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July 15, 2024 Page 29 City of San Leandro/ACI Franchise Agreement materials which have been Source Separated with other materials types (for example, Source 1121 Separated Recyclable Materials which have been properly placed for Collection shall not be 1122 combined with Solid Waste or Source Separated Organic Materials). 1123 5.4 COLLECTION VEHICLE REQUIREMENTS 1124 As of the Effective Date, all Collection vehicles shall operate on compressed natural gas (CNG). Contractor 1125 shall replace Collection vehicles in accordance with the schedule contained in Exhibit G7 except as 1126 otherwise required by this Section. The Parties agree that the schedule contained in Exhibit G7 does not 1127 represent the limit of vehicle life and actual vehicle replacements shall occur on a schedule agreed upon 1128 by both Parties and subject to the fleet plan developed in accordance with this Section. The Parties 1129 acknowledge the requirements of the Advanced Clean Fleets Rule requiring Contractor to transition to a 1130 zero-emission fleet. The Parties further acknowledge that this requires use of new technology that is both 1131 relatively expensive and technically unproven compared to conventional fleets. The Parties agree that the 1132 cost of transitioning to a zero-emission fleet, and infrastructure changes and increased utility costs 1133 required for such fleet, shall result in a more precise and frequent review of actual specific cost categories 1134 including depreciation expenses, interest expenses, utility expenses, fuel costs, and vehicle maintenance 1135 costs that are impacted by a change from CNG to ZEV propulsion. Such review shall be used to determine 1136 an adjustment to Rates subject to the provisions of this Section. During such review, Contractor may 1137 request that other cost categories, beyond those listed in this Section, are considered in the evaluation of 1138 the Rate adjustment, and shall provide all information requested by the City in order to substantiate 1139 Contractor’s request. No additional cost categories shall be considered in the Rate adjustment pursuant 1140 to this Section without the prior approval of the City, which shall not be unreasonably withheld. The 1141 Parties shall work collaboratively to minimize the cost impact to Customers of the transition to a zero-1142 emission fleet and infrastructure changes and increased utility costs required for such fleet, including 1143 making use of any delays that are allowed through the Advanced Clean Fleets Rule and any subsequent 1144 law or regulation. Contractor’s obligations to transition to a zero-emission fleet and all costs associated 1145 therewith shall not burden the City or Customers disproportionately to other jurisdictions or customers 1146 served by Contractor or its Affiliates under the same ownership, and if Contractor expands its fleet as a 1147 result of new, expanded, or extended service contracts or an expansion into new market areas, the City 1148 shall benefit proportionately from that expansion of services and impacts on Contractor’s fleet to the 1149 extent that such expansion reduces the City’s share of Contractor’s obligations under the Advanced Clean 1150 Fleets Rule. A condition precedent to the execution of this Agreement is Contractor’s identification and 1151 approval by the City Contract Manager of up to three (3) third party fleet expert(s) that can be timely 1152 engaged to conduct an assessment of Contractor’s existing fleet relative to the Advanced Clean Fleets 1153 Rule. 1154 Within thirty (30) days of the Effective Date of this Agreement, Contractor shall engage an approved third 1155 party fleet expert to conduct such an assessment, as considered through the common ownership rules of 1156 the regulation, and prepare a draft plan articulating the schedule and strategic considerations for how 1157 Contractor can most cost-effectively accomplish the fleet transition, using best available information at 1158 the time of the study including Contractor’s existing franchise agreements and durations remaining, 1159 exclusive of any extension options not yet granted or exercised. Such draft plan shall be submitted 1160 concurrently to Contractor and the City for review, consideration, and feedback. The third-party expert 1161 shall then revise the draft plan and provide to Contractor and the City. Based on the revised draft plan, 1162 Contractor shall prepare a forecast for each Rate Year remaining in this Agreement of Contractor’s 1163 proposed change in maintenance, fuel, utilities, depreciation, and interest expense on Contractor’s 1164 operations covered by the fleet (including necessary infrastructure changes), as defined by the Advanced 1165 Docusign Envelope ID: 908A450D-1F36-4C09-B8A4-C1D639B5A05A