property which may arise from or in connection with the performance of
the services hereunder by the Franchisee, its agents, representatives, employees, or Subcontractors.
10.3.1 Minimum Scope of Insurance.
Coverage shall be at least as broad as:
A. Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001).
B. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile
Liability, code I (any auto).
C. Workers' Compensation insurance as required by the State of California and Employer's
Liability insurance.
D. Pollution Legal Liability
10.3.2 Minimum Limits of Insurance.
Franchisee shall maintain limits no less than:
A. Commercial or Comprehensive General Liability: Five Million Dollars ($5,000,000) combined
single limit per occurrence for bodily injury, personal injury, and property damage. If Commercial
General Liability or other form with a general aggregate limit is used, either the general aggregate
limit shall apply separately to this Agreement or the general aggregate limit shall be twice the
required occurrence limit.
B. Automobile Liability: Five Million Dollars ($5,000,000) combined single limit per accident for
bodily injury and property damage.
C. Workers' Compensation and Employers Liability: Workers' compensation limits as required by the
Labor Code of the State of California and employers’ liability with limits of $1,000,000 per
accident for bodily injury or disease.
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D. Pollution Liabilities: One Million Dollars ($1,000,000) each loss / Two Million Dollars
($2,000,000) annual aggregate all losses.
10.3.3 Other Insurance Provisions.
The general liability and automobile liability policies are to contain, or be endorsed to contain, the
following provisions:
A. The City, Council members, its officers, officials, employees, and agents are to be covered as
insured as respects: liability arising out of activities performed by or on behalf of Franchisee;
products and completed operations of Franchisee; Premises owned, occupied, or used by
Franchisee; or automobiles owned, leased, hired, or borrowed by Franchisee. The coverage shall
contain no special limitations on the scope of protection afforded to the City, Council members, its
officers, officials, employees, agents, or volunteers.
B. For any claims related to this project, Franchisee's insurance coverage shall be primary insurance
as respects City, Council members, its officers, officials, employees, agents, and volunteers. Any
insurance or self-insurance maintained by City, Council members, its officers, officials,
employees, agents, or volunteers shall be excess of Franchisee’s insurance and shall not contribute
with it.
C. Any failure to comply with reporting or other provisions of the policies, including breaches of
warranties, shall not affect coverage provided to City, Council members, its officers, officials,
employees, agents, or volunteers.
D. Franchisee's insurance shall apply separately to each insured against whom claim is made or suit is
brought, except with respect to the limits of the insurer's liability.
E. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be
suspended, voided, canceled by either Party, reduced in coverage or in limits except after thirty
(30) days’ prior written notice by certified mail, return receipt required, has been given to City.
F. The Automobile Liability Policy shall be endorsed to delete the Pollution exclusion and add the
Motor Carrier Act endorsement (MCS-90), TL.1005, TL 1007 and/or other endorsements required
by Federal or State authorities.
G. Pollution, if on a Claims Made form:
1. The "Retro Date" must be shown and must be before the date of the contract or the
beginning contract work.
2. Insurance must be maintained, and evidence of insurance must be provided for at least five
(5) years after completion of the contract of work.
3. If coverage is canceled or non-renewed, and not replaced with another claims made policy
form with a "Retro Date" prior to the contract Effective Date, the Franchisee must
purchase "extended reporting" coverage for minimum of two years after completion of
contract.
10.3.4 Acceptability of Insurers.
Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII.
Insurers selected by Franchisee shall be admitted to issue insurance in the State of California.
10.3.5 Verification of Coverage.
Franchisee shall furnish City with certificates of insurance and with original endorsements
affecting coverage required herein, which may be requested by City at any time. The certificates
and endorsements for each insurance policy are to be signed by a Person authorized by that insurer
to bind coverage on its behalf. The certificates and endorsements are to be on forms provided by or
acceptable to City and are to be received and approved by City before performance under this
Agreement commences.
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10.3.6 Subcontractors.
Franchisee shall include all Subcontractors as insurers under its policies or shall furnish
separate certificates and endorsements for each Subcontractor. All coverages for
Subcontractors shall be subject to all of the requirements stated herein.
10.3.7 Occurrence Based Coverage.
All policies secured by Franchisee shall be occurrence and not claims based unless City so
Consents in writing.
10.4 Performance Bond
Simultaneously with the execution of this Agreement, Franchisee shall file with City a bond, payable to
City, securing Franchisee's faithful performance of its obligations under this Agreement. The principal sum
of the bond shall be One and a Half Million Dollars ($1,500,000).
ARTICLE 11.
CITY'S RIGHT TO PERFORM SERVICE
11.1 General
Subject to the other provisions of this Agreement, including without limitation Sections 12.1 and 12.5, in
the event that Franchisee, for any reason whatsoever, fails, refuses or is unable to Collect, Transport,
Process, or market any or all Discarded Materials which it is required by this Agreement to Collect,
Process, and market, at the time and in the manner provided in this Agreement, for a period of more than
seven (7) days, and if, as a result thereof, Discarded Materials should accumulate in the City to such an
extent, in such a manner, or for such a time that the City Manager should find that such accumulation
endangers or menaces the public health, safety, or welfare, then City shall have the right, but not the
obligation, upon twenty-four (24) hour prior written notice to Franchisee during the period of such
emergency as determined by the City Manager, (1) to perform, or cause to be performed, such services
itself with its own or other personnel without liability to Franchisee; and/or (2) to take possession of any
or all of Franchisee's land, equipment, and other property to Collect, Transport, Process, and/or market
any Discarded Materials generated within the City which Franchisee would otherwise be obligated to
Collect, Transport, Process, or market pursuant to this Agreement. In the event that the City takes
possession of the Franchisee's equipment and other property, the City shall be entitled to have another
contractor operate such equipment and property under City direction. Additionally, in the event the City
takes possession of the Franchisee's equipment and other property, the City does not guarantee repair of
existing problems with equipment and facilities.
Notice of Franchisee's failure, refusal, or neglect to Collect, Transport, Process, or market Discarded
Materials may be given orally by telephone to Franchisee at its principal office and shall be effective
immediately. Written confirmation of such oral notification shall be sent to Franchisee within twenty-
four (24) hours of the oral notification.
Franchisee further agrees that in such event:
A. It will take direction from City to affect the transfer of possession of property to City for City's
use.
B. It will, if City so requests, keep in good repair and condition all of such property, provide
all motor vehicles with fuel, oil, and other service, and provide such other service as may
be necessary to maintain said property in operational condition.
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City may immediately engage all or any personnel necessary or useful for the Collection, Transportation,
Processing, and/or marketing of Discarded Materials, including, if City so desires, employees previously
or then employed by Franchisee. Franchisee further agrees, if City so requests, to furnish City the
services of any or all management or office personnel employed by Franchisee whose services are
necessary or useful for operations associated with Collection, Transportation, Diversion, Processing,
marketing, and Disposal of Discarded Materials, and for the billing and collection of fees for these
services.
City agrees that it assumes complete responsibility for the proper and normal use of such equipment and
facilities while in its possession.
If the interruption or discontinuance in service is caused by any of the reasons listed in Section
12.5 (Excuse From Performance), City shall pay to Franchisee the reasonable rental value of the equipment
and facilities, possession of which is taken by City, for the period of City's possession, if any, which
extends beyond the period of time for which Franchisee has rendered bills in advance of service.
Except as otherwise expressly provided in the previous paragraph, City's exercise of its rights under this
Article 11 (1) does not constitute a taking of private property for which compensation must be paid; (2)
will not create any liability on the part of City to Franchisee; and (3) does not exempt Franchisee from the
indemnity provisions of Article 10, Indemnity, Insurance, and Performance Bond, which are meant to
extend to circumstances arising under this Section, provided that Franchisee is not required to indemnify
City against claims and damages arising from the acts or omissions of City officers, employees and agents
in the operation or use of Franchisee’s land, property, equipment, or other assets during the time City has
taken possession of such items.
11.2 Temporary Possession of Franchisee's Property
If the City suffers an interruption or discontinuance of service as described in Section 11.1 (including
interruptions and discontinuance due to events described in Section 12.5, Excuse from Performance), City
may take possession of and use all of Franchisee's property described above until other suitable
arrangements can be made for the provision of Collection of Discarded Materials, which may include the
grant of a Contract to another company. The same notice requirements of Section 11.1 are applicable.
11.3 Billing and Compensation to City During City's Possession
During such time that city is providing Collection services, as above provided, Franchisee shall continue to
bill and collect payment from all users of the above-mentioned services.
Franchisee further agrees that, in such event, it shall reimburse City for any and all costs and expenses
incurred by City in taking over possession of the above-mentioned property for Collection Service in such
manner and to an extent as would otherwise be required of Franchisee under the Terms of this Agreement.
Such reimbursement shall be made from time to time after submission by City to Franchisee of each
statement listing such costs and expenses, but in no event later than five (5) Working Days from and after
each such submission. The City shall have the right, at its sole discretion, to take over billing and payment
collection activities. The City shall then pay any net revenues to the Franchisee, after deducting all
expenses, including City-incurred expenses.
11.4 City's Right to Relinquish Possession
It is further mutually agreed that City may at any time at its discretion relinquish possession of any or all of
the above-mentioned property to Franchisee and thereupon demand that Franchisee resume the Collection
services as provided in this Agreement, whereupon Franchisee shall be bound to resume the same.
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11.5 Duration of City's Possession
City's right pursuant to this Article to retain temporary possession-of Franchisee's facilities and equipment,
and to render Collection services, shall terminate when City determines that such services can be resumed
by Franchisee, or when City no longer reasonably requires such facilities or equipment. In any case, City
has no obligation to maintain possession of Franchisee's property and/or continue its use for any period of
time and may at any time, in its sole discretion, relinquish possession to Franchisee.
ARTICLE 12.
DEFAULT, REMEDIES, AND LIQUIDATED DAMAGES
12.1 Events of Default
All provisions of this Agreement to be performed by Franchisee are considered material. Each of the
following shall constitute an event of default.
A. Fraud or Deceit. If Franchisee practices, or attempts to practice, any fraud or deceit upon city.
B. Insolvency or Bankruptcy. If Franchisee becomes insolvent, unable, or unwilling to pay its debts
when due, or upon listing of an order for relief in favor of Franchisee in a bankruptcy proceeding.
The Franchisee is also in default if there is an assignment of this contract for the benefit of its
creditors.
C. Failure to Maintain Coverage. If Franchisee fails to provide or maintain in full force and effect
the Workers' Compensation, liability, indemnification coverage or any insurance coverage or bond
required under this Agreement.
D. Violations of Regulation. If Franchisee facilities fall out of full regulatory compliance or if
Franchisee violates any orders or filings of any regulatory body having jurisdiction over
Franchisee relative to this Agreement, provided that Franchisee may contest any such orders or
filings by appropriate proceedings conducted in good faith, in which case no breach of the
Agreement shall be deemed to have occurred.
E. Failure to Perform. If Franchisee ceases to provide Collection services as required under this
Agreement for a period of two (2) days or more, for any reason within the control of Franchisee.
F. Failure to Pay/Report. If Franchisee fails to make any timely payments, including Liquidated
Damages and penalties, required under this Agreement and/or fails to provide City with required
information, reports, and/or records in a timely manner as provided for in the Agreement.
G. Acts or Omissions. Any other act or omission by Franchisee which violates the terms, conditions,
or requirements of this Agreement, the California Integrated Waste Management Act of 1989, as it
may be amended from time to time, or any order, directive, rule, or regulation issued thereunder
and which is not corrected or remedied within the time set in the written notice the violation or, if
Franchisee cannot reasonably correct or remedy the breach within the time set forth in such notice,
if Franchisee should fail to commence to correct or remedy such violation within the time set forth
in such notice and diligently effect such correction or remedy thereafter.
H. False or Misleading Statements. Any representation or disclosure made to City by Franchisee in
connection with or as an inducement to entering into this Agreement, or any future amendment to
this Agreement, which proves to be false or misleading in any material respect as of the time such
representation or disclosure is made, whether or not any such representation or disclosure appears
as part of this Agreement.
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I. Attachment. There is a seizure of attachment of, or levy on, the operating equipment of
Franchisee, including without limits its equipment, maintenance, or office facilities, or any part
thereof.
J. Suspension or Termination of Service. There is any termination or suspension of the transaction
of business by Franchisee, including without limit, due to labor unrest including strike, work
stoppage or slowdown, sickout, picketing, or other concerted job action lasting more than two (2)
days.
Upon default by the Franchisee, the City Manager shall provide written notice to Franchisee of the
violation. The City Manager shall include in the notice, a demand that the Franchisee correct the violation
within ten (10) days following the delivery of said notice. If the violation is not corrected within the ten
(10) days, the City shall have the right to terminate the Agreement per the provisions provided in Section
12.2. For purposes of this Agreement and any notice required thereunder, the term "days" shall mean
calendar days.
12.2 Right to Terminate Upon Default
Upon a default by Franchisee, City shall have the right to terminate this Agreement upon ten
(10) days’ notice if the public health or safety is threatened, or otherwise upon thirty (30) days’ notice, but
without the need for any hearing, suit, or legal action. This right of termination is in addition to any other
rights of City upon a failure of Franchisee to perform its obligations under this Agreement.
12.3 Possession of Property and Billing Records and Systems Upon Termination
In the event of termination for default, the City shall have the right, subject to the obligations contained
in Article 12 hereof, to take possession of any and all of Franchisee's land, equipment, and other
property used or useful in the Collection, Diversion, and/or Disposal of Discarded Materials and to
conduct all activities concerning billing and collection of fees for these services and to use such
property. The City shall have the right to retain the possession of such property until other suitable
arrangements can be made for the provision of Collection of Discarded Materials , which may
include the award of an agreement or franchise to another waste hauling company. If the City
retains possession thereof after the period of time for which Franchisee has already been paid by
means of bills issued in advance of providing service for the class of service involved, Franchisee
shall be entitled to the reasonable rental value of such property (which shall be offset against any
damages due the City for the Franchisees default).
Franchisee shall provide the City immediate access to all of its business records and billing system
related to its billing of accounts for services and shall take direction from the City regarding the
billing of Customers during the period between the City's termination of the Agreement for default
until other suitable arrangements can be made for the billing of Collection of Discarded Materials.
The provisions of this Section 12.3 shall survive the termination of this Agreement.
12.4 City's Remedies Cumulative; Specific Performance
The City's right to terminate the Agreement under Section 12.1 and to take possession of the
Franchisee's properties under Section 12.3 are not exclusive, and City's termination of this Agreement
shall not constitute an election of remedies. Instead, they shall be in addition to any and all other legal and
equitable rights and remedies which City may have.
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By virtue of the nature of this Agreement, the urgency of timely, continuous, and high-quality service, the
lead time required to effect alternative service, and the rights granted by City to Franchisee, the remedy of
damages for a breach hereof by Franchisee is inadequate and City shall be entitled to injunctive relief
and/or specific performance if it so desires.
12.5 Excuse from Performance
The Parties shall be excused from performing their respective obligations hereunder in the event they are
prevented from so performing by reason of floods, earthquakes, other "acts of God", war, civil
insurrection, riots, acts of any government (including judicial action), and other similar catastrophic
events which are beyond the control of and not the fault of the Party claiming excuse from performance
hereunder. Labor unrest, including but not limited to strike, work stoppage or slowdown, sick-out,
picketing, or other concerted job action conducted by Franchisee's employees or directed at Franchisee, or
its selected facilities is not an excuse from performance and Franchisee shall be obligated to continue to
provide service notwithstanding the occurrence of any or all such events.
The Party claiming excuse from performance shall, within two (2) days after such Party has notice of
such cause, give the other Party notice of the facts constituting such cause and asserting its claim to
excuse under this Section.
The interruption or discontinuance of Franchisee's services caused by one or more of the events excused
shall not constitute a default by Franchisee under this Agreement. Notwithstanding the foregoing,
however, if Franchisee is excused from performing its obligations hereunder for any of the causes listed
in this Section for a period of seven (7) days or more, City shall have the right to review the
circumstances under which the excuse from performance was granted. After such review, if the City
reasonably determines the excuse from service is no longer valid, the City shall notify the Franchisee in
writing to resume service within two (2) days from the receipt of such notification. If the Franchisee fails
to resume service within the two (2) days, the City shall have the right to terminate this Agreement by
giving ten (10) days’ notice, in which case the provisions relative to taking possession of Franchisee's
land, equipment and other property and engaging Franchisee's personnel in Article 11, City's Right to
Perform Service, and this Article 12 shall apply.
12.6 Liquidated Damages
12.6.1. General.
City finds, and Franchisee agrees, that as of the time of the execution of this Agreement, it is impractical, if
not impossible, to reasonably ascertain the extent of damages which shall be incurred by City as a result of
a breach by Franchisee of its obligations under this Agreement. The factors relating to the impracticability
of ascertaining damages include, but are not limited to, the fact that:
A. Substantial damage results to members of the public who are denied services or denied quality or
reliable service;
B. Such breaches cause inconvenience, anxiety, frustration, and deprivation of the benefits of the
Agreement to individual members of the general public to whom the City provides services
pursuant to this Agreement, in subjective ways and in varying degrees of intensity which are
incapable of measurement in precise monetary terms;
C. That services might be available at substantially lower costs than alternative services and the
monetary loss resulting from denial of services or denial of quality or reliable services is
impossible to calculate in precise monetary terms; and
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D. The termination of this Agreement for such breaches, and other remedies are, at best, a means of
future correction and not remedies which make the City whole for past breaches. However,
substantial breaches may result in the termination of this Agreement as described in Section 12.1.
12.6.2 Service Performance Standards and Liquidated Damages for Failure to Meet Standards.
The Parties further acknowledge that consistent, reliable Collection of Discarded Materials is of utmost
importance to City and that City has considered and relied on Franchisee’s representations as to its quality
of service commitment in awarding the Agreement to it. The Parties further recognize that if Franchisee
fails to achieve the performance standards defined in this Section or fails to submit required documents in
a timely manner, City and its residents will suffer damages, and that it is and will be impractical and
extremely difficult to ascertain and determine the exact number of damages which City will suffer.
Therefore, without prejudice to City’s right to treat such nonperformance as an event of default under this
Article 12, the Parties agree that the following Liquidated Damage amounts represent a reasonable
estimate of the number of such damages considering all of the circumstances existing on the date of this
Agreement, including the relationship of the sums to the range of harm to City that reasonably could be
anticipated and the anticipation that proof of actual damages would be costly or inconvenient.
The City may monitor the Franchisee’s performance under the Agreement in each of the performance areas
listed below. In the event that the City determines that Franchisee has failed to meet the performance
standard established for any of the areas identified below, the City may assess Liquidated Damages
pursuant to this Section of the Agreement.
Franchisee agrees to pay (as Liquidated Damages and not as a penalty) the amounts set forth below:
Event of Non-Performance Liquidated Damage
1 For each occurrence of failing to provide Customers
with Solid Waste, Recyclable Materials, or Organic
Materials Containers as part of the three-Container
system required by and compliant with the City’s
Municipal Code (excluding Generators and
Customers that demonstrate compliance with
Recycling and Organic Materials Self-Hauling
requirements pursuant to the Municipal Code and 14
CCR Division 7, Article 12, Article 7 and/or pursuant
to Section 5.15 [Generator Waivers] of this
agreement) unless Customer refuses to accept the
Solid Waste, Recyclables Materials, or Organic
Materials Container from Franchisee, and Franchisee
has provided this information to the City or its
designee for further review within two (2) Business
Days of Customer refusal:
$150 / Generator or Customer /
occurrence / Day until compliance
achieved
2 For each failure over five (5) annually to commence
service to a new Customer account within seven (7)
days after order:
$150
3 For each failure over ten (10) annually to Collect
Discarded Materials, which have been properly set
out for Collection, from an established Customer
account on the scheduled Collection day:
$150
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Event of Non-Performance Liquidated Damage
4 For each failure to Collect Discarded Materials which
have been properly set out for Collection, from the
same Customer on two (2) consecutive scheduled
pickup days:
$150
5 For each occurrence over five (5) annually of damage
to private property:
$250
6 For each occurrence of discourteous behavior:
$250
7 For each failure over ten (10) annually to clean up
Discarded Materials spilled by Franchisee from
Containers:
$150
8 For each failure to prepare for or properly conduct
semiannual clean-ups, including advertising and
press releases
$250
9 For each occurrence over ten (10) annually of failure
to properly return Containers to avoid pedestrian or
vehicular traffic impediments or to place cans upright
with lid secured
$150
10 For each occurrence of excessive noise above the
limits specified in this Agreement
$250
11 For each occurrence of Franchisee’s failure to
comply with Container labeling and color
requirements pursuant to Section 6.1.3 of this
Agreement:
$150 / Container / occurrence
12 Failure of Franchisee to follow Recyclable Materials
and Organic Materials Contamination Procedure:
$100 / occurrence
13 For each individual occurrence of delivering
Discarded Materials to a Facility other than a
Designated Disposal Facility(ies) for each Discarded
Material type under this Agreement:
$150 / Ton / occurrence
14 For each failure to respond to a Customer
Complaint within twenty four (24) working hours
$100
15 For each failure to process Customer Complaints
to City
$500
16 For each failure to carry out responsibilities for
establishing service
$500
17 Failure to submit to City all reports by the deadlines
required under the provisions of this Agreement:
$100 / day
18 Failure to include all parts of quarterly and annual
reports required under the provisions of this
Agreement:
$100 / day
19 For each failure to provide access to records in
compliance with and in the timeframe specified in
this Agreement:
$120 / day
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Event of Non-Performance Liquidated Damage
20 For each failure to perform any individual education
and outreach activity as required and in the
timeframe specified by this Agreement:
$180 / occurrence
21 For each failure of Franchisee Collection personnel
to issue contamination notices and maintain
documentation of issuance as required by Section 6.2
of this Agreement:
$100 / Franchisee Route / day
22 For each fee that is issued to a Generator without
prior authorization from City under this Agreement:
$100 / Customer / Day
Liquidated Damages may be assessed at the discretion of the Utilities Director, not more than quarterly.
The Utilities Director, or their designee, will issue a written notice to the Franchisee with the Liquidated
Damages assessed and the basis for each assessment will only be assessed after Franchisee has been given
the opportunity but failed to rectify the damages, as described in this Agreement (e.g., twenty-four (24)
working hours to respond to a Complaint). City may determine the occurrence of events giving rise to
Liquidated Damages through the observation of its own employees or representative or investigation of
Customer Complaints.
Franchisee may review (and make copies at its own expense) all information in the possession of City
relating to incident(s)/non-performance. Franchisee may, within ten (10) days after receiving the notice,
request a meeting with City. If a meeting is requested, it shall be held by the City Manager or their
designee. Franchisee may present evidence in writing and through testimony of its employees and others
relevant to the incident(s)/non-performance. The City Manager or designee will provide Franchisee with a
written explanation of their determination on each incident(s)/non-performance prior to authorizing the
assessment of Liquidated Damages. The decision of the City Manager or designee shall be final.
In the event Franchisee does not submit a written request for a meeting within ten (10) calendar days
of the date of the Notice of Assessment, the City Manager’s determination will be final.
12.7 Notice, Hearing, and Appeal
Should the Franchisee contend that the City is in breach of the Agreement, Franchisee shall file a
written request with the Utilities Director for a consultation regarding the allegations. Such
consultation shall be held within thirty days of the receipt o f Franchisee's request. Franchisee
shall present its position and all relevant facts to the Utilities Director. Franchisee shall be
notified of the Utilities Director judgment within ten (10) days of the consultation.
If the Franchisee is not in agreement with the ruling issued by the Utilities Director, it shall have
the right to appeal the decision to the City Manager. This appeal shall be made in writing to the
City no later than fourteen days after the notification is mailed by Utilities Director of the
judgment. The City Manager shall notify Franchisee of the time and date of the review of
allegation within thirty days of the request. Franchisee shall present its position and all relevant
facts to the City Manager. Franchisee shall be notified in writi ng within fourteen days of the City
Manager's ruling. The decision of the City Manager can be appealed to City Council per
Municipal Code Section 1.20.020.
12.8 Financial Material Errors, Omissions, or Irregularities
The City may review, test, and audit the books and records of the Franchisee for the purpose of
determining whether the Franchisee is complying with the terms of the Agreement. In the event that
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material errors or omissions or irregularities are identified, then the cost associated with the audit, test, or
review shall be paid by the Franchisee to the City. In the case of financial errors, materiality shall be
deemed to be two percent (2%) or greater of the Gross Revenues of the Franchisee from activities
performed under this agreement. Recovery of any over payment will be negotiated on a case-by-case basis,
either immediately or through the next rate-setting evaluation.
ARTICLE 13.
ASSIGNMENT
13.1 Assignment
Except as provided in Article 11, City's Right to Perform Service, neither Party shall assign its rights nor
delegate or otherwise transfer its obligations under this Agreement to any other person without the prior
written consent of the other Party. Any such assignment made without the consent of the other Party
shall be void and the attempted assignment shall constitute a material breach of this Agreement. The
City may, however, assign its rights and delegate its obligations under this Agreement to a joint powers
authority without the prior written consent of Franchisee.
For purposes of this section, "assignment" shall include, but not be limited to
A. A sale, exchange, or other transfer to a third party of at least fifty -one percent (51%) of
Franchisee's assets dedicated to service under this Agreement;
B. A sale, exchange, or other transfer to a third party, including other shareholders, of outstanding
common stock of Franchisee which may result in a change of control of Franchisee;
C. Any dissolution, reorganization, consolidation, merger, recapitalization, stock issuance or re-issuance,
voting trust, pooling agreement, escrow arrangement, liquidation , or other transaction which
Franchisee or any of its shareholders is a party which results in a change of ownership or control of
Franchisee;
D. Any assignment by operation of law, including insolvency or bankruptcy, assignment for the benefit of
creditors, writ of attachment for an execution being levied against this Agreement, appointment of a
receiver taking possession of Franchisee's property, or transfer occurring in the prob ate proceeding;
and
E. Any combination of the foregoing (whether or not in related or contemporaneous transactions), which
has the effect of any such transfer or change of ownership, or change of control of Franchisee.
Franchisee acknowledges that this Agreement involves rendering a vital service to City residents and
businesses, and that City has selected Franchisee to perform the services specified herein based on:
A. Franchisee's experience, skill, and reputation for conducting its Solid Waste management operations in
a safe, effective, and responsible fashion, at all times in keeping with applicable Environmental Laws,
regulations and best waste management practices, and
B. Franchisee's financial resources to maintain the required equipment and to support its indemnity
obligations to City under this Agreement. City has relied on each of these factors, among others, in
choosing Franchisee to perform the services to be rendered by Franchisee under this Agreement.
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If Franchisee requests City’s consideration of and consent to an assignment, City may deny or approve such
request in its complete discretion. The City is concerned about the possibility that assignment could result in
significant rate increases, as well as a change in the quality of service. Accordingly, the following standards
have been set to ensure that assignment will result in continued quality service. In addition, the City reserves
the right to solicit competitive bids for these services if the assignment resu lts in a request by the assignee
for rate increases that are higher than the inflationary index and do not reflect value changes in service
standards. At a minimum, no request by Franchisee for consent to an assignment need be considered by
City unless and until Franchisee has met the following requirements:
A. Franchisee shall undertake to pay City its reasonable expenses for attorney's fees and investigate the
suitability of any proposed assignee, and to review and finalize any documentation required as a
condition for approving any such assignment.
B. Franchisee shall furnish City with audited financial statements of the proposed assignee's operations
for the immediately preceding three (3) operating years .
C. Franchisee shall furnish City with satisfactory pr oof:
1. That the proposed assignee has at least ten (10) years of Solid Waste
management experience on a scale equal to or exceeding the scale of operations
conducted by Franchisee under this Agreement;
2. That in the last five (5) years, the proposed assignee or affiliates has not suffered any
significant citations or other censure from any Federal, State, or local agency having
jurisdictions over its waste management operations due to any significant failure to comply
with Federal, State, or local Environmental Laws and that the assignee has provided City
with a complete list of such citations and censures;
3. That the proposed assignee has at all times conducted its operations in an
environmentally safe and c onscientious fashion;
4. That the proposed assignee conducts its Solid Waste management practices in accordance
with sound waste management practices in full compliance with all Federal, State, or
local laws regulating the Collection and Disposal of Solid Waste, including Hazardous
Wastes; and
5. Of any other information required by City to ensure the proposed assignee can fulfill the
terms of this Agreement in a timely, safe, and effective manner.
Under no circumstances shall the City be obliged to consider any proposed assignment by Franchisee,
if Franchisee is in default at any time during the period of consideration.
ARTICLE 14.
OTHER AGREEMENTS OF THE PARTIES
14.1 Relationship of Parties
The parties intend that Franchisee shall perform the services required by this Agreement as an independent
contractor engaged by City and not as an officer or employee of City nor as a partner of or joint venture
with City. No employee or agent or Franchisee shall be or shall be deemed to be an employee or agent of
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City. Except as expressly provided herein, Franchisee shall have the exclusive control over the manner and
means of conducting the Collection of Discarded Materials performed under this Agreement, and all
Persons performing such services. Franchisee shall be solely responsible for the acts and omissions of its
officers, employees, Subcontractors, and agents. Neither Franchisee nor its officers, employees,
Subcontractors, and agents shall obtain any rights to retirement benefits, workers compensation benefits, or
any other benefits which accrue to City employees by virtue of their employment with City.
14.2 Governing Law
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State
of California.
14.3 Jurisdiction
Any lawsuits between the parties arising out of this Agreement shall be brought and concluded in the
courts of the State of California, which shall have exclusive jurisdiction over such lawsuits. With respect to
venue, the parties agree that this Agreement is made in and will be performed in San Luis Obispo County.
14.4 Subcontracting
Except as approved in writing by the City, Franchisee shall not enter into an agreement to have another
Person perform Franchisee’s duties of this Agreement. Franchisee shall undertake to pay City its
reasonable expenses for attorney’s fees and investigation costs necessary to investigate the suitability of
any proposed Subcontractor, and to review and finalize any documentation required as a condition for
approving any such subcontracting agreement.
14.5 Interests of Franchisee
Franchisee covenants that it presently has no interest, and shall not acquire any interest, direct or indirect
or otherwise, which would conflict in any manner or degree with the performance of the work hereunder.
The Franchisee further covenants that, in the performance of this work, no Subcontractor of any person
having such an interest shall be employed. The Franchisee certifies that no one who has or will have any
financial interest in performing this work is an officer or employee of the City.
14.6 Binding on Successors
The provisions of this Agreement shall inure to the benefit to and be binding on the successors and
permitted assigns of the parties.
14.7 Transition to Next Franchise
At the point of transition to a new Franchise, Franchisee will cooperate with City and subsequent
franchisee(s) to assist in an orderly transition which will include Franchisee providing route lists and
billing information. Franchisee will not be obliged to sell Collection vehicles or Containers to the next
franchisee. Franchisee, at its option, may enter into negotiations with the next franchisee to sell (in part or
all) Collection vehicles and/or Containers.
14.8 Parties in Interest
Nothing in the Agreement, whether express or implied, is intended to confer any rights on any persons
other than the parties to it and their representatives, successors and permitted assigns.
14.9 Waiver
The waiver by either Party of any breach or violation of any provision(s) of this Agreement shall not be
deemed to be a waiver of any breach or violation of any other provision nor of any subsequent breach or
violation of the same or any other provision. The subsequent acceptance by either Party of any monies
which become due hereunder shall not be deemed to be a waiver of any pre-existing or concurrent breach
or violation by the other Party of any provision of this Agreement.
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14.10. Condemnation
The City fully reserves whatever rights it may have to acquire Franchisee's property utilized in the
performance of this Agreement, by negotiated purchase or failing that.1 through the exercise of the right
of eminent domain.
14.11. City Free to Negotiate with Third Parties
The City may investigate, during the Term and thereafter, all options for the Collection, Transportation,
Diversion, Processing, marketing, and Disposal of Solid Waste after the expiration of the Term. Without
limiting the foregoing, the City may solicit proposals from Franchisee and from third parties for the
provision of Collection services, Disposal services, Recycling services, Solid Waste Collection, and
Composting, and any combination thereof, and may negotiate and execute agreements for such services
which will take effect upon the expiration or earlier termination under Section 11.1 (City’s Right to
Perform Service: General).
14.12. Immigration Act of 1986
The Franchisee warrants on behalf of itself and all Subcontractors engaged for the performance of this
work that only persons authorized to work in the United States pursuant to the Immigration Reform
and Control Act of 1986 and other applicable laws shall be employed in the performance of this
work.
14.13. Non-Discrimination
In the performance of this work, the Franchisee agrees that it will not engage in, nor permit such
Subcontractors as it may employ, to engage in discrimination in employment of persons because of
age, race, color, sex, national origin o r ancestry, sexual orientation, physical disability, mental
condition, or religion of such persons.
14.14. Public and Employee Safety
Whenever the Franchisee's operations create a condition hazardous to the public or City employees, it
shall, at its expense and without cost to the City, furnish, erect , and maintain such fences,
temporary railings, barricades, lights, signs, and other devices, and take such other protective
measures as are necessary to prevent accidents or damage or injury to the public and employ ees.
14.15. Recycled Products
The City encourages the Franchisee's use of recycled products.
14.16 Notice
All notices, demands, requests, proposals, approvals, consents, and other communications which this
Agreement requires, authorizes, or contemplates, except as provided in Section 12.1 (Events of Default),
shall be in writing and shall either be personally delivered to a representative of the parties at the address
below, or be deposited in the United States mail, first class postage prepaid, addressed as follows:
If to City: Utilities Director
City of San Luis Obispo
879 Morro Street
San Luis Obispo, CA 93401
If to Franchisee: District Manager
San Luis Garbage Company
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4388 Old Santa Fe Springs Road
San Luis Obispo, CA 93401
The address to which communications may be delivered may be changed from time to time by a notice
given in accordance with this Section.
14.17 Representatives of the Parties
References in this Agreement to “City” shall mean the City Council, and all actions to be taken by City
shall be taken by the City Council except as provided below. The City Council may delegate, in writing,
authority to the City Manager, the Director of Utilities, and/or to other City officials, and may permit such
officials, in turn, to delegate in writing some or all of such authority to subordinate officers. Franchisee
may rely upon actions taken by such delegates if they are within the scope of the authority properly
delegated to them.
Franchisee shall, by the Effective Date, designate in writing a responsible officer who shall serve as the
representative of Franchisee in all matters related to the Agreement and shall inform City in writing of
such designation and of any limitations upon their authority to bind Franchisee. City may rely upon action
taken by such designated representative as actions of Franchisee unless they are outside the scope of the
authority delegated to them by Franchisee as communicated to City.
14.18 Entire Agreement
This Agreement, including any exhibits, represents the full and entire Agreement between the parties with
respect to the matters covered herein.
14.19 Section Headings
The article headings and section headings in this Agreement are for convenience of reference only and are
not intended to be used in the construction of this Agreement nor to alter or affect any of its provisions.
14.20 References to Laws
All references in this Agreement to laws shall be understood to include such laws as they may be
subsequently amended or recodified, unless otherwise specifically provided. This Agreement supersedes
any and all Agreements for Solid Waste, Recyclable Materials, and/or Organic Materials Collection,
Processing, and/or marketing heretofore entered into by the parties and the City.
14.21 Interpretation
This Agreement, including any exhibits attached hereto, shall be interpreted and construed reasonably and
neither for nor against either Party, regardless of the degree to which either Party participated in its
drafting.
14.22 Agreement
This Agreement may not be modified or amended in any respect except by a writing signed by the parties.
14.23 Severability
If any non-material provision of this Agreement is for any reason deemed to be inval id and unenforceable,
the invalidity or unenforceability of such provision shall not affect any of the remaining provisions of this
Agreement, which shall be enforced as if such invalid or unenforceable provision had not been contained
herein.
14.24 Counterparts
This Agreement may be executed in counterparts, each of which hall be considered an original.
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14.25 Use of "Will"
The use of the word "will" shall be construed as interchangeable with the word "shall".
14.26 Investigation
Franchisee has relied on its own investigations in deciding to enter into this Agreement and has not relied
upon any representations of the City, its Council members, officers, directors, employees, or agents.
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IN WITNESS WHEREOF, City and Franchisee have executed this Agreement as of the day and year first
above written.
The City of San Luis Obispo San Luis Garbage Company
“City” “Franchisee”
By: ___________________________ By: _______________________________
Whitney McDonald, City Manager Name:
Title:
ATTEST:
By: ___________________________
Teresa Purrington, City Clerk
APPROVED TO FORM:
By: ___________________________
J. Christine Dietrick, City Attorney
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Exhibit A
Annual Rate Adjustment Methodology
Section 1 Objectives
This Exhibit details the process by which Maximum Service Rates are adjusted annually to provide fair and adequate
compensation to Franchisee for collection of solid waste and other services provided to Customers and the City per
the Agreement. The annual rate adjustment methodology described herein fulfills key objectives established by the
City and Franchisee, including rate stability, predictability, fairness, transparency, ease of administration, and cost -
effectiveness.
Section 2 Index-Based Rate Adjustments
Except in the case of a Cost-Based Rate Adjustment (see Section 3, below) Franchisee’s Maximum Service Rates
shall be adjusted via the Index-Based Rate Adjustment methodology described in this section. The Index-Based Rate
Adjustment methodology shall be used to adjust Maximum Service Rates effective each January 1 of 2026, 2027,
2028, and 2029 and any subsequent year during which a Cost-Based Rate Adjustment is not allowed or not requested
by the City or the Franchisee.
In years during which Maximum Services Rates are to be adjusted pursuant to this Index -Based Rate Adjustment
methodology, Franchisee shall submit a report to the City on or before September 1 detailing its calculations of Index -
Based Rate Adjustment. City shall have the right to review Franchisee’s calculations of Index-Based Rate Adjustment
for mathematical accuracy and adherence to the terms and conditions of this Exhibit. City shall prepare written
findings regarding adjustments to the Franchisee’s calculations of Index-Based Rate Adjustment that are required for
mathematical accuracy and adherence to the terms and conditions of this Exhibit on or before October 30.
Index-Based Rate Adjustments shall be prepared and calculated in accordance with the steps described below. All
Index-Based percentages shall be rounded to the nearest hundredth of a percent, and all cost calculations shall be
rounded to the nearest dollar.
A. Calculation of CPI Adjustment to Franchisee’s Collection Services and Post-Collection Services
Franchisee’s prior year cost projections for Collection Services and Post-Collection Services shall be
adjusted in accordance with the Consumer Price Index (CPI) for Garbage and Trash Collection, U.S. City
average, Bureau of Labor Statistics Series I.D. CUUR0000SEHG02.
The CPI Adjustment shall be equal to the percentage change in the average 12-month CPI value ending June
of the current year and compared to the average 12-month CPI value ending June of the prior year.
For example, the CPI used to set the 2026 rates shall be calculated as follows:
(Average CPI from July 1, 2024 to June 30, 2025 ) − (Average CPI from July 1, 2023 to June 30, 2024)
Average CPI from July 1, 2023 to June 30, 2024
If the percentage change is below 2%, the applicable CPI Adjustment shall be 2%, with the difference in the
amount below 2% being carried forward as a credit on the rates and applied to the subsequent year. If the
percentage change is above 5%, the applicable CPI Adjustment shall be 5%, with the difference in the amount
above 5% being carried forward and applied to the rates in subsequent years. Franchisee’s prior year cost
projections for Collection Services and Post-Collection Services shall be escalated by the resultant CPI
Adjustment, rounded to the nearest dollar.
Franchisee’s 2025 cost projection for Collection Services is $8,552,555 and Franchisee’s 2025 cost projection
for Post-Collection Services is $4,602,096. For 2026, by way of example, if the percentage change in the
average 12-month CPI value ending June 2026 compared to the average 12-month CPI value ending June of
2025 is 5%, then Franchisee’s 2026 cost projection for Collection Services shall be $8,980,183 and
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Franchisee’s 2026 cost projection for Post-Collection Services shall be $4,832,201. Likewise, if the
percentage change in the average 12-month CPI value ending June 2026 compared to the average 12-month
CPI value ending June of 2025 is 2%, then Franchisee’s 2026 cost projection for Collection Services shall be
$8,723,606 and Franchisee’s 2026 cost projection for Post-Collection Services shall be $4,694,138.
Example Calculation for application of amounts above cap on CPI increases applied to Collection Services
component of CPI Adjustment (noting that cap on CPI increases also applies to Post-Collection Services):
Year 1
Collection Services: $8,552,555
12-month average CPI index increase: 6.00%
$8,552,555 x (1+5.00%*) = $8,980,183
*5% cap on CPI increases. 1% difference carried over to next year
Year 2
Collection Services: $8,980,183
12-month average CPI index increase: 6.00%
$8,980,183 x (1+5.0%*) = $9,429,192
*5% cap on CPI increases. 1% difference carried over to next year
Year 3
Collection Services: $9,429,192
12-month average CPI index increase: 3.00%
$9,429,192 x (1+5.0%*) = $9,900,651
*3.00% + 1.00% carried forward from Year 1 + 1.00% carried forward from Year 2
The above is also demonstrated in Table 1, below:
Table 1 – Example of CPI Cap and Carryforward
2025 2026 2027 2028
Collection Services $8,552,555 $8,980,183 $9,429,192 $9,900,651
12-Month Average CPI 6.00% 6.00% 3.00%
CPI Adjustment (5%
Cap) 5.00% 5.00% 5.00%
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B. Calculation of Profit Allowance
The Index-Based Rate Adjustment methodology includes a component for Franchisee’s fair and reasonable
Profit Allowance. Profit Allowance is used for the purposes of calculating Index-Based Rate Adjustments and
does not constitute a guarantee of profit to the Franchisee.
Franchisee’s Profit Allowance for the purposes of Index-Based Rate Adjustments is calculated as a function
of Franchisee’s current year cost projection for Collection Services. For 2025, Franchisee’s Profit Allowance
is 9% of the cost projection for Collection Services and in 2026 and thereafter, Franchisee’s Profit Allowance
shall be 10% of the cost projection for Collection Services.
Franchisee’s 2025 cost projection for Collection Services is $8,552,555; therefore, Franchisee’s Profit
Allowance for 2025 is $8,552,555 times 9%, rounded to the nearest dollar, equaling $769,730. Using the first
example from Section 2.A above, if Franchisee’s 2026 cost projection is $8,980,183 (corresponding to a 5%
CPI Adjustment), Franchisee’s 2026 Profit Allowance for the purposes of calculating Index-Based Rate
Adjustment shall be $898,018. Likewise, and using the second example from Section 2.A above, if
Franchisee’s 2026 cost projection is $8,723,606 (corresponding to a 2% CPI Adjustment), Franchisee’s 2026
Profit Allowance for the purposes of calculating Index-Based Rate Adjustment shall be $872,361 .
C. Calculation of CPI Adjustment to AB 939 Fee
Franchisee pays the City an AB 939 Fee which in 2025 is $368,041. The AB 939 Fee shall be adjusted
annually in accordance with the same CPI Adjustment calculation described in Section 2.A above, or as
otherwise directed by the City.
Using the examples from Section 2.A, for 2026, if the percentage change in the average 12-month CPI value
ending June 2026 compared to the average 12-month CPI value ending June of 2025 is 5%, then the 2026 AB
939 Fee shall be $386,443. Likewise, if the percentage change in the average 12-month CPI value ending
June 2026 compared to the average 12-month CPI value ending June of 2025 is 2%, then the 2026 AB 939
Fee shall be $375,402. Alternatively, the City may direct Franchisee regarding the amount of AB 939 Fee
payable to the City for the coming rate year (and shall provide that amount to the Franchisee prior to
September 1 in an Index-Based Rate Adjustment year.
D. Calculation of Franchise Fee
Franchisee pays the City a Franchise Fee of 10% of Franchisee’s gross revenues received from Customers in
the City. For the purposes of Index-Based Rate Adjustments, the Franchise Fee is calculated as 10% of
Franchisee’s annual Total Cost Projection, per Section 2.F below, rounded to the nearest dollar. For 2025,
Franchisee’s annual Total Cost Projection is $15,880,469 , yielding Franchise Fee component of $1,588,047 .
Actual Franchise Fee payments made by Franchisee to City shall be calculated as a function of Franchisee’s
gross revenues received from Customers in the City and may differ from the amount used in calculating
adjustments to the Maximum Service Rates.
E. Calculation of Annual Revenue Reconciliation
Starting with the 2027 Index-Based Rate Adjustment, the difference between the Franchisee’s annual Total
Cost Projection and the Franchisee’s actual annual total billings to Customers in the City shall be included in
the annual Index-Based Rate Adjustment as an Annual Revenue Reconciliation.
For example, for the 2027 Index-Based Rate Adjustment, the difference between Franchisee’s 2025 Total
Cost Projection and Franchisee’s total 2025 billings to Customers in the City shall be included in the 2027
annual Total Cost Projection. By way of example, if Franchisee’s 2025 total billings to Customers in the City
is a shortfall of 1% (-$158,805) then $158,805 will be added to Franchisee’s Total Cost Projection for 2027.
Conversely, if Franchisee’s 2025 total billings to Customers in the City is a surplus of 1% (+$158,805) then
$158,805 will be subtracted from Franchisee’s Total Cost Projection for 2027.
Table 2, on the following page, provides an example of the case in which there is a 1% shortfall of billed
revenues in 2025, which is added to the Total Cost Projection in 2027. The table shows a continuation of 1%
shortfalls being added in 2028 and 2029 for example purposes only, and assumes the CPI adjustment to
Collection Services, Post-Collection Services, and AB 939 Fee at the 5% cap. Table 2a on the following page,
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provides an example of the case in which there is a 1% surplus of billed revenues in 2025, which is added to
the Total Cost Projection in 2027. The table shows a continuation of 1% surpluses being added in 2028 and
2029 for example purposes only, and assumes the CPI adjustment to Collection Services, Post-Collection
Services, and AB 939 Fee at the 5% cap.
Table 2 – Example Revenue Reconciliation of -1% Annually
2025 2026 2027 2028 2029
Collection Services $8,552,555 $8,980,183 $9,429,192 $9,900,651 $10,395,684
Profit Allowance 769,730 898,018 942,919 990,065 1,039,568
Post-Collection Services 4,602,096 4,832,201 5,073,811 5,327,501 5,593,876
AB 939 Fee 368,041 386,443 405,765 426,053 447,356
Franchise Fee 1,588,047 1,677,427 1,778,944 1,868,002 1,961,598
Revenue Reconciliation Example N/A N/A 158,805 167,743 177,894
Total Cost Projection 15,880,469 16,774,272 17,789,435 18,680,016 19,615,977
Indexed Rate Adjustment 5.63% 6.05% 5.01% 5.01%
Table 2a – Example Revenue Reconciliation of +1% Annually
2025 2026 2027 2028 2029
Collection Services $8,552,555 $8,980,183 $9,429,192 $9,900,651 $10,395,684
Profit Allowance 769,730 898,018 942,919 990,065 1,039,568
Post-Collection Services 4,602,096 4,832,201 5,073,811 5,327,501 5,593,876
AB 939 Fee 368,041 386,443 405,765 426,053 447,356
Franchise Fee 1,588,047 1,677,427 1,743,654 1,830,725 1,922,458
Revenue Reconciliation
Example N/A N/A -158,805 -167,743 -174,365
Total Cost Projection 15,880,469 16,774,272 17,436,536 18,307,254 19,224,577
Indexed Rate Adjustment 5.63% 3.95% 4.99% 5.01%
Significant, unexpected increases or decreases in revenue may be included or excluded from the Annual
Revenue Reconciliation if deemed reasonable by the parties. As a one-time exercise, the Franchisee may
request to review the entirety of its revenue earnings with the City as a check-in to evaluate alignment with its
revenue forecast and conditions outlined in this exhibit. By no later than September 30, 2025, the Franchisee
shall provide the City with documentation of actual to-date receipts or billings, accompanied by an analysis of
all corresponding service trends. Upon receipt of these materials, the City and the Franchisee shall engage in a
good-faith meet-and-confer process to discuss and determine an appropriate resolution, which may include a
rate adjustment in January 2026 if necessary.
F. Calculation of Total Cost Projection
Franchisee’s annual Total Cost Projection shall be the sum of the resultant values from Section 2.A through
2.E above. For 2025, the Total Cost Projection is $15,880,469. Table 3 below demonstrates the 2026 Total
Cost Projection if the percentage change in the average 12-month CPI value ending June 2026 compared to
the average 12-month CPI value ending June of 2025 is 5%. Table 4, on the following page, demonstrates the
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2026 Total Cost Projection in the percentage change in the average 12-month CPI value ending June 2026
compared to the average 12-month CPI value ending June of 2025 is 2%.
Table 3 – 2026 Total Cost Projection at 5% CPI Value for 2026
2025 2026
Collection Services $8,552,555 $8,980,183
Profit Allowance 769,730 898,018
Post-Collection Services 4,602,096 4,832,201
AB 939 Fee 368,041 386,443
Franchise Fee 1,588,047 1,677,427
Total Cost Projection 15,880,469 16,774,272
Table 4 – 2026 Total Cost Projection at 2% CPI Value for 2026
2025 2026
Collection Services $8,552,555 $8,723,606
Profit Allowance 769,730 872,361
Post-Collection Services 4,602,096 4,694,138
AB 939 Fee 368,041 375,402
Franchise Fee 1,588,047 1,629,501
Total Cost Projection 15,880,469 16,295,007
G. Calculation of Annual Index-Based Rate Adjustments
The Index-Based Rate Adjustment shall be the calculated as function of the Franchisee’s forthcoming annual
Total Cost Projection divided by the then current year Total Cost Projection, minus 100%, rounded to the
nearest hundredth of a percent.
For example, taking the results shown in Table 3, on the prior page, the Index-Based Rate Adjustment for
2026 would be $16,774,272 , divided by $15,880,469, minus 100%, yielding a 5.63% adjustment to the
Maximum Service Rates effective January 1, 2026. Using the results of Table 4, above as an example, the
Index-Based Rate Adjustment for 2026 would be $16,295,007, divided by $15,880,469 , minus 100%,
yielding a 2.61% adjustment to the Maximum Service Rates effective January 1, 2026.
This Index-Based Rate Adjustment calculation described herein shall repeat in 2027, 2028, and 2029, with the
addition of the Annual Revenue Reconciliation amounts calculated pursuant to Section 2.E of this Exhibit.
Rate adjustments shall be effective on January 1st of each year (unless otherwise agreed to in writing by the
parties) and any delay in rate change approval not caused by Franchisee will result in additional adjustments
so that all required revenues are billed within the rate year. Any delay in rate change approval that is caused
by Franchisee shall not result in additional adjustments corresponding with the delay in approval.
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Section 3 Cost-Based Rate Adjustments
Franchisee or City shall have the right to request a Cost-Based Rate Adjustment effective January 1, 2030. Franchisee’s
request for Cost-Based Rate Adjustment in 2030 shall be requested in writing on or before January 15, 2029 and City’s
request for Cost-Based Rate Adjustment in 2030 shall be requested in writing on or before January 31, 2029. To the
extent possible Any City request for Cost-Based Rate Adjustment shall be coordinated with the other agencies in San
Luis Obispo County that follow the rate adjustment methodology described in this Exhibit, with all such agencies
opting to request Cost-Based Rate Adjustment effective in the same rate year
Upon request by either party for Cost-Based Rate Adjustment, Franchisee shall prepare and submit financial records
and calculations to the City in accordance with this Section by April 30, 2029. City shall have the right to review
Franchisee’s financial records related to the Cost-Based Rate Adjustment and calculations of Cost-Based Rate
Adjustment for mathematical accuracy and adherence to the terms and conditions of this Section. City shall prep are
written findings regarding adjustments to the Franchisee’s calculations of Cost-Based Rate Adjustment that are
required for mathematical accuracy and adherence to the terms and conditions of this Exhibit on or before June 30,
2029. City shall make every effort to seek City Council authorization of Cost-Based Rate Adjustment prior to August
30, 2029. If neither party requests a Cost-Based Rate Adjustment in writing as specified above, then an Index-Based
Rate Adjustment shall be applied for adjustments to Maximum Service Rates effective January 1, 2030 and subject to
the terms and conditions of Section 2 of this Exhibit.
Franchise or City shall have the right to request subsequent Cost -Based Rate Adjustments no more frequently than
every five (5) years following the prior Cost-Based Rate Adjustment. For example, if a Cost-Based Rate Adjustment
is requested as stipulated in above in January, 2029 (and effective January 1, 2030) then the next Cost -Based Rate
Adjustment may not be requested by either party until January, 2034 (for effectiveness in 2035). The schedule from
the following paragraph would also apply: Franchisee would prepare and submit financial records and calculations by
April 30, 2034, City would prepare written findings regarding adjustments to Franchisee’s calculations of Cost-Based
Rate Adjustment that are required for mathematical accuracy and adherence to the terms and conditions of this Exhibit
by June 30, 2034, and City would make every effort to seek City Council authorization of Cost-Based Rate Adjustment
prior to August 30, 2034.
Notwithstanding the above, nothing shall prevent the parties from mutually agreeing to conduct Cost -Based Rate
Adjustments in other years (i.e., years other than 2030 and 2035), provided that both parties agree in writing to waive
the five (5) year limitation on Cost-Based Rate Adjustments expressed herein. If neither party requests Cost-Based
Rate Adjustments in subsequent years pursuant to the five (5) year schedule described above, then Index-Based Rate
Adjustments shall be applied for adjustments to Maximum Service Rates in such years, subject to the terms and
conditions of Section 2 of this Exhibit.
Franchisee shall provide all financial information and supporting documentation required by this review in a format
acceptable to City (or City’s designated consultant) in a timely manner. Franchisee shall not require City (or City’s
designated consultant) to review any such documents at Franchisee’s worksite but shall instead allow for all required
information and supporting documentation to be provided to City (or its designated consultant) via physical mail, e-
mail, or any other delivery method approved by City.
Cost-Based Rate Adjustments shall be prepared and calculated in accordance with the steps described below.
A. Projection of Collection Services and Post-Collection Service Costs
Franchisee shall prepare financial records and calculations of Cost -Based Rate Adjustment using audited
financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) for
Franchisee’s immediately preceding three (3) fiscal years. Such financial records and calculations shall
include Franchisee’s projected costs for Collection Services and Post-Collection Services as well as
Franchisee’s projected gross revenues at then-current Maximum Service Rates for the forthcoming year (e.g.,
2030 at the earliest).
Franchisee shall promptly assemble, provide, and submit such information that is reasonably necessary to
support the assumptions made by the Franchisee with regard to the assumptions underlying the forecast.
Upon submission of such information, the City holds the ability to make appropriate changes for non -
allowable costs, large unsupported variances in cost projections including but limited to corporate
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transactions and allocations, large variances in inter-company and related party transactions and
allocations, unjustifiable variances in any cost category, non-conformance with agreed upon depreciation
terms, non-conformance agreed upon profit allowances, and other customary and reasonable adjustments
as detailed in the Agreement. Cost projections for Collection Services and Post -Collection Services
prepared by Franchisee must be justifiable, supportable with financial information, and provide
accountability for all expenditures. In preparing such cost projections, Franchisee shall assemble and
submit its forecasts of:
a. Revenues at current Maximum Service Rates for the then-current year, including delineation of
revenues by sector (single-family residential vs. commercial and multi-family) and with details
of the number of subscribers by type within each sector.
b. Projected costs of Collection Services for the then-current year and the forthcoming year, with
comparison to and explanation of any variances to actual costs for Collection Services in the prior
three (3) fiscal years. Costs for Collection Services include labor, corporate overhead,
depreciation (with rolling stock at 10-year depreciation lifespan), and general and administrative
costs and shall be delineated as per the primary cost categories included in Franchisee’s Audited
Financial Statements. Franchisee must provide documentation of, and explanation for, material
variances in any cost category. Projected costs for the forthcoming year shall be based on
Franchisee’s actual costs per Audited Financial Statements and escalated by the CPI Adjustment
described in Section 2.A of this Exhibit, with the exception that Franchisee may adjust projections
to account for other documentable changes in costs. Corporate overhead costs shall be limited to
be less than 4% of Franchisee’s Total Cost Projection for the forthcoming year and Franchisee
must provide documentation and justification for any amounts of Corporate Overhead above 3%
of Franchisee’s Total Cost Projection for the forthcoming year. City retains the right to make
appropriate adjustments to cost projections to cost categories for which Franchisee does not or
cannot provide adequate documentation and explanation of material variances compared to prior
years.
c. Projected costs of Post-Collection Services for the then-current year and the forthcoming year,
with comparison to and explanation of any variances to actual costs for Collection Services in the
prior three (3) fiscal years. Costs for Post -Collection Services include landfill disposal, organics
processing, recyclables processing and marketing, related-party transportation, and related-party
rent and shall be delineated as per the primary cost categories included in Franchisee’s Audited
Financial Statements. Franchisee must provide documentation of, and explanation for, material
variances in any cost category. Projected costs for the forthcoming year shall be based on
Franchisee’s actual costs per Audited Financial Statements and escalated by the CPI Adjustment
described in Section 2.A of this Exhibit, with the exception that Franchisee may adjust projections
to account for other documentable changes in costs. City retains the right to make appropriate
adjustments to cost projections to cost categories for which Franchisee does not or cannot provide
adequate documentation and explanation of material variances compared to prior years.
d. Franchisee shall not include any non-allowable costs in its cost projections for Collection Services
or Post-Collection Services. Non-allowable costs include but are not limited to:
i. Entertainment and non-work related travel expenses, unless authorized in advance by
City.
ii. Advertising for services not within the scope of this Agreement or outside of the service
area of the City of San Luis Obispo.
iii. Fines or penalties of any nature.
iv. Liquidated damages assessed under this Agreement.
v. Federal or State income taxes.
vi. Profit sharing payments not related to an IRS approved pension program.
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vii. Charitable or political donations.
viii. Attorneys’ fees and other expenses incurred by Franchisee in any court proceeding in
which City and Franchisee are adverse parties, unless Franchisee is the prevailing party
in said proceedings.
ix. Attorneys’ fees and other expenses incurred by Franchisee in any court proceeding in
which Franchisee’s own negligence, violation of law or regulation, or other wrongdoing,
is in issue and occasions part of the attorneys’ fees and expenses claimed, provided,
however, such attorneys’ fees will be allowed to the extent Franchisee can demonstrate
they were reasonable and necessary and a cost of doing business, and were not the result
of any intentional or willful misconduct by Franchisee or its employees; and attorneys’
fees and expenses incurred by Franchisee in a court proceeding in which the legal theory
or statute providing a basis of liability against Franchisee also provides for separate strict
liability for City arising from the action of its citizens or ratepayers (such as in a CERCLA
lawsuit).
x. Payments to related party entities for products or services (other than lease expense,
calculated as provided below), in excess of the fair market value for those products or
services. For purposes of this Agreement, related party expenses are those resulting from
transactions between Franchisee and another company (companies) that has (have)
common ownership or management control.
e. Franchisee’s audited financial statements, and any other documentation as deemed necessary by the City,
will be reviewed to determine Franchisee’s cost projections for each of the foregoing categories
during the year involved. City will use the financial statements to determine that costs have
actually been incurred and have been assigned to the appropriate category.
f. City may adjust the actual costs in two ways: (1) to exclude any non -allowable costs, set out
below, and (2) to exclude and/or reduce any costs that were actually incurred but which are not
reasonable and necessary in keeping with industry standard best practices.
B. Calculation of Profit Allowance
Franchisee’s Profit Allowance shall be 10% of the cost projection for Collection Services, rounded to the
nearest dollar.
C. Calculation of CPI Adjustment to AB 939 Fee
Calculation of AB 939 Fee shall be calculated in accordance with Section 2.C, above, for the applicable year
as appropriate.
D. Calculation of Franchise Fee
Calculation of Franchise Fee shall be calculated in accordance with Section 2.D, above, for the applicable
year as appropriate.
E. Calculation of Annual Revenue Reconciliation
Calculation of Annual Revenue Reconciliation shall be calculated in accordance with Section 2.E, above, for
the applicable year as appropriate.
F. Calculation of Total Cost Projection
Calculation of Total Cost Projection shall be calculated in accordance with Section 2.F, above, for the
applicable year as appropriate.
G. Calculation of Cost-Based Rate Adjustment
The Cost-Based Rate Adjustment shall be the calculated as function of the Franchisee’s forthcoming annual
Total Cost Projection divided by the then current year Total Cost Projection, minus 100%, rounded to the
nearest hundredth of a percent. This is the same calculation described in Section 2.G, above. The resultant
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percentage shall be applied to the then-current Maximum Service Rates and be effective January 1 of the
forthcoming year.
Rate adjustments shall be effective on January 1st of each year (unless otherwise agreed to in writing by the
parties) and any delay in rate change approval not caused by Franchisee will result in additional adjustments
so that all required revenues are billed within the rate year. Any delay in rate change approval that is caused
by Franchisee shall not result in additional adjustments corresponding with the delay in approval.
Section 4 Annual Audited Financial Statements
Franchisee shall annually prepare Audited Financial Statements in accordance with Generally Accepted Accounting
Principles (GAAP) for its operations in the San Luis Obispo County region. Franchisee shall provide City with copies
of the annual Audited Financial Statements upon request and with any Cost-Based Rate Adjustment submittal.
Section 5 Extraordinary Adjustments
Except as provided herein, Franchisee may not request adjustments to Maximum Service Rates in years during which
Index-Based Rate Adjustments are scheduled to be applied and must follow the timeline described in Section 3.
Notwithstanding the above, Franchisee may request extraordinary adjustments to Maximum Service Rates due to
changes in law affecting collection operations, including for compliance with the California Air Resource Board’s
(CARBS’s) Advanced Clean Fleet (ACF) electrification mandate. The City may, but is not obligated to, consider
requests for extraordinary adjustment to Maximum Service Rates due to ch anges in law affecting Post-Collection
Services. Requests for extraordinary changes in Maximum Service Rates are subject to good faith negotiations between
City and Franchisee.
In the event of any Change in Scope or Change in Law (each as described below) that results in an material increase
or decrease in Franchisee’s costs or revenues, in the event of an Extraordinary Cost Increase (as defined below), or in
the event of any Change in Fees (as described below), an appropriate adjustment will be made to the Maximum Service
Rates in order to compensate, to the maximum extent possible, for such increase or decrease in costs, revenues or Fees,
commencing from the Effective Date(s) such increase or decrease first occurs. Any adjustment to Maximum Service
Rates due to a Change in Scope, a Change in Law or an Extraordinary Cost Increase shall be in the reasonable discretion
of the City.
A. “Change in Scope” shall mean any change in the services provided by the Franchisee under the Agreement
whether proposed by the Franchisee or by the City.
B. “Change in Law” shall mean the enactment, adoption, promulgation, issuance, modification or written change
in any law, regulation, order or judgment of any governmental body that affects the Franchisee’s performance
of services under the Agreement including, without limitation, the issuance of final regulations under existing
laws.
C. “Change in Fees” shall mean any change in franchise fees, vehicle impact fees and other fees charged to the
Franchisee by the City connection with the services provided by the Franchisee under the Agreement the
cancellation of any existing fees, and the adoption of any new fees.
D. “Extraordinary Cost Increase” shall mean a substantial increase in the Franchisee’s operating or capital costs
or expenses that is outside of the Franchisee’s control but not due to a Change in Scope or Change in Law.
E. “Effective Date” shall mean the date in which the Franchisee notifies the City of the reasons for the cost
estimate associated with a Change in Law, Change in Fees, and/or Extraordinary Cost Increase or when the
Franchisee begins incurring costs for the Change in Law, Change in Fees, or Extraordinary Cost Increase,
whichever is later.
In the case of a Change in Scope, a Change in Law or an Extraordinary Cost Increase, the Franchisee shall provide
the City with projected operational, cost and revenue data reflecting the entire financial effect of such Change. The
City reserves the right to require that the Franchisee supply any additional operational, cost and revenue data, or any
other information it may reasonably need, to ascertain the appropriate financial impact of the Change and any
necessary adjustment to Maximum Service resulting from such Change.
Extraordinary adjustments to Maximum Service Rates for a qualifying Change in Scope or Change in Law, for a
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Change in Fees, or for an Extraordinary Cost Increase shall take effect as of the beginning of the next year and will
include all impacts of the extraordinary adjustment from the Effective Date of the impact; pro vided, however, that, in
the case of any Change in Fees charged by the City, the extraordinary adjustment shall take effect as of the Effective
Date of such Change in Fees. The underlying service, cost, revenue or Fee changes supporting any rate adjustment
under this Section 5 will be added to the appropriate category under Sections 2 and 3 above for purposes of future
cost projections.
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Page 398 of 486
REPORT
City of San Luis Obispo and Participating Agencies
Submitted electronically on October 22,2020
Submitted electronically: November 1, 2024
New Solid Waste Rate Adjustment
Methodology and 2025 Rates
Page 399 of 486
1512 Eureka Road, Suite 220, Roseville, CA 95661 | p 916.782.7821 | f 916.782.7824 | www.r3cgi.com
November 1, 2024
Ms. Meg Buckingham
Solid Waste and Recycling Coordinator
Public Utilities
879 Morro, San Luis Obispo, CA 93401
submitted via email: mbuckin@slocity.org
SUBJECT: New Solid Waste Rate Adjustment Methodology and 2025 Rates
Dear Ms. Buckingham and Participating Agencies,
R3 Consulting Group, Inc. (R3) was engaged by the City of San Luis Obispo (City) to provide solid
waste consulting services via two engagements supporting the City’s negotiations of a new solid
waste services agreement with Waste Connections, the solid waste hauler. R3 was originally
engaged by the City to work in collaboration with Los Osos Community Services District and Waste
Connections to update the methodology for annual adjustments to the solid waste rates charged by
Waste Connections. The key objectives for updating the rate adjustment methodology were to
enhance rate stability, predictability, fairness, transparency, ease of administration, and cost-
effectiveness.
As that engagement proceeded, eight other agencies in San Luis Obispo County (the City of Arroyo
Grande, the City of Grover Beach, the City of Pismo Beach, Avila Beach Community Services
District, Cambria Community Services District, Cayucos Sanitary District, Nipomo Community
Services District, and Oceano Community Services District – altogether “Participating Agencies” or
“Agencies”) were included as stakeholder participants in the development of new rate adjustment
methodology. With the inclusion of these additional Agencies, objectives for the engagement were
updated to include regional scale applicability of the new rate adjustment methodology. R3 was then
engaged by the City to review Waste Connections’ rate adjustment requests for the 2025 rate year
on behalf of all ten Agencies with the objective of determining 2025 solid waste rates that would an
appropriate starting point for a new rate adjustment methodology starting in 2026.
The City of San Luis Obispo served as the lead contracting agency for both engagements, providing
primary oversight and direction of R3’s work. Input and feedback were also sought from the other
nine Agencies, and the results reflect their stakeholder input. Ultimately, the outcomes of both
engagements are the conclusion of good faith contract negotiations between the City and Waste
Connections. In summary, the City and Waste Connections have tentatively agreed to updated
terms and conditions for annual rate adjustment which fulfill key objectives while also securing
enhanced services that will protect low income households, prevent illegal dumping, and clean solid
waste collection containers. The new rate adjustment methodology and enhanced services also
resulted in updated adjustments to solid waste rates for 2025.
The City intends to recommend a new agreement with Waste Connections to the City Council that
will include the new rate adjustment methodology and enhanced services along with the 2025
adjustments to solid waste rates. In keeping with the objective for the results to be applicable on a
regional scale, Waste Connections is willing to offer the new rate adjustment methodology and
Page 400 of 486
1512 Eureka Road, Suite 220, Roseville, CA 95661 | p 916.782.7821 | f 916.782.7824 | www.r3cgi.com
select enhanced services to the other nine Agencies at the updated 2025 adjustments to solid waste
rates.
R3 would like to recognize that this has been a significant undertaking, and we’d like to thank the City of
San Luis Obispo, Waste Connections, Los Osos Community Services District, and Participating Agencies
for your involvement in providing feedback during this process. In closing, R3 recommends City and
stakeholder consideration of the revised 2025 rates and the new rate adjustment methodology as a
means of achieving shared rate fairness, stability, and predictability objectives. Here’s what Waste
Connections has shared regarding the outcomes:
“San Luis Garbage (SLG) had the opportunity to negotiate with the City of San Luis Obispo on the
re-write of the 1994 rate-making manual. The goal of this endeavor was to simplify and
streamline the rate-making process for all parties and provide an improved model going forward
for potential refuse collection rate changes. The process included a considerable amount of
discussion and analysis and although arduous at times, SLG feels the negotiations were
performed in good faith, were collaborative in nature and carried out with mutual respect. In
addition to updating the rate-making methodology, both parties took the opportunity to establish
some new service enhancements that will discourage illegal dumping, provide cart cleaning
exchanges, and offer rate relief for low-income customers. SLG believes the outcome of the
negotiation has provided a much-improved rate-review process for the City of San Luis Obispo
and other cities currently under the old rate-making methodology which will ultimately allow for an
easier path to fair and reasonable rates for all customers.”
* * * * * * *
We appreciate the opportunity to be of service to the City and would like to thank the City and the
Participating Agencies for their involvement and feedback. We would also like to recognize Waste
Connections staff for being communicative and responsive to requests for information during the
process.
Sincerely,
Garth Schultz |Principal
R3 Consulting Group, Inc.
510.292.0853 | gschultz@r3cgi.com
Page 401 of 486
TABLE OF CONTENTS
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates TOC
1.Executive Summary
page 1
2.Background
page 4
3.New Solid Waste Rate Adjustment
Methodology and 2025 Rates
page 10
Attachments
1 Summary of Original 2025 Base Year Rate Adjustments
2 Revised 2025 Rate Adjustments
3 CPI-U for Garbage and Trash
4 Example Rate Calculations for 2026 through 2029
Page 402 of 486
1. EXECUTIVE SUMMARY
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 1 of 19
New Rate Adjustment Methodology
The City of San Luis Obispo, in its capacity as the lead agency on the solid waste rate adjustment
methodology update process, and in partnership with Los Osos Community Services District and Waste
Connections, completed negotiations and arrived at tentative agreement with Waste Connections
regarding the terms and conditions of a new methodology. The outcome was the result of extensive good
faith negotiations between the City and Waste Connections, with due consideration to input provided by
other public agency stakeholders.
Pending City Council approvals, the new methodology will replace the 1994 Rate Setting Process
and Methodology Manual for Integrated Solid Waste Management Rates (1994 Rate Manual) and
will regulate annual rate adjustments for the City’s solid waste rates starting in 2026.
The new methodology fulfills key objectives established by the City and Waste Connections, including
rate stability, predictability, fairness, transparency, ease of administration, and cost-effectiveness.
Additionally, in response to requests by other Agencies that contract with Waste Connections in San Luis
Obispo County, the new methodology can be applied on a regional-scale and is available as
recommended alternative to the 1994 Rate Adjustment Manual for those Agencies.
The key features of the new methodology include:
CPI Adjustments:Starting in 2026, rate adjustments will be based on the Garbage and Trash
CPI, with a floor of 2% and a cap of 5%. Amounts under 2% or over 5% will carry forward. The
CPI adjustment will apply to Waste Connections’ collection and post-collection cost centers.
Revenue Balancing Mechanism:Starting in 2027, adjustments to rates will account for
shortfalls or surpluses in Waste Connections’ actual revenues compared to projected revenues
from prior years. For example, if Waste Connections’ 2025 revenues exceed projections, the
amount of surplus revenues will be credited to the rates in 2027 (and vice versa), achieving
fairness in compensation and rates for the company and for ratepayers. Such adjustments would
take place annually and will be independent of the CPI cap and floor noted above (there is no cap
on these amounts).
Less Frequent Cost-Based Adjustments:Currently, solid waste rates are adjusted based on
the 1994 Rate Adjustment Manual every three years on Waste Connections’ costs. Via the new
methodology, cost-based adjustments would occur a maximum of every five years, and only if
requested by Waste Connections or the City. The first opportunity for a cost-based adjustment
will be for the 2030 rate year. If neither Waste Connections nor the City request a cost-based
adjustment, then the CPI adjustment approach will be applied. Cost-based adjustments will be
based on Waste Connections’ consolidated audited financial statements for the region.
Timeframes for cost-based adjustment application and review process will be ample, such that
the City will have sufficient time for review and approval processes and such that the potential for
delay in implementation is minimized. These timeframes will be delineated in the forthcoming
amendment to the agreement with Waste Connections.
Updated Depreciation Lifespan for Trucks:The 1994 Rate Manual set a 7-year depreciation
schedule for solid waste collection trucks. Modern solid waste collection trucks have a 10-year
lifespan, and the depreciation schedule was adjusted accordingly.
Updated Profit Allowance:The 2025 rate adjustment will include a 9% profit allowance of
projected collection costs and in 2026 and thereafter the profit allowance will be 10%. The
updated profit allowance is in-keeping with industry standard ranges for solid waste services. For
Page 403 of 486
Executive Summary
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 2 of 19
context, the 2025 profit allowance is approximately 5% of revenues and we estimate that the
2026 profit allowance will be approximately 5.5% of revenues. Profit will not be allowed on post-
collection costs.
Removed Limitation on Corporate Overhead:The 1994 Rate Manual placed a limitation on
corporate overhead costs. Today, corporate overhead costs fund legal, tax, payroll, human
resources, engineering, compliance, IT, training and recruiting programs. The City and Waste
Connections agreed to remove the prior limitation in order to fund these services. In the near-
term, compensation to Waste Connections for corporate overhead will be limited by the CPI
adjustment noted above. Cost-based adjustments to corporate overhead are possible in 2030,
and will be subject to review, justification, and potential limitation at that time.
Extraordinary Adjustments:The California Air Resources Board (CARB) Advanced Clean
Fleets (ACF) regulation is requiring all solid waste collection trucks to have zero emissions by
2042. This includes a phased in plan to get the percentage of the fleet to be zero emission
vehicle (ZEV) with 10% by 2030, 25% by 2033, 50% by 2036,75% by 2039 and 100% by 2042.
During CPI Adjustment years, Waste Connections may request extraordinary rate adjustments
due to changes in law affecting collection operations, including for compliance with CARB’s ACF
zero emission mandate (which may necessitate change to depreciation schedules). The City
may, but is not obligated to, consider requests for extraordinary rate adjustments due to changes
in law affecting post-collection operations. Requests for extraordinary change are subject to good
faith negotiations between City and Waste Connections.
New Service Enhancements
During negotiations, the City and Waste Connections also took the opportunity to establish new service
enhancements that will discourage illegal dumping, provide cart cleaning exchanges, and offer rate relief
for low-income customers. The below service enhancements are available to the other Agencies that
approve the new rate adjustment methodology in association with adjusted 2025 solid waste rates:
Customer Assistance Program:20% low-income discount provided to residential customers
using 32-gallon cart service, using existing jurisdictional practices on low-income relief for their
offered utility type services with evidence of qualifying financial hardship.
Free Bulky Waste Collections:Collection of a bulky waste item twice annually from residential
accounts at no separate cost, via clean-up week or voucher program depending on existing
program.
Annual Cart Exchange:Once annual exchange of a residential solid waste, recycling, or
organics cart per customer account.
2025 Rate Adjustments
As a result of the above, Waste Connections’ 2025 rate adjustment request was revised from a 9.29%
increase to a 9.89% increase in solid waste rates, effective January 1, 2025 (and prior to other rate
structure adjustments that the City and Waste Connections may enact). When the new rate methodology
changes and service enhancements are equally applied to the other regional Agencies, the results are as
shown in Table 1 on the following page. Additional details are included in Section 3 of this report.
Page 404 of 486
Executive Summary
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 3 of 19
Table 1: 2025 Rate Adjustments
Agency Original Revised
City of San Luis Obispo 9.29% 9.89%
City of Arroyo Grande 3.97% 4.92%
Los Osos CSD 12.47% 13.18%
City of Pismo Beach 3.97% 4.82%
Cambria CSD 12.78% 12.59%
City of Grover Beach 3.97% 5.02%
Nipomo CSD 3.23% 5.04%
Oceano CSD 3.76% 4.98%
Cayucos SD 12.47% 14.32%
Avila Beach CSD 3.97% 4.60%
Page 405 of 486
2. BACKGROUND
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 4 of 19
1994 Rate Manual
The 1994 Rate Manual is a 120-page document that provides step-by-step directives regarding annual
adjustments to solid waste rates in the City. Though the 1994 Rate Manual specifically references the
City of San Luis Obispo, other agencies in San Luis Obispo County (including the nine Agencies
referenced in this report) also follow the 1994 Rate Manual for annual adjustments to solid waste rates.
The 1994 Rate Manual established a three-year cycle for adjustments to solid waste rates. The first year
of each three-year cycle (called a “base year”) adjusted rates based on the documented costs of
providing solid waste services. In the second and third years, solid waste rates were adjusted in
accordance with external indicators, such as the Consumer Price Index (CPI).
While the 1994 Rate Manual was an appropriate approach to annually adjusting solid waste rates at the
time, changing regulatory conditions and modern best practices in solid waste rate setting indicate that
the prior approach has outlived its usefulness. In particular, cost-based adjustments on a fixed three-year
cycle are no longer the industry norm. Most solid waste rate adjustment methodologies in California today
either do not include regular cost-based adjustments or do so less frequently. When allowed, cost-based
adjustments are typically the result of extraordinary changes in cost due to factors like changes in law or
other uncontrollable factors (such as China’s National Sword Policy in 2017 and the COVID pandemic in
2020). Additionally, step-by-step instructions and timelines in the 1994 Rate Manual are outdated and do
not contemplate current approaches to public noticing, public hearings, and review timelines for
authorizing rate adjustments.
RFQ for New Rate Adjustment Methodology
Recognizing the limitations of the 1994 Rate Manual, the City and Los Osos Community Services District
issued a request for quotes (RFQ) in early 2024 seeking a consultant to develop a new rate adjustment
methodology. Pursuant to the RFQ process, R3 was awarded an agreement to provide support in
developing a new rate adjustment methodology.
Rate Adjustment History
Rate adjustments experienced by the City and participating Agencies have varied significantly in the prior
ten years from 2015 through 2014, as shown in Table 2, on the following page. As shown in the table,
rate adjustments by agency have varied from 0% (most Agencies in 2015) to over 20% (most Agencies in
2022).
There are important reasons for these variances, primarily related to the unfunded State mandates of SB
1383 (Short-lived Climate Pollutants Act) which required all agencies in California to implement programs
to recover and recycle organic waste to reduce methane emissions from landfills. While rate adjustments
were necessary to fund the required SB 1383 programs, the combination of new costs with the three-year
cost-based adjustment approach in the 1994 Rate Manual resulted in rate adjustment spikes in 2016,
2019, and 2022. Overall, across the Agencies, the average annual rate adjustment from 2015 through
2024 has been 6.76%.
One important objective of the new rate adjustment methodology is to minimize the recurrence of such
spikes by reducing the frequency of cost-based rate adjustments. From R3’s experience implanting new
rate methodologies with other clients, the result has been stable and predictable annual rate adjustments.
Page 406 of 486
Background
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 5 of 19
Table 2: 2015 – 2024 Rate Adjustments by Agency
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
0.00% 5.25% 1.00% 1.60% 13.70% 1.70% 0.70% 17.75% 9.10% 3.00%
0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 22.19% 9.10% 3.00%
2.00% 10.37% 1.00% 1.60% 25.74% 1.70% 0.70% 41.87% 7.70% 2.70%
0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 22.19% 9.10% 3.00%
1.92% 9.93% 1.00% 1.60% 25.32% 1.70% 0.70% 41.50% 9.10% 3.00%
0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 22.19% 9.10% 3.00%
0.00% 0.00% 1.00% 1.60% 15.08% 1.70% 0.70% 21.27% 9.10% 3.00%
0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 21.03% 9.10% 3.00%
2.00% 27.39% 1.00% 1.60% 26.43% 1.70% 0.70% 43.30% 9.10% 3.00%
0.00% 3.25% 1.00% 1.60% 10.06% 1.70% 0.70% 22.19% 9.10% 3.00%
Financial Statement History
There are three Waste Connections business units serving the ten participating Agencies (San Luis
Garbage, Mission Country Disposal, and South County Sanitary Service). Each business unit prepares
annual audited financial statements which are used as the basis for base year rate applications to the
Agencies. R3 analyzed Waste Connections’ audited financial statements for the six years from 2018
through 2023 to evaluate profit achievement, with the results summarized in Table 3, below. Table 3 also
includes estimated profit achievement in 2024 (still underway) and for 2025 (prior to 2025 rate
adjustments).
Table 3: 2018 – 2023 Profit Achievement
Page 407 of 486
Background
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 6 of 19
As shown in Table 3, in total across all three business units, Waste Connections operated without any net
income between 2018 and 2021, with net positive profitability being achieved in 2022 and 2023. Profit
achievement varied by business unit, with South County Sanitary Service consistently experiencing
greater profit achievement and Mission Country Disposal consistently experiencing lesser or no profit
achievement. This is one of the key reasons that rate adjustments for the Agencies served by Mission
Country Disposal (Cambria Community Services District, Cayucos Sanitary District, and Los Osos
Community Services District) were higher than the other Agencies in 2019 and 2022.
Table 3 also shows that projected profit achievement in 2024 will be lower than 2023, which is primarily
the result of Waste Connections incurring increased landfill disposal costs (provided by a related party)
and increased organics processing costs (provided by a non-affiliated third party processor). Projected
profit achievement for 2025 – which, importantly, is prior to 2025 adjustments to solid waste rates –
demonstrates no net profit for San Luis Garbage and Mission County Disposal and low net income for
South County Sanitary Service. Overall, without adjustments to rates, Waste Connections service to the
Agencies in 2025 will not yield net income.
It should be noted that Waste Connections allocates costs between business units based on allocation
metrics that include vehicle operating hours, number of solid waste containers, and number of customer
accounts. While such metrics are useful means of allocating costs, they do not necessarily represent the
exact cost of providing service within a given business unit.
Rate Comparison
R3 compared current 2024 solid waste rates for the Agencies to rates in other jurisdictions in San Luis
Obispo County, Santa Barbara County, and Monterey County. The results are shown in Table 4, below
and on the following page, and are organized in ascending order by 32-gallon monthly rate (common
residential subscription level).
Table 4: Regional Comparison of Monthly Rates
Agency 20 Gallon 32 Gallon 64 Gallon 96 Gallon
2 Cubic
Yards
Oceano CSD N/A $20.37 $29.31 $57.39 $128.75
San Luis Obispo $14.74 $23.53 $47.06 $70.59 $185.21
Pismo Beach N/A $23.76 $47.56 $71.33 $166.02
Grover Beach N/A $24.23 $32.74 $41.23 $147.95
Arroyo Grande N/A $27.33 $35.52 $43.73 $167.65
Nipomo CSD N/A $27.57 $39.52 $51.81 $136.62
Avila Beach CSD N/A $28.31 $46.78 $65.24 $177.68
Santa Barbara County Zone 4 Lompoc N/A $31.41 $36.13 $40.70 $179.98
Cayucos SD N/A $32.60 $38.52 $44.48 $184.32
Santa Barbara County Zone 5 N/A $33.03 $37.84 $42.46 $192.87
City of Atascadero N/A $33.67 $52.80 $66.35 $172.24
San Miguel N/A $34.13 $53.80 $72.88 $124.12
Santa Barbara County Zone 4 Santa Ynez N/A $34.33 $42.62 $50.77 $254.11
City of Morro Bay $22.21 $35.54 $71.07 $106.63 $265.30
Solvang N/A $36.28 $45.20 $54.69 $256.55
Page 408 of 486
Background
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 7 of 19
Agency 20 Gallon 32 Gallon 64 Gallon 96 Gallon
2 Cubic
Yards
Goleta N/A $37.39 $41.88 $48.35 $240.10
Templeton N/A $38.73 $54.63 $60.41 $149.58
Los Osos CSD $27.74 $39.45 $60.57 $64.96 $228.72
Buellton N/A $40.51 $48.40 $56.38 $281.13
Cambria CSD N/A $41.52 $83.03 $124.55 $201.94
King City $32.43 $42.83 $53.68 $63.52 $288.00
Santa Barbara County Zone 2 N/A $43.25 $54.66 $65.92 $259.61
City of Paso Robles $38.15 $43.32 $57.42 $63.59 $188.36
Santa Barbara County Zone 3 N/A $45.22 $51.52 $57.75 $215.72
MRWMD $38.28 $46.54 $72.92 $91.20 $277.20
City of Santa Barbara N/A $48.26 $59.82 $71.38 $277.66
WM Area (Formerly Mid-State) N/A $48.72 $71.31 $93.84 $214.46
Santa Barbara County Zone 1 N/A $56.60 $62.86 $69.25 $256.74
Santa Maria N/A N/A $38.74 $47.87 $166.72
Table 4 demonstrates that solid waste rates for the City and other Participating Agencies compare
favorably to others in the region. Charts 1 through 4, below and on the following pages, show the
information from Table 4 in graphical format.
Chart 1: Regional Comparison of Monthly 32-gallon Cart Rates
Chart 1, which is organized in ascending order of 32-gallon monthly rate, demonstrates that the rates for
32-gallon monthly service (the most subscribed residential service level) for all Participating Agencies
$0
$10
$20
$30
$40
$50
$60
Page 409 of 486
Background
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 8 of 19
other than Cambria Community Services District, Cayucos Sanitary District, and Los Osos Community
Services District are the lowest in the region. Chart 2 shows how 64-gallon monthly rates compare.
Chart 2: Regional Comparison of Monthly 64-gallon Cart Rates
Chart 3: Regional Comparison of Monthly 96-gallon Cart Rates
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$0
$20
$40
$60
$80
$100
$120
$140
Page 410 of 486
Background
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 9 of 19
Charts 3 and 4 keep the same ordering as Charts 1 and 2 and show how large residential 96-gallon
service and commercial two (2) cubic yard bin service compare with the region. Overall, while exceptions
exist, rates for solid waste service for the City and the Participating Agencies are among the lowest in the
region, including San Luis Obispo County, Santa Barbara County, and Monterey County.
Chart 4: Regional Comparison of Monthly 2 Cubic Yard Rates
$0
$50
$100
$150
$200
$250
$300
$350
Page 411 of 486
3. NEW RATE ADJUSTMENT METHODOLOGY
AND 2025 RATES
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 10 of 19
2025 Base Year Rate Adjustments
Waste Connections submitted base year rate applications to the Agencies for rates effective January 1,
2025.1 Those rate applications were prepared in accordance with the 1994 Rate Manual, with
modification for an effectiveness date of January 1, 2025, instead of the October 1, 2024 date that
otherwise would have been the effective date given strict adherence to the 1994 Rate Manual. In simple
terms, the applications project future 2025 costs for providing solid waste services based on the actual
costs of providing services as follows:
Actual results for the most recently completed year (2023), which are based on the audited
financial statements.
Projected results for the current year (2024), which are to be based on year-to-date information
available at the time the application is submitted.
Projected results for the next year (2025).
Adjustments to solid waste rates are then calculated based on the projected 2025 revenue requirement,
which is the sum of:
Allowed costs.
Allowable operating profit.
Pass through costs.
In reviewing the 2025 base year rate applications for the Agencies, R3:
Checked calculations for mathematical accuracy and consistency.
Tied projected costs back to the 2023 audited financial statements.
Evaluated the root causes of extraordinary changes in cost for landfilling and organics
processing.
Reviewed 2024 revenues year to date to determine accuracy of projected revenues at current
rates for 2025.
Proposed adjustments to solid waste collection vehicle depreciation lifetimes.
A summary of Waste Connections’ original 2025 base year rate adjustments per the applications
submitted to the Agencies is included as Attachment 1.
It should be noted that Waste Connections’ base year rate applications are made at the business unit
level (San Luis Garbage, Mission Country Disposal, and South County Sanitary Service) with no
allocation of projected costs to individual Agencies served by those business units. Rather, the base year
rate adjustment applications use total costs and revenues for those business units to calculate rate
adjustments for the individual Agencies. For the purposes of our analysis, and as documented in
Attachment 1, R3 allocated projected expenses by agency in accordance with proportion of revenues –
this allocation approach is what the base year rate application achieve in practice, and the result is an
exact match to the rate adjustment calculations included in the base year rate applications for each
agency.
1 Authorization of the January 1, 2025 rate adjustments are expected to occur after that date. Waste
Connections will prorate adjustment amounts on customer bills to account for the timing difference.
Page 412 of 486
New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 11 of 19
R3 thoroughly reviewed the figures included in the 2025 rate adjustment calculations, as well as
supporting documentation requested of Waste Connections during the review process and found that
Waste Connections’ rate applications were accurate and in accordance with the 1994 Rate Manual. The
rate adjustments shown in Table 5 on the following page are the correct rate adjustments per the 1994
Rate Manual and are the default rate adjustments effective January 1, 2025, if the City and the
Participating Agencies do not move forward with revisions to the 2025 rates in accordance with the new
rate adjustment methodology.
Table 5: 2025 Rate Adjustments Per 1994 Rate Manual
Agency January 1, 2025, Default
Rate Adjustment
City of San Luis Obispo 9.29%
City of Arroyo Grande 3.97%
Los Osos CSD 12.47%
City of Pismo Beach 3.97%
Cambria CSD 12.78%
City of Grover Beach 3.97%
Nipomo CSD 3.23%
Oceano CSD 3.97%
Cayucos SD 12.47%
Avila Beach CSD 3.97%
Revisions for New Rate Adjustment Methodology
In negotiating the terms and conditions of a new rate adjustment methodology starting in 2026, the City
and Waste Connections made the following revisions to the 2025 base year rate adjustments:
Updated Depreciation Lifespan for Trucks
The 1994 Rate Manual set a 7-year depreciation schedule for solid waste collection trucks. Modern solid
waste collection trucks have a 10-year lifespan, and the depreciation schedule was adjusted by Waste
Connections accordingly. Table 6, on the following page, shows the dollar magnitude of this change and
the effect on the 2025 rate adjustment, with the effect being a reduction in the rate adjustment calculation
ranging from 1.33% to 1.62%, depending on agency. Differences in effect by agency are the result of
business unit allocations described earlier in this report.
Page 413 of 486
New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 12 of 19
Table 6: Change in Depreciation Lifespan
Original
Depreciation
$1,338,367
$376,989
$295,515
$131,502
$398,063
$316,350
$236,919
$225,376
$114,616
$26,441
Revised
Depreciation
1,125,720
317,545
248,918
110,766
336,460
267,393
200,254
190,498
96,879
22,349
Change in
Calculations
(212,647)
(59,444)
(46,597)
(20,735)
(61,603)
(48,957)
(36,665)
(34,878)
(17,737)
(4,092)
Effect on
Rate
Adjustment
-1.47% -1.62% -1.62% -1.62% -1.33% -1.33% -1.33% -1.33% -1.33% -1.33%
Removed Limitation on Corporate Overhead
The 1994 Rate Manual placed a limitation on corporate overhead costs. Today, corporate overhead costs
fund legal, tax, payroll, human resources, engineering, compliance, IT, training and recruiting programs.
The City and Waste Connections agreed to remove the prior limitation in order to fund these services.
Table 7, below, shows the effect of removing the prior limitation on corporate overhead. Differences in
effect by agency are the result of different original proportionate amounts of corporate overhead between
Agencies. In the near-term, compensation to Waste Connections for corporate overhead will be limited by
the CPI adjustment noted above. Cost-based adjustments to corporate overhead are possible in 2030,
and will be subject to review, justification, and potential limitation at that time.
Table 7: Change in Corporate Overhead
Original
Corporate
Overhead
$246,296 $46,213 $36,226 $16,120 $93,625 $74,406 $55,724 $53,009 $26,958 $6,219
Revised
Corporate
Overhead
430,378 80,753 63,301 28,168 163,600 130,017 97,371 92,627 47,106 10,867
Change in
Calculations 184,082 34,540 27,075 12,048 69,975 55,611 41,648 39,619 20,148 4,648
Effect on Rate
Adjustment 1.28% 0.94% 0.94% 0.94% 1.51% 1.51% 1.51% 1.51% 1.51% 1.51%
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New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 13 of 19
50% Cost Share for Regional Service Enhancements
Waste Connections is offering new service enhancement to the benefit of the City and the Agencies
including:
Collection of a bulky waste item twice annually from residential accounts at no cost, via clean-up
week or voucher program depending on existing program.
Once annual exchange of a residential solid waste, recycling, or organics cart per customer
account.
Waste Connections has estimated the annual cost of offering these service regionally and is proposing
recovery of 50% of the projected costs via the 2025 rate adjustment. The City and Waste Connections
have tentatively agreed to this cost sharing as part of the new agreement and for inclusion in the 2025
rates. Waste Connections is proposing the low income discount customer assistance program without a
change in rate adjustment.
Table 8, below, shows the effect of including the 50% cost sharing for these two service enhancements
into the 2025 rate adjustment. Cost allocations are by percentage of accounts by agency, which is the
reason for differences in the effect of rate adjustment by agency.
Table 8: 50% Cost Share for Service Enhancements
New Annual
Cart Exchange $26,376 $9,889 $7,223 $3,623 $11,445 $7,566 $8,179 $7,987 $3,681 $320
Bulky Clean-up
Enhancements 21,091 7,908 5,776 2,897 9,152 6,050 6,540 6,386 2,944 256
Change in
Calculations 47,467 17,797 12,999 6,520 20,597 13,616 14,719 14,373 6,625 576
Effect on Rate
Adjustment 0.33% 0.48% 0.45% 0.51% 0.45% 0.37% 0.54% 0.55% 0.50% 0.19%
Corrections to AB 939 Fees
Agency fees, which include AB 939 Fees and Franchise Fees, are included as estimates in rate
adjustment applications. Because the rate applications are at the company business unit level, and not at
the individual agency level, AB 939 fees in the application are allocated to the Agencies in proportion to
revenues. However, only the City of San Luis Obispo and Cayucos Sanitary District receive AB 939 Fees
– therefore this was corrected in the revised 2025 rate adjustments as shown in Table 9, on the following
page. Note that the values for the City of San Luis Obispo also include a correction to Franchise Fee
revenues.2
2 Specifically, to remove the 1994 Rate Manual’s approach to “grossing up” the calculated rate adjustment to account
for the Franchise Fee by including the projected Franchise Fee payment amounts in the rate adjustment calculation
itself. This approach is also recommended for the other Agencies starting with the 2026 rate adjustment.
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New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 14 of 19
Table 9: Corrections to AB 939 Fees
Original
Agency Fees $362,140 $5,226 $4,097 $1,823 $- $- $- $- $- $-
Revised
Agency Fees 439,411 - - 12,754 - - - - - -
Change in
Calculations 77,2713 (5,226) (4,097) 10,931 - - - - - -
Effect on Rate
Adjustment
Updated Profit Allowance
The 1994 Rate Manual, along with the Agencies agreements with Waste Connections, limits allowable
profit based on an “operating ratio” of 92% or 93% of allowable collection expenses (not including post-
collection disposal, processing or recycling expenses nor agency fees) depending on the agency. A 93%
operating ratio is the equivalent of a 7.53% profit margin, and a 92% operating ratio is the equivalent of
an 8.7% profit margin.
A key negotiation point between the City and Waste Connections was a change to the profit allowance.
Ultimately, after much discussion and negotiation, the City and Waste Connections agreed that the 2025
rate adjustment will include a 9% profit allowance of projected allowable collection costs and in 2026 and
thereafter the profit allowance will be 10%. The updated profit allowance is in-keeping with industry
standards for solid waste services.
For context, the 2025 profit allowance is approximately 5% of revenues and we estimate that the 2026
profit allowance will be approximately 5.5% of revenues. Table 10, on the following page, shows the
effect of changing the profit allowance to 9% of collection costs for all Agencies for the 2025 rate
adjustments. Differences in the effect on rate adjustment are due to differences in existing profit
allowances by agency, as well as differences in the depreciation, corporate overhead and new service
enhancements shown in earlier tables.
3 Includes adjustment to Franchise Fee to remove “grossing up” method from City’s 2025 rate adjustment
calculations.
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New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 15 of 19
Table 10: 9% Profit Allowance on Allowable Collection Costs
Original Profit
Allowance $641,302 $188,392 $170,609 $65,715 $227,094 $180,477 $135,161 $111,295 $65,388 $15,085
Revised Profit
Allowance 768,515 224,623 175,993 78,382 237,649 188,618 141,665 134,797 68,490 15,714
Change in
Calculations 127,213 36,231 5,384 12,667 10,555 8,141 6,504 23,502 3,102 629
Effect on Rate
Adjustment
Total Revisions for New Rate Adjustment Methodology
Taken altogether, the revisions to the 2025 rate adjustment result in small increases to the original 2025
rate adjustment calculations. These are shown in Table 11, on the following page, and are also shown in
Attachment 2.
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New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 16 of 19
Table 11: Overall Revisions to 2025 Rate Adjustments
Original 2025
Revenue
Calculation
$15,640,734 $4,089,595 $3,228,699 $1,426,540 $4,786,646 $3,804,059 $2,848,911 $2,692,832 $1,378,241 $317,951
Change in
Depreciation (212,647) (59,444) (46,597) (20,735) (61,603) (48,957) (36,665) (34,878) (17,737) (4,092)
Change in
Corporate
Overhead
184,082 34,540 27,075 12,048 69,975 55,611 41,648 39,619 20,148 4,648
Enhanced
Services 47,467 17,797 12,999 6,520 20,597 13,616 14,719 14,373 6,625 576
Updated Profit
Allowance 127,213 36,231 5,384 12,667 10,555 8,141 6,504 23,502 3,102 629
Corrections to
AB 939 Fees 77,271 (5,226) (4,097) 10,931 - - - - - -
Revised 2025
Revenue
Calculation
15,864,119 4,113,493 3,223,463 1,447,971 4,826,170 3,832,470 2,875,118 2,735,447 1,390,379 319,712
Revenues at
Current Rates 14,435,726 3,677,194 2,882,493 1,282,686 4,621,616 3,672,906 2,750,690 2,616,676 1,330,724 306,989
Shortfall (1,428,393) (436,299) (340,970) (165,285) (204,554) (159,564) (124,428) (118,771) (59,655) (12,724)
Revised 2025
Rate
Adjustment4
9.89%13.18%12.59%14.32%4.92%4.82%5.02%5.04%4.98%4.60%
Proportionality in Cost of Service
R3 analyzed the 2025 rate adjustments for adequacy with respect to the cost-of-service requirements of
Proposition 218. Because the base year rate adjustment methodology is based on the documented cost
of provided solid waste services as expressed in Waste Connections’ audited financial statements, we
find that the current and proposed solid waste service rates will generate revenues sufficient to cover the
cost-of-providing service plus a reasonable profit allowance commensurate with normal expectations in
the solid waste industry.
R3 also analyzed the proposed solid waste service rates for adequacy with respect to proportionate
allocation of costs among solid waste service customers. R3 found that the current (and thus also
4 Rate adjustments shown include grossing up for franchise fees per 1994 Rate Manual methodology, except for San
Luis Obispo.
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New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 17 of 19
proposed) solid waste rate structure proportionately allocates costs to service types and container sizes
based on the relative differences in cost associated with the types of services provided to customers.
For example, for customers subscribing to 60- or 90-gallon cart solid waste service, the per-gallon cost-of-
service for those subscribed to the larger container size (90-gallons) is proportionately less than those
subscribed to the smaller container size (60-gallons). This is because solid waste service is comprised of
both fixed and variable costs, with the fixed cost portion being for the cost of collection (labor, fuel, capital
equipment, and other shared costs) as well as the costs related to post-collection disposal, processing,
recycling and composting. Thus, the cost-of-service for the larger container size (90-gallons) has a lesser
proportion of fixed costs to variable costs compared to the smaller (60-gallon) container size.
Factors Affecting 2025 Rate Adjustments
Overall, for the Agencies and the three Waste Connections business units, the 2025 rate adjustments
reflect an 8.12% increase in revenues to meet increased costs and revised profit allowances. The largest
contributors to the overall increase are:
Increases in organics processing costs – Third-party costs for the organic waste post-
collection processing facility operated by the company formerly named Hitachi Zosen INOVA, and
which are not within Waste Connections’ control, have doubled since 2022. The change in cost is
the result of changes in facility capital and operating costs.
Increases in landfill disposal costs – Related party costs for landfill waste disposal at Cold
Canyon have remained flat since 2016. The 2025 rate adjustment reflects a market adjustment to
these costs, from a per ton tipping fee of $41 per ton (in place since 2016) to a per ton tipping fee
of $70. Waste Connections provided market comparison demonstrating the applicability of the
$70 per ton market tipping fee.
Other factors play minor roles in the 2025 rate adjustment:
Collection costs including labor, vehicles, operating expenses and overhead – These costs
are increasing in proportion to the Consumer Price Index and are projected to increase by 3.20%
in 2024 and 4.21% for 2025.
Agency fees – These costs are mostly proportionate to changes in rates and are projected to
increase by 2.22% in 2024 and 3.30% in 2025.
Overall, collection services comprise the single largest component overall rate funded expenses, at 56%
of total rate revenues. Post-collection services are the next largest component of rate funding, at 29% of
total rate revenues. Agency fees comprise 10% of rate revenues and profit allowance comprises 5% of
rate revenues. This is demonstrated in Chart 5, on the following page.
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New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 18 of 19
Chart 5: Summary Components of 2025 Rate Revenues
New Rate Adjustment Methodology
The City and Waste Connections negotiated a new methodology for adjusting rates starting in 2026,
which are summarized below. R3 is preparing an exhibit to the City’s new agreement with Waste
Connections that will further detail the terms and conditions of the new methodology in accordance with
the following points, which have been tentatively agreed to by the parties. The exhibit will be finalized and
ready for distribution to the Agencies on or around November 18, 2024. It is recommended that the
Agencies bring forward the exhibit as an amendment to their agreements with Waste Connections when
considering the 2025 rate adjustments, which is anticipated to occur in January 2025.
The features of the new methodology include:
CPI Adjustments:Starting in 2026, rate adjustments will be based on the Garbage and Trash
CPI, with a floor of 2% and a cap of 5%. Amounts under 2% or over 5% will carry forward. The
CPI adjustment will apply to Waste Connections’ collection and post-collection cost centers. The
proposed CPI is the Consumer Price Index for all Urban Consumers for Garbage and Trash in the
United States, all City average. Details and prior results for this CPI are included in Attachment 3.
This is the same CPI used by Waste Connections in preparing its 2025 base year application.
Updated Profit Allowance:As stated previously, the 2025 rate adjustment includes a 9% profit
allowance of projected collection costs. The City and Waste Connections have tentatively agreed
that, in 2026 and thereafter, the profit allowance will be 10% of collection costs.
Revenue Balancing Mechanism:Starting in 2027, adjustments to rates will account for
shortfalls or surpluses in Waste Connections’ actual revenues compared to projected revenues
from prior years. For example, if Waste Connections’ 2025 revenues exceed projections, the
amount of surplus revenues will be credited to the rates in 2027 (and vice versa), achieving
fairness in compensation and rates for the company and for ratepayers. Such adjustments would
take place annually and will be independent of the CPI cap and floor noted above.
Less Frequent Cost-Based Adjustments:Currently, solid waste rates are adjusted based on
the 1994 Rate Manual every three years on Waste Connections’ costs. Via the new methodology,
Collection
Services
56%
Post-
Collection
Services
29%
Agency Fees
10%
Profit
Allowance
5%
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New Rate Adjustment Methodology and 2025 Rates
City of San Luis Obispo |New Solid Waste Rate Adjustment Methodology and 2025 Rates 19 of 19
cost-based adjustments would occur a maximum of every five years, and only if requested by
Waste Connections or the City. The first opportunity for a cost-based adjustment will be for the
2030 rate year. If neither Waste Connections nor the City request a cost-based adjustment, then
the CPI adjustment approach will be applied. Cost-based adjustments will be based on Waste
Connections’ consolidated audited financial statements for the region. Timeframes for cost-based
adjustment application and review process will be ample, such that the City will have sufficient
time for review and approval processes and such that the potential for delay in implementation is
minimized.
Extraordinary Adjustments:The California Air Resources Board (CARB) Advanced Clean
Fleets (ACF) regulation is requiring all solid waste collection trucks to be zero emissions in 2042.
This includes a phased in plan to get the percentage of the fleet to be zero emission vehicle
(ZEV) with 10% by 2030, 25% by 2033, 50% by 2036,75% by 2039 and100% by 2042. During
CPI Adjustment years, Waste Connections may request extraordinary rate adjustments due to
changes in law affecting collection operations, including for compliance with CARB’s ACF zero
emission mandate (which may necessitate change to depreciation schedules). The City may, but
is not obligated to, consider requests for extraordinary rate adjustments due to changes in law
affective post-collection operations. Requests for extraordinary change are subject to good faith
meet and confer negotiations between City and Waste Connections.
Example Calculations for 2026 through 2029
R3 has prepared example calculations of projected rate adjustments for 2026 through 2029 based on the
tentatively agreed to terms and conditions outlined above (including adjustment to 10% profit allowance
on collection services starting in 2026). Table 12, below, demonstrates this example for the City of San
Luis Obispo, and Attachment 4 provides examples for all Agencies. Note that the example in Table 12
and Attachment 4 includes the following assumptions:
CPI at the 5% cap (note that CPI below the 5% cap will result in lower rate adjustments)
Revenue reconciliation at 1% below annual rate revenue projections (note that amounts above
rate revenue projections will offset rate adjustments, not add to them).
Discontinuance of the prior Franchise Fee grossing method on rate adjustment for all Agencies
starting in 2026.
Table 12: Example Calculation of New Rate Methodology for the City of San Luis Obispo
2025 2026 2027 2028 2029
Collection Services $8,539,055 $8,966,008 $9,414,308 $9,885,024 $10,379,275
Profit Allowance 768,515 896,601 941,431 988,502 1,037,927
Post-Collection Services 4,602,096 4,832,201 5,073,811 5,327,501 5,593,876
Franchise Fee 1,586,412 1,675,695 1,777,106 1,866,072 1,959,572
AB 939 Fee 368,041 386,443 405,765 426,053 447,356
Revenue Reconciliation Example N/A N/A 158,641 167,569 177,711
Total Revenues 15,864,119 16,756,947 17,771,062 18,660,722 19,595,717
Indexed Rate Adjustment 5.63% 6.05% 5.01% 5.01%
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Series Id:
Series Title:
Area:
Item:
Base Period:
Years:
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec HALF1 HALF2
2014 422.440 422.483 423.413 425.393 425.242 425.930 426.562 426.771 427.327 427.995 427.808 428.187
2015 427.734 429.248 429.235 429.807 431.234 430.813 431.229 432.967 433.843 434.829 436.428 436.996
2016 437.205 438.296 437.699 437.676 438.317 437.858 438.607 439.358 439.707 440.311 443.343 444.745
2017 446.266 447.699 446.987 447.129 447.272 448.046 448.328 448.717 449.008 452.196 453.820 453.596
2018 453.354 454.915 455.230 458.722 462.887 465.041 465.579 470.457 471.026 472.535 486.650 485.935 458.358 475.364
2019 475.687 477.474 478.569 479.449 480.865 480.984 482.138 483.987 484.346 486.133 486.485 486.708 478.838 484.966
2020 491.003 494.429 495.288 494.432 494.946 496.679 498.564 500.882 501.756 503.315 504.970 508.190 494.463 502.946
2021 512.722 517.270 518.505 518.579 516.440 517.202 521.185 524.408 529.934 530.114 529.053 532.538 516.786 527.872
2022 533.078 538.313 540.719 542.564 544.546 547.554 548.187 548.706 558.254 561.090 563.816 565.185 541.129 557.540
2023 570.412 575.697 576.773 580.124 587.431 589.812 596.167 597.347 596.997 597.569 601.631 602.164 580.042 598.646
2024 606.773 610.551 610.015 611.073 609.538 611.946 614.089 615.880 609.983
U.S. city average
Garbage and trash collection
DECEMBER 1983=100
2014 to 2024
Consumer Price Index for All Urban Consumers (CPI-U)
Original Data Value
CUUR0000SEHG02
Not Seasonally Adjusted
Garbage and trash collection in U.S. city average, all
b t ll dj t d
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Notice of Public Hearing Regarding
Proposed Solid Waste Rate Adjustment
Residential, Multi-Family, and Commercial Property Owners and Tenants - Customers:
This notice is intended to inform you that the City of San Luis Obispo (the “City”) will hold a public hearing
regarding rate adjustments (the “Proposed Rate Adjustment”) proposed by San Luis Garbage Company (the
“Garbage Company”) for properties and customers receiving solid waste, recycling, and organics services within
the City. The Proposed Rate Adjustment will be considered by the San Luis Obispo City Council at the date, time,
and location specified below. Consistent with the requirements of Proposition 218, this notice also provides you
with the following information:
● The Amount of the Proposed Rate Adjustment;
● The Effective Date of the Rate Adjustment;
● The Date, Time, and Place of the Public Hearing;
● The Majority Protest Procedures;
● The Reason for the Proposed Rate Adjustment; and
● The Basis for the Proposed Rate Adjustment.
NOTICE OF PUBLIC HEARING
The Public Hearing for the Proposed Rate Adjustment within the City limits will be held on:
Date: March 18, 2025 Time: 5:30 p.m.
Place: San Luis Obispo City Hall, 990 Palm Street, San Luis Obispo, CA
At the Public Hearing, the City Council will consider all public comment in support of and in opposition to the
Proposed Rate Adjustment and whether or not a Majority Protest exists pursuant to the California
Constitution (as described below).
If approved, the Proposed 2025 Rate Adjustment would become effective on March 19, 2025, and annual
adjustments would be effective each January 1 of 2026, 2027, 2028 and 2029.
Reason For and Basis of the Proposed Rate Adjustments
The Proposed Rate Adjustment for 2025 is based on the Garbage Company’s documented cost of providing solid
waste services and is a 7.98% increase above current solid waste rates. This cost-based adjustment is necessary
for the Garbage Company to continue to provide safe, environmentally sound and reliable solid waste removal,
transportation and disposal services to the residents and businesses of the City. The adjustments are requested
due to:
• Increases in organics processing costs – Third-party costs for the organic waste post-collection
processing facility operated by Kanadevia Inova Anaerobic Digestion Facility, formerly Hitachi Zosen
INOVA, have doubled since 2022. The change in cost is the result of changes in facility capital and
operating costs.
Page 429 of 486
• Increases in landfill disposal costs – Related party costs charged to the customer for landfill waste
disposal at Cold Canyon Landfill have remained the same since 2016. The 2025 rate adjustment
reflects a market adjustment to these costs, from a per ton tipping fee of $41 per ton (in place since
2016) to a per ton tipping fee of $70. The Garbage Company provided marke t comparison
demonstrating the applicability of the $70 per ton market tipping fee.
• Collection costs including labor, vehicles, operating expenses and overhead – These costs are
increasing by 4.22% in 2025.
• Adjustments necessary for moving to a new methodology for annual rate adjustments that provides
for increased rate stability, predictability, fairness, transparency, ease of administration, and cost -
effectiveness. These include updated depreciation lifespans for solid waste collection vehicles,
change to the limitation on corporate overhead costs for legal, tax, payroll, human resources,
engineering, compliance, IT, training and recruiting programs, and updated profit allowance (to 9%
of projected collection service costs in 2025, approximately 5% of overall costs) in-keeping with
industry standards.
• Adjustments for new service enhancements, including the ability for residents to exchange a
collection cart once annually at no additional cost, a few no cost bulky/large item collections, and a
Customer Assistance Program providing a 20% low-income discount provided to residential
customers using 20, 32, or 64-gallon cart service (using existing City practices to determine eligibility).
Beginning March 19, 2025, commercial customers enrolled in recycling bin service collection once and twice a
week will begin paying for the service at 25% of the correlating trash bin service level rate.
The Proposed Rate Adjustments for 2025 applicable to residential solid waste customers are shown in the table
below.
Garbage
Container Size 2024 Change in
Monthly Rate 2025
20-gallon $14.74 $1.18 $15.92
32-gallon $23.53 $1.88 $25.41
64-gallon $47.05 $3.75 $50.80
96-gallon $70.60 $5.63 $76.23
In addition, commencing each January 1 of 2026, 2027, 2028 and 2029 solid waste rates will be adjusted based
on the following:
• Annual change in the Bureau of Labor Statistics’ Consumer Price Index (CPI) for Garbage and Trash
Collection in the U.S all city average, with a minimum 2% adjustment and a maximum 5% adjustment.
Amounts below the minimum or above the maximum will carry forward to the following year.
• Calculation of a 10% profit allowance on projected collection service costs (increased from 9% in
2025, and approximately 5.5% of overall costs) to the Garbage Company starting in 2026 (estimated
at an additional 0.67% to 0.69% adjustment in 2026).
Page 430 of 486
• Addition of a revenue balancing mechanism starting in 2027, wherein actual revenues from solid
waste rates over or under projections carry forward as additions to, or offsets against, the annual
CPI adjustment.
• The rate adjustment for January 1, 2026, is not expected to exceed 8% and rate adjustments for
January 1, 2027, 2028 and 2029 are not expected to exceed 7%.
The Proposed Rate Adjustments have been independently reviewed for consistency with the City of San Luis
Obispo Rate Setting Process and Methodology Manual for Integrated Solid Waste Management dated June 1994
and in accordance with the provisions of the City’s Franchise Agreement with the Garbage Company, as
amended, governing solid waste service within the boundaries of the City. The Proposed Rate Adjustments
contemplate implementation of a new methodology for annual rate adjustments which is described in the New
Solid Waste Rate Adjustment Methodology and 2025 Rates report authored by independent reviewer, R3
Consulting Group, Inc. The consultant’s report and the complete set of proposed 2025 solid waste rates is
available at the City Clerk’s office located at 990 Palm Street, San Luis Obispo, California . The complete set of
proposed 2025 rates is also available online at sanluisgarbage.com.
How Do I Protest the Proposed Rate Adjustments?
Pursuant to Section 6 of Article XIII D of the California Constitution, the following persons may submit a written
protest against the Proposed Rate Adjustments to the City Clerk before the close of the Public Hearing
referenced above.
An owner(s) of property (parcel(s)) receiving solid waste, recycling, and organics services within the City
limits. If the person(s) signing the protest, as an owner, is not shown on the last equalized assessment
roll as the owner of the parcel(s) then the protest must contain or be accompanied by written evidence
that such person signing the protest is the owner of the parcel(s) receiving services;
or
A tenant(s) whose name appears on the Garbage Company’s records as the customer of record for the
corresponding parcel receiving solid waste, recycling, and organics services within the City limits (tenant-
customer).
A valid written protest must contain a statement that you protest the Proposed Rate Adjustments, the address
or Assessor’s Parcel Number (APN) of the parcel or parcels which receive solid waste, recycling, and organics
services, and a signature by either the owner or the tenant -customer of the parcel or parcels. One written
protest per parcel shall be counted in calculating a majority protest to the Proposed Rate Adjustments subject
to the requirements of Section 6 of Article XIII D of the California Constitution. Written protests will not b e
accepted by e-mail or by facsimile. Verbal protests will not be counted in determining the existence of a majority
protest. To be counted, a protest must be received in writing by the City Clerk before the close of the Public
Hearing referenced above.
Written protests regarding the solid waste rate Adjustment may be mailed to:
City of San Luis Obispo
Attn: City Clerk
990 Palm Street
San Luis Obispo, CA 93401-3249
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Written protests may also be personally delivered to the City Clerk at San Luis Obispo City Hall located at 990
Palm Street, San Luis Obispo, California, 93401.
If valid written protests are presented by a majority of owners and/or tenants -customers of parcels receiving
solid waste, recycling, and organics services within the City limits, then the City will not adjust the rates for the
services.
Questions can also be directed to San Luis Garbage by calling (805) 543-0875.
An informational session has been coordinated to allow the opportunity for the public to learn and ask questions
about the proposed rate adjustment on a date prior to the public hearing.
Informational Session
Date: February 26, 2025
Time: Doors open at 5:00 p.m., brief presentation at 5:30 p.m.
Location: Ludwick Community Center
864 Santa Rosa Street
San Luis Obispo, CA 93401
SAN LUIS GARBAGE COMPANY, INC.
RATE ADJUSTMENT EFFECTIVE MARCH 19, 2025
CITY OF SAN LUIS OBISPO
SINGLE-FAMILY AND MULTI-FAMILY RESIDENTIAL CART
Residential customers must use containers provided by San Luis Garbage. The bundled residential cart rate includes
weekly pickup of one trash cart (black or gray lid), one organics cart (green lid), and one recycling cart (blue lid), at no
extra cost.
RESIDENTIAL CART SERVICE
Pickup
Per
Week
Monthly Rate
Effective
01/01/2024
PROPOSED
7.98%
RATE
ADJUSTMENT
MONTHLY
RATE
EFFECTIVE
3/19/2025
19 Gallon Cart Set 1 $14.74 1.18 15.92
32 Gallon Cart Set 1 $23.53 1.88 25.41
64 Gallon Cart Set 1 $47.05 3.75 50.80
PARA UNA VERSIÓN EN ESPAÑOL DE ESTE “AVISO DE AUDENCIA PÚBLICA SOBRE LOS
AUMENTOR PROPUESTOS DE LA TASA DE RESIDUOS SÓLIDOS”, UTILICE EL SIGUIENTE ENLACE
AL SITIO WEB:
www.sanluisgarbage.com/news
Si tiene preguntas o consultas adicionales, no dude en comunicarse con la compañía de basura
al (805) 543-0875 y uno de nuestros representantes de servicio al cliente podrá ayudarlo.
Page 432 of 486
96 Gallon Cart Set 1 $70.60 5.63 76.23
32 Gallon Additional Trash Cart 1 $21.45 1.71 23.16
64 Gallon Additional Trash Cart 1 $42.93 3.43 46.36
96 Gallon Additional Trash Cart 1 $64.36 5.14 69.50
32/64/96 Additional Recycle Cart 1 $4.93 0.39 5.32
32/96 Additional Organics Cart 1 $9.16 0.73 9.89
DESIGNED MANUAL SERVICE (determined by city staff)
19 Gallon Cart Set 1 $23.93 1.91 25.84
32 Gallon Cart Set 1 $38.29 3.06 41.35
64 Gallon Cart Set 1 $76.63 6.12 82.75
96 Gallon Cart Set 1 $114.89 9.17 124.06
LATE MAKEUP COLLECTIONS WITH TRASH TRUCK (Phone call required)
TRIP CHARGE, plus additional charge below for any
extra carts or equivalent volume (gallons). $23.74 1.89 25.63
- Additional charge per 32 gallon cart. $11.77 0.94 12.71
EXTRA COLLECTIONS WITH PICKUP OR FLATBED TRUCK (Phone call required)
TRIP CHARGE, plus applicable amount below: $35.59 2.84 38.43
- Contamination Fee (Equivalent to a trash cart dump) $0.00 12.71 12.71
- Per trash cart or equivalent volume (over 6 cans) $11.77 0.94 12.71
- Per recycle cart or equivalent volume (over 6 cans) $5.88 0.47 6.35
- Per bulky/large item or white goods/large appliance
(after no cost collections are used - see notes section
for details) $44.48 3.55 48.03
- Per piece of small size furniture/appliance (after no
cost collections are used - see notes section for details) $26.30 2.10 28.40
- Per mattress with boxspring. $26.30 2.10 28.40
RESIDENTIAL - OTHER CHARGES:
TAX LIEN CERT. MAIL FEE $5.36 0.43 5.79
SPECIAL TRIP FEE $71.20 5.68 76.88
LOOSE CARDBOARD $12.63 1.01 13.64
RESTART FEE-RESIDENTIAL $35.59 2.84 38.43
VACANT RATE $12.10 0.97 13.07
SERVICE AWAY FROM THE CURB $16.04 1.28 17.32
CART REPLACMENT (One provided annually at no
cost) $34.07 2.72 36.79
USED OIL COLLECTION - no charge (Call for details and pick up information).
Page 433 of 486
MULTI-FAMILY RESIDENTIAL BIN (5 UNITS OR MORE)
MULTI-FAMILY TRASH BIN SERVICE
(Cubic Yards)
Pickup
Per
Week
Monthly Rate
Effective
01/01/2024
PROPOSED
7.98%
RATE
ADJUSTMENT
MONTHLY
RATE
EFFECTIVE
3/19/2025
1 Yard Trash Bin 1 $170.30 13.59 183.89
1 Yard Trash Bin 2 $248.03 19.79 267.82
1 Yard Trash Bin 3 $325.64 25.99 351.63
1 Yard Trash Bin 4 $403.32 32.18 435.50
1 Yard Trash Bin 5 $481.05 38.39 519.44
1 Yard Trash Bin 6 $558.64 44.58 603.22
1 Yard Trash Bin 7 $502.44 40.09 542.53
1.5 Yard Trash Bin 1 $197.18 15.73 212.91
1.5 Yard Trash Bin 2 $304.72 24.32 329.04
1.5 Yard Trash Bin 3 $412.30 32.90 445.20
1.5 Yard Trash Bin 4 $519.81 41.48 561.29
1.5 Yard Trash Bin 5 $627.36 50.06 677.42
1.5 Yard Trash Bin 6 $734.88 58.64 793.52
1.5 Yard Trash Bin 7 $842.41 67.22 909.63
2 Yard Trash Bin 1 $224.06 17.88 241.94
2 Yard Trash Bin 2 $358.50 28.61 387.11
2 Yard Trash Bin 3 $492.92 39.34 532.26
2 Yard Trash Bin 4 $627.35 50.06 677.41
2 Yard Trash Bin 5 $761.78 60.79 822.57
2 Yard Trash Bin 6 $896.21 71.52 967.73
2 Yard Trash Bin 7 $1,030.60 82.24 1,112.84
3 Yard Trash Bin 1 $277.79 22.17 299.96
3 Yard Trash Bin 2 $466.06 37.19 503.25
3 Yard Trash Bin 3 $654.26 52.21 706.47
3 Yard Trash Bin 4 $842.50 67.23 909.73
3 Yard Trash Bin 5 $1,030.65 82.25 1,112.90
3 Yard Trash Bin 6 $1,218.91 97.27 1,316.18
3 Yard Trash Bin 7 $1,407.13 112.29 1,519.42
4 Yard Trash Bin 1 $331.61 26.46 358.07
4 Yard Trash Bin 2 $576.56 46.01 622.57
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4 Yard Trash Bin 3 $821.60 65.56 887.16
4 Yard Trash Bin 4 $1,066.61 85.12 1,151.73
4 Yard Trash Bin 5 $1,311.55 104.66 1,416.21
4 Yard Trash Bin 6 $1,556.59 124.22 1,680.81
4 Yard Trash Bin 7 $1,801.65 143.77 1,945.42
6 Yard Trash Bin 1 $439.12 35.04 474.16
6 Yard Trash Bin 2 $794.65 63.41 858.06
6 Yard Trash Bin 3 $1,150.20 91.79 1,241.99
6 Yard Trash Bin 4 $1,505.73 120.16 1,625.89
6 Yard Trash Bin 5 $1,861.29 148.53 2,009.82
6 Yard Trash Bin 6 $2,286.55 182.47 2,469.02
6 Yard Trash Bin 7 $2,596.25 207.18 2,803.43
8 Yard Trash Bin 1 $534.94 42.69 577.63
8 Yard Trash Bin 2 $992.34 79.19 1,071.53
8 Yard Trash Bin 3 $1,450.54 115.75 1,566.29
8 Yard Trash Bin 4 $1,909.22 152.36 2,061.58
8 Yard Trash Bin 5 $2,368.06 188.97 2,557.03
8 Yard Trash Bin 6 $2,915.92 232.69 3,148.61
8 Yard Trash Bin 7 $4,871.03 388.71 5,259.74
MULTI-FAMILY RECYCLING BIN
SERVICE
(Cubic Yards)
Pickup
Per
Week
Monthly Rate
Effective
01/01/2024
PROPOSED
7.98%
RATE
ADJUSTMENT
MONTHLY RATE
EFFECTIVE
03/19/2025
1 Yard Recycle Bin 1 $0.00 45.97 45.97
1 Yard Recycle Bin 2 $0.00 66.96 66.96
1 Yard Recycle Bin 3 $81.41 6.50 87.91
1 Yard Recycle Bin 4 $100.83 8.05 108.88
1 Yard Recycle Bin 5 $120.26 9.60 129.86
1 Yard Recycle Bin 6 $139.66 11.14 150.80
1 Yard Recycle Bin 7 $125.61 10.02 135.63
1.5 Yard Recycle Bin 1 $0.00 53.23 53.23
1.5 Yard Recycle Bin 2 $0.00 82.26 82.26
1.5 Yard Recycle Bin 3 $103.08 8.23 111.31
1.5 Yard Recycle Bin 4 $129.95 10.37 140.32
1.5 Yard Recycle Bin 5 $156.84 12.52 169.36
1.5 Yard Recycle Bin 6 $183.72 14.66 198.38
Page 435 of 486
1.5 Yard Recycle Bin 7 $210.60 16.81 227.41
2 Yard Recycle Bin 1 $0.00 60.49 60.49
2 Yard Recycle Bin 2 $0.00 96.78 96.78
2 Yard Recycle Bin 3 $123.23 9.83 133.06
2 Yard Recycle Bin 4 $156.84 12.52 169.36
2 Yard Recycle Bin 5 $190.45 15.20 205.65
2 Yard Recycle Bin 6 $224.05 17.88 241.93
2 Yard Recycle Bin 7 $257.65 20.56 278.21
3 Yard Recycle Bin 1 $0.00 74.99 74.99
3 Yard Recycle Bin 2 $0.00 125.81 125.81
3 Yard Recycle Bin 3 $163.57 13.05 176.62
3 Yard Recycle Bin 4 $210.63 16.81 227.44
3 Yard Recycle Bin 5 $257.66 20.56 278.22
3 Yard Recycle Bin 6 $304.73 24.32 329.05
3 Yard Recycle Bin 7 $351.78 28.07 379.85
4 Yard Recycle Bin 1 $0.00 89.52 89.52
4 Yard Recycle Bin 2 $0.00 155.64 155.64
4 Yard Recycle Bin 3 $205.40 16.39 221.79
4 Yard Recycle Bin 4 $266.65 21.28 287.93
4 Yard Recycle Bin 5 $327.89 26.17 354.06
4 Yard Recycle Bin 6 $389.15 31.05 420.20
4 Yard Recycle Bin 7 $450.41 35.94 486.35
6 Yard Recycle Bin 1 $0.00 118.54 118.54
6 Yard Recycle Bin 2 $0.00 214.52 214.52
6 Yard Recycle Bin 3 $287.55 22.95 310.50
6 Yard Recycle Bin 4 $376.43 30.04 406.47
6 Yard Recycle Bin 5 $465.32 37.13 502.45
6 Yard Recycle Bin 6 $571.64 45.62 617.26
6 Yard Recycle Bin 7 $649.06 51.79 700.85
8 Yard Recycle Bin 1 $0.00 144.41 144.41
8 Yard Recycle Bin 2 $0.00 267.88 267.88
8 Yard Recycle Bin 3 $362.64 28.94 391.58
8 Yard Recycle Bin 4 $477.31 38.09 515.40
8 Yard Recycle Bin 5 $592.02 47.24 639.26
8 Yard Recycle Bin 6 $728.98 58.17 787.15
8 Yard Recycle Bin 7 $1,217.76 97.18 1,314.94
Page 436 of 486
ADDITIONAL INFORMATION - RESIDENTIAL CUSTOMERS
1. For Temporary Bins or Rolloff Box services, please call the office for current rates.
2. Polystyrene (Styrofoam, Plastic #6) and soft plastics (plastic bags/films) are not accepted in the mixed recycling
program and must be disposed as trash. Mixed recycle in plastic bags will be tagged for contamination.
3. Trash, Recycle, and organics carts should be placed next to one another for collection.
4. BULKY/LARGE ITEM COLLECTION:
- Single-Family customers may schedule one (1) large/bulky item collection throughout the year at no additional
charge and schedule one (1) large/bulky item pickup during each Clean Up Week at no additional charge. Additional
pickups scheduled during Clean Up Week will be charged at a discounted rate.
- Multi-Family customers may schedule up to four (4) large/bulky item collections throughout the year at no additional
charge and schedule up to four (4) large/bulky item pickups during each Clean Up Week at no additional charge.
Additional pickups scheduled during Clean Up Week will be charged at a discounted rate.
*Clean Up Week is held two times per year in the spring and fall.
5. Low-income residential customers may be eligible for a 20% discount off of the garbage rate. To check eligibility,
visit slocity.org/recycle or call the City of San Luis Obispo at (805) 781 -7215.
6. Late Fees are imposed for residential customers over 30 days delinquent. The fee is 1.5% per month of the
outstanding charge, with a minimum fee of $5.00. No prior notice is required, as this late fee policy is stated at the
bottom of every bill.
7. Any additional recycling services are charged at a 75% discount of the garbage rate for the equivalent container
size and frequency.
8. The fee schedule above only includes the Garbage Company rates and does not include IWMA fees, which are
separately noted on the billings.
9. It is encouraged to bag your trash in the garbage container, but do not bag your recyclables or organic materials in
their respective carts. Keep items loose.
COMMERCIAL
Commercial customers must use trash carts from San Luis Garbage. The bundled commercial cart rate includes
weekly pickup of one trash cart (black or gray lid), one organics cart (green lid), and one recycling cart (blue lid),
including the same level of service at no additional charge. Additional recycling or organic cart pickups are available at
a 75% discount off the trash cart rate for the specified service level.
COMMERCIAL CART SERVICE Pickups Per
Week
Monthly Rates
Effective
01/01/2024
PROPOSED
7.98%
RATE
ADJUSTMENT
MONTHLY
RATE
EFFECTIVE
3/19/2025
One 32 Gallon Trash Cart 1 $41.85 3.34 45.19
One 32 Gallon Trash Cart 2 $65.68 5.24 70.92
One 32 Gallon Trash Cart 3 $89.65 7.15 96.80
One 32 Gallon Trash Cart 4 $113.50 9.06 122.56
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One 32 Gallon Trash Cart 5 $137.37 10.96 148.33
One 32 Gallon Trash Cart 6 $161.29 12.87 174.16
One 32 Gallon Trash Cart 7 $185.12 14.77 199.89
Two 32 Gallon Trash Carts 1 $53.78 4.29 58.07
Two 32 Gallon Trash Carts 2 $83.69 6.68 90.37
Two 32 Gallon Trash Carts 3 $113.54 9.06 122.60
Two 32 Gallon Trash Carts 4 $143.40 11.44 154.84
Two 32 Gallon Trash Carts 5 $173.34 13.83 187.17
Two 32 Gallon Trash Carts 6 $203.19 16.21 219.40
Two 32 Gallon Trash Carts 7 $233.05 18.60 251.65
Three 32 Gallon Trash Carts 1 $65.72 5.24 70.96
Three 32 Gallon Trash Carts 2 $101.66 8.11 109.77
Three 32 Gallon Trash Carts 3 $137.46 10.97 148.43
Three 32 Gallon Trash Carts 4 $173.41 13.84 187.25
Three 32 Gallon Trash Carts 5 $209.20 16.69 225.89
Three 32 Gallon Trash Carts 6 $245.06 19.56 264.62
Three 32 Gallon Trash Carts 7 $280.96 22.42 303.38
Four 32 Gallon Trash Carts 1 $77.70 6.20 83.90
Four 32 Gallon Trash Carts 2 $119.55 9.54 129.09
Four 32 Gallon Trash Carts 3 $161.34 12.87 174.21
Four 32 Gallon Trash Carts 4 $203.20 16.22 219.42
Four 32 Gallon Trash Carts 5 $245.03 19.55 264.58
Four 32 Gallon Trash Carts 6 $286.90 22.89 309.79
Four 32 Gallon Trash Carts 7 $328.66 26.23 354.89
Five 32 Gallon Trash Carts 1 $89.68 7.16 96.84
Five 32 Gallon Trash Carts 2 $137.44 10.97 148.41
Five 32 Gallon Trash Carts 3 $185.25 14.78 200.03
Five 32 Gallon Trash Carts 4 $233.03 18.60 251.63
Five 32 Gallon Trash Carts 5 $280.90 22.42 303.32
Five 32 Gallon Trash Carts 6 $328.63 26.22 354.85
Five 32 Gallon Trash Carts 7 $376.42 30.04 406.46
Six 32 Gallon Trash Carts 1 $101.66 8.11 109.77
Six 32 Gallon Trash Carts 2 $155.37 12.40 167.77
Six 32 Gallon Trash Carts 3 $209.11 16.69 225.80
Six 32 Gallon Trash Carts 4 $262.92 20.98 283.90
Six 32 Gallon Trash Carts 5 $316.63 25.27 341.90
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Six 32 Gallon Trash Carts 6 $370.42 29.56 399.98
Six 32 Gallon Trash Carts 7 $424.17 33.85 458.02
One 64 Gallon Trash Cart 1 $53.78 4.29 58.07
One 64 Gallon Trash Cart 2 $83.69 6.68 90.37
One 64 Gallon Trash Cart 3 $113.54 9.06 122.60
One 64 Gallon Trash Cart 4 $143.40 11.44 154.84
One 64 Gallon Trash Cart 5 $173.34 13.83 187.17
One 64 Gallon Trash Cart 6 $203.19 16.21 219.40
One 64 Gallon Trash Cart 7 $233.05 18.60 251.65
One 96 Gallon Trash Cart 1 $74.59 5.95 80.54
One 96 Gallon Trash Cart 2 $119.42 9.53 128.95
One 96 Gallon Trash Cart 3 $164.24 13.11 177.35
One 96 Gallon Trash Cart 4 $209.03 16.68 225.71
One 96 Gallon Trash Cart 5 $253.92 20.26 274.18
One 96 Gallon Trash Cart 6 $298.67 23.83 322.50
One 96 Gallon Trash Cart 7 $343.52 27.41 370.93
Two 96 Gallon Trash Carts 1 $122.25 9.76 132.01
Two 96 Gallon Trash Carts 2 $187.91 15.00 202.91
Two 96 Gallon Trash Carts 3 $253.65 20.24 273.89
Two 96 Gallon Trash Carts 4 $319.33 25.48 344.81
Two 96 Gallon Trash Carts 5 $385.08 30.73 415.81
Two 96 Gallon Trash Carts 6 $450.73 35.97 486.70
Two 96 Gallon Trash Carts 7 $516.56 41.22 557.78
Three 96 Gallon Trash Carts 1 $169.91 13.56 183.47
Three 96 Gallon Trash Carts 2 $256.52 20.47 276.99
Three 96 Gallon Trash Carts 3 $343.17 27.38 370.55
Three 96 Gallon Trash Carts 4 $429.79 34.30 464.09
Three 96 Gallon Trash Carts 5 $516.45 41.21 557.66
Three 96 Gallon Trash Carts 6 $603.03 48.12 651.15
Three 96 Gallon Trash Carts 7 $689.68 55.04 744.72
Four 96 Gallon Trash Carts 1 $217.55 17.36 234.91
Four 96 Gallon Trash Carts 2 $325.10 25.94 351.04
Four 96 Gallon Trash Carts 3 $433.63 34.60 468.23
Four 96 Gallon Trash Carts 4 $540.18 43.11 583.29
Four 96 Gallon Trash Carts 5 $647.76 51.69 699.45
Four 96 Gallon Trash Carts 6 $755.24 60.27 815.51
Page 439 of 486
Four 96 Gallon Trash Carts 7 $862.87 68.86 931.73
Five 96 Gallon Trash Carts 1 $265.21 21.16 286.37
Five 96 Gallon Trash Carts 2 $393.76 31.42 425.18
Five 96 Gallon Trash Carts 3 $522.15 41.67 563.82
Five 96 Gallon Trash Carts 4 $650.62 51.92 702.54
Five 96 Gallon Trash Carts 5 $779.06 62.17 841.23
Five 96 Gallon Trash Carts 6 $907.53 72.42 979.95
Five 96 Gallon Trash Carts 7 $1,073.98 85.70 1,159.68
Six 96 Gallon Trash Carts 1 $312.90 24.97 337.87
Six 96 Gallon Trash Carts 2 $462.28 36.89 499.17
Six 96 Gallon Trash Carts 3 $611.67 48.81 660.48
Seven 96 Gallon Trash Carts 1 $360.54 28.77 389.31
Eight 96 Gallon Trash Carts 1 $408.22 32.58 440.80
Eight 96 Gallon Trash Carts 7 $1,555.51 124.13 1,679.64
LATE MAKEUP COLLECTIONS WITH GARBAGE TRUCK (Phone call required)
TRIP CHARGE, plus additional charge below for any
extra carts or equivalent volume (gallons). $23.95 1.91 $25.86
- Additional charge per 32 gallon cart. $12.83 1.02 $13.85
COMMERCIAL TRASH BIN SERVICE
(Cubic Yards)
Pickups Per
Week
Monthly Rates
Effective
01/01/2024
PROPOSED
7.98%
RATE
ADJUSTMENT
MONTHLY
RATE
EFFECTIVE
3/19/2025
1 Yard Trash Bin 1 $149.37 11.92 161.29
1 Yard Trash Bin 2 $209.11 16.69 225.80
1 Yard Trash Bin 3 $268.89 21.46 290.35
1 Yard Trash Bin 4 $328.63 26.22 354.85
1 Yard Trash Bin 5 $388.36 30.99 419.35
1 Yard Trash Bin 6 $448.14 35.76 483.90
1 Yard Trash Bin 7 $507.90 40.53 548.43
1.5 Yard Trash Bin 1 $167.31 13.35 180.66
1.5 Yard Trash Bin 2 $244.95 19.55 264.50
1.5 Yard Trash Bin 3 $322.61 25.74 348.35
1.5 Yard Trash Bin 4 $400.31 31.94 432.25
1.5 Yard Trash Bin 5 $477.96 38.14 516.10
Page 440 of 486
1.5 Yard Trash Bin 6 $555.67 44.34 600.01
1.5 Yard Trash Bin 7 $633.35 50.54 683.89
2 Yard Trash Bin 1 $185.21 14.78 199.99
2 Yard Trash Bin 2 $277.83 22.17 300.00
2 Yard Trash Bin 3 $370.51 29.57 400.08
2 Yard Trash Bin 4 $463.09 36.95 500.04
2 Yard Trash Bin 5 $555.72 44.35 600.07
2 Yard Trash Bin 6 $648.34 51.74 700.08
2 Yard Trash Bin 7 $740.94 59.13 800.07
3 Yard Trash Bin 1 $221.08 17.64 238.72
3 Yard Trash Bin 2 $349.50 27.89 377.39
3 Yard Trash Bin 3 $477.96 38.14 516.10
3 Yard Trash Bin 4 $606.45 48.39 654.84
3 Yard Trash Bin 5 $734.88 58.64 793.52
3 Yard Trash Bin 6 $863.37 68.90 932.27
3 Yard Trash Bin 7 $991.87 79.15 1,071.02
4 Yard Trash Bin 1 $256.87 20.50 277.37
4 Yard Trash Bin 2 $424.21 33.85 458.06
4 Yard Trash Bin 3 $591.47 47.20 638.67
4 Yard Trash Bin 4 $758.81 60.55 819.36
4 Yard Trash Bin 5 $926.08 73.90 999.98
4 Yard Trash Bin 6 $1,093.37 87.25 1,180.62
4 Yard Trash Bin 7 $1,260.72 100.61 1,361.33
6 Yard Trash Bin 1 $328.57 26.22 354.79
6 Yard Trash Bin 2 $564.60 45.06 609.66
6 Yard Trash Bin 3 $800.67 63.89 864.56
6 Yard Trash Bin 4 $1,036.72 82.73 1,119.45
6 Yard Trash Bin 5 $1,272.76 101.57 1,374.33
6 Yard Trash Bin 6 $1,508.79 120.40 1,629.19
6 Yard Trash Bin 7 $1,744.87 139.24 1,884.11
8 Yard Trash Bin 1 $400.27 31.94 432.21
8 Yard Trash Bin 2 $704.97 56.26 761.23
8 Yard Trash Bin 3 $1,009.74 80.58 1,090.32
8 Yard Trash Bin 4 $1,314.53 104.90 1,419.43
8 Yard Trash Bin 5 $1,619.29 129.22 1,748.51
8 Yard Trash Bin 6 $1,923.98 153.53 2,077.51
Page 441 of 486
8 Yard Trash Bin 7 $3,273.69 261.24 3,534.93
Sunday Trash Service* $104.59 8.35 112.94
COMMERCIAL RECYCLING BIN
SERVICE
(Cubic Yards)
Pickups Per
Week
Monthly Rates
Effective
01/01/2024
PROPOSED
7.98%
RATE
ADJUSTMENT
MONTHLY
RATE
EFFECTIVE
3/19/2025
1 Yard Recycle Bin 1 $0.00 40.32 40.32
1 Yard Recycle Bin 2 $0.00 56.45 56.45
1 Yard Recycle Bin 3 $67.23 5.36 72.59
1 Yard Recycle Bin 4 $82.44 6.58 89.02
1 Yard Recycle Bin 5 $97.06 7.75 104.81
1 Yard Recycle Bin 6 $112.07 8.94 121.01
1 Yard Recycle Bin 7 $126.95 10.13 137.08
1.5 Yard Recycle Bin 1 $0.00 45.17 45.17
1.5 Yard Recycle Bin 2 $0.00 66.13 66.13
1.5 Yard Recycle Bin 3 $80.66 6.44 87.10
1.5 Yard Recycle Bin 4 $100.05 7.98 108.03
1.5 Yard Recycle Bin 5 $119.47 9.53 129.00
1.5 Yard Recycle Bin 6 $138.89 11.08 149.97
1.5 Yard Recycle Bin 7 $158.34 12.64 170.98
2 Yard Recycle Bin 1 $0.00 50.00 50.00
2 Yard Recycle Bin 2 $0.00 75.00 75.00
2 Yard Recycle Bin 3 $92.62 7.39 100.01
2 Yard Recycle Bin 4 $115.77 9.24 125.01
2 Yard Recycle Bin 5 $138.90 11.08 149.98
2 Yard Recycle Bin 6 $162.11 12.94 175.05
2 Yard Recycle Bin 7 $185.24 14.78 200.02
3 Yard Recycle Bin 1 $0.00 59.68 59.68
3 Yard Recycle Bin 2 $0.00 94.35 94.35
3 Yard Recycle Bin 3 $119.47 9.53 129.00
3 Yard Recycle Bin 4 $151.66 12.10 163.76
3 Yard Recycle Bin 5 $183.73 14.66 198.39
3 Yard Recycle Bin 6 $215.86 17.23 233.09
3 Yard Recycle Bin 7 $315.16 25.15 340.31
4 Yard Recycle Bin 1 $0.00 69.34 69.34
Page 442 of 486
4 Yard Recycle Bin 2 $0.00 114.52 114.52
4 Yard Recycle Bin 3 $147.92 11.80 159.72
4 Yard Recycle Bin 4 $189.70 15.14 204.84
4 Yard Recycle Bin 5 $231.55 18.48 250.03
4 Yard Recycle Bin 6 $273.40 21.82 295.22
4 Yard Recycle Bin 7 $315.16 25.15 340.31
6 Yard Recycle Bin 1 $0.00 88.70 88.70
6 Yard Recycle Bin 2 $0.00 152.42 152.42
6 Yard Recycle Bin 3 $200.20 15.98 216.18
6 Yard Recycle Bin 4 $259.20 20.68 279.88
6 Yard Recycle Bin 5 $318.23 25.39 343.62
6 Yard Recycle Bin 6 $377.18 30.10 407.28
6 Yard Recycle Bin 7 $436.22 34.81 471.03
8 Yard Recycle Bin 1 $0.00 108.05 108.05
8 Yard Recycle Bin 2 $0.00 190.31 190.31
8 Yard Recycle Bin 3 $239.72 19.13 258.85
8 Yard Recycle Bin 4 $312.07 24.90 336.97
8 Yard Recycle Bin 5 $384.42 30.68 415.10
8 Yard Recycle Bin 6 $467.36 37.30 504.66
8 Yard Recycle Bin 7 $541.33 43.20 584.53
The rates shown include the monthly container rental fee and are the same for bins and garwoods, when volume is
identical. (Garwoods are types of containers)
UNSCHEDULED EXTRA COLLECTIONS FOR COMMERCIAL AND MULTI-FAMILY CUSTOMERS
1 CUBIC YARD Per Lift $68.75 5.49 74.24
1.5 CUBIC YARD Per Lift $76.24 6.08 82.32
2 CUBIC YARDS Per Lift $89.66 7.15 96.81
3 CUBIC YARDS Per Lift $110.53 8.82 119.35
4 CUBIC YARDS Per Lift $131.44 10.49 141.93
Rates for all commercial customers for unscheduled extra collections of recycling or organics can be provided at a
75% discount from the trash service rates for the specified level of service required.
COMMERCIAL - OTHER CHARGES:
LOOSE CARDBOARD Per Yard $12.72 1.02 13.74
LOOSE YARDAGE (SOLID WASTE) Per Yard $50.78 4.05 54.83
RENTAL Per Month $59.81 4.77 64.58
TEMPORARY RENTAL CHARGE Per Day $2.00 0.16 2.16
TAX LIEN CERT. MAIL FEE Per Mailing $5.40 0.43 5.83
LOCK CHARGE-FRONT Per Month $112.18 8.95 121.13
LOCK CHARGE-REAR Per Month $96.74 7.72 104.46
Page 443 of 486
STAND BY TIME Per Minute $1.67 0.13 1.80
CART OR BIN REPLACMENT Per Unit $34.07 2.72 36.79
COMPACTORS Per Ton $73.80 5.89 79.69
EXTRA COLLECTIONS WITH PICKUP OR FLATBED TRUCK (Phone call required)
TRIP CHARGE, plus applicable amount below: $35.90 2.86 38.76
- Contamination fee per trash cart or equivalent
volume (per cubic yard above) $0.00 13.85 13.85
- Per trash cart or equivalent volume (over 6 cans) $12.83 1.02 13.85
- Per recycle cart or equivalent volume (over 6 cans) $5.94 0.47 6.41
- Per bulky/large item or white goods/large appliance $26.38 2.11 28.49
- Per piece of small size furniture/appliance $26.38 2.11 28.49
- Per mattress with boxspring. $26.38 2.11 28.49
Commercial Maintenance Fee - per trip $35.90 2.86 38.76
ADDITIONAL INFORMATION - COMMERCIAL CUSTOMERS
1. Polystyrene (Styrofoam, Plastic #6) is no longer collected for recycling and should be thrown away as trash.
2. Organics is recycled in a special green waste wheeler and is picked up once a week at no additional charge.
3. All commercial customers are eligible for one standard recycling cart and one organics cart at no additional
charge. Commercial customers can choose from a 32, a 64, or a 96 gallon blue cart for commingled recycling.
4. Recycling and organics containers should be placed near/next to the garbage container for collection.
5. White office paper can be commingled with the other recyclables in the blue container.
6. Shredded paper can be placed in a knotted, clear bag and put in the recycling container (no other plastic bags are
permitted).
7. Customers requesting Temporary Bins or Rolloff boxes service can call the office for current rates.
8. The fee schedule above only includes the Garbage Company rates and does not include IWMA fees, which are
separately noted on the billings.
9. It is encouraged to bag your trash in the garbage container, but do not bag your recyclables or organic materials in
their respective containers. Keep items loose.
10. Late Fees are imposed for commercial customers over 30 days delinquent. The fee is 1.5% per month of the
outstanding charge, with a minimum fee of $5.00. No prior notice is required, as this late fee policy is stated at the
bottom of every bill.
Page 444 of 486
1
2025 Solid Waste Rate Adjustment and Restated Solid Waste Franchise Agreement
January 21, 2025
2
Recommended Action
1.Adopt a Resolution of Intent entitled, “A Resolution of the City Council of the City of
San Luis Obispo, California, declaring the City’s intent to adopt an Ordinance
restating its existing franchise agreements with San Luis Garbage Company and
set a public hearing for March 18, 2025”pursuant to the provisions of Article X of
the City Charter.
2.Set a Public Hearing date of March 18, 2025, to consider the adoption of the solid
waste rates if there is not a majority protest in accordance with Proposition 218.
3.Approve the publication and mailing of a notice consistent with Article XIIID of the
California Constitution and the Proposition 218 Omnibus Implementation Act
(Proposition 218) as it relates to solid waste rates.
3
Background
1.Solid waste collection and disposal services are critical services
required for health and safety as well as compliance with State
laws.
2.The City’s solid waste collection operations are contracted to
Waste Connections (San Luis Garbage Company or “SLG”) and
are funded through solid waste rates.
3.Rates historically are set by utilizing the Rate Setting Process and
Methodology Manual for Integrated Solid Waste Rates created in
1994, which pre-dated noticing requirements set forth in
Proposition 218 and allowed cost-based rate adjustments every
three years with adjustments from the Consumer Price Index
(CPI) occurring in interim years.
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Background Continued
4.The last cost-based adjustment occurred in 2022, with CPI
adjustments in 2023 and 2024.
5.In July 2024, SLG submitted a cost-based rate adjustment
application for 2025 per the existing 1994 Rate Manual.
6.The City’s Solid Waste and Recycling Franchise Agreements
expire in August 2025.
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“Business As Usual” Timeline
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Amended Timeline
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Notice of Intent to Restate the Franchise Agreement
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Negotiated Service Enhancements
1.Customer Assistance Program –20% discount offered to eligible
low-income residential customers using 19, 32, or 64-gallon cart
service.
2.Free Bulky/Large Item Collections –Collection of up to three
scheduled bulky/large items for single-family residential customers
and up to twelve for multi-family complexes annually (some
collections must occur during semiannual Clean Up Weeks).
3.Annual Cart Exchange –Once annual exchange of a residential
garbage, recycling, or organics cart per customer account.
4.Holiday Tree Collection –No cost collection of in-tact holiday trees
set on curbside for 2 weeks after Christmas Day. No stands,
ornaments, or flocking permitted.
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Negotiated Service Enhancements Continued
4.Illegal Dumping Removal –No cost retrieval of illegally
dumped materials on the sidewalks and in some areas of the
public right-of-way.
5.Special Event Collection Service –No cost collection and
disposal services for up to 12 City events annually.
6.Less Frequent Solid Waste Lien Processes –Public
Hearing to authorize delinquent fees to be placed on the
property tax roll no more than every five years, or when
delinquent accounts exceed $50,000, whichever is sooner.
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1.Earlier Collection Time –Residential collection changed
from 6:30 a.m. to 6:00 a.m. Not included in recommendation.
Staff may come back to Council after evaluation.
2.Growth Cap on Sidewalk Litter Containers –10 percent
growth cap on servicing City containers.
Additional Requests/Changes
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Solid Waste Rate Methodology
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1994 Rate Setting Manual
Proposition 218 noticing
Outdated methodology
Less stability, complex
New Methodology
Rate stability
Predictability
Fairness
Transparency
Ease of administration
Cost-effectiveness
Proposition 218 noticing
Standard practices
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Key Components of the New Rate Methodology
1.Capped CPI Adjustments – Adjustments based on the Garbage and
Trash CPI with a 2% floor and 5% cap.
2.Updated Depreciation Schedule – Changes to collection truck
deprecation from 7 to 10 years.
3.Increase Profit Allowance – Increase of allowable profit from 7% to
9% for collection costs in 2025 and 10% thereafter.
4.Adjustments to the Limitation on Corporate Overhead – Less
restrictions on rates allowable for services such as training, payroll, human
resources.
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Key Components of the New Rate Methodology Continued
5. Revenue Balancing Mechanism – Shortfalls or surpluses in actual
revenues carry forward or credit future adjustments.
6. Less Frequent Cost-Based Adjustments – Optional cost-based
adjustments every 5 years.
7. Allowable Extraordinary Adjustments – Allow potential
adjustments in interim years if unanticipated laws are passed.
8. Rate Adjustment Timeline and Implementation – Earlier rate
application and Proposition 218 process.
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5.25%
1.00%1.60%
13.72%
1.70%0.70%
17.75%
9.10%
3.00%
7.98%
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
CITY OF SLO – HISTORIC RATE
INCREASES
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Regional Rate Setting Progress
10 agencies serviced by Waste Connections participated in
updating the 1994 Rate Manual.
R3 Consulting Group, Inc was hired to facilitate the discussion with
Waste Connections and the agencies to develop a methodology.
8 of the 10 agencies participating received unanimous direction
from their Councils and Boards to release the Prop 218 noticing
and 6 held successful Public Hearings.
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2025 Proposed Solid Waste Rate Adjustment
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Paid Commercial
Bin Recycling
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Bin Size 2024
(Current)
Once/Week –
25% of trash rate
Twice/Week –
25% of trash rate
1 Cubic Yard $0 $40.32 $56.45
1.5 Cubic Yard $0 $45.17 $66.13
2 Cubic Yard $0 $50.00 $75.00
3 Cubic Yard $0 $59.68 $94.35
4 Cubic Yard $0 $69.34 $114.52
6 Cubic Yard $0 $88.70 $152.42
8 Cubic Yard $0 $108.05 $190.31
Example Monthly Change to Customer Bill –
Recycling Bin Service
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2025 Proposed Integrated Solid Waste Rate
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Garbage
Container Size
2024
(Current)
7.98%
Change
Proposed 2025
Rates
20-gallon $14.74 $1.18 $15.92
32-gallon $23.53 $1.88 $25.41
64-gallon $47.05 $3.75 $50.80
96-gallon $70.60 $5.63 $76.23
Proposed Monthly Rate Increase by Residential Service Level
Proposed Monthly Rate Increase for Commercial Customers
3 Yard Bin
Serviced 1x/week $221.08 $17.64 $238.72
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Current 2024 Monthly 32-Gallon Residential Cart
Rate
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Outreach Efforts
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Next Steps
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Questions
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Recommended Action
1.Adopt a Resolution of Intent entitled, “A Resolution of the City Council of
the City of San Luis Obispo, California, declaring the City’s intent to adopt
an Ordinance restating its existing franchise agreements with San Luis
Garbage Company and set a public hearing for March 18, 2025” pursuant
to the provisions of Article X of the City Charter.
2.Set a Public Hearing date of March 18, 2025, to consider the adoption of
the solid waste rates if there is not a majority protest in accordance with
Proposition 218.
3.Approve the publication and mailing of a notice consistent with Article XIIID
of the California Constitution and the Proposition 218 Omnibus
Implementation Act (Proposition 218) as it relates to solid waste rates.