Solid Waste Disposal and Recycling Franchise Agreement Notes

Solid Waste Disposal and Recycling Franchise Agreement

Resolution No. 99-225

This document is Resolution No. 99-225, also marked as Exhibit 1.
It is a Solid Waste Disposal and Recycling Franchise Agreement.
The agreement is between the City of Escondido and Refuse Services, Inc.

Recitals

Includes a table of contents.
Lists the sections of the agreement, including:
- Definitions
- Representations and Warranties of the Contractor
- Grant of Franchise
- Term
- Conditions of Effectiveness of Agreement
- Services to be Provided
- Records, Reports and Audits
- Rates for Collection and Other Services
- Indemnity
- Insurance
- Faithful Performance Bond
- Default and Remedies
- Other Agreements of the Parties

Section 1. Definitions

Agreement: This SOLID WASTE DISPOSAL AND RECYCLING FRANCHISE AGREEMENT between the City and the Contractor dated October 6, 1999, including all exhibits and attachments, and any amendments thereto.
Bulky Items: Solid Waste generated by residential Customers in Escondido which is too large to fit in a standard container or refuse cart, including furniture and white goods.
City: The City of Escondido, California.
Collection Operations: The curbside collection and disposal of Solid Waste, Recyclables, and Yard Waste from residential Generators within the City of Escondido, and the collection and disposal of Solid Waste and Recyclables from commercial and industrial Generators within the City of Escondido. "Collection Operations" shall not include collateral or any operations not subject to a Franchise Fee such as the operation of the Transfer Station.
Contractor: Refuse Services, Inc., d/b/a Escondido Disposal, Inc., a California corporation, and its officers, directors, employees, agents and companies.
Customer: The person having the care and control of any premises in the City who receives refuse collection service from the Contractor.
Designated Disposal Site: The Solid Waste disposal site(s) used by the Contractor for ultimate disposal of Solid Waste pursuant to this Agreement as designated by the Contractor and approved by the City, which consent shall not be unreasonably withheld.
Designated Recyclables Processing Facility: The facility or facilities used by the Contractor for the purposes of separating or processing Recyclables as designated by the Contractor and approved by the City, which consent shall not be unreasonably withheld.
Designated Yard Waste Processing Facility: The facility or facilities used by the Contractor for the purposes of processing Yard Waste as designated by the Contractor and approved by the City, which consent shall not be unreasonably withheld.
Effective Mean Rate: The Maximum Rate charged to the Ratepayer for collection service, including Yard Waste, recycling and Solid Waste collection, less any local fees such as AB 939 fees, Household Hazardous Waste fees, Franchise Fees, and any local Ratepayer discounts.
- Effective Mean Rate shall be calculated by reducing the "residential mean rate," as that term is used in the SANDAG Solid Waste Rates Survey dated April 9, 1999, attached hereto as Attachment A, by the component amount of local fees.
- Effective Mean Rate for commercial Ratepayers shall be calculated by reducing the "Commercial - Standard 3 Yard Commercial Bin Rate - One time per week," as that term is used in the SANDAG Solid Waste Rates Survey dated April 9, 1999, attached hereto as Attachment A, by the component amount of local fees. In the event the SANDAG Solid Waste Rates Survey is no longer published, another similar survey may be substituted upon approval by the City Manager.
Franchise: The special right granted by the City to operate a public utility for Solid Waste and Recycling Services within the City.
Franchise Fee: The fee paid by the Contractor to the City pursuant to this Agreement for the right to hold the Franchise for Solid Waste and Recycling Services granted by this Agreement.
Franchised Recyclables: Source-separated and other Recyclables as to which the City and the Contractor shall share revenues generated thereby pursuant to Section 6(C)(8) of this Agreement; the types of Recyclables shall be as agreed by the City and the Contractor from time to time in writing and shall initially be limited to the Recyclables identified in Section 6(C)(1) of this Agreement.
Generators: residential, industrial and commercial producers of Solid Waste, Recyclables and Yard Waste.
Governmental Authorities: shall mean the local, state and federal agencies which have primary regulatory control over the Contractor's provision of the Solid Waste and Recycling Services which, as of the date of execution of this Agreement, consist of the City, the San Diego County Department of Environmental Health and the California Integrated Waste Management Board.
Gross Receipts: Any and all revenues, receipts, or compensation in any form, except for revenues, receipts, and compensation from Recyclables, received by the Contractor or its subsidiaries, parent companies or other affiliates of the Contractor, for Collection Operations pursuant to this Agreement, in accordance with Generally Accepted Accounting Principles including, but not limited to, monthly Customer fees for collection of Solid Waste or any other cost of doing business.
Hazardous Waste: All substances defined as Hazardous Waste, acutely Hazardous Waste, or extremely Hazardous Waste by the State of California in Health and Safety Code Sections 25110.02, 25115, and 25117 or in the future amendments to or recodifications of such statutes, or identified and listed as Hazardous Waste by the US Environmental Protection Agency (EPA), pursuant to the Federal Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.), all future amendments thereto, and all rules and regulations promulgated thereunder.
Household Hazardous Waste: Hazardous Waste generated at residential premises.
Industrial Recyclables: Recyclables from industrial, construction, and demolition operations, including, but not limited to, asphalt, concrete, dirt, land clearing brush, sand and rock.
Initial Maximum Rates and Maximum Rates: shall be as defined in Sections 8(B) and 8(C) of this Agreement and as set forth in Attachment B.
Normal Business Hours: are limited to the hours between 8:00 a.m. and 5:00 p.m. daily, excluding Saturday, Sunday and national holidays.
Ratepayers: shall mean residential, industrial and commercial users of Solid Waste and Recycling Services.
Recyclables: Source-separated and other materials and substances in the Solid Waste collected by the Contractor which is susceptible of reuse, reprocessing, combustion or other means of recycling or revenue generation in lieu of permanent disposal.
Solid Waste: means all garbage, refuse, rubbish and other materials and substances discarded or rejected as being spent, useless, worthless or in excess to the Generator thereof at the time of such discard or rejection and which are (a) normally disposed of by or collected from residential (single family and multi-family), commercial, industrial, governmental and institutional establishments and (b) acceptable at permitted landfills under applicable law. The term "Solid Waste" does not include (1) Hazardous Waste, as defined in Public Resources Code Section 40141; (2) Radioactive waste regulated pursuant to the Radiation Control Law pursuant to Chapter 8 (commencing with Section 114960) of Part 9 of Division 104 of the Health and Safety Code); (3) Medical waste regulated pursuant to the Medical Waste Management Act (Part 14 (commencing with Section 117600) of Division 104 of the Health and Safety Code); (4) any other materials or substances which must be segregated or handled in a manner different from other Solid Waste under any applicable law or regulation. Solid Waste does not include Recyclables or Yard Waste which have been Source-separated or once separated from the Solid Waste by the Contractor.
Source-separated: means the segregation into separate containers by the Generator of individual components of material which otherwise would become Solid Waste, for the sole purpose of Recycling, to be picked up by the Contractor, provided that such container complies with the requirements of Section 6(C) of this Agreement.
Transfer Station: shall mean the Solid Waste transfer and processing facility owned, leased, or operated by the Contractor in Escondido.
Tip Fee and "City Tip Fee" shall mean the fees charged to Generators and haulers and to the City, respectively, for the use of the Transfer Station.
Waste Import Fee: means the fee imposed by the City on the Contractor for Solid Waste accepted by the Contractor at the Transfer Station from Generators located outside of Escondido.
Yard Waste: shall mean plants and organic landscaping materials such as trees, ground cover, lawns and shrubs, including leaves, weeds, clippings, branches, brush, bark and wood materials.

Section 2. Representations and Warranties of the Contractor

A. Corporation Status:
- The Contractor is a division of Refuse Services, Inc., a corporation duly organized, validly existing and in good standing under the laws of the State of California.
- It is qualified to transact business in the State of California, maintains a valid City business license and has the corporate power to own its own properties and to carry on its business as required by this Agreement.
B. Corporate Authorization:
- The Contractor has the authority to enter into and perform its obligations under this Agreement.
- The Board of Directors of the Contractor have taken all actions required by law, its articles of incorporation, its bylaws or otherwise to authorize the execution of this Agreement.
- The person signing this Agreement on behalf of the Contractor has authority to do so.

Section 3. Grant of Franchise

A. In General:
- The City grants the Contractor an exclusive Franchise to collect, transfer, transport, recycle, process and dispose of Solid Waste, Recyclables, and Yard Waste from residential, commercial and industrial Generators within Escondido and to use Escondido streets and byways for such purposes.
- This Franchise is granted pursuant to Chapter 14 of the Escondido Municipal Code.
- The Franchise is granted upon each and every condition contained in this Agreement, and shall be strictly construed against the Contractor.
B. Exclusive Nature of Franchise:
- During the term of this Franchise, except as otherwise provided in the Agreement, or except as may otherwise be required by federal or state law, the rights granted to the Contractor under this Franchise shall be exclusive to the Contractor.
- The City will not contract with any other entity for the services required of the Contractor.
- The City shall protect the Contractor's rights to such exclusive contract by proper ordinances, and by reasonable enforcement thereof.
- Exclusive rights do not extend to services that cannot be exclusively franchised under federal or state law.
- The Franchise does not preclude Escondido-based non-profit organizations and community groups from conducting recycling programs for fundraising, nor does it preclude individuals from selling or donating their own Recyclables.
C. Franchise Fee:
- The Contractor agrees to pay the City a Franchise Fee equal to ten percent (10%) of the Contractor's Gross Receipts from its operation in the City, in consideration of the exclusive Franchise.
- The Franchise Fee may be modified in amount and manner of payment by City Council resolution.
D. Timing of Franchise Fee Payments:
- The Franchise Fee is payable no later than the 10th day of each month following the Contractor's actual receipt of Gross Receipts.
- The Contractor shall submit a signed statement of Gross Receipts during the preceding month.
- The Contractor shall maintain full, complete, and proper books, records, and accounts of Gross Receipts, open to inspection by the City.

Section 4. Term

The term of this Agreement is fifteen (15) years, commencing on October 6, 1999, and terminating on October 5, 2014, unless earlier terminated.

Section 5. Conditions of Effectiveness of Agreement

The obligations of the City are subject to the Contractor's satisfaction of the following conditions:
- Accuracy of Representations: The representations and warranties made by the Contractor are true and correct on the effective date.
- Absence of Litigation: No pending litigation challenging the award or execution of the Agreement.
- Furnishing of Insurance and Bonds: The Contractor has furnished evidence of required insurance and bonds.
- Effectiveness of City Council Action: The City's Resolution authorizing the City Manager to execute this Agreement has become effective.

Section 6. Services to be Provided

A. In General:
- The Contractor agrees to collect, transfer, transport, recycle, process and dispose of all Solid Waste, Recyclables and Yard Waste generated or accumulated within Escondido during the Agreement term.
- The Contractor shall furnish all labor, equipment, and vehicles, insurance and bonds necessary for efficient and timely performance.
- All Solid Waste and Recyclables collected become the property of the Contractor.
- The Contractor must submit a written contingency plan demonstrating how uninterrupted service will be maintained during mechanical breakdowns, natural disasters, or other emergencies.
B. Solid Waste Collection and Disposal:
- 1. Collection of Residential Solid Waste:
  - The Contractor will provide weekly Solid Waste collection services to all existing and future single family and multi-family residences within the incorporated boundary of the City, with standard service at the curb.
  - Backyard service will be offered at an additional fee.
  - The Contractor is responsible for collecting residential Solid Waste and transporting it to the Designated Disposal Site.
- 2. Automated Collection Service:
  - Automated collection of Solid Waste from all residences shall be implemented by the Contractor during the second year of the term.
  - The automated collection system includes fully automated collection vehicles and standard refuse carts for all Customers.
  - The Contractor is responsible for purchasing, distributing, and maintaining all refuse carts for residential Customers.
  - The cost of these carts is included in the service fee charged to residential Customers and are already included in the Initial Maximum Rate, attached hereto as Attachment B.
  - The Contractor shall provide wheeled carts with securable attached lids and approximately 60-gallons capacity or as otherwise approved by the Director of Public Works for residential Solid Waste service.
- 3. Additional Services:
  - The Contractor will be required to provide additional special services as listed in Attachment B, “Initial Maximum Rates."
- 4. Collection of Commercial and Industrial Solid Waste:
  - The Contractor will provide weekly commercial Solid Waste collection with containers sized to service customer needs and collection on a frequency as required by the Customer, including bins ranging in size from approximately 1-1/2 to 6 cubic yards.
  - The Contractor shall be responsible for collecting the Solid Waste and delivering it to the Designated Disposal Site.
  - The Contractor shall be responsible for purchasing, distributing, and maintaining any collection containers or bins provided to commercial bin Customers, with the cost included in the service fee.
  - The Contractor will make compactors and drop-off box (DOB) containers available for industrial Solid Waste collection, with container sizes typically ranging from approximately 14 to 38 cubic yards.
  - The fee for such service will include the cost of delivery and pick-up of the container and disposal of the Solid Waste.
  - The Contractor shall also make available DOB containers for Yard Waste and Industrial Recyclables with fees for the respective materials.
- 5. Collection of Solid Waste from Public Containers and Collection of Solid Waste and Recyclables from City Facilities:
  - The Contractor shall collect and dispose of all Solid Waste and Recyclables contained in designated public refuse and recycling containers throughout Escondido at all locations set forth in Attachment C, at no additional charge to the City.
  - Drop boxes ranging in size from approximately 14 to 38 cubic yards, or as designated by the Director of Public Works, for Solid Waste collection at City facilities shall be provided at no additional charge.
  - The Contractor shall provide collection service of public refuse and recycling containers and drop boxes at City facilities as specified in Attachment C.
  - The City and the Contractor may amend the location or collection schedule for public refuse and recycling containers and for drop boxes at City facilities at any time by mutual consent.
  - Contractor shall provide collection of Solid Waste and/or Recyclables from any new facility owned and operated by the City that provides essential services, including, but not limited to, fire stations, police stations and parks.
- 6. Clean-Up Events:
  - The Contractor shall sponsor two (2) Clean-Up events per calendar year during which Escondido City residents will be allowed to dispose of an unlimited amount of residential Solid Waste, Recyclables and Yard Waste generated by Escondido residents at the Transfer Station or other designated location.
  - Each Clean-Up event shall take place over a period of two consecutive days and will be conducted for a minimum of eight (8) hours per day.
  - The Contractor shall provide advertising for the Clean-Up events.
  - The City shall provide traffic control for each Clean-Up event.
- 7. Bulky Items Collection:
  - The Contractor will provide collection of Bulky Items as an ongoing service available to residential Customers on an on-call basis for a service fee.
  - The Contractor shall deliver the collected Bulky Items to the Designated Recyclables Processing Facility for recovery, or to the Designated Disposal Site.
C. Recycling and Other Related Services:
- 1. Recyclables Collection:
  - The Contractor shall be responsible for collecting Source-separated Recyclables from residential service Customers at the curbside and multi-family Customers on-premises.
  - The residential Source-separated Recyclables collection services will be provided weekly on the same day as Solid Waste collection.
  - The Contractor shall collect Source-separated Recyclables using a method compatible with the Designated Recyclables Processing Facility and will accept responsibility for maintaining minimum contamination levels as set by applicable law; The contractor shall transport the Source-separated Recyclables to the Designated Recyclables Processing Facility.
  - Examples of Source-separated Recyclables include: newspaper, cardboard, office paper, mixed waste paper, computer paper, magazines, aseptic packaging, milk and juice cartons, glass containers, aluminum, steel/tin cans, and plastics.
  - Any other materials may be added or deleted with mutual agreement by the Contractor and the City.
- 2. Automated Collection Service:
  - The automated collection of Source-separated Recyclables from residential Customers shall be implemented during the first year of the Agreement to assist the City in meeting the AB 939 diversion requirement of fifty percent (50%) by the year 2000.
  - The Contractor's automated collection system shall include fully automated collection vehicles and standard carts for all residential Customers.
  - The Contractor shall provide a single dual-wheeled cart of approximately 60 gallons capacity or as approved by the Director of Public Works for each residential Customer.
  - The Contractor shall be responsible for purchasing, distributing, and maintaining the collection containers or bins, though the initial cost is paid for by the City.
  - The Contractor shall be responsible for repair and maintenance of the containers, graffiti removal, and replacement of lost, stolen or damaged containers.
  - The Contractor shall also be responsible for purchase of containers for new Customers after the City's initial purchase of containers.
  - The Contractor will be responsible for collecting all stackable crates from Customers during the transition to automated collection.
- 3. Commercial Recycling Program:
  - The City has adopted a mandatory recycling program to help achieve the diversion goals established by AB 939.
  - The Contractor will make reasonable efforts to divert recyclable commercial and industrial waste, implementing floor sorting procedures to recover and divert loads delivered to the Transfer Station containing significant amounts of commercial designated recyclable waste as described in the City's SRRE.
  - Commercial and Industrial Customers will be encouraged to separate designated recyclable waste at the point of generation through an education program and differential rates.
  - The City will work with the Contractor to establish commercial recycling fees and programs that encourage diversion and recycling.
  - The Contractor agrees to recover and recycle at least five percent (5%) of the commercial waste generated by commercial Customers within the City.
  - The Contractor shall actively solicit and encourage all commercial Customers to subscribe to recycling services, assisting them in evaluating potential cost reductions.
- 4. Recyclables Processing and Marketing:
  - The Contractor will use its best efforts to sell Franchised Recyclables for cash at the highest available market rates and must obtain approval of the City on the marketing plan and estimated revenue generated from the sale of Franchised Recyclables.
  - Written reports reflecting payments received by the Contractor for Franchised Recyclables shall be submitted to the City on a quarterly basis.
  - The Contractor shall receive and process Franchised Recyclables, prepare Franchised Recyclables for markets, and market Franchised Recyclables.
  - The Designated Recyclables Processing Facility must have the capability to receive and process Source-separated Franchised Recyclables and Franchised Recyclables separated by the Contractor.
  - The Contractor shall be required to provide processing facility capacity and shall designate a site for such purpose, ensuring the technical and environmental suitability of any site for its intended purpose.
  - If the Contractor is unable to accept and/or process the Franchised Recyclables at the Designated Recyclables Processing Facility, the Contractor shall pay the City all costs incurred by the City to implement alternative processing of Franchised Recyclables collected.
  - All revenues from sale of Franchised Recyclables will be distributed as set forth in Section 6(C)(8) of this Agreement, and all sale prices, volumes, terms, and purchasers must be reported to the City.
  - Source-separated Franchised Recyclables that are contaminated may be disposed of as Solid Waste, with the Contractor retaining a record of occurrences and reporting them to the City on a quarterly basis.
- 5. Christmas Trees:
  - The Contractor shall collect all Christmas trees discarded by Customers during the first three regularly scheduled collection days after New Year's Day and provide DOB containers, delivering all collected Christmas trees to the Designated Yard Waste Processing Facility.
- 6. Yard Waste Collection:
  - The Contractor shall provide weekly Source-separated Yard Waste curbside collection on the same collection day as Solid Waste and Recyclables collection, and deliver collected Source-separated Yard Waste to the Designated Yard Waste Processing Facility.
  - All residential Customers in Escondido are eligible to receive Yard Waste collection service; Customers will be required to place Source-separated Yard Waste materials at the curbside in either cans provided by the Customer designated for Yard Waste materials or bundles.
  - Multi-family residential complexes receiving refuse bin service will be offered Yard Waste collection service for a fee as shown in Attachment B, "Initial Maximum Rates."
- 7. Yard Waste Processing:
  - The Contractor shall make arrangements for processing the Source-separated Yard Waste volume generated through the Yard Waste collection service, having the responsibility to assure the technical and environmental suitability of any site for its intended purpose.
  - If the Contractor is unable to accept and/or process the City's Source-separated Yard Waste at the Designated Yard Waste Processing Facility, the Contractor shall pay to the City all costs incurred by the City to implement alternative processing of Source-separated Yard Waste collected.
- 8. Recycling Revenues:
  - To provide financial incentive to the Contractor to achieve the highest possible market value and greatest quantity of Recyclables, the Contractor shall retain all revenues generated from the sale of Recyclables collected by the Contractor and the payment distributed annually by the Department of Conservation while paying the City an annual payment of One Hundred and Fifty Thousand Dollars ($150,000.00).
  - Annually, starting the second year of this Agreement, the Contractor shall also pay the City fifty percent (50%) of all profit generated from the sale of curbside and multi-family Franchised Recyclables.
  - The profit in any year will be the revenue generated from the sale of curbside and multi-family Franchised Recyclables that year, less the cost of processing and selling the curbside and multi-family Franchised Recyclables, and less the Contractor's payment of $150,000.00$ to the City. The payment of $150,000.00$ and the City's fifty percent (50%) share of profit, will be due on or before July 1st of each year. The Contractor's $150,000.00$ payment to the City during the first year of the Agreement will be prorated on a monthly basis.
- 9. Public Education Program:
  - The Contractor will develop and implement public education programs on automated collection and recycling, source reduction, reuse, recycling, composting and secondary materials usage and availability, bulky goods pick-ups, green waste programs, and the importance of the safe disposal of Hazardous Waste.
  - The City and the Contractor recognize the importance of continual public education in support of Escondido Waste Collection and Recycling programs.
  - Educational programs may include achieving the goals of AB 939, proper disposal of Hazardous Waste, composting, secondary materials usage and availability, phone book recycling, multi-family recycling, commercial business recycling, and other programs.
  - The Contractor shall provide all Customers with a handbook that explains the Contractor's Solid Waste and Recycling programs and shall publish a quarterly newsletter.
  - The Contractor, at its discretion, shall provide information to the public using flyers, school presentations, facility tours, community events, community banners, billing inserts, presentations to service groups, workshops, brochures, and press releases.
  - The City and the Contractor shall meet annually to coordinate their goals and activities for public education, with the Contractor providing the City with copies of all educational materials prior to distribution.
- 10. Change in Laws:
  - The Contractor shall develop and implement programs to meet new requirements of AB 939 or similar state and federal laws and may request a rate increase or decrease under Section 8(F) of this Agreement for additional duties required hereunder.
D. Transfer and Disposal:
- 1. In General:
  - The Contractor owns and operates a Transfer Station located in Escondido and agrees to use it to accept all of the City's Solid Waste and Recyclables, maintaining sufficient capacity.
  - The Contractor shall make sufficient space available at the Transfer Station site for the City to operate its Household Hazardous Waste collection program.
  - The City agrees that all Solid Waste and Recyclables collected within its boundaries may be delivered to the Contractor's Transfer Station.
- 2. Priority Over Other Generators:
  - The Contractor shall use its best efforts to attract Solid Waste from other Generators, giving the City priority at the Transfer Station over all other Generators.
  - The Contractor may set Tip Fees for Solid Waste, Yard Waste and Recyclables other than the City's at any amount it determines to be commercially reasonable.
  - The City Tip Fee shall at all times be equal to or lower than the lowest Tip Fee charged to any other Generator or hauler, except for self-haul Solid Waste.
- 3. Waste Import Fees:
  - The Contractor agrees to pay to the City a Waste Import Fee not to exceed the amount set forth in Attachment D "Waste Import Fees" for every ton of Solid Waste originating from Generators located outside Escondido and delivered by permitted haulers to the Transfer Station.
  - The City may review the amount of the Waste Import Fee and may increase or decrease the Waste Import Fee at the discretion of the City Council.
- 4. Sale of Transfer Station/City's Right of First Refusal:
  - If the shareholders of the Contractor elect to sell all or any portion of the Transfer Station, the City shall maintain the right of first refusal to purchase the Transfer Station at the then current fair market value, determined by an independent appraiser jointly selected by the Contractor and the City.
  - A sale or transfer will not be deemed to have occurred in the event that (a) operational control is passed to or assumed by specified family members; (b) a transfer of stock occurs between or among specified family members; or (c) any transfer of stock or assets primarily for estate planning or asset protection purposes which does not materially affect the day to day operations of the Contractor or the Transfer Station.

Section 7. Records, Reports and Audits

A. General:
- The Contractor shall maintain accurate records for its operation including Solid Waste quantities collected and quantities transported to each disposal site.
- The Contractor shall make these records available for the City to fulfill obligations under AB 939 and agrees that the records of any and all companies conducting operations which are subject to the Franchise Fee addressed in this Agreement shall be provided or made available to the City and its designated representatives during Normal Business Hours.
- The Contractor shall keep full and accurate books of account, records, receipts and other data showing its rates, fees and associated tonnages, and shall install and maintain accurate receipt-printing registers.
B. Reports:
- The Contractor shall furnish to the City copies of its periodic reports and returns filed with all Governmental Authorities.
- The Contractor shall record and provide to the City on a monthly basis the daily quantities of Solid Waste collected and disposed at each disposal facility used by the Contractor and the daily quantities of Recyclables, Yard Waste, and any materials destined for transformation facilities collected according to: (1) material types; (2) program; and (3) processing facility/markets to which materials are delivered.
- All disposal and diversion tonnages shall also be further disaggregated according to the source of generation as follows: Residential Solid Waste, Commercial Solid Waste, Industrial Solid Waste, and Other Sources.
- This monthly information shall be given to the Director of Public Works to note within AB 939 documentation submittals to the California Integrated Waste Management Board (CIWMB).
- The Contractor shall also provide an annual Waste Disposal and Diversion Report by the 31st day of January of each year of the Agreement, including total tonnages disposed by waste source and disposal facility, and total tonnages diverted by waste source, material type, and program.
- The Contractor shall attempt to include reports on private recycling efforts, include reports on private recycling efforts so that these will be counted toward the City's diversion goals.
- All reports shall be adequate to meet the City's reporting requirements to the California Integrated Waste Management Board, and to the County of San Diego throughout the term of this Agreement.
- Monthly reports shall also include the number of Escondido residential and commercial Customers participating and a summary of service requests, complaints and Contractor responses for the month.
- All records shall be maintained and submitted on computer discs and in a computerized database compatible with the City's computers.
- The Contractor shall submit to the City on a monthly basis all reporting forms for the disposition of Solid Waste, Recyclables and Transfer Station operations prepared by the Contractor or the Governmental Authorities.
C. Audit and Inspection by the City:
- 1. In General:
  - At any time during Normal Business Hours, the Contractor shall make available to the City for examination the Contractor's data and records with respect to Collection Operations under this Agreement and permit the City to audit, examine, and make excerpts or transcripts from such data and records.
  - The Contractor shall maintain such data and records in an accessible location and condition for a period of not less than three years following the termination of this Agreement.
- 2. Five Year Audit:
  - The Contractor agrees to allow the City to conduct an audit of the Contractor's financial records concerning its Collection Operations, commencing on July 1, 2000 and every five year anniversary thereafter.
  - If the audit reveals that the Contractor's Rate of Return for Collection Operations exceeds ten percent (10%), the City Manager shall have the right to propose in writing that the Contractor adjust its service rates, including proposed rates for all Generator classes of fees and all affected Escondido Ratepayers.
  - Unless the Contractor and the City Manager agree on different rates or the Contractor requests a review of such proposal by the City Council, such proposal shall become effective and such rates shall be incorporated as an amendment to this Agreement at the end of such 45 day period. If the City Council reviews such proposal at the Contractor's request, such proposal will be effective immediately upon City Council consideration.

Section 8. Rates for Collection and Other Services

A. In General:
- The Contractor shall be permitted to charge service fees to all Ratepayers, charging service fees to users of Solid Waste and Recycling Services who are not located in Escondido as the Contractor deems commercially reasonable.
B. Initial Maximum Rates for Solid Waste and Recycling Services:
- The Initial Maximum Rates charged by the Contractor shall be those set forth on Attachment B, remaining in effect from the beginning of the term until July 1, 2000.
- Thereafter, the Maximum Rates shall be subject to increase by the Contractor in accordance with the terms of Section 8(C) of this Agreement.
C. Contractor's Right to Increase Maximum Rates:
- Commencing on July 1, 2000, and upon each one year anniversary thereafter for the remainder of the term, the Maximum Rates (excluding any Franchise Fees or other "pass-throughs") shall increase by an amount not to exceed the product of the previous year's rate multiplied by the percentage change in the San Diego, CA area Consumer Price Index for All Urban Consumers (all items), base period of 1982 – 84 = 100, published by the United States Department of Labor, Bureau of Labor Statistics for the latest twelve-month period for which statistics are available ("Applicable CPI Increase").
- The formula for calculating the percentage adjustment shall be:
  $Current Period CPI - Previous Period CPI = index point change/previous period CPI * 100 = percent change$
- All service rate increases must first be reviewed and approved by the City Manager or his or her designee and such rates shall be incorporated as an amendment to this Agreement before such increase becomes effective.
- The Contractor's right to increase the Maximum Rate is contingent upon the Contractor providing written notice to the City Manager including proposed rates for all Generator classes of fees and all affected Escondido Ratepayers by no later than 45 days prior to the effective date of the proposed increase.
- The Contractor's unused ability to increase rates in any give year shall not be carried forward to subsequent years.
- The Contractor agrees to coordinate, whenever possible, the concurrent imposition of any pending service rate increase with any pending Franchise Fee or regulatory fee increases by the City.
D. Annual Rate Reviews to Ensure Within Lowest 25%:
- Commencing on July 1, 2000, and upon each one year anniversary thereafter for the remainder of the term, the City will conduct a review of the Contractor's rates to ensure that the Escondido Ratepayers' Effective Mean Rate is within the lowest twenty-five percent (25%) of Effective Mean Rates being charged in San Diego County.
- If the Escondido Ratepayers' Effective Mean Rate is not within the lowest twenty-five percent (25%) being charged in San Diego County, the City Manager shall have the right to propose in writing that the Contractor adjust its service rates, with the City Manager's proposal including proposed rates for all Generator classes of fees and all affected Escondido Ratepayers.
- The Contractor agrees to adjust its service rates so that the Effective Mean Rate for Escondido Ratepayers is within the lowest twenty-five percent (25%) in San Diego County.
E. Most Favored Nation Rate for Transfer Services:
- If the Contractor agrees to charge any other Generator or hauler a lower service rate at the Transfer Station than the service rate charged to Escondido Ratepayers for the corresponding service, then the Contractor shall immediately charge such lower service rate to Escondido Ratepayers.
- To ensure that the City is receiving the lowest transfer service rate for use of the Transfer Station, the Contractor will