Recology South Valley - 1997 Agreement - Amendment No. 3THIRD AMENDMENT TO THE AGREEMENT
BETWEEN THE CITY OF GILROY
AND SOUTH VALLEY DISPOSAL AND RECYCLING
This Amendment to the Franchise Agreement dated September 2, 1997 the ( "Third
Amendment ") is entered this 1" day of July, 2014; by and between the City of Gilroy (the
"City"), a municipal corporation of the State of California, and South Valley Disposal and
Recycling ( "Contractor "), a California Corporation.
This Third Amendment is made with references to the following facts:
A. City and Contractor are currently parties to an Agreement Between City of Gilroy and
South Valley Disposal & Recycling, Inc., dated September 2, 1997 (the "Franchise
Agreement "), by which City granted to Contractor the exclusive franchise to collect,
transport and dispose of garbage and refuse produced within the corporate limits of City.
B. City acknowledges that South Valley Disposal & Recycling, Inc. now conducts business
as Recology South Valley.
C. City has solicited proposals from waste disposal facilities in order to reduce the air
pollution associated with hauling waste from Contractor's transfer facilities to disposal
facilities.
D. City has negotiated an agreement for waste disposal capacity with a disposal facility
operator that is closer to the Contractor's transfer facilities and City desires Contractor to
deliver waste to this closer facility in order to reduce air pollution.
E. City and Contractor mutually desire to have waste collected throughout the.City's
incorporated limits using vehicles fueled by compressed natural gas in order to reduce air
pollution and enhance community health.
F. City and Contractor mutually desire to spread the capital costs of the compressed natural
gas vehicles and related fueling facility out over seven years in order to reduce the need
for a one -time steep adjustment to service rates.
G. City and Contractor have mutually determined that the annual rate review articulated in
and conducted pursuant to the Franchise Agreement is an administrative task that does
not require direct City Council intervention.
NOW, THEREFORE, in consideration of the factual premises and the covenants and
conditions set forth in this Third Amendment, City and Contractor hereby agree as follows:
1. Section 4(e)(i) shall be amended and replaced in its entirety by the following:
(i) City shall have the right to direct Contractor to deliver Refuse to a landfill
or other waste management facility designated by the City provided that the
landfill or other waste management facility has agreed to accept waste from the
City. If the City does not choose to exercise this right, Contractor shall select and
use landfill sites for the transportation, sorting and disposal of Refuse, which sites
must be reasonably acceptable to the City.
2. Section 10(i) shall be added into the agreement as follows:
(i) Rate Adjustments Relating to Landfill Direction.— If City has directed
Contractor to deliver Refuse to a landfill or other waste management facility,
Contractor and City shall negotiate a fair and reasonable adjustment to service
rates and charges that reflect all of the cost increases or decreases resulting from
the City's direction of the waste. Costs to be included in the negotiation include,
but are not limited to, tipping fees, labor, fuel, and equipment.
3. Section E shall be added to Exhibit E, COLLECTION VEHICLE SPECIFICATIONS, as
follows:
E. All collection vehicles shall be fueled by compressed natural gas by
December 31, 2018. The collection vehicle fleet shall be converted to compressed
natural gas between January 1, 2015 and December 31, 2018 with approximately
25% of the fleet converted each year.
4. Section 18 (a) Commencement and Term shall be amended and replaced in its entirety by
the following:
18(a) Commencement and Term. This Agreement shall commence on the
Effective Date, but the Contractor's services hereunder shall commence on July 9,
1997, or on such other date as the parties may mutually agree. The term of this
Agreement shall be eighteen (18) years in addition to the unexpired portion of the
term of the present franchise agreement between the parties, that is, until July 1,
2022.
5. Exhibit J, ANNUAL INDEX RATE ADJUSTMENTS, shall be amended as follows:
Section B shall be replaced in its entirety as follows:
B. The Base Rates shall be adjusted on the Adjustment Dates up or down by
a proportion equal to 40% of the Percentage Change in the Index and a further
proportion equal to 10% of the Percentage Change in the Motor Fuel Component
of the Index during the fourth year of this Agreement. The Base Rates shall be
adjusted on the Adjustment Dates up or down by a proportion equal to 70% of the
Percentage Change in the Index and a further proportion equal to 10% of the
Percentage Change in the Motor Fuel Component of the Index during all
subsequent years of this Agreement unti12017 (unless such rates are determined
by a rate review pursuant to Section 10). Beginning with the July 1, 2017
Adjustment Date, the Base Rates shall be adjusted on the Adjustment Dates up or
down by a proportion equal to 70% of the percentage Change in the Index and a
further proportion equal to 10% of the Percentage Change in the price of
compressed natural gas fuel during all subsequent years of this Agreement (unless
such rates are determined by a rate review pursuant to Section 10). Changes in the
price of compressed natural gas fuel shall be based on the United States
Department of Energy's Clean Cities Alternative Fuel Price Report issued each
January. If the publication of this report is suspended or if it otherwise becomes
unsuitable for use in determining price changes actually experienced by
Contractor, Contractor and City shall mutually agree on a methodology for
calculating the Percentage Change in the price of compressed natural gas fuel.
A new Section F shall be added to Exhibit J as follows:
F. The Base Rates shall be established pursuant to Section B and any increases or
decreases in the Base Rates shall be reviewed and approved annually by the City
Administrator.
6. Section I0(d)(iv) shall be added into the agreement as follows:
(iv) City and Contractor mutually agree that extraordinary costs related to the
conversion of the collection vehicle fleet warrant a supplemental 6.82% increase
in service rates. This supplemental increase shall be phased in over a two -year
period with 3.82% applied in 2015 and 3% applied in 2016. These supplemental
increases shall be applied in addition to any other rate adjustments Contractor is
eligible to request under the Franchise Agreement.
All other terms of the Franchise Agreement, the First Amendment to the Agreement, and
the Second Amendment to the Agreement, which are not in conflict with the provisions of this
Third Amendment_shall remain unchanged in full force and effect. In case of a conflict in the
terms of the Franchise Agreement, the First Amendment to the Agreement, and the Second
Amendment to the Agreement, and this Third Amendment, the provisions of this Third'
Amendment shall control.
The Parties acknowledge and accept the terms and conditions of this Third Amendment
as evidenced by the following signatures of their duly authorized representatives. It is the intent
of the Parties that this Third Amendment shall become operative on July 1, 2014.
Dated:
CITY OF GILROY:
lajw -4. (;��
I as F. Gage , Mayor Haglund, ity Administrator
ATTEST:
-k r
-- Shawrta Freels, City Cterk
APPROVED AS TO FORM:
.7'
n, City Attorney
lbla -ice; AT-6, 5AaN+
RECOLOGY SOUTH VALLEY:
Mike Sangiacom hief xecutive Officer