HomeMy WebLinkAboutOrdinance 2636 N.C.S. 01/22/20181
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EFFECTIVE DATE ORDINANCE NO. 2636 N.C.S.
OF ORDINANCE
February 22, 2018
Introduced by Seconded by
Teresa Barrett Gabe Kearney
AN ORDINANCE CONDITIONALLY APPROVING ASSIGNMENT OF THE FRANCHISE
AGREEMENT BETWEEN THE CITY OF PETALUMA AND PETALUMA REFUSE & RECYCLING, INC.,
AN AFFILIATE OF THE RATTO GROUP OF COMPANIES, INC., FOR SOLID WASTE, RECYCLABLE
MATERIALS AND YARD TRIMMINGS SERVICES TO RECOLOGY SONOMA MARIN, A WHOLLY
OWNED SUBSIDIARY OF RECOLOGY INC., AND AUTHORIZING THE CITY MANAGER TO
EXECUTE AN ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT UPON
SATISFACTION OF THE CONDITIONS PRECEDENT SPECIFIED IN THE FRANCHISE AGREEMENT
AND THE ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT
WHEREAS, on September 13, 2005, the City entered into an exclusive Franchise
Agreement ( "Franchise Agreement ") with GreenWaste Recovery, Inc., ( "GreenWaste ")
commencing on January 1, 2006, for collection of solid waste, recyclable materials and yard
trimmings, pursuant to authority granted in Resolution No. 2005 -141 N.C.S.; and
22 WHEREAS, on January 4, 2010, the City Council of the City of Petaluma adopted
23 Ordinance No, 2010 -2361 N.C.S. authorizing the assignment of the Franchise Agreement from
24 GreenWaste to Petaluma Refuse & Recycling, Inc, a California corporation ( "PR &R "); and
25 WHEREAS, on January 7, 2013 the City Council of the City of Petaluma adopted
26 Ordinance No. 2013 -2448 N.C,S, authorizing the City and PR &R to enter into a restated
27 Agreement for the provision of the exclusive right to collect, transport, and process mixed
28 materials, recyclable materials, and organic material generated within the City; and
29 WHEREAS, by letter dated August 18, 2017, PR &R requested assignment of the Franchise
30 Agreement, in accordance with Section 14.8 of the Agreement, to Recology Sonoma Marin
31 ( "Recology" or "Assignee ") as included as Exhibit B to this Ordinance; and
32 WHEREAS, The Ratto Group of Companies Inc. and its owners and affiliated entities,
33 including PR &R (collectively, "TRG "), entered into an Asset Purchase Agreement dated August
34 11, 2017 (the "APA ") which Recology and TRG represent provides for the purchase by Recology
35 or its designated subsidiaries of substantially all of TRG's assets, including all of PR &R's assets; and
36 WHEREAS, in connection with the closing of the transactions contemplated by the APA
37 (the "Closing "), PR &R wishes to assign the Franchise Agreement to Recology, and Recology
38 wishes to accept such assignment; and,
Ordinance No. 2636 N.C.S. Page 1
1 WHEREAS, Section 14.8 of the Franchise Agreement requires the City's consent to any
2 assignment of the Franchise Agreement as defined therein, including the sale of PR &R's assets
3 dedicated to service under the Franchise Agreement, to a third party; and
4 WHEREAS, the City has considered the potential risks associated with such an assignment,
5 including, but not limited to, those discussed in the related report entitled, "Final Report: Review
6 of Assignment of TRG Agreements to Recology Sonoma Marin," and seeks certain assurances
7 regarding the performance of Recology, as provided for herein, in consideration of the City's
8 consent to the assignment; and
9 WHEREAS, Recology seeks to assure the City that, following the sale, Recology will
10 continue operations under the Franchise Agreement in accordance with high professional
11 standards, and provide services to the City in full compliance with the terms of the Franchise
12 Agreement and the City's operational expectations (not limited to, but specifically including, the
13 maintenance of separate operations and financial records, and separate records of all other
14 transactions - except for the allocation of health, liability and workers compensation insurance),
15 and keeping separate from any other franchise agreement or other activity of Recology
16 reporting of activities under the Franchise Agreement, as well as keeping separate identification
17 and use of all assets, including vehicles and containers under the Franchise Agreement, unless
18 otherwise specifically approved in writing in advance by the City; and
19 WHEREAS, Recology seeks to assure the City that the sale of the Franchise Agreement
20 assets to Recology will not result in increased costs or a reduction in services or the quality of
21 those services provided to the City, its residents, or businesses or a reduction of any obligations of
22 Contractor under the Agreement; and
23 WHEREAS, the City has determined that the implementation costs for the Trash Capture
24 Program as required by the State Phase II MS4 permit for municipal separate storm sewer systems
25 is a property - related cost of providing refuse services for the community and that therefore such
26 costs are eligible for recovery through the fee structure and the annual refuse rate adjustment
27 process of the Franchise Agreement; and
28 WHEREAS, although the materials attached to and made a part of this ordinance for
29 approving assignment and amendment of the Franchise Agreement provide a mechanism for
30 providing Trash Capture services and recovering Trash Capture service costs pursuant to the
31 Franchise Agreement, approval of assignment and amendment of the Franchise Agreement
32 pursuant to this ordinance does not commence the provision of Trash Capture services in the
33 City or recovery of Trash Capture service costs; and
34 WHEREAS, commencement of such Trash Capture services and cost recovery are
35 anticipated to occur after assignment of the Franchise Agreement has taken effect and
36 following a subsequent budget approval and rate setting action of the City in accordance with
37 all procedural and substantive requirements for such a rate setting action and the terms of the
38 Franchise Agreement; and
39 WHEREAS, assignment of the Franchise Agreement and the rights and obligations
40 thereunder continues the same solid waste disposal, recycling and related services currently
41 provided under the Franchise Agreement, requires the same diversion percentage of waste
42 from landfills, directs garbage and rubbish hauled from City sources to the same landfill,
43 continues the composting of green waste and directs the hauling of green waste to the same
44 composting site, and uses the same trucks, equipment and facilities as used by the existing solid
45 waste, recycling and disposal services provided under the Franchise Agreement, thereby
46 making no changes to the Franchise Agreement services which would have physical
47 environment impacts as defined by the California Environmental Quality Act ( "CEQA "); and
Ordinance No, 2636 N.C.S. Page 2
1 WHEREAS, because assignment of the Franchise Agreement would result in no changes
2 that would have physical environmental impacts under CEQA, such assignment pursuant to
3 adoption of this ordinance is not a "project" subject to CEQA and /or is categorically exempt
4 pursuant to Section 15301 of the CEQA guidelines as the operation, maintenance, repair,
5 permitting, leasing or licensing of existing public or private structures, facilities or mechanical
6 equipment with negligible or no expansion of use;
7 NOW THEREFORE BE IT ORDAINED by the Council of the City of Petaluma as follows:
8 Section 1. Recitals Incorporated as Findings. The above recitals are hereby declared to
9 be true and correct and are incorporated into this ordinance as findings of the City Council.
10 Section 2. Conditions Precedent. Before assignment of the Franchise Agreement to
11 Assignee contemplated pursuant to this ordinance may take effect, each and every condition
12 precedent in Sections 2 and 14 of the Franchise Agreement, as modified by the Assignment,
13 Assumption and Amendment Agreement ( "Assignment Agreement "), which is attached to and
14 made a part of this Ordinance as Exhibit A, and each and every condition precedent in Section
15 1 of the Assignment Agreement, must first be satisfied. The Franchise Agreement is hereby made
16 a part of this ordinance by this reference.
17 Section 3. Approval of Assignment. Subject to satisfaction of the conditions precedent
18 specified in Section 2, above, the City Council approves the Assignment Agreement. Each and
19 every provision in the Assignment Agreement shall be binding upon the City, Recology, PR &R
20 and their successors and assigns conditioned upon this ordinance taking effect, satisfaction of
21 the conditions specified in Section 2 of this ordinance and execution of the Assignment
22 Agreement by the City Manager in accordance with this ordinance. Provided the foregoing
23 have occurred, the amendments to the Franchise Agreement contained in the Assignment
24 Agreement shall become effective and part of the Franchise Agreement and binding on
25 Recology and the City and their successors and assigns, subject to and effective as of the
26 Closing.
27 Section 4. Execution. The City Council authorizes and directs the City Manager to
28 execute the Assignment Agreement on behalf of the City, including any related and necessary
29 implementing documents, at the time that this ordinance has become effective in accordance
30 with the City Charter and all of the conditions specified in Section 2, above, are satisfied.
31 Section 5, Severability. If any section, subsection, sentence, clause, phrase or word of
32 this ordinance is for any reason held to be unconstitutional, unlawful or otherwise invalid by a
33 court of competent jurisdiction or preempted by state legislation, such decision or legislation
34 shall not affect the validity of the remaining portions of this ordinance. The City Council of the
35 City of Petaluma hereby declares that it would have passed and adopted this ordinance and
36 each and all provisions thereof irrespective of the fact that any one or more of said provisions be
37 declared unconstitutional, unlawful or otherwise invalid.
38 Section 6. Publication. This ordinance or a synopsis of it shall be posted and /or published
39 for the period and in the manner required by City charter.
40 Section 7, Effective Date. This ordinance shall become effective thirty (30) days after the
41 date of its adoption by the Petaluma City Council.
42 INTRODUCED, and ordered posted /shed, this 18'" day of December 2017.
43
44 ADOPTED this 22nd day of January 2018, by the following vote:
45
Ordinance No. 2636 N.C.S. Page 3
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Ayes: Vice Mayor Barrett, Mayor Glass, Healy, Kearney, King, Miller
Noes: None
Abstain: None
Absent: Albertson
J/
avid Glass, Mayor
ATTEST: APPROVED AS TO FORM:
Claire Cooper, City Clerk
Eric W. Danly, City Attorney
I
Ordinance No. 2636 N.C.S,
Page 4
1
2 Exhibit A to Ordinance
3
4
5 AMENDMENT NO.1 TO FRANCHISE AGREEMENT
6
7 The Franchise Agreement for Collection, Disposal, and Processing of Mixed Materials,
8 Recyclable Materials and Organic Materials and Related Activities in the City of
9 Petaluma Pursuant to Chapter 8.16 of the Petaluma Code ( "Franchise Agreement ") is
10 hereby amended in accordance with Section 14.8.2 of the Franchise Agreement as
11 follows:
12
13 1. Section 1 of the Franchise Agreement is amended to add a new Section 1.15.A, which shall
14 read in its entirety as follows:
15 1.15.A "Change of Control" means that beneficial ownership of securities of
16 Contractor representing at least fifty percent (50 %) of the combined voting power
17 entitled to vote in the election of directors is no longer held (whether directly or
18 through one or more wholly -owned subsidiaries) by the Person or Persons that
19 (whether directly or through one or more wholly -owned subsidiaries) owned one
20 hundred percent (100 %) of the outstanding voting securities of Contractor as of the
21 date Contractor first began providing services under this Agreement.
22 2. Section 1.29 of the Franchise Agreement is amended to read in its entirety as follows:
23 1.29 "Contractor" means Recology Sonoma Marin, a corporation organized and
24 operating under the laws of the State of California.
25 3. Section 1.37 of the Franchise Agreement is amended to read in its entirety as follows:
26 1.37 "Diversion" means the handling of materials in a manner that counts as
27 diversion under applicable CalRecycle regulations.
28 4. Section 1.38 of the Franchise Agreement is amended to read in its entirety as follows:
29 1.38 "Diversion Level" means the percentage equal to 100 multiplied by the quotient
30 obtained by dividing (i) the number of tons of material collected by Contractor
31 pursuant to this Agreement, or pursuant to a non - exclusive franchise agreement with
32 City for the collection of Construction and Demolition Debris, that are delivered to an
33 Approved Recyclable Materials Processing Site, an Approved Organic Materials
34 Processing Site, or a permitted Construction and Demolition Debris processing
35 facility (in each of the foregoing cases, net of all residue), or that are otherwise
36 Diverted, by (ii) the total number of tons of material collected by Contractor pursuant
37 to this Agreement, or pursuant to a non - exclusive franchise agreement with City for
38 the collection of Construction and Demolition Debris.
Ordinance No. 2636 N.C.S. Page 5
1 5. Section 1.39 of the Franchise Agreement, which defines the term "Diversion Rate," is deleted
2 in its entirety, and the words "Diversion Rate" in Sections 12.1.4.10 are replaced by the
3 words "Diversion Level."
4 6. Sections 1.57 and 14.8.3.3 of the Franchise Agreement, relating to interfamilial assignments,
5 are deleted in their entirety.
6 7. Section 1 of the Franchise Agreement is amended to add a new Section 1.58A which shall
7 read in its entirety as follows:
8 1.58A "MS4 Permit" means the waste discharge requirements that apply to the City pursuant
9 to the State Water Resources Control Board Water Quality Order no. 2013- 0001 -DWQ
10 National Pollutant Discharge Elimination System General Permit No. CAS000004 for small
11 municipal separate storm sewer systems.
12 8. Section 1.75 of the Franchise Agreement is amended to read in its entirety as follows:
13 1.75 "Rate" means the dollar unit the Contractor bills a Customer for Mixed Materials
14 Collection and disposal, Recyclable Materials Collection and Processing Services, Organic
15 Materials Collection and Processing Services, and Trash Capture services, where such dollar
16 unit does not exceed the maximum Rate determined by the City pursuant to Section 8.16.220
17 and 8.16. 230 of the Petaluma Municipal Code and contained in Exhibit 1.
18 9. Section 1.85 of the Franchise Agreement is amended to read in its entirety as follows:
19 1.85 "Service Type" refers separately to the following types of Mixed Materials, Recyclable
20 Materials, and Organic Materials Collection services, and Trash Capture services for each of
21 the following types of services: Single - Family Premises Cart service, Multi -Plex Premises
22 Cart service, Multi- family Premises Cart service, Multi - Family Premises Bin service,
23 Commercial Cart service, Commercial Bin service, Drop Box service, annual clean -ups, City
24 facilities service, and Street Sweeping.
25 10. Section 1 of the Franchise Agreement is amended to add a new Section 1.98A which shall
26 read in its entirety as follows:
27 1.98A "Trash Capture Materials" means Mixed Materials resulting from the City's retrieval
28 activities under the Trash Capture Program."
29 11. Section 1 of the Franchise Agreement is amended to add a new Section 1.98B which shall
30 read in its entirety as follows:
31 1.98B "Trash Capture Program" refers to the City program to prevent discharge of refuse to
32 City storm sewers in accordance with MS4 permit requirements. The Trash Capture Program
33 may consist of a combination of installation and maintenance of full capture devices, large
34 capture devices, and small capture devices, as well as utilization of control measures such as
35 public education and outreach, street sweeping, cleanup days, and public refuse receptacles
36 in order to satisfy MS4 requirements.
37
Ordinance No. 2636 N.C.S. Page 6
1 12. Section 2.8 is amended to read in its entirety as follows:
2 2.8 Council Action
3 The City Council shall adopt an ordinance approving of and adopting this Franchise
4 Agreement and authorizing execution of this Franchise Agreement on behalf of the City prior
5 to or on the effective date of this Franchise Agreement.
6 13, Section 4.2 of the Franchise Agreement is amended to add a new Section 4.2.11A which
7 shall read in its entirety as follows:
8 4.2.11A MS4 Trash Capture Services
9 Retrieval of refuse from City capture facilities under the Trash Capture Program will be
10 carried out by City staff and /or contractors and not by Contractor. Contractor will collect
11 Trash Capture Materials following retrieval by the City or contractors in accordance with
12 Section 5,7 of this Agreement.
13 14, The first and fourth paragraphs of Section 5.7 of the Franchise Agreement are amended to
14 read in their entirety as follows
15 Contractor shall Collect Mixed Materials, Recyclable Materials, Organic Materials and Trash
16 Capture Materials from the City locations identified in Exhibit 4. Collection for City
17 Facilities shall occur at least once per week or more frequently as requested by the City.
18 Contractor may integrate Collection of Mixed Materials, Recyclable Materials, Organic
19 Materials and Trash Capture Materials from City facilities with other Collection services,
20 provided that Contractor attributes Tonnage Collected from City facilities separately from
21 other Customers.
22 15, Section 6.2.2 of the Franchise Agreement is amended to read in its entirety as follows:
23 6.2.2 No Commingling of City Materials
24 6.2.2.1 Mixed Materials. Contractor shall not commingle in Collection
25 vehicles any Mixed Materials Collected pursuant to this Agreement, with any other
26 material Collected by Contractor inside or outside the City, without the prior written
27 approval of an authorized representative of the City.
28 6.2.2.2 Recyclable Materials. Contractor shall not commingle in Collection
29 vehicles any Recyclable Materials Collected pursuant to this Agreement, with any
30 other material Collected by Contractor inside or outside the City, without the prior
31 written approval of an authorized representative of the City.
32 6.2.2.3 Organic Materials. Contractor shall not commingle in Collection
33 vehicles any Organic Materials Collected pursuant to this Agreement, with any other
34 material Collected by Contractor inside or outside the City, without the prior written
35 approval of an authorized representative of the City,
Ordinance No. 2636 N.C.S. Page 7
1 16. The second paragraph of Section 6.3.1 of the Franchise Agreement is amended to read in its
2 entirety as follows:
3 Contractor shall confer with the City before purchasing any new Collection and
4 Street- Sweeping vehicles during the Term. Contractor shall submit the specifications
5 for all vehicles to the City for review and approval before acquisition. Contractor
6 acknowledges that City is constructing a CNG facility and agrees that after the
7 facility becomes operational the City may require subsequent vehicle purchases to be
8 CNG vehicles.
9 17. The first paragraph of Section 103.1 is amended, and a new final paragraph is added to that
10 section, to read in their entirety as follows:
11 The RRI Adjustment shall be the sum of the weighted percentage changes for all RRI
12 indices. With the exception of the "Disposal Fee," "Organic Waste Processing Fee," and
13 "Trash Capture Fee," the percentage change in each RRI index shall be calculated using the
14 change in the 12 -month annual average of RRI index values between the base year, which
15 shall be the prior preceding calendar year ending December 31, and the preceding calendar
16 year ending December 31, as contained in the most recent release of the source document
17 listed in Exhibit 2, which is attached to and included this Agreement. Therefore, the first
18 RRI adjustment (effective July 1, 2014) will be based on the percentage changes between the
19 12 -month annual average of the RRI indices for the calendar year ending December 31, 2012
20 and the 12 -month annual average of the RRI indices for the calendar year ending December
21 31, 2013.
22 So long as the City has approved a Trash Capture Program budget and rate setting in
23 accordance with all procedural and substantive requirements for such a budgeting and rate
24 setting action and the terms of this Agreement, the percentage change shall be calculated
25 using the change in the Trash Capture Fee between the preceding calendar year and the
26 current calendar year's fee as established and provided to the Contractor by the City prior to
27 March 1 of the current year. Except that; for the first year the Trash Capture Fee is collected
28 (e.g., the RRI that is applicable to any rate change taking effect on July 1, 2018), the RRI
29 shall be calculated based on the Trash Capture Fee established by the City prior to March 1,
30 2018 by adding to that RRI calculation the quotient, multiplied by 100, of the City -
31 established Trash Capture Fee and the total revenue generated by this Agreement as reported
32 in the 2017 Annual Report. As an example, using the total revenue of $11,534,192 generated
33 by this Agreement as reported in the 2017 annual report, if the City established the Trash
34 Capture Fee to be $100,000 before March 1, 2018, the RRI percentage calculated based on
35 the prior year methodology would be increased by $100,000 divided by $11,534,192
36 multiplied by 100.
37 18. Section 10.4 of the Franchise Agreement is amended to read in its entirety as follows:
38 10.4 The City or Contractor may request a Detailed Rate Review to be conducted
39 following the procedures as specified in Exhibit 3. However, a Detailed Rate Review
40 shall not be conducted more than once every three (3) Agreement years. Contractor
41 shall not request a Detailed Rate Review before November 1, 2019. On or after that
42 date (but no later than December 31, 2019), Contractor may request a Detailed Rate
43 Review to adjust Maximum Service Rates effective July 1, 2020. A request for a
Ordinance No. 2636 N.C.S. Page 8
1 Detailed Rate Review shall be made in writing at least six (6) months prior to the July
2 1sc rate adjustment date for the year in which the results for the Detailed Rate Review
3 are to be applied. If City engages a consultant to assist it in a Detailed Rate Review,
4 Contractor shall pay, or reimburse City for, such consultant's fees and expenses, and
5 such fees and expenses shall be an allowable pass - through cost for purposes of such
6 Detailed Rate Review.
7 19. A new Section 113A is added to the Franchise Agreement to read in its entirety as follows:
8 The Contractor shall remit the proceeds of Trash Capture Fees paid by Customers to the City
9 in one annual payment by 5:00 p.m. on October 31 of each year.
10 20. The second paragraph of Section 12.2.1 is amended to read in its entirety as follows:
11 Contractor shall submit monthly reports by 5:00 PM on the 30 "' calendar days after
12 the end of the reporting month. Contractor shall submit quarterly reports by 5:00 PM
13 on the 45`x' calendar days after the end of the reporting quarter. Contractor shall
14 submit annual reports by 5:00 PM on the 45`x' calendar days after the end of the
15 calendar year.
16 21. Section 12.2.3 of the Franchise Agreement is amended to add a new Section 12.2.3.17, which
17 shall read in its entirety as follows:
18 12.2.3.17 Diversion
19 Provide calculated Diversion Levels for the quarter for (i) all material collected by
20 Contractor, (ii) all material collected by Contractor from Single - Family Premises, and
21 (iii) all material collected by Contractor other than from Single - Family Premises.
22 22, Section 1224 of the Franchise Agreement is amended to add a new Section 12.2.4.5, which
23 shall read in its entirety as follows:
24 12.2.4.5 AB 341 and 1826 Compliance Data. Contractor shall report the total
25 number of Commercial and /or Multi- Family Premises serviced and the number of
26 containers, container sizes and frequency of collection for Mixed Materials,
27 Recyclable Materials, and Organic Materials for each Commercial and /or Multi -
28 Family Premises. Contractor shall also provide the following information, separately
29 as required by both AB 341 and AB 1826:
30 12.2.4.5.1 The total number of Commercial Premises that appear (based on
31 subscribed -for container volume) to fall under the AB 341/1826 thresholds, and
32 the total number of those Commercial Premises that are not subscribed to
33 Recycling /Organics Material Collection Service, and a summary of the type of
34 follow -up outreach provided to such Commercial Premises,
35 12.2.4.5.2 The total number of Multi- Family Premises that appear (based on
36 subscribed -for container volume) to fall under the AB 341/1826 thresholds, the
37 total number of those Multi- Family Premises that are not subscribed to
Ordinance No. 2636 N.C.S. Page 9
1 Recycling /Organics Material Collection Service, and a summary of the type of
2 follow -up outreach provided to such Multi- Family Premises.
3 23. The first two sentences of Section 12.2.4.2 are amended to read in their entirety as follows:
4 At the request of the City or in conjunction with a Detailed Rate Review as described
5 in Section 10.4, within 120 calendar days after the close of Contractor's fiscal year,
6 Contractor shall deliver to the City four copies or a PDF of audited financial
7 statements and profit and loss statements reflecting Contractor's operations under this
8 Agreement for such fiscal year. The financial statements shall show Contractor's
9 results of operations (including the specific revenues and expenses) in connection
10 with the operations provided for in this Agreement.
11 24. Section 14.4.5 of the Franchise Agreement is amended to add the following to the table of
12 liquidated damages:
47. Failure to submit the Diversion Plan and Public $1,000/ day
Education Plan required by Section II(3) of the that either
Assignment, Assumption and Amendment plan is
Agreement among City, Contractor and Petaluma overdue.
Refuse and Recycling, Inc., by the deadline specified
in that section.
13
14 25. Section 14.8.1 of the Franchise Agreement is amended to add the following as the second
15 paragraph thereof:
16 For purposes of this Section 14.8, the term `assignment' shall also include (i) a sale of
17 all or substantially all the assets of Contractor; (ii) a sale, exchange or other transfer
18 of outstanding voting securities of Contractor which results in a Change of Control;
19 (iii) any dissolution, reorganization, consolidation, merger, re- capitalization, stock
20 issuance or re- issuance, voting trust, pooling agreement, escrow arrangement,
21 liquidation or other transaction which results in a Change of Control; (iv) any
22 assignment by operation of law, including insolvency or bankruptcy, an assignment
23 for the benefit of creditors, or appointment of a receiver taking possession of
24 Contractor's property; and (v) any combination of the foregoing which results in a
25 Change of Control.
26 26. Section 15.13 of the Franchise Agreement is amended to change Contractor's notice address
27 to the following.
28
Recology Sonoma Marin
29
c/o Recology Inc,
30
50 California Street, 24"' Floor
31
San Francisco, CA 94111
32
Attention: Legal Department
Ordinance No, 2636 N.C.S. Page 10
1 27. Exhibit 2 of the Franchise Agreement is amended to add the following additional Operating
2 Cost Category and Index as follows:
3 Trash Capture Fee: Fee to be calculated in accordance with section 10.3.1 of this Agreement
4 and paid to the City in accordance with Section 113A of this Agreement.
5 28. Section 1(b) of Exhibit 3 of the Franchise Agreement is amended to read in its entirety as
6 follows:
7 b. Forecasts of Costs. Allowed costs of operations for the Contractor's prior fiscal
8 year will be used to evaluate the forecasted cost for upcoming year. The review will
9 evaluate forecasted labor- related costs, vehicle - related costs, depreciation expense,
10 and other costs, including pass- through costs. Pass - through costs are those portions of
11 Contractor's annual cost of operations that are recoverable through the detailed rate
12 review, but without a profit margin (i.e. without application of the operating ratio).
13 Pass - through costs consist of (i) Franchise Fees, HHW fees, AB 939 fees, and any
14 other fees established by or pursuant to Sections 11. 1, 11.2 or 11.4; (ii) detailed rate
15 review costs payable by Contractor under Section 10.4; (iii) fees payable by
16 Contractor for landfill disposal; and (iv) fees payable by Contractor for processing of
17 Organic Materials.
18 29. Exhibit 5 of the Franchise Agreement is amended to read in its entirety as set forth in Exhibit
19 5 to this Amendment.
20 30, Exhibit 9 of the Franchise Agreement is amended to read in its entirety as set forth in Exhibit
21 9 to this Amendment.
22 31. All references in the Franchise Agreement to "Petaluma Refuse and Recycling," "The Ratto
23 Group of Companies, Inc.," and "www.uni cycler. coin" are amended to refer to "Contractor,"
24 " Recology Inc.," and "www.recology.com," respectively. All references in the Franchise
25 Agreement to "North Bay Corporation" or "Redwood Empire Realty, LLC" are amended to
26 refer to " Recology Inc. or an Affiliate of Recology Inc." All references in the Franchise
27 Agreement to James Ratto, or to Contractor's fiscal year being January to December, are
28 deleted.
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Ordinance No. 2636 N.C.S. Page 1 1
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EXHIBIT 5
APPROVED FACILITIES
Approved Disposal Sites)
Name: Redwood Landfill
Address: 8950 Redwood Highway, Novato CA 94945
SWIS #:21 -AA -0001
Approved Organic Materials Processing Site
Green Materials
Name: Redwood Landfill Composting Facility
Address: 8950 Redwood Highway, Novato, CA 94945
SWIS #: 21 -AA -0001
Commercial Organics
Name: West Contra Costa Sanitary Landfill Organics Material Processing Facility
Address: Parr Blvd. & Garden Tract Rd., Richmond, CA 94806
SWIS #: 07 -AA -0044
Approved Recyclable Materials Processing Sites)
Name: Novato Disposal Service
Address: 2543 Petaluma Blvd. South, Petaluma, CA 94952
SWIS #: 49 -AA -0406
Ordinance No. 2636 N.C.S.
Page 12
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EXHIBIT 9
VEHICLE SPECIFICATIONS
Truck #
License #
Ty .fie
Year
Manufacturer
10113
7210001
Ford
2006
FORD - CONTAINER
102P
7205642
Ford
2006
FORD - SERVICE
106P
7Y24701
Ford
2006
FORD - PICKUP
1007
94927A2
Sweeper
2016
FREIGHTLINER
103P
7Y62221
Sweeper
2006
TYMCO
901P
8AO7228
Side Loader
2005
PETERBILT
903P
8AO7223
Side Loader
2005
PETERBILT
904P
8AO7224
Side Loader
2005
PETERBILT
905P
8A07225
Side Loader
2005
PETERBILT
906P
8A07112
Side Loader
2006
PETERBILT
907P
8A07113
Side Loader
2006
PETERBILT
91113
8AO7230
Side Loader
2005
PETERBILT
912P
8AO7231
Side Loader
2005
PETERBILT
937R
68306X1
Side Loader
2006
PETERBILT
300P
7W98433
Rear Loader
2006
FREIGHTLINER
201P
7V68242
Front Loader
2006
AUTOCAR
202P
7V68243
Front Loader
2006
AUTOCAR
203P
7V68245
Front Loader
2006
AUTOCAR
2024
03710Z1
Front Loader
2006
AUTOCAR
5
6 Note: The information in this exhibit was provided by the previous contractor.
7 Contractor may correct this exhibit if it discovers that the information herein is
Ordinance No. 2636 N.C.S. Page 13
1 inaccurate, provided such corrections are submitted to City within sixty (60) days after
2 Recology Sonoma Marin begins providing services under the Franchise Agreement.
Ordinance No. 2636 N.C.S. Page 14
1 Attachment 1 to Exhibit A to Ordinance
2
3
4 AMENDMENT NO.1 TO FRANCHISE AGREEMENT
5
6 The Franchise Agreement for Collection, Disposal, and Processing of Mixed Materials,
7 Recyclable Materials and Organic Materials and Related Activities in the City of
8 Petaluma Pursuant to Chapter 8.16 of the Petaluma Code ( "Franchise Agreement ") is
9 hereby amended in accordance with Section 14.8.2 of the Franchise Agreement as
10 follows:
11
12 32. Section 1 of the Franchise Agreement is amended to add a new Section 1.15.A, which shall
13 read in its entirety as follows:
14 1.15.A "Change of Control" means that beneficial ownership of securities of
15 Contractor representing at least fifty percent (50 %) of the combined voting power
16 entitled to vote in the election of directors is no longer held (whether directly or
17 through one or more wholly -owned subsidiaries) by the Person or Persons that
18 (whether directly or through one or more wholly -owned subsidiaries) owned one
19 hundred percent (100 %) of the outstanding voting securities of Contractor as of the
20 date Contractor first began providing services under this Agreement.
21 33. Section 1.29 of the Franchise Agreement is amended to read in its entirety as follows:
22 1.29 "Contractor" means Recology Sonoma Marin, a corporation organized and
23 operating under the laws of the State of California.
24 34. Section 1.37 of the Franchise Agreement is amended to read in its entirety as follows:
25 1.37 "Diversion" means the handling of materials in a manner that counts as
26 diversion under applicable CalRecycle regulations.
27 35, Section 1.38 of the Franchise Agreement is amended to read in its entirety as follows:
28 1.38 "Diversion Level" means the percentage equal to 100 multiplied by the quotient
29 obtained by dividing (i) the number of tons of material collected by Contractor
30 pursuant to this Agreement, or pursuant to a non - exclusive franchise agreement with
31 City for the collection of Construction and Demolition Debris, that are delivered to an
32 Approved Recyclable Materials Processing Site, an Approved Organic Materials
33 Processing Site, or a permitted Construction and Demolition Debris processing
34 facility (in each of the foregoing cases, net of all residue), or that are otherwise
35 Diverted, by (ii) the total number of tons of material collected by Contractor pursuant
36 to this Agreement, or pursuant to a non - exclusive franchise agreement with City for
37 the collection of Construction and Demolition Debris.
38 36. Section 1.39 of the Franchise Agreement, which defines the term "Diversion Rate," is deleted
39 in its entirety, and the words "Diversion Rate" in Sections 12.1.4.10 are replaced by the
40 words "Diversion Level."
Ordinance No. 2636 N.C.S. Page 15
1 37. Sections 1.57 and 14.8.33 of the Franchise Agreement, relating to interfamilial assignments,
2 are deleted in their entirety.
3 38. Section 1 of the Franchise Agreement is amended to add a new Section 1.58A which shall
4 read in its entirety as follows:
5 1.58A "MS4 Permit" means the waste discharge requirements that apply to the City pursuant
6 to the State Water Resources Control Board Water Quality Order no. 2013 - 0001 -DWQ
7 National Pollutant Discharge Elimination System General Permit No. CAS000004 for small
8 municipal separate storm sewer systems.
9 39. Section 1.75 of the Franchise Agreement is amended to read in its entirety as follows:
10 1.75 "Rate" means the dollar unit the Contractor bills a Customer for Mixed Materials
11 Collection and disposal, Recyclable Materials Collection and Processing Services, Organic
12 Materials Collection and Processing Services, and Trash Capture services, where such dollar
13 unit does not exceed the maximum Rate determined by the City pursuant to Section 8. 16.220
14 and 8.16. 230 of the Petaluma Municipal Code and contained in Exhibit 1.
15 40. Section 1.85 of the Franchise Agreement is amended to read in its entirety as follows:
16 1.85 "Service Type" refers separately to the following types of Mixed Materials, Recyclable
17 Materials, and Organic Materials Collection services, and Trash Capture services for each of
18 the following types of services: Single - Family Premises Cart service, Multi -Plex Premises
19 Cart service, Multi - family Premises Cart service, Multi - Family Premises Bin service,
20 Commercial Cart service, Commercial Bin service, Drop Box service, annual clean -ups, City
21 facilities service, and Street Sweeping.
22 41. Section 1 of the Franchise Agreement is amended to add a new Section 1.98A which shall
23 read in its entirety as follows:
24 1.98A "Trash Capture Materials" means Mixed Materials resulting from the City's retrieval
25 activities under the Trash Capture Program."
26 42. Section 1 of the Franchise Agreement is amended to add a new Section 1.98B which shall
27 read in its entirety as follows:
28 1.98B "Trash Capture Program" refers to the City program to prevent discharge of refuse to
29 City storm sewers in accordance with MS4 permit requirements. The Trash Capture Program
30 may consist of a combination of installation and maintenance of full capture devices, large
31 capture devices, and small capture devices, as well as utilization of control measures such as
32 public education and outreach, street sweeping, cleanup days, and public refuse receptacles
33 in order to satisfy MS4 requirements.
34
35
36
Ordinance No. 2636 N.C.S. Page 16
43. Section 2.8 is amended to read in its entirety as follows:
2 2.8 Council Action
3 The City Council shall adopt an ordinance approving of and adopting this Franchise
4 Agreement and authorizing execution of this Franchise Agreement on behalf of the City prior
5 to or on the effective date of this Franchise Agreement.
6 44. Section 4.2 of the Franchise Agreement is amended to add a new Section 4.2.11 A which
7 shall read in its entirety as follows:
8 4.2.11A MS4 Trash Capture Services
9 Retrieval of refuse from City capture facilities under the Trash Capture Program will be
10 carried out by City staff and /or contractors and not by Contractor. Contractor will collect
11 Trash Capture Materials following retrieval by the City or contractors in accordance with
12 Section 5.7 of this Agreement.
13 45. The first and fourth paragraphs of Section 5.7 of the Franchise Agreement are amended to
14 read in their entirety as follows
15 Contractor shall Collect Mixed Materials, Recyclable Materials, Organic Materials and Trash
16 Capture Materials from the City locations identified in Exhibit 4. Collection for City
17 Facilities shall occur at least once per week or more frequently as requested by the City.
18 Contractor may integrate Collection of Mixed Materials, Recyclable Materials, Organic
19 Materials and Trash Capture Materials from City facilities with other Collection services,
20 provided that Contractor attributes Tonnage Collected from City facilities separately from
21 other Customers.
22 46. Section 6.2.2 of the Franchise Agreement is amended to read in its entirety as follows:
23 6.2.2 No Commingling of City Materials
24 6.221 Mixed Materials. Contractor shall not commingle in Collection
25 vehicles any Mixed Materials Collected pursuant to this Agreement, with any other
26 material Collected by Contractor inside or outside the City, without the prior written
27 approval of an authorized representative of the City.
28 6.2.22 Recyclable Materials. Contractor shall not commingle in Collection
29 vehicles any Recyclable Materials Collected pursuant to this Agreement, with any
30 other material Collected by Contractor inside or outside the City, without the prior
31 written approval of an authorized representative of the City.
32 6.2.2.3 Organic Materials. Contractor shall not commingle in Collection
33 vehicles any Organic Materials Collected pursuant to this Agreement, with any other
34 material Collected by Contractor inside or outside the City, without the prior written
35 approval of an authorized representative of the City.
Ordinance No. 2636 N.C.S. Page 17
1 47. The second paragraph of Section 6.3.1 of the Franchise Agreement is amended to read in its
2 entirety as follows:
3 Contractor shall confer with the City before purchasing any new Collection and
4 Street - Sweeping vehicles during the Term. Contractor shall submit the specifications
5 for all vehicles to the City for review and approval before acquisition. Contractor
6 acknowledges that City is constructing a CNG facility and agrees that after the
7 facility becomes operational the City may require subsequent vehicle purchases to be
8 CNG vehicles.
9 48. The first paragraph of Section 103.1 is amended, and a new final paragraph is added to that
10 section, to read in their entirety as follows:
11 The RRI Adjustment shall be the sum of the weighted percentage changes for all RRI
12 indices. With the exception of the "Disposal Fee," "Organic Waste Processing Fee," and
13 "Trash Capture Fee," the percentage change in each RRI index shall be calculated using the
14 change in the 12 -month annual average of RRI index values between the base year, which
15 shall be the prior preceding calendar year ending December 31, and the preceding calendar
16 year ending December 31, as contained in the most recent release of the source document
17 listed in Exhibit 2, which is attached to and included this Agreement. Therefore, the first
18 RRI adjustment (effective July 1, 2014) will be based on the percentage changes between the
19 12 -month annual average of the RRI indices for the calendar year ending December 31, 2012
20 and the 12 -month annual average of the RRI indices for the calendar year ending December
21 31, 2013.
22 So long as the City has approved a Trash Capture Program budget and rate setting in
23 accordance with all procedural and substantive requirements for such a budgeting and rate
24 setting action and the terms of this Agreement, the percentage change shall be calculated
25 using the change in the Trash Capture Fee between the preceding calendar year and the
26 current calendar year's fee as established and provided to the Contractor by the City prior to
27 March 1 of the current year. Except that; for the first year the Trash Capture Fee is collected
28 (e.g., the RRI that is applicable to any rate change taking effect on July 1, 2018), the RRI
29 shall be calculated based on the Trash Capture Fee established by the City prior to March 1,
30 2018 by adding to that RRI calculation the quotient, multiplied by 100, of the City -
31 established Trash Capture Fee and the total revenue generated by this Agreement as reported
32 in the 2017 Annual Report. As an example, using the total revenue of $11,534,192 generated
33 by this Agreement as reported in the 2017 annual report, if the City established the Trash
34 Capture Fee to be $100,000 before March 1, 2018, the RRI percentage calculated based on
35 the prior year methodology would be increased by $100,000 divided by $11,534,192
36 multiplied by 100.
37 49. Section 10.4 of the Franchise Agreement is amended to read in its entirety as follows:
38 10.4 The City or Contractor may request a Detailed Rate Review to be conducted
39 following the procedures as specified in Exhibit 3. However, a Detailed Rate Review
40 shall not be conducted more than once every three (3) Agreement years. Contractor
41 shall not request a Detailed Rate Review before November 1, 2019. On or after that
42 date (but no later than December 31, 2019), Contractor may request a Detailed Rate
43 Review to adjust Maximum Service Rates effective July 1, 2020. A request for a
Ordinance No. 2636 N.C.S. Page 18
1 Detailed Rate Review shall be made in writing at least six (6) months prior to the July
2 1" rate adjustment date for the year in which the results for the Detailed Rate Review
3 are to be applied. If City engages a consultant to assist it in a Detailed Rate Review,
4 Contractor shall pay, or reimburse City for, such consultant's fees and expenses, and
5 such fees and expenses shall be an allowable pass - through cost for purposes of such
6 Detailed Rate Review.
7 50. A new Section 11.3A is added to the Franchise Agreement to read in its entirety as follows:
8 The Contractor shall remit the proceeds of Trash Capture Fees paid by Customers to the City
9 in one annual payment by 5:00 p.m. on October 31 of each year.
10 51. The second paragraph of Section 12.2.1 is amended to read in its entirety as follows:
11 Contractor shall submit monthly reports by 5:00 PM on the 30th calendar days after
12 the end of the reporting month. Contractor shall submit quarterly reports by 5:00 PM
13 on the 45th calendar days after the end of the reporting quarter. Contractor shall
14 submit annual reports by 5:00 PM on the 45th calendar days after the end of the
15 calendar year.
16 52. Section 12.2.3 of the Franchise Agreement is amended to add a new Section 12.2.3.17, which
17 shall read in its entirety as follows:
18 12.2.3.17 Diversion
19 Provide calculated Diversion Levels for the quarter for (i) all material collected by
20 Contractor, (ii) all material collected by Contractor from Single - Family Premises, and
21 (iii) all material collected by Contractor other than from Single - Family Premises.
22 53. Section 12.2.4 of the Franchise Agreement is amended to add a new Section 12.2.4.5, which
23 shall read in its entirety as follows:
24 12.2.4.5 AB 341 and 1826 Compliance Data. Contractor shall report the total
25 number of Commercial and /or Multi- Family Premises serviced and the number of
26 containers, container sizes and frequency of collection for Mixed Materials,
27 Recyclable Materials, and Organic Materials for each Commercial and /or Multi -
28 Family Premises. Contractor shall also provide the following information, separately
29 as required by both AB 341 and AB 1826:
30 12.2.4.5.1 The total number of Commercial Premises that appear (based on
31 subscribed -for container volume) to fall tinder the AB 341/1826 thresholds, and
32 the total number of those Commercial Premises that are not subscribed to
33 Recycling /Organics Material Collection Service, and a summary of the type of
34 follow -up outreach provided to such Commercial Premises.
35 12.2.4.5.2 The total number of Multi- Family Premises that appear (based on
36 subscribed -for container volume) to fall under the AB 341/1826 thresholds, the
37 total number of those Multi- Family Premises that are not subscribed to
Ordinance No. 2636 N.C.S. Page 19
1 Recycling /Organics Material Collection Service, and a summary of the type of
2 follow -up outreach provided to such Multi - Family Premises.
3 54. The first two sentences of Section 12.2.4.2 are amended to read in their entirety as follows:
4 At the request of the City or in conjunction with a Detailed Rate Review as described
5 in Section 10.4, within 120 calendar days after the close of Contractor's fiscal year,
6 Contractor shall deliver to the City four copies or a PDF of audited financial
7 statements and profit and loss statements reflecting Contractor's operations under this
8 Agreement for such fiscal year. The financial statements shall show Contractor's
9 results of operations (including the specific revenues and expenses) in connection
10 with the operations provided for in this Agreement.
11 55. Section 14.4.5 of the Franchise Agreement is amended to add the following to the table of
12 liquidated damages:
47. Failure to submit the Diversion Plan and Public $1,000/ day
Education Plan required by Section II(3) of the that either
Assignment, Assumption and Amendment plan is
Agreement among City, Contractor and Petaluma overdue.
Refuse and Recycling, Inc., by the deadline specified
in that section.
13
14 56. Section 14.8.1 of the Franchise Agreement is amended to add the following as the second
15 paragraph thereof:
16 For purposes of this Section 14.8, the term `assignment' shall also include (i) a sale of
17 all or substantially all the assets of Contractor; (ii) a sale, exchange or other transfer
18 of outstanding voting securities of Contractor which results in a Change of Control;
19 (iii) any dissolution, reorganization, consolidation, merger, re- capitalization, stock
20 issuance or re- issuance, voting trust, pooling agreement, escrow arrangement,
21 liquidation or other transaction which results in a Change of Control; (iv) any
22 assignment by operation of law, including insolvency or bankruptcy, an assignment
23 for the benefit of creditors, or appointment of a receiver taking possession of
24 Contractor's property; and (v) any combination of the foregoing which results in a
25 Change of Control.
26 57. Section 15.13 of the Franchise Agreement is amended to change Contractor's notice address
27 to the following.
28
Recology Sonoma Marin
29
c/o Recology Inc.
30
50 California Street, 24th Floor
31
San Francisco, CA 94111
32
Attention: Legal Department
Ordinance No. 2636 N.C.S. Page 20
1 58. Exhibit 2 of the Franchise Agreement is amended to add the following additional Operating
2 Cost Category and Index as follows:
3 Trash Capture Fee: Fee to be calculated in accordance with section 10.3.1 of this Agreement
4 and paid to the City in accordance with Section 113A of this Agreement.
5 59, Section 1(b) of Exhibit 3 of the Franchise Agreement is amended to read in its entirety as
6 follows:
7 b. Forecasts of Costs. Allowed costs of operations for the Contractor's prior fiscal
8 year will be used to evaluate the forecasted cost for upcoming year. The review will
9 evaluate forecasted labor- related costs, vehicle - related costs, depreciation expense,.
10 and other costs, including pass - through costs. Pass - through costs are those portions of
11 Contractor's annual cost of operations that are recoverable through the detailed rate
12 review, but without a profit margin (i.e. without application of the operating ratio).
13 Pass - through costs consist of (i) Franchise Fees, HHW fees, AB 939 fees, and any
14 other fees established by or pursuant to Sections 11, 1, 11.2 or 11.4; (ii) detailed rate
15 review costs payable by Contractor under Section 10.4; (iii) fees payable by
16 Contractor for landfill disposal; and (iv) fees payable by Contractor for processing of
17 Organic Materials.
18 60. Exhibit 5 of the Franchise Agreement is amended to read in its entirety as set forth in Exhibit
19 5 to this Amendment,
20 61. Exhibit 9 of the Franchise Agreement is amended to read in its entirety as set forth in Exhibit
21 9 to this Amendment,
22 62. All references in the Franchise Agreement to "Petaluma Refuse and Recycling," "The Ratto
23 Group of Companies, Inc.," and "www.unicycler.com" are amended to refer to "Contractor,"
24 "Recology Inc.," and "www.recology.com," respectively. All references in the Franchise
25 Agreement to "North Bay Corporation" or "Redwood Empire Realty, LLC" are amended to
26 refer to "Recology Inc. or an Affiliate of Recology Inc." All references in the Franchise
27 Agreement to James Ratto, or to Contractor's fiscal year being January to December, are
28 deleted.
29
30
31
32
33
34
35
36
37 [Remainder of this page intentionally left blank]
38
39
Ordinance No. 2636 N.C.S. Page 21
1
2
3
4
5
6
7
EXHIBIT 5
APPROVED FACILITIES
Approved Disposal Sites)
Name: Redwood Landfill
Address: 8950 Redwood Highway, Novato CA 94945
SWIS #:21 -AA -0001
Approved Organic Materials Processing Sites)
Green Materials
Name: Redwood Landfill Composting Facility
Address: 8950 Redwood Highway, Novato, CA 94945
SWIS #: 21 -AA -0001
Commercial Organics
Name: West Contra Costa Sanitary Landfill Organics Material Processing Facility
Address: Parr Blvd, & Garden Tract Rd., Richmond, CA 94806
SWIS #: 07 -AA -0044
Approved Recyclable Materials Processing ig te(s)
Name: Novato Disposal Service
Address: 2543 Petaluma Blvd. South, Petaluma, CA 94952
SWIS #: 49 -AA -0406
Ordinance No. 2636 N.C.S.
Page 22
1
2
3
4
EXHIBIT 9
VEHICLE SPECIFICATIONS
Truck #
License #
Type
Year
Manufacturer
10113
7210001
Ford
2006
FORD - CONTAINER
102P
7205642
Ford
2006
FORD - SERVICE
106P
7Y24701
Ford
2006
FORD - PICKUP
1007
94927A2
Sweeper
2016
FREIGHTLINER
103P
7Y62221
Sweeper
2006
TYMCO
901P
8AO7228
Side Loader
2005
PETERBILT
903P
8AO7223
Side Loader
2005
PETERBILT
904P
8AO7224
Side Loader
2005
PETERBILT
905P
8AO7225
Side Loader
2005
PETERBILT
906P
8AO7112
Side Loader
2006
PETERBILT
907P
8AO7113
Side Loader
2006
PETERBILT
91113
8AO7230
Side Loader
2005
PETERBILT
912P
8AO7231
Side Loader
2005
PETERBILT
937R
68306X1
Side Loader
2006
PETERBILT
300P
7W98433
Rear Loader
2006
FREIGHTLINER
201P
7V68242
Front Loader
2006
AUTOCAR
202P
7V68243
Front Loader
2006
AUTOCAR
203P
7V68245
Front Loader
2006
AUTOCAR
2024
03710Z1
Front Loader
2006
AUTOCAR
5
6 Note: The information in this exhibit was provided by the previous contractor.
7 Contractor may correct this exhibit if it discovers that the information herein is
Ordinance No. 2636 N.C.S. Page 23
I inaccurate, provided such corrections are submitted to City within sixty (60) days after
2 Recology Sonoma Marin begins providing services under the Franchise Agreement.
Ordinance No. 2636 N.C.S. Page 24