Agmt 2005 R3 Consulting Group Inc

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Project Understanding The City of San Leandro ("City") granted an exclusive franchise to Alameda County Industries ("ACI") for the collection, processing and disposal of residential and commercial solid waste. Residential customers receive automated collection of garbage, recyclables and green waste, and commercial customers receive bin and compactor services. Residential customers may select from four garbage collection cart sizes, and commercial customers may select the size and frequency of bin collection. Residential rates are determined by garbage cart size, and commercial rates by the size and frequency of bin collection. Customer rates are adjusted annually based on changes in the Consumer Price Index, as appropriate, with provisions for 5, 10, and 15 year rate comparisons. The City receives a franchise fee of 10 percent of the gross revenues collected by ACI, monthly payments to retire the $2.5 million promissory note signed by ACI, and any monthly Revenue Neutrality payments due to the City if ACI does not dispose of solid waste and green waste at the Davis Street Transfer Station. Collection services are provided under a 10-year franchise agreement, with a renewal date of January 31, 20101. The current franchise agreement requires the City to conduct a performance review to ensure compliance with the terms and conditions of the Agreement. ACI is required to pay the cost of the performance review. As part of the performance review, the City is also undertaking a financial compliance assessment. The objectives of the performance review and fmancial compliance assessment include the following: ^ Determine the extent to which ACI has materially complied with the provisions of the franchise agreement; ^ Identify opportunities for performance and customer service enhancements; and ^ Verify that ACI is fulfilling the financial terms of the agreement, including the proper billing of customers and the accurate remittance of payments to the City. R3 has the ability to address the above project objectives and issues through our staffs 80+ years of combined experience performing numerous audits and financial reviews, contract compliance, and operational efficiency studies on behalf of municipalities. In addition, our Project Team has extensive experience evaluating customer information and billing systems (CIS) developing and evaluating collection programs, drafting and negotiating franchise agreements and contracts, preparing and evaluating proposal documents, and conducting benchmarking reviews. As discussed in our cover letter, R3 staff recently completed a series of projects for ACI's affiliated companies, Pleasanton Garbage Service (PGS) and Amador Valley Industries (AVI). These included a procurement project for Dublin where AVI was selected to provide collection services, a rate review of ACI's operations for the City of Alameda, and a rate review of PGS's operations for the City of Pleasanton. In addition, we recently completed a similar performance and financial compliance review of North Bay Corporation for the Town of Windsor that operates under similar franchise agreement provisions as the City of San Leandro. As a result, our team is very familiar with the managerial and operational aspects of ACI, and the franchise agreement requirements. R3's overall approach to project management is to complete the engagement with minimal interruption to the City's staff and ACL The Project Team members will work directly with ACI to obtain the information and data required to perform the performance review and financial ~ The franchise agreement provides for a second 10-year term provided that ACI is not in material default, and a third 10-year term at ACI's option. Consulting Services Agreement between 3/14/2005 City of San Leandro and R3 Consulting Group, Inc. Page 17 of 17