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File Number: 15-010 <br />remain stable and comply with the law. Providing waste management and recycling services <br />is a key component of public safety by promoting community health and welfare. Waste <br />management and recycling services allow the City to comply with its public health mandates <br />and standards so that the community is not detrimentally affected by trash, vectors, and <br />disease. <br />DISCUSSION <br />The City Council should find that the 11th Amendment to the franchise agreement is in the <br />City's best interest because: <br />- It furthers the City Council's goal to place the City on a firm foundation for fiscal <br />sustainability. As the City negotiates the terms of ACI, Inc.'s request for special rate review <br />that would lead to amendments to the City's franchise agreement with ACI, it is necessary for <br />the parties to examine and understand what rate increases, if any, may occur from such <br />negotiations. Thus, operations and costs could be planned that would minimize effects on <br />ACI's San Leandro customers, their refuse rates, and levels of service. This would also <br />ensure rate parity between the customers of ACI and Oro Loma Sanitary District's franchise <br />with Waste Management, which affects approximately 35% of the City. To that end, the City <br />Manager recommends that the City Council formally ratify the 4.01 % rate increase (effective <br />February 1, 2015) permitted by the franchise agreement in Section 6.3(C). ACI delayed the <br />implementation of this contractually permitted rate increase, which was supposed to take <br />effect July 1, 2014, while ACI was analyzing and negotiating the terms of a settlement <br />agreement to pay back wages to MRF employees related to the City's Living Wage <br />Ordinance. The City Manager also recommends that the City Council approve an advance to <br />ACI of $1,109,706.74, which would be repaid by ACI together with simple interest at 2.5% per <br />annum in forty equal installments of $31,441.00. This advance is in lieu of any immediate rate <br />increases not contemplated in the current version of the franchise agreement pursuant to <br />ACI's special rate review. Although a 2.14% rate increase effective July 1, 2015 is <br />contemplated and identified in the settlement agreement, the parties intend to negotiate in <br />good faith any and all requested and already permitted rate adjustments pursuant to the <br />special rate review, which could include rate adjustments as soon as July 1, 2015. <br />- The City seeks to ensure public health and safety are protected through negotiating updates <br />to ACI's franchise agreement that induce ACI to continue investing into newer and better <br />processing equipment so that the MRF operates at optimal levels. ACI's stated goal is to <br />process more solid waste tonnage at the MRF than it does currently. <br />Financial Impact <br />The City's advance of $1,109,706.74 from General Fund reserves will earn interest at a rate <br />greater than the Local Agency Investment Fund (LAIF) rate. <br />ATTACHMENTS <br />Attachment to Staff Report <br />Loan Amortization Schedule <br />City of San Leandro Page 2 Printed on 1113/2015 <br />