10C Action 2009 0406 - Laserfiche WebLink

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CITY OF SAN LEANDRO STAFF REPORT DATE: Apri16, 2009 TO: Stephen Hollister, City Manager FROM: Michael Bakaldin, Public Works Director M$ BY: Jennifer Nassab, Administrative Analyst SUBJECT PROJECT/PROJECT DESCRIPTION: APPROVED AND FORWARDED TO CITY COUNCIL Stephen L. Hollister City Manager RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A LETTER AMENDMENT TO THE AGREEMENT BETWEEN THE CITY OF SAN LEANDRO AND ALAMEDA COUNTY INDUSTRIES, INC. SUMMARY AND RECOMMENDATION Staff recommends authorizing the City Manager to execute a letter amendment to that certain Franchise Agreement for Solid Waste, Recyclables, and Green Waste Services ("Agreement") between the City of San Leandro and Alameda County Industries, Inc. (ACI). The letter amendment would authorize ACI to increase the rates charged to customers by ten percent (10%) effective July 1, 2009 with the provision that no further rate increases would be allowed for the remainder of the Agreement until the City and ACI have mutually agreed to an alternative rate adjustment process than is currently specified in the Agreement. The alternative rate adjustment process and other amendments to the Agreement will be brought to the City Council for approval before August 1, 2009. BACKGROUND On January 29, 2009, ACI submitted a formal request to the City to discontinue the collection and processing of recyclable fiber material due to the catastrophic collapse in market value since October of last year. Section 4.6 of the Agreement allows them to make such a request "if it becomes infeasible or financially impractical to continue collection", although the City is under no obligation to grant the request. As an alternative to the request, ACI has offered to continue to collect the recyclable materials if they are duly compensated for their losses. In addition to the loss of revenue from recyclable materials they are also challenged with labor costs that have well exceeded the consumer price index over the last four years. In order to meet the fmancial obligations they have with their banks ACI has asked the City for a ten percent (10%) rate increase, effective July 1, 2009. The City of San Leandro entered into the Agreement with ACI on February 1, 2000 for a period of ten (10) years with an option to extend the term an additional ten (10) years. As part of the extension process, the City has conducted a performance and financial review of ACI's billing records and payments to the City. In addition, staff conducted the ten year rate comparison process as outlined in Section 6.3 of the Agreement. The preliminary results of the rate