HomeMy WebLinkAboutItem 6b. Adopt 2025 Integrated Solid Waste Rates (Prop 218) Item 6b
Department: Utilities
Cost Center: 6107
For Agenda of: 3/18/2025
Placement: Public Hearing
Estimated Time: 30 minutes
FROM: Aaron Floyd, Utilities Director
Prepared By: Meg Buckingham, Solid Waste and Recycling Program Manager
SUBJECT: 2025 INTEGRATED SOLID WASTE RATES
RECOMMENDATION
Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, establishing 2025 Integrated Solid Waste Rates”, provided there is not
a majority protest received against such increase.
POLICY CONTEXT
The recommendation to increase solid waste rates to maintain healthy and safe collection
and disposal services for solid waste, recycling, and organic material to the community
aligns with the City of San Luis Obispo’s (City) Climate Action Plan, Title 8 of the City’s
Municipal Code, and regulations pursuant to the State of California. Additionally, the
recommended increase follows the parameters set forth in the rate methodology exhibit
within the restated Discarded Materials Franchise Agreement (Exhibit A in Attachment
B).1
REPORT-IN-BRIEF
In alignment with the City’s 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) subm itted a Base Year Rate Adjustment Application
(Attachment C) proposing a rate adjustment in 2025 to continue providing environmentally
sound solid waste, recycling, and organics collection and processing services to City
customers.
The City holds three franchise agreements with San Luis Garbage Company for solid
waste, recycling, and organics services. 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
1 The restated Discarded Materials Franchise Agreement is being recommended for adoption by the City
Council via Ordinance as a separate agenda item for this meeting.
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Item 6b
Discarded Materials Agreement (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; and
an annual no cost residential cart swap; and
a few no cost bulky/large item collections for residential customers ; and
no-cost collection of in-tact holiday trees after Christmas day.
Feedback from residents and stakeholders informed these updates, reflecting shared
goals of sustainability, operational efficiency, and value for ratepayers.
Staff and San Luis Garbage Company leveraged the timing of negotiating the Agreement
to also replace the outdated Rate Setting Manual with a new rate adjustment
methodology. The City and San Luis Garbage Company negotiated a new 2025 solid
waste rate adjustment utilizing the new methodology, which aims to bring greater
transparency, predictability, and fairness to future rate adjustments. The proposed 2025
rates and the restated Agreement (Attachment B) were introduced at the January 21,
2025 City Council meeting where staff received direction to release a Proposition 218
notice to all customers at least 45 days prior to the Public Hearing and set a Public
Hearing date of March 18, 2025.
DISCUSSION
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 such as service
delivery, record keeping, landfill diversion goals, outreach responsibilities, and regulatory
compliance. In accordance with the franchise 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 Facility2, 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.
2 The Kompogas SLO Anaerobic Digestion Facility is commonly known as Hitachi Zosen Inova, however,
the facility is under new ownership of Kanadevia Inova.
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Item 6b
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 Comparison3
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 adjustment4
every three years in a Base Year Rate Adjustment Application with two interim years
adjusted by CPI. The last cost-based adjustment occurred on April 19, 2022, meaning the
next base adjustment year is 2025. On July 3, 2024, the City received San Luis Garbage
Company’s 2025 Base Year Rate Adjustment Application proposing adjustments to the
solid waste rates due to increased collection and processing costs. Details on the
increase are explained further below.
3 The rates shown in Table 1 are the adopted and proposed 2025 rates of the most common residential
cart size for the jurisdictions who participated in the regional rate adjustment methodology update.
4 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.
$0
$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
CSD
Los
Osos
CSD
Cambria
CSD
2025 Rates 2024 Rates*proposed
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Item 6b
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 P roposition 218. Ten agencies in San Luis Obispo
County, which all franchise their solid waste, recyclable, and organic material services
with Waste Connections5, 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 negotiate the new,
proposed 2025 rate adjustments for all ten agencies and fulfills the critical objectives.
Nine of the ten agencies (with the City of San Luis Obispo remaining) have received
unanimous approval from their respective Councils and Boards to adopt the 2025 rates
with the new methodology.
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 percent and a cap of 5 percent. Amounts under 2
percent or over 5 percent 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. Extraordinary Adjustments: Consistent with the 1994 Rate Setting Manual,
during CPI adjustment years, San Luis Garbage Company may request
extraordinary rate adjustments due to changes in law affecting operations. The
City may, but is not obligated to, consider requests for extraordinary rate
adjustments. Requests for extraordinary changes are subject to good faith meet
and confer negotiations between the City and San Luis Garbage Company.
5 San Luis Garbage is a subsidiary of Waste Connections that provides solid waste, recycling, and organics
collection and disposal services in San Luis Obispo County. Waste Connections also owns Missi on Country
Disposal and South County Sanitary Services that provide waste collection and disposal to other
jurisdictions in the County.
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Item 6b
4. Profit Allowance: The proposed Agreement and revised rate methodology
includes an adjustment to address San Luis Garbage Company’s request for a fair
and reasonable profit allowance. The proposed methodology increases the
allowable profit on collection costs from seven percent to nine percent in 2025.
Collection costs are expenses associated with labor, fuel, and capital equipment
to perform the collection function of the operations and are forecasted by the
garbage company during the base rate adjustment process . The requested
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.
Profit allowance is not guaranteed profitability. During the base rate adjustment
process, the City and San Luis Garbage Company agreed to a rate structure that
identifies forecasted revenues (which includes the allowable profit) and projected
expenses. To reach profitability, the garbage company’s actual revenues with the
profit allowance must exceed actual expenses. For the period of 2025 through
2029, changes in San Luis Garbage Company’s expenses will not impact rate
compensation and they must operate within the agreed-upon compensation to
achieve a profit. During the five-year agreed upon fixed compensation schedule,
which does not account for actual expense changes , San Luis Garbage
Company’s compensation will be adjusted based on external financial indicators,
such as CPI, ensuring alignment with market conditions (except for potential
changes in law or other extraordinary circumstances agreed upon by the garbage
company and the City).
If actual costs exceed the forecasted amounts, profitability will be impacted since
profit is determined by revenues minus expenses. Simpl y having a target profit
margin does not ensure earnings—if expenses surpass projections, the company
may fall short of its expected profit.
5. 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 operations in San Luis
Obispo, therefore, the recommended Agreement and proposed rates allow San
Luis Garbage to recoup a defined amount of overhead costs. Under the proposed
Agreement, allowable overhead costs are limited to less than four percent of the
total cost projection.
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Item 6b
6. Revenue Balancing Mechanism: Starting in 2027, rate adjustments will account
for shortfalls or surpluses in San Luis Garbage Company’s actual revenues
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.
7. 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 actual 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. Under the proposed Agreement, 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.
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
the City Council, perform Proposition 218 noticing if directed, and conduct a Public
Hearing by the end of summer before rate implementation on January 1.
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 Setting 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. If approved, the new rate adjustment methodology will
be detailed as an exhibit to the proposed restated Agreement and will replace the current
1994 Rate Setting Manual in its entirety. The proposed new rate adjustment methodology
was incorporated into San Luis Garbage Company’s 2025 proposed rate adjustment.
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Item 6b
Proposed 2025 Rate Adjustments
After San Luis Garbage Company submitted their initial 2025 Base Year Rate Adjustment
Application calculated using the 1994 Rate Setting 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 2 below shows the development of the
proposed 2025 rate with the new methodology. Staff received direction from the City
Council at the January 21, 2025 meeting to release a 45-day Proposition 218 written
notice to solid waste ratepayers with information about the below proposed rate
adjustment and details about how ratepayers may submit written protests to the proposed
rate adjustment.
Table 2: Negotiated 2025 Rate Adjustment Request
The above table shows the development of the 2025 rate negotiations. The original 2025
Base Year Rate Adjustment Application utilized the 1994 Rate Setting Manual and did
not incorporate new service enhancements or paid commercial bin recycling explained in
further detail below. The middle percentage in Table 2 shows the negotiated rate to
incorporate the new services and methodology if effective on January 1, 2025. 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 for the rate year 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 customers who are subscribed to recycling bin (dumpster) service.
Currently, in the City, recycling bin service is offered at no cost to 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 for bin customers subscribed to service
more than twice a week because 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 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 recycling bin customers at 50 percent
of the trash rate. Currently, San Luis Garbage Company’s cost to provide free recycling
bin service to customers is being offset by overall customer rates. Outreach to commercial
customers who will be impacted by this proposed change has been sent out via two
emails from San Luis Garbage Company, an email from the City’s SLO Business Update ,
informational sessions hosted by staff from the City and San Luis Garbage Company,
and on the City’s website.
Table 3 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.
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Item 6b
Table 3: 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%
Table 4 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 bin recycling for collection once and twice a week is listed in Attachment A.
Table 4: 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
64-gallon $47.05 $3.75 $50.80
96-gallon $70.60 $5.63 $76.23
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Item 6b
Proposition 218 Process
Pursuant to Section 6 of Article XIII D of the California Constitution, the following persons
may submit a written protest against the proposed rate adjustment to the City Clerk before
the close of the Public Hearing.
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
adjustment, the address or Assessor’s Parcel Number 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 be 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 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 8,207 valid written protests are presented, which is 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.
If valid written protests are not collected from the majority of owners and/or tenants-
customers of parcels, the City Council will consider a resolution adjusting solid waste
rates, and if adopted, will go into effect the day after the Public Hearing on March 19,
2025. At the City Council meeting, the City Clerk will report on the number of validated
protests received.
Previous Council or Advisory Body Action
Every three years, San Luis Garbage Company 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 noticing
and Public Hearing process. All 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, and nine have received unanimous approval to adopt the 2025 solid waste rates.
The remaining agency to act on the proposed 2025 rates and new methodology is the
City of San Luis Obispo.
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Item 6b
Public Engagement
Staff met with the Chamber
of Commerce and the
Downtown SLO Association
to partner on coordinating
effective outreach and
messaging to the commercial
customers impacted by the
paid recycling bin change.
One informational session
was held for commercial
customers, and one was held
for all customers by staff from
the City and San Luis
Garbage Company to answer
questions and provide more
information.
Three emails were sent to
commercial customers
notifying them of the
proposed rate increase as well as the change to bin recycling service. Staff attended two
Farmers Markets to notify local customers of the proposed changes and a news release
was distributed. Frequently Asked Questions with more information on the proposed
increase and instructions on how to protest are available on the City’s website. After
receiving Council direction at the January 21, 2025 City Council meeting, the garbage
company mailed notices regarding the proposed rate increase and adjustment
methodology to all property owners and customers 45 -days prior to the March 18, 2025
Public Hearing consistent with Article XIIID of the California Constitution and the
Proposition 218 Omnibus Implementation Act as it relates to solid waste rates. The notice
included the proposed rate increase, the location, date, and time of the Public Hearing, a
summary of the purpose of the increase, a fee schedule, and instructions on ho w to
protest the proposed increase. A copy of the notice is available in Attachment D and on
San Luis Garbage Company’s website in English and Spanish.
CONCURRENCE
The City Attorney’s Office reviewed and approved the 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 Cities of San Luis Obispo, Arroyo Grande, Pismo
Beach, Grover Beach, and the Los Osos, Avila Beach, Cayucos, Oceano, Cambria, and
Nipomo Community Services Districts, which have exclusive franchise agreements with
Waste Connections.
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Item 6b
ENVIRONMENTAL REVIEW
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 exemp tion).
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 ma nner 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 adoption of
solid waste rates would have a significant effect on the environment; the refore, 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
As part of San Luis Garbage Company’s proposed rate adjustment, 0.96 percent includes
an increase to continue to fund the City's Solid Waste and Recycling Program from
$345,907 in 2024 to $368,041 in 2025 and is set to escalate annually based on CPI per
the new methodology. The amount is passed directly to the ratepayer through the solid
waste bill with no opportunity for the garbage company to earn profit from it. It is restricted
for use directly related to waste diversion and reduction efforts, which will fund the
necessary staffing and resources to carryout the City’s waste diversion programs
associated with California Assembly Bill 939 and Senate Bill 1383.
The proposed increase would also impact the City as a commercial customer. The City
currently utilizes six recycling bins receiving recycling service once or twice a week at
various City facilities. If approved, the City will begin paying recycling service for those
bins at 25 percent of the trash rate totalling $340 a month.
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Item 6b
Additionally, ten percent of the Company’s gross revenues is paid to the City as a
franchise fee and escalates annually based on the overall adjustment in San Luis
Garbage Company’s rate compensation. From 2024 to 2025 with the new methodology,
growth of approximately $220,000 is expected to be collected based on projected
revenues.
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.
ALTERNATIVES
Council could decide not to adopt the Resolution implementing 2025 solid waste
rates and continue consideration of proposed rates. If Council chooses not to adopt
a Resolution implementing 2025 solid waste rates, staff could be directed to either bring
San Luis Garbage Company’s original 9.29 percent Base Year Rate Adjustment
Application derived from the 1994 Rate Setting Manual to Council for consideration, which
does not include service enhancements, or continue to negotiate a 2025 solid waste rate
and methodology. 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 Agreement, and R3 Consulting Group, Inc. has verified and
confirmed the proposed rates are justifiable and accurate.
ATTACHMENTS
A - Draft Resolution Establishing 2025 Solid Waste Rates
B - Draft Restated Discarded Materials Franchise Agreement
C - 2025 Original Base Year Rate Adjustment Application
D - Proposition 218 Notice – All Customers
E - R3 Report – 2025 Rate Adjustment and New Methodology
Page 385 of 559
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R ______
RESOLUTION NO. _____ (2025 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ESTABLISHING 2025 INTEGRATED SOLID
WASTE RATES
WHEREAS, on June 21, 1994, the City Council of the City of San Luis Obispo
approved the Rate Setting Process and Methodology Manual for Integrated Solid Waste
Management Rates (Rate Setting Manual); and
WHEREAS, on July 3, 2024, Waste Connection (dba San Luis Garbage Company)
submitted a Base Year Rate Adjustment Application utilizing the Rate Setting Manual for
2025 integrated solid waste rates; and
WHEREAS, the City of San Luis Obispo hired R3 Consulting Group Inc. to develop
a new rate setting methodology, with feedback from the City of San Luis Obispo, Waste
Connections and nine other local agencies who utilized the 1994 Rate Setting Manual,
that aims to bring greater transparency, predictability, and fairness to future rate
adjustments; and
WHEREAS, the new methodology was used to negotiate San Luis Garbage
Company’s 2025 solid waste rate adjustment; and
WHEREAS, notices regarding the requested rate increase and adjustment
methodology were mailed to all property owners and customers 45 -days prior to the
March 18, 2025 Public Hearing consistent with Article XIIID of the California Constitution
and the Proposition 218 Omnibus Implementation Act as it relates to solid waste rates ;
and
WHEREAS, sufficient protests were not received to prevent the rate increase; and
WHEREAS, a review of San Luis Garbage Company’s revised 2025 rate
adjustment was completed by City staff and R3 Consulting Group, Inc. in accordance with
the new rate setting methodology.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Resolution No. 11323 (2022 Series) is hereby rescinded as of 11:59
p.m., March 18, 2025.
Page 387 of 559
Resolution No. _____ (2025 Series) Page 2
R ______
SECTION 2. Rate increases in Exhibit A shall become effective at 12:00 a.m.
March 19, 2025, as outlined in the Proposition 218 notification.
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 _______________ 20 25.
___________________________
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 388 of 559
Resolution No. _____ (2025 Series) Page 3
R ______
EXHIBIT A
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
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
Page 389 of 559
Resolution No. _____ (2025 Series) Page 4
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- 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).
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
Page 390 of 559
Resolution No. _____ (2025 Series) Page 5
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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
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
Page 391 of 559
Resolution No. _____ (2025 Series) Page 6
R ______
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
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
Page 392 of 559
Resolution No. _____ (2025 Series) Page 7
R ______
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
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.
Page 393 of 559
Resolution No. _____ (2025 Series) Page 8
R ______
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
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
Page 394 of 559
Resolution No. _____ (2025 Series) Page 9
R ______
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
Six 32 Gallon Trash Carts 6 $370.42 29.56 399.98
Page 395 of 559
Resolution No. _____ (2025 Series) Page 10
R ______
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
Page 396 of 559
Resolution No. _____ (2025 Series) Page 11
R ______
Four 96 Gallon Trash Carts 5 $647.76 51.69 699.45
Four 96 Gallon Trash Carts 6 $755.24 60.27 815.51
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
Page 397 of 559
Resolution No. _____ (2025 Series) Page 12
R ______
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
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
Page 398 of 559
Resolution No. _____ (2025 Series) Page 13
R ______
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
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
Page 399 of 559
Resolution No. _____ (2025 Series) Page 14
R ______
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
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
Page 400 of 559
Resolution No. _____ (2025 Series) Page 15
R ______
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
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.
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R ______
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.
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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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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…………. ......................................................................... 47
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…………. ......................................................... 53
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
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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 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.
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.
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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.
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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 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.
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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 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
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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 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
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substance, material, chemical, waste or pollutant identified as hazardous or toxic or regulated under any
other Applicable Law currently existing or hereinafter enacted, including, without limitation, friable
asbestos, polychlorinated biphenyl’s (PCBs), petroleum, natural gas, and synthetic fuel products, and by-
products.
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.
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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.
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.
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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.
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 Divertible 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.
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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.
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).
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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.
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 1, 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 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.
3.3 Compliance with Laws and Regulations
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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, 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:
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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 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.
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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 remai ning 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 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.
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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 appropria te 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 their Containers at t his 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, residents 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.
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
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Collection location for a particular Multi-Family Dwelling Unit is inap propriate, 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 .
5.3.3 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 (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
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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 the 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 s of City-owned Solid Waste, Recycling,
and Organics litter Containers, not less than once per week, Mo nday 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 A greement, the number of collection services at no cost to the
City, include 1,069 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 containers, 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.
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:
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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 Organic 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
2. Disassemble for reuse or Recycling
3. Recycle
4. Disposal
5.8 Semi-Annual Clean-up Weeks
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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 Daily Cover.
Franchisee is not required to Collect or Divert Holiday Trees with tinsel, flocking, or ornaments.
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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 ad dress 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 Utilities Director.
Franchisee shall provide City with adequate written notice prior to contracting for any alternate
Disposal Facility.
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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 Recyclable 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 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
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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 Agreement Term. 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 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.
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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 Franchisee 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 demonstrating 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 applicab le 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 Collection
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 Owner’s obligation to c omply with some or all of the
Source-Separated Recyclable Materials and/or Organic Materials Collection service
requirements set forth in this Agreement, SB 1383 Regulations, and the City’s Municipal
Code, in the event that the Generator qualifies for a space constraint waiver under the City’s
Municipal Code.
5.12.3 Waiver Requests
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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 Fra nchisee 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, and 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 measuremen t 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. Revenues 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 Ha ndling 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 the name of the
Waste Generator, if known) shall be delivered to the City on the following Business Day.
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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 an d
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 maintained 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 repaired and do operate properl y 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 sha ll 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. Franchisee 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
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A. General.
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 Diverting
Organic Materials through another City-approved method, for the duration of the approved
exemption.
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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 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.
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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.
Franchisee shall provide adequate operations, health and safety, and Hazardous Waste
identification and handling training for all of its employe es who use or operate equipment or
who are otherwise directly involved in Collection or other related operations.
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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 themselves 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 contaminated 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
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
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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. Franchisee ’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 representative, 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
Franchisee shall notify Customers of this Complaint procedure at the time Customers apply for or are
provided service, and subsequently, annually.
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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 provide d. 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
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.
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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 findings 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
minimize 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.
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.
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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 res ults 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
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 .
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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 no r 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 Customers with information explaining how to qualify for and
receive the Discount. Franchisee sha ll 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;
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;
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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 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.
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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.
C. 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.
D. 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.
E. 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 fi nancial 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 t he 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.
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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
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 Materi als, and 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 Contaminant 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 activi ties.
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 2025.
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.
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7.11 Right to Audit Records
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 Section 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
Franchisee uses a Subcont ractor 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 Facili ty 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 Source-Separated Recyclable Materials, Source-Separated
Organic Materials, and/or Solid Waste capacity such Facility has the ability to receive within permitted
limits.
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Include description of potential new or expanded Processing capacity at those Facilities, 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.
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7.16.4 Billing Inserts.
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 f ee 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 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.
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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) days 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 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.
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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.
10.2 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.
10.2.1 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
10.2.2 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.
D. Pollution Liabilities: One Million Dollars ($1,000,000) each loss / Two Million Dollars ($2,000,000)
annual aggregate all losses.
10.2.3 Other Insurance Provisions.
The general liability and automobile liability policies are to contain, or be endorsed to contain, the following
provisions:
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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.
10.2.4 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.
10.2.5 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.
10.2.6 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.
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10.2.7 Occurrence Based Coverage.
All policies secured by Franchisee shall be occurrence and not claims based unless City so
Consents in writing.
10.3 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.
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, mark eting, and Disposal
of Discarded Materials, and for the billing and collection of fees for these services.
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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.
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.
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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.
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.
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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 issue d 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 provid e 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.
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.
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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
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.
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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
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
$150
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Event of Non-Performance Liquidated Damage
vehicular traffic impediments or to place Containers
upright with lid secured
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
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.
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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 of 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 writing 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 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;
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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 probate 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.
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
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60
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 conscientious 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 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.
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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.
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.
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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 or 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 employees.
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
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.
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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 invalid 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.
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:
_______________________________
Teresa Purrington, City Clerk
APPROVED TO FORM:
________________________________
J. Christine Dietrick, City Attorney
Page 472 of 559
{00120238.DOCX.}
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.
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{00120238.DOCX.}
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 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
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{00120238.DOCX.}
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%
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 ,
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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, 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%
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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 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
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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.
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 prepare 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,
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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 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
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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.
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.
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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,
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minus 100%, rounded to the nearest hundredth of a percent. This is the same calculation
described in Section 2.G, above. The resultant 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 changes 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.
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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 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; provided, 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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San Luis Garbage Company
Financial Statements
December 31, 2023 and 2022
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C O N T E N T S
Page(s)
Independent Auditors Report 1 - 2
Financial Statements
Statements of revenues and expenses - regulatory basis 3
Notes to financial statements 4 - 11
Independent Auditors Report on Supplementary Information 12
Schedules of allowable costs - regulatory basis 13 - 14
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- 3 -
2023 2022
Revenues
Hauling revenue 15,290,913$ 14,229,919$
Other income 19,642 15,773
Total revenue 15,310,555 14,245,692
Allowable Costs
Direct labor 3,240,444 3,190,511
Corporate overhead - allowable threshold 253,513 232,794
Office salaries 441,918 419,239
Other general and administrative costs 4,601,981 4,281,662
Interest, related party 173,867 191,690
Total allowable costs 8,711,723 8,315,896
Allowable Pass-Through Costs
Tipping fees, related party 2,987,529 2,199,882
Non-related party tipping fees 953,253 700,637
Franchise fees and taxes 1,932,189 1,824,783
Related party rent 168,486 160,615
Transportation - compactors, related parties - 550
Total pass-through costs 6,041,457 4,886,467
Total allowable and pass-through costs 14,753,180 13,202,363
Rate setting income 557,375 1,043,329
Non-Allowable Costs 8,492 6,349
Net income 548,883$ 1,036,980$
See Notes to Financial Statements.
San Luis Garbage Company
Statements of Revenues and Expenses - Regulatory Basis
Years Ended December 31, 2023 and 2022
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San Luis Garbage Company
Notes to Financial Statements
- 4 -
Note 1. Summary of Significant Accounting Policies
Nature of business:
San Luis Garbage Company (the Company) became a wholly-owned subsidiary of Waste
Connections US, Inc. as of April 1, 2002. The Company operates a garbage collection
service for residential, commercial, and governmental entities within the city and vicinity of
San Luis Obispo, California. The Company services collection routes by use of Company-
owned equipment and employees of the Company. The Company extends credit in the form
of accounts receivable to customers in its service area.
Prescribed accounting practices:
The County of San Luis Obispo and the City of San Luis Obispo require the Company to
utilize the accounting principles prescribed by the Rate Setting Process and Methodology
Manual for Integrated Solid Waste Management Rates of the City of San Luis Obispo (the
Manual) in its financial statement reporting for rate setting purposes.
The primary purpose of the accounting principles prescribed by the Rate Setting Process
and Methodology Manual for Integrated Solid Waste Management Rates of the City of San
Luis Obispo is to determine integrated solid waste management rates which are fair to
residents and which provide adequate revenue to the hauler. The basis of presentation
prescribed by the Rate Setting Process and Methodology Manual for Integrated Solid Waste
Management Rates of the City of San Luis Obispo differs from U.S. generally accepted
accounting principles (U.S. GAAP) in that the following expenses are non-allowable costs:
charitable donations and political contributions, entertainment expenses, income tax
expenses, and profit sharing payments not related to an Internal Revenue Service approved
pension program. The Manual also specifies a limitation on corporate overhead, which is
defined as salaries of corporate officers that can be treated as allowable costs. Bonus costs
and allocated facility and administrative support costs are included as allowable costs and
are not part of the corporate overhead pool subject to limitation. Although not specifically
listed as non-allowable costs in the Manual, management has also historically classified the
following costs as non-allowable: loss (or gain) on disposal of assets, penalties, and certain
employee relocation costs.
In addition, according to the accounting principles prescribed by the Rate Setting Process
and Methodology Manual for Integrated Solid Waste Management, the operations of the
individual garbage districts are considered separate entities for rate setting purposes. Given
this, the financial statements for each company have not been consolidated with the other
subsidiaries of Waste Connections US, Inc.
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San Luis Garbage Company
Notes to Financial Statements
- 5 -
Reclassifications:
Certain amounts in the 2022 financial statements have been reclassified for comparative
purposes to conform with presentation in the 2023 financial statements.
Allocation of costs:
Management of the Company believes that because costs are shared between districts,
allocating costs between the companies receiving the benefits is the most effective way to
track and record the costs at the standalone district (Company) level. These costs are mainly
allocated based on truck hours or customer count (container counts, CNG trucks and yard
waste tons are also used as allocators), depending on the nature of the cost. In general, costs
that are administrative are allocated on customer count, and costs that are direct are
allocated on truck hours, consistent with the direct labor (direct) and office salaries
(administrative) allocations.
Interest:
Interest expense is allocated using an estimated internal interest rate (3.09% for 2023 and
3.89% for 2022) and applying that interest rate to the average net book value of fixed
assets, and then allocating to the stand-alone district level based on the pro-rata depreciation
allocation percentages. The Rate Setting Process and Methodology Manual for Integrated
Solid Waste Management Rates of the City of San Luis Obispo includes interest expense as
an allowable cost.
Income tax:
Entity level income tax is assessed at the corporate parent entity level. As a wholly owned
subsidiary, the standalone district (the Company) does not pay or incur income tax. As
such, there is no provision for current or deferred income taxes for the Company, and no
allocation is made on the standalone financial statements for income tax. Income tax
expense is a non-allowable cost under the principles prescribed by the Rate Setting Process
and Methodology Manual for Integrated Solid Waste Management Rates of the City of San
Luis Obispo.
Franchise fees and taxes:
U.S. generally accepted accounting principles would require that tax and franchise fees that
are assessed by governmental authorities that are directly imposed on a revenue-producing
transaction between a seller and a customer be presented on a net basis (excluded from
revenues). However, in accordance with the Rate Setting Process and Methodology Manual
for Integrated Solid Waste Management Rates of the City of San Luis Obispo, franchise
fees and taxes have been shown gross on the statements of revenues and expenses
regulatory basis and are included in revenues and shown as an allowable cost.
Use of estimates:
The preparation of financial statements in conformity with practices prescribed or permitted
by the Rate Setting Process and Methodology Manual for Integrated Solid Waste
Management Rates of the City of San Luis Obispo, which is a comprehensive basis of
Page 504 of 559
San Luis Garbage Company
Notes to Financial Statements
- 6 -
accounting other than U.S. generally accepted accounting principles, requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Revenue recognition:
Revenues are recognized when services are transferred to customers in an amount that
reflects consideration that is expected to be received.
Nature of revenue:
The Companys solid waste collection business involves the collection of waste from
residential, commercial and industrial customers for transport directly to the landfill,
transfer stations or recycling centers. Solid waste collection services include both recurring
and temporary customer relationships. The services are performed under service
agreements or franchise agreements with governmental entities. Residential and
commercial collection services are provided on a subscription basis with individual
households or businesses. The fees received for collection services are based primarily on
the market, collection frequency, level of service, route density, type and volume or weight
of the waste collected, type of equipment and containers furnished, the distance to the
disposal or processing facility, the cost of disposal or processing, and prices charged by
competitors for similar services.
Disaggregation of revenue:
The following table presents the Companys revenue disaggregated by contract type:
2023 2022
Hauling revenues - residential customers 5,645,681$ 4,972,579$
Hauling revenues - commercial customers 9,645,232 9,257,340
Total 15,290,913$ 14,229,919$
The factors that impact the timing and amount of revenue recognized for each type of
revenue may vary based on the nature of the service performed. Generally, the Company
recognizes revenue at the time it performs a service. Certain customers are billed in
advance (bi-monthly billing) and, accordingly, recognition of the related revenues is
deferred until the services are provided.
Page 505 of 559
San Luis Garbage Company
Notes to Financial Statements
- 7 -
Contract balances:
The timing of revenue recognition, billings and cash collections results in billed accounts
receivable (contract assets), and customer deposits and deferred revenue (contract
liabilities) on the Companys balance sheet (not presented).
Performance obligations:
Service performance obligations of a long-term nature, such as solid waste collection
service contracts, are satisfied over time, and revenue is recognized based on the value
provided to the customer during the period. The amount billed to the customer is based on
variable elements such as the number of residential homes or businesses for which
collection services are provided, the volume of waste collected, transported and disposed,
and the nature of the waste accepted. The Company does not disclose the value of
unsatisfied performance obligations for these contracts as its right to consideration
corresponds directly to the value provided to the customer for services completed to date
and all future variable consideration is allocated to wholly unsatisfied performance
obligations.
Costs to obtain a contract:
The incremental direct costs of obtaining a contract, which consist of sales incentives,
would be recognized on the Companys balance sheet (not presented) as a deferred sales
incentive to be amortized to expense over the life of the customer relationship. There were
no contract acquisition costs recorded at the stand-alone district level.
Accounts receivable and allowance for credit losses:
Accounts receivable is stated at the amount management expects to collect from
outstanding balances. At each balance sheet date, the Company recognizes an expected
allowance for credit losses. In addition, also at each reporting date, this estimate is updated
to reflect any changes in credit risk since the receivable was initially recorded. This
estimate is calculated on a pooled basis where similar risk characteristics exist. The
allowance estimate is derived from a review of the Companys historical losses based on
the aging of receivables. This estimate is adjusted for managements assessment of current
conditions, reasonable and supportable forecasts regarding future events, and any other
factors deemed relevant by the Company. Management believes that the composition of
trade receivables at year-end is consistent with historical conditions as credit terms and
practices and the customer base has not changed significantly and has not identified any
current conditions or supportable forecasts that would have a material impact on the
expected credit losses.
The Company writes off receivables when there is information that indicates the debtor is
facing significant financial difficulty and there is no possibility of recovery. If any
recoveries are made from any accounts previously written off, they will be recognized in
income or an offset to credit loss expense in the year of recovery, in accordance with the
entitys accounting policy election. Changes in the valuation allowance have not been
material to the financial statements.
Page 506 of 559
San Luis Garbage Company
Notes to Financial Statements
- 8 -
Property and equipment, and depreciation:
Repairs, maintenance and small equipment purchases are charged to expense when
incurred. Expenditures, which significantly increase asset values or extend useful lives, are
capitalized and recorded at cost. Depreciation expense is calculated on the straight-line
method over the following useful lives:
Years
Buildings and improvements 25
Vehicles 7
Containers 7
Equipment 7
Office equipment 5
Depreciation is allocated to each stand-alone district based on a combination of customer
count, container count, and truck hours allocation factors. Depreciation expense for the
years ended December 31, 2023 and 2022 was $1,341,004 and $1,078,188, respectively.
Public relations and promotions (advertising) costs:
The Company expenses public relations and promotions costs as incurred.
Insurance:
Waste Connections US, Inc., the sole shareholder and parent of the Company has high
deductible coverage for automobile liability, general liability, employers liability,
environmental liability, as well as for certain employee group health claims, property and
workers compensation. Waste Connections insurance accruals are based on claims filed
and estimates of claims incurred but not reported and are developed by corporate
management with assistance from its third-party actuary and its third-party claims
administrator. The insurance accruals are influenced by past claims experience factors,
which have a limited history, and by published industry development factors. Insurance
expense and allocated insurance expense for the Company are recorded in other general and
administrative costs on the statements of revenues and expenses regulatory basis.
Economic dependency:
The Company provides disposal services to residential and commercial customers under the
terms of franchise agreements with the City of San Luis Obispo (City) and the County of
San Luis Obispo (County). Collection rates are determined annually based on historical
expenses, future budgeted expenses, and a reasonable rate of return. The garbage and
recycling franchise agreements with the City extend through 2025, and the green waste
organics agreement extends through 2038. The franchise agreement with the County
extends to 2039.
Page 507 of 559
San Luis Garbage Company
Notes to Financial Statements
- 9 -
In consideration for the grant of the exclusive franchise to provide services to the respective
municipalities, the Company has agreed to pay a franchise fee based upon a percentage of
annual gross solid waste revenues provided to each grantee, as follows:
City of San Luis Obispo 10%
County of San Luis Obispo
(unincorporated) 10%
The Company is required to submit audited financial statements to the City of San Luis
Obispo within four months of their year-end and to the County of San Luis Obispo within
six months of their year-end. The contracts allow for an extension of time if mutually
agreed upon by both parties.
Related party rent:
The Company accounts for intercompany leases as related party rent expense and has not
adopted the new lease guidance because the intercompany leases eliminate on a
consolidated level for Waste Connections US, Inc.
Note 2. Related Party Transactions
The Company has entered into various related party transactions. The nature of related
party transactions and amounts not specifically identified elsewhere in the financial
statements are as follows:
Overhead:
San Luis Garbage Company is a wholly-owned subsidiary of Waste Connections US, Inc.
Waste Connections US, Inc. provides management and administrative services San Luis
Garbage Company. These costs are included as corporate overhead - allowable threshold in
the accompanying statements of revenues and expenses - regulatory basis.
Tipping fees:
Waste Connections US, Inc. is also the sole shareholder in Cold Canyon Land Fill, Inc.,
which operates the sanitary landfill that the Company utilizes for the disposal of garbage
collected, and the Materials Recovery Facility (MRF) for the disposal of recyclable
material. These costs are included in tipping fees, related party in the accompanying
statement of revenues and expenses regulatory basis.
Transportation:
The Company also pays other related companies for transportation costs of garbage to the
landfill. The transportation costs compactors, related parties are included in the
accompanying statement of revenues and expenses regulatory basis.
Allocated insurance:
The Company incurs expenses for insurance costs that are allocated from a related party
company that is a subsidiary of Waste Connections US, Inc. The amount of the insurance
Page 508 of 559
San Luis Garbage Company
Notes to Financial Statements
- 10 -
cost allocated totaled $1,106,795 and $1,143,042 for the years ended December 31, 2023
and 2022, respectively, which is included in other general and administrative costs.
Allocated facilities and regional support costs:
The Company incurs expenses for regional facilities and administrative support costs that
are allocated from the regional division of Waste Connections US, Inc. The amount of the
facilities and administrative support costs allocated totaled $29,386 and $35,736 for the
years ended December 31, 2023 and 2022, respectively, which is included in other general
and administrative costs.
Allocated labor:
The related companies pay for labor and services on behalf of each other. These costs are
allocated between the companies receiving the benefits. The allocated labor costs are
recorded to direct labor or office salaries. Direct labor costs are allocated to the companies
based on truck hours. Office salaries are allocated to the companies based on customer
count.
Allocated bonuses:
Bonus costs to the local level employees allocated from corporate are included in direct
labor and office salaries.
Allocated interest:
Interest expense is allocated to the stand-alone district level based on the policy as
described in Note 1, and is shown as interest, related party.
Allocated other costs:
The Company incurs other costs that are shared between the related companies. These costs
are allocated between the companies receiving the benefits. These costs are mainly
allocated based on truck hours or customer count (container counts, CNG trucks and yard
waste tons are also used as allocators), depending on the nature of the cost. In general, costs
that are administrative are allocated on customer count, and costs that are direct are
allocated on truck hours, consistent with the direct labor (direct) and office salaries
(administrative) allocations.
Note 3. Employee Benefit Plan
The Companys employees can participate in the 401(k) profit sharing plan (the Plan)
offered by Waste Connections US, Inc. Waste Connections US, Inc. made matching
contributions to a trust, for the benefit of qualified employees, subject to certain limitations
imposed by the Internal Revenue Service for the years ended December 31, 2023 and 2022.
The Company matches 100% of employee contributions up to 5% of compensation and the
match vests immediately. Substantially all employees are eligible who are 21 years of age
and have at least one year of service. For the years ended December 31, 2023 and 2022, the
Page 509 of 559
San Luis Garbage Company
Notes to Financial Statements
- 11 -
Companys contribution amounted to $106,324 and $100,497, respectively. The total
amount of the retirement costs are recorded in the financial statements as part of direct
labor and office salaries.
Note 4. Related Party Lease
The Company has a lease for office and yard space with a related party, Corral de Piedra
Land Company. The lease is renewed annually. The base rent is allocated to the stand-alone
districts. The monthly base rent for the Companys yard and office space for the years
ended December 31, 2023 and 2022 was $14,040 and $13,385, respectively. The base rent
is subject to an annual increase based on the Consumer Price Index (CPI) and is also subject
to allocation adjustments. Related party rent expense for the years ended December 31,
2023 and 2022 was $168,486 and $160,615, respectively. Non-related party rent expense
for the years ended December 31, 2023 and 2022 $3,182 and $2,533, respectively.
Note 5. Commitments and Contingencies
The Company has certain workers compensation and auto liability claims outstanding at
the end of the year. The ultimate responsibility of these claims is held by Waste
Connections US, Inc, the sole shareholder and parent of the Company. The known liability
and expense is allocated from the corporate consolidated level to the stand-alone Company.
However, the liability and expense for any incurred but not reported (IBNR) estimated
amounts have not been recorded to the financial statements of the stand-alone Company.
The solid waste industry in which the Company operates is subject to a certain level of
environmental risk. Although the Company does not accept hazardous waste materials from
its commercial and residential customers for placement in the landfill, and is not aware of
any occurrences of receiving hazardous waste materials, occurrences are reasonably
possible. Such environmental liabilities could have a material effect on the financial
position of the Company.
Note 6. Significant Concentration of Risk
The Company operates exclusively in the solid waste industry in San Luis Obispo County,
and therefore, its revenues and receivables are subject to geographical concentrations.
Due to the nature of the Companys services, its accounts receivable balance is comprised
of amounts due from many customers. This diversity reduces the risk of any one customer
significantly impacting the Companys realization of its receivables.
Note 7. Subsequent Events
The date to which events occurring after December 31, 2023 have been evaluated for
possible adjustment to the financial statements or disclosure is June 21, 2024, which is the
date on which the financial statements were available to be issued.
Page 510 of 559
Page 511 of 559
- 13 -
2023 2022
Direct Labor
Labor 3,009,592$ 2,968,930$
Payroll taxes 230,852 221,581
Total direct labor 3,240,444$ 3,190,511$
Office Salaries
Office salaries 414,001$ 394,696$
Payroll taxes 27,917 24,543
Total office salaries 441,918$ 419,239$
San Luis Garbage Company
Schedules of Allowable Costs - Regulatory Basis
Years Ended December 31, 2023 and 2022
Page 512 of 559
- 14 -
2023 2022
Other General and Administrative Costs
Bad debt (7,813)$ 26,696$
Bond 17,888 7,613
Depreciation 1,341,004 1,078,188
Drive cam fees 28,590 28,945
Dues and subscriptions 13,042 9,137
Facilities & regional support - allocated from related parties 29,386 35,736
Gas and oil 923,489 782,675
Insurance - allocated from related parties 1,106,795 1,143,042
Laundry and uniforms 22,691 26,012
Legal and accounting 55,856 37,086
Miscellaneous and other 3,277 2,772
Office 201,002 179,347
Operating supplies 49,622 57,688
Other taxes 38,775 40,822
Outside services 52,242 68,120
Permits and licenses 93,253 80,529
Postage 6,125 15,501
Public relations and promotions 10,484 2,249
Relocation 7,496 255
Rent 3,182 2,533
Telephone 19,518 20,612
Tires 155,898 163,183
Travel 12,973 20,326
Truck repairs 400,504 432,111
Utilities 16,702 20,484
Total other general and administrative costs 4,601,981$ 4,281,662$
San Luis Garbage Company
Schedules of Allowable Costs - Regulatory Basis - Continued
Years Ended December 31, 2023 and 2022
Page 513 of 559
Page 514 of 559
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 515 of 559
• 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 residential customers 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 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 516 of 559
• 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 Pub lic 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 cus tomer 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 be
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 t he 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
Page 517 of 559
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
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 518 of 559
64 Gallon Cart Set 1 $47.05 3.75 50.80
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 519 of 559
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
Page 520 of 559
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 521 of 559
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 522 of 559
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
Page 523 of 559
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
Page 524 of 559
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 525 of 559
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 526 of 559
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 527 of 559
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 528 of 559
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 529 of 559
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 530 of 559
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 531 of 559
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 532 of 559
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 533 of 559
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
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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 535 of 559
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.
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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 537 of 559
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 538 of 559
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
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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 540 of 559
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
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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 542 of 559
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 543 of 559
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 544 of 559
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.
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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 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.
Page 547 of 559
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%
Page 553 of 559
Page 554 of 559
Page 555 of 559
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
Page 556 of 559
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1
2025 Integrated Solid Waste Rates
March 18, 2025
2
Recommended Action
Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis
Obispo, California, establishing 2025 Integrated Solid Waste Rates”, provided there is
not a majority protest received against such increase.
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.
4
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.
5
“Business As Usual” Timeline
6
Amended Timeline
7
Solid Waste Rate Methodology
8
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
9
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.
10
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.
11
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
12
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.
All 10 participating agencies received unanimous direction from
their Councils and Boards to release the Prop 218 noticing and/or
held successful Public Hearings. 9 of the 10 successfully held a
Public Hearing and adopted 2025 rates.
13
2025 Proposed Solid Waste Rate Adjustment
14
Paid Bin Recycling
15
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
16
2025 Proposed Integrated Solid Waste Rate
17
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
18
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Current 2024 Monthly 32-Gallon Residential Cart
Rate
19
Outreach Efforts
20
Proposition 218 Protest Process
Customers were mailed Proposition 218 notices 45-days prior to the
Public Hearing
Protest guidelines were available in the notice, on the City’s webpage,
and on the garbage company’s webpage in English and Spanish
16,412 active accounts
8,207 valid protests required to establish a successful protest (50% +1)
21
Next Steps
22
Questions
23
Recommended Action
Adopt a Resolution entitled “A Resolution of the City Council of the City of San Luis
Obispo, California, establishing 2025 Integrated Solid Waste Rates”, provided there is
not a majority protest received against such increase.