Meeting Date June 6, 2017

Transcription

1 C ITU" SIHIC.0 TO: City Council Agenda Report Honorable Mayor and City Council Meeting Date June 6, 2017 FROM Mark Orme, City Manager Richard Tagore-Erwin, R3 Consulting Group, Inc. RE: Consideration of Revisions to the Proposed Solid Waste, Recycling and Orgarics Collection Services Franchise System and Initial Reading of three Ordinances Modifying Applicable Chapters of the Chico Municipal Code REPORT IN BRIEF: At its meeting of March 21, 2017, Council authorized (5-2) the proposed franchise system key points and directed the City Attorney to prepare ordinance modifications to applicable chapters of the Chico Municipal Code allowing for a citywide solid waste, recycling and organics collection services franchise system. Based on comments during the Council meeting, discussions staff has had with stakeholders, two public meetings, and further negotiations with Waste Management and Recology, some revisions have been made to the proposed franchise system. Council will be briefed on the revisions, however, staff is recommending Council, introduce the following ordinances to make the necessary changes to the Chico Municipal Code to allow for the implementation of the proposed franchise system. Staff will return with a final draft of the proposed franchise agreements for Council consideration at the July 5th meeting, Recommendation: The City Manager recommends that Council introduce the following ordinances by reading of their titles only. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHICO, AMENDING THE CHICO MUNICIPAL CODE, TITLE 5, BUSINESS REGULATIONS, ARTICLE 5.16, ENTITLED "SOLID WASTE COLLECTORS" - Introductory Reading AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHICO AMENDING THE CHICO MUNICIPAL CODE, TITLE 8, HEALTH AND SAFETY, ARTICLE 8.04, ENTITLED "SOLID WASTE DISPOSAL - GENERAL PROVISIONS" AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CHICO AMENDING THE CHICO MUNICIPAL CODE, TITLE 8, HEALTH AND SAFETY, ARTICLE 8.08, ENTITLED "SOLID WASTE DISPOSAL- STORAGE AND COLLECTION" FISCAL IMPACT: 1. There has been no fiscal impacttothe Cityto date. Waste Managementand Recology have each paid a cost recovery fee to the City which has compensated the City for the actual costs incurred for the franchising efforts. 2. The proposed franchise system contemplates an increase from a 2% permit fee to a 10% franchise fee paid by the haulers to the City. BACKGROUND: The Agenda Report from the March 21, 2017, City Council Meeting (Attachment 1) provides the key terms and conditions of the proposed Solid Waste, Recycling and Organics Collection Services Franchise System. Based on comments recejved during the Council meeting, discussions that staff has had with stakeholders, two public meetings, and further negotiations with Waste Management and Recology, some revisions have been made and incorporated into the draft collection service agreements as outlined below.

2 RE: Proposed Solid Waste, Recycling and Organics Collection Services Franchise System Meeting Date: June 6, 2017 Page 2 DISCUSSION. The following revisions have been made to both the draft Single-Family Residential (Attachment 2) and the draft Com mercial (Attachments 3 and 4) Collection Service Agreements. 1. Recyclable Materials and Organic Waste Contamination (Section 3.13) - Specifically defines what constitutes contamination (the comingling of garbage, recyclable materials and/or organic waste) by a residential or commercial service recipient and the actions the haulers are authorized to take to resolve contamination issues. Actions include service recipient education on proper separation and written notice of contamination. For on-going contamination issues these actions escalate to include charging of a contamination fee, removal of the cart/bin, and discontinuance of service. The purpose of this section is to ensure service recipients are educated regarding their responsibilities when separating waste, to support State of California mandated recycling and organic waste diversion goals and the diversion requirement's that the haulers must meet as part of the Collection Service Agreements. 2. Container Overflow and Correction Procedures (Section 3.15) - Specifically defines what constitutes a container overflow by a residential or com mercial service recipient and the actions the haulers are authorized to take to resolve on-going container overflow issues. Actions include service recipient education, written notice of the overage to include the date, description and photograph of the overage as well as the consequences for continuing to overflow the container. If the service recipient continues to overflow the container the consequences escalate to include charging of a container overage fee and an increase in the capacity or collection frequency of the container to match the documented service needs. The purpose of this section is to ensure that the correct service level is being provided for the garbage, recyclable materials and/or organic waste being generated by the service recipient and to ensure that each service recipient is treated consistently in the event of a documented container overage. 3. Annual Adiustments to Maximum Service Rates to be made in accordance with the Consumer Price Index All Urban Consumers U.S. Cities Average (CPI-U) (Section 4.02) - It was originally proposed that service rate adjustments be made in accordance with changes in the Water-Sewer-Trash Collection Services (WST) Index published by the U.S. Department of Labor, Bureau of Labor Statistics. Concerns were raised regarding the rate at which the WST index has historically performed (increased). As such, rate adjustments will instead be made in accordance with the Consumer Price Index All Urban Consumers U.S. Cities Average (CPI-U) which has historically increased at a lower rate. All rate adjustment requests shall be submitted to and reviewed bythe City and under no circumstances will an adjustment to maximum service rates exceed five percent (5%) per year. 4. Maximum Service Rates (Exhibit 4) - Exhibit 4 to the Collection Service Agreements has been revised to clearly outline the Maximum Service Rates that will become effective upon implementation of the franchise system. It was noted that some service recipients, such as those with a Homeowner's Association, do not have a need for individual organic waste carts because they utilize a third-party landscaping service, have removed their lawns due to the drought, or are composting their green waste. In such cases the service recipient will have the option to "unsubscribe" from green waste services. 5. Start Date - After public input, the originally proposed start date of July 1, 2017, has been moved to October 1, 2017, to provide the haulers with additional time to educate customers and plan for a smooth transition. These recommendations are a direct result of feedback received from public meetings and community outreach, to determine what additional modifications would make this transition smoother for the community. Additionally, staff, as

3 RE: Proposed Solid Waste, Recycling and Organics Collection Services Franchise System Meeting Date: June 6, 2017 Page 3 well as the haulers, will continue to evaluate opportunities to modify the franchise agreements (based upon City Council and community feedback), up and until Council consideration of them at the July 5th meeting. The following revisions apply to the Commercial Collection Service Agreements only: 1 Commercial Territorv Realignment Map (Exhibit 5a and 5b to the Commercial Collection Agreements) - The final commercial territory realignment maps depict the commercial service areas for each hauler. 2. Containers in Citv-owned Parks (Exhibit 1 b to the Waste Management Commercial Collection Agreement) -City-owned parks will not be assigned in accordance with the commercial service areas. Instead, Waste Management will be responsible for providing collection services for all city-owned parks. PUBLIC CONTACT: Two community meetings were held on Thursday, May 25, 2017, at which representatives from the City, R3 Consulting, Waste Management, and Recology were present to answer questions and address concerns that residents and businesses had related to the proposed Solid Waste, Recycling and Organics Collection Services Franchise System. Prepared by: Dfa#jam e 42"J Deborah M. Collins, Management Analyst Approved and Recommended by: M-J Ilk Mark Orme, City Manager DISTRIBUTION: City Clerk (3) ATTACHMENTS: Attachment 1 - Agenda Report of March 12, 2017 (without Attachments) Attachment 2 - Draft SFD Collection Service Agreement - USA Waste of California, Inc. dba Waste Management Attachment 3 - Draft Commercial Collection Service Agreement - USA Waste of California, Inc. dba Waste Management Attachment 4 - Draft Commercial Collection Service Agreement - Recology Butte Colusa Counties Attachment 5 - An Ordinance of the City Council of Chico Amending the Chico Municipal Code, Title 5, Business Regulations, Article 5.16, Entitled "Solid Waste Collectors" Attachment 6 - An Ordinance of the City Council of Chico Amending the Chico Municipal Code, Title 8, Health and Sanitation, Article 8.04, Entitled "Solid Waste Disposal - General Provisions" Attachment 7 - An Ordinance of the City Council of Chico Amending the Chico Municipal Code, Title 8, Health and Sanitation, Article 8.08, Entitled "Solid Waste Disposal - Storage and Collection" FILE: PS / L-AGR

4 City Council Agenda Report Meeting Date: March 21, 2017 TO: FROM: RE: Honorable Mayor and City Council Mark Orme, City Manager Richard Tagore-Erwin, R3 Consulting Group, Inc. Consideration of the Key Points of the Proposed Solid Waste, Recycling and Other Collection Services Franchise System and Draft Collection Service Agreements REPORT IN BRIEF: Richard Tagore-Erwin, R3 Consulting Group, Inc., will report to the City Council on the progress made in negotiations with USA Waste of California, Inc. dba Waste Management and Recology Butte Colusa Counties toward development of a Citywide Solid Waste, Recycling and Other Collection Services Franchise System and draft Collection Service Agreements. The City Council is being asked to consider the information presented and provide direction to staff and R3 regarding the following options. Option 1: Option 2: Option 3: Authorize the proposed franchise system key points and direct the City Attorney to prepare an ordinance modifying applicable chapters of the Chico Municipal Code allowing for a citywide collection service franchise system. Propose changes to the key points of the franchise system and direct staff and R3 to renegotiate the proposed changes with the haulers. Keep the existing permit system. Recommendation: The City Manager recommends that the City Council approve Option 1 authorizing the proposed franchise system key points and directing the City Attorney to prepare an ordinance modifying applicable chapters of the Chico Municipal Code allowing for a citywide collection service franchise system. FISCAL IMPACT: 1. There has been no fiscal impact to the City to date. Waste Management and Recology have each paid a cost recovery fee to the City which has compensated the City for the actual costs incurred for the franchise efforts. 2. The proposed franchise system contemplates an increase from a 2% permit fee to a 10% franchise fee paid by the haulers to the City. COUNCIL COMMITTEE RECOMMENDATION: At the Finance Committee meeting of April 22, 2014, Richard Tagore-Erwin, R3 Consulting Group, Inc., presented various options for collection services for Committee consideration. The Finance Committee recommended that the City Council approve adoption of a Zoned Franchise System which would include negotiating an exclusive franchise limited to two haulers, Waste Management and Recology. At the City Council meeting of September 2, 2014, Council was provided the Finance Committee s recommendation and Richard Tagore-Erwin, R3 Consulting Group, Inc., provided a report on the progress that had been made on the City s franchising efforts. Council considered the information presented and provided direction to staff and R3 regarding the terms, conditions and service options that Council would like addressed during the franchise agreement negotiations. ATTACHMENT 1

5 Re: Proposed Collection Service Franchise System Meeting Date: 3/21/17 Page 2 of 6 BACKGROUND: Current System. The City currently regulates collection services through an open-market permit system which allows for a maximum of two unrestricted permits to be issued at any time. Solid waste permits are currently issued to Waste Management and Recology to serve both residential and commercial accounts. Both unrestricted permits expire June 30, The current permit system requires the permittees to collect solid waste, recycling and organics, to provide two free solid waste collection events per year, and to offer rear-yard solid waste service. The current system is not mandatory, allowing for self-hauling by residents and allowing haulers to discontinue service for non-payment. State Mandates. Assembly Bill (AB) 939, the Integrated Waste Management Act, applies to the entire City, including single-family dwellings (one to four units), and addresses diversion programs in a general way. In 2012, AB 341 established California s first statewide diversion goal and requires CalRecycle to develop a report to the legislature that identifies strategies that will assist in achieving a 75% recycling goal. This state mandate also established mandatory commercial and multi-family dwelling recycling regulations for all businesses and for public entities that generate more than four cubic yards of solid waste per week. Multi-family dwellings (five or more units) are required to provide either (1) source separated recyclable materials from solid waste or (2) subscribe to a recycling service that may include mixed waste processing yielding diversion results comparable to source separation. Other requirements include a commercial recycling program that offers education and outreach, and monitoring for compliance with mandatory recycling. CalRecycle also requires an annual report from the City, which includes details on the commercial recycling program, education, and monitoring. AB 1826 was signed by Governor Brown in October 2014, as a next step for CalRecycle to achieve its 75% recycling goal. It requires businesses and multi-family dwellings to recycle their organic waste based on the total amount of waste generated per week. This program will be implemented over time based on the amount and type of waste generated by a business weekly, with full implementation scheduled for Currently, all businesses that generate four cubic yards of organic waste per week shall arrange for organic waste recycling services. Beginning August 1, 2017, the City will be required to provide information about their organic waste recycling program in the annual report submitted to CalRecycle. The final threshold will take place January 1, 2019, requiring all businesses that generate four cubic yards or more of commercial solid waste per week to arrange for organic waste recycling services. City Provided Services. The City provides street sweeping, illegal dumping collection, and leaf collection on City streets. In addition, the City pays Waste Management to collect from the City s public trash receptacles. These services are generally provided for at no cost by a franchisee under an exclusive franchise agreement. The City owns the City of Chico Compost Facility, which is located on Cohasset Road, north of Eaton Road. Per the City of Chico Contractual Services Agreement (Composting Agreement), Waste Management provides all work and furnishes all labor and materials necessary to operate the composting facility. The Composting Agreement is renewed annually and the City compensates Waste Management for its services. Current Customer Rate Setting Methodology. Residential rates are established per the City of Chico Fee Schedule , Solid Waste and Recycling Fees, which provides for annual review of the solid waste collection rates on a fiscal year basis through an adopted rate methodology. The current rate methodology allows the waste haulers to increase their allowable costs, excluding fuel use, based on the increase in the Consumer Price Index All Urban Consumers-All Items Less Food and Energy from September to September each year. Increases are based on the following cost categories: Fuel; Landfill Disposal; City Permit Fees; and all other allowable expenses (i.e., labor, vehicle maintenance). The City s current commercial solid waste rates are unregulated. Each commercial customer within the City can negotiate their own rate with one of the two permitted haulers. ATTACHMENT 1

6 Re: Proposed Collection Service Franchise System Meeting Date: 3/21/17 Page 3 of 6 5-Year Notice of Intent to Authorize Exclusive Solid Waste Handling Services. R3 was tasked with developing and providing the City with potential alternative approaches to the procurement of an improved solid waste collection system. One potential hurdle the City faced was California Public Resources Code Section which requires that a five-year notice of intent to authorize exclusive solid waste handling services be issued to any authorized nonexclusive hauler that had operated lawfully in the City for more than three years. Based on the City Attorney s interpretation of the Code, R3 recommended the City immediately issue five-year notices of intent to each permitted hauler operating within the City. The notices were issued on June 3, 2014, and stated that all solid waste services provided by [the hauler] within the City of Chico shall be terminated no later than July 1, Meetings with City, R3 and Current Permitted Haulers. The City and R3 met with Waste Management and Recology on March 24, 2014, to discuss options for future solid waste collection permit or franchise systems. During this meeting, Waste Management and Recology agreed that they would negotiate exclusive franchise agreements to replace the current permit system and that they would fully reimburse the City for its franchising efforts. Both haulers also agreed to evaluate a zoned residential and an open market commercial system. If directed by the City, they may also assume the operation of current City operated services such as street sweeping, leaf collection, and illegal dumping collection in their assigned residential zones as they do in other communities. R3 then met with Waste Management and Recology from September 2014 through March 2017 to establish the key points for exclusive collection service agreements. Franchising Cost Recovery. During the March 24, 2014, meeting with Waste Management and Recology they agreed to pay the City a cost recovery fee of up to $100,000 each for its collection services franchising efforts. An initial deposit of $60,000 was remitted by each hauler to the City in June A second deposit of $20,000 each was remitted in August A final deposit of $20,000 each will only be requested if necessary to complete the franchising efforts. DISCUSSION: Negotiations with Waste Management and Recology have established the following key points in the proposed franchise system. Three separate exclusive agreements for solid waste, recyclables and organics. All single-family dwellings (SFD), which include one to four units, will be managed under a single citywide exclusive SFD Collection Service Agreement (Attachment 1) with Waste Management. Commercial and multi-family dwellings will be split into two zones, one zone to be serviced by Waste Management and the other by Recology (Attachment 2). Separate exclusive Commercial Collection Service Agreements will be executed with Waste Management (Attachment 3) and Recology (Attachment 4). Open Competition for Temporary Collection / Construction & Demolition Debris Collection. Open competition collection services will be provided by both Waste Management and Recology as exclusive providers. Roll-off/debris boxes under this open competition are serviced for 7 days or less. Open competition does not apply to ongoing weekly collection services for roll-off/debris boxes. City Services. Collection of solid waste, recyclables and organics at all City-owned buildings and facilities will be at no cost to the City as part of the commercial collection service agreements. Each hauler will service the City buildings or facilities that are in their zone. The commercial collection service agreements will also provide for services up to $6,250 per year for special events as requested by the City. Street Sweeping and Leaf Collection. These services will be retained by the City. Term. The term will be 12 years starting July 1, 2017 (10 years past the current permit expiration date). Franchise Fee. A 10% franchise fee will be paid by the haulers to the City. ATTACHMENT 1

7 Re: Proposed Collection Service Franchise System Meeting Date: 3/21/17 Page 4 of 6 Hauler Diversion Requirements. Each hauler s diversion requirements are set to achieve the state mandates established in AB 341 and AB 1826 to be phased in over three to five years. The haulers agree to meet diversion rates as follow: 30% diversion by January 1, 2021; 32% diversion by January 1, 2024; and 35% diversion by January 1, Tons diverted will include materials collected by each hauler and delivered to a recycler, re-user or processor. Up to 10% of the City s total waste stream may be directed to a transformation facility for waste-to-energy for diversion purposes. Sustainability Support Staff. Each hauler will provide the City with staff resources to support waste diversion and sustainability programs. The sustainability support staff will provide an annual waste diversion and sustainability work plan to guide the hauler s waste diversion and to support City staff s work efforts. The sustainability support staff will also provide an annual collection service notice to all service units. Customer Rates. Residential single-family dwelling rates will be uniform and set citywide by the City. The residential customer rates will be bundled to include solid waste, recycling and organics. Commercial / multi-family dwelling rates will be uniform and set citywide by the City. These rates will be bundled to include solid waste and recycling for service up to 96-gallon carts. An additional cost will apply to recycling service over 96-gallons. Organics will be available to commercial / multi-family dwellings for an additional cost. The basis for establishing the proposed FY 2017/18 customer rates: Single-family customer rates are based on the City approved FY 2016/17 rates, including the additional rate for yard waste and the fuel / environmental surcharge. Commercial / multi-family customer rates are based on averaging the rates charged by Waste Management and Recology to their current customers by service level (i.e., 1 cubic yard bin collected 1/week, 1 cubic yard bin collected 2/week, etc.). Future Rate Adjustment Methodology. Residential single-family and commercial / multi-family maximum rates will be set though July 1, Adjustments to these rates will be based on the change in the water/sewer/trash index published by the U.S. Department of Labor, Bureau of Labor Statistics for the previous 12-month period (January to December). In any given year, rate adjustments will not exceed a 5% increase and will not be reduced due to a negative index adjustment. Those amounts above 5% or negative will be added to the rate adjustment percentage in the following year. There are no additional charges allowed. (i.e., fuel, landfill, etc.) Billing. Residential single-family dwellings will be billed quarterly in advance with the payment due after 45 days. Commercial / multi-family dwellings will be billed in arrears with payment due after 20 days. Collection Stop Service. Haulers may discontinue collection services to single-family dwellings whose accounts are over 90-days past due. Haulers may discontinue collection services to commercial / multi-family dwellings whose accounts are over 45-days past due. ATTACHMENT 1

8 Re: Proposed Collection Service Franchise System Meeting Date: 3/21/17 Page 5 of 6 Reporting. Haulers will be required to submit monthly, quarterly, and annual reports. At a minimum, the reports will include: Tonnage collected, processed, marketed and disposed; Public education and information activities; Customer service data; Operational problems and actions taken; Historical and proposed activities; Summary of payments to City; and Equipment inventory. Liquidated Damages. Both haulers agree that the intent of an exclusive franchise agreement is to ensure high quality collection service, meet required diversion levels and divert materials collected to their highest and best use. As such, both haulers agree to pay liquidated damages for failure to meet the collection service agreement requirements. The City may assess liquidated damages for the following reasons: Failure to respond to complaints with 3 work days; Failure to maintain call center hours or collection hours; Failure to submit reports by their deadlines; Failure to properly label collection vehicles; Failure to collect missed service; Failure to repair or replace containers; Failure to have personnel in hauler provided uniforms; Failure to clean up spillage or litter on a City street caused by hauler; Disposal of separated recyclable materials or organic waste in disposal facility; Failure to deliver garbage to the disposal facility; and Failure to meet the minimum diversion requirements. Equipment. Haulers will use new or refurbished vehicles equipped with a global positioning system (GPS). Compressed Natural Gas (CNG) fueled vehicles will be used when commercially viable. New or refurbished carts and bins will be uniform throughout the City. Contamination by Service Recipient (recycling and organics containers). Recycling containers that contain more than 10% contamination or organic containers that contain more than 3% contamination: 1 st offense Hauler to leave container unemptied, along with a warning and instructions for proper sorting. 2 nd and 3 rd offense Hauler to leave instructions for proper sorting, collect contaminated container and may charge for collection (same as solid waste). 4 th offense Hauler to collect contaminated container, remove the recycling or organics container (after notifying service recipient) and may charge a contamination fee. ATTACHMENT 1

9 Re: Proposed Collection Service Franchise System Meeting Date: 3/21/17 Page 6 of 6 Single-family Dwelling Bulky Waste. Two collections per year at four cubic yards per collection as part of the bundled rate, on call by the next regular service day. Multi-family Dwelling Bulky Waste. One collection per year measured at one-half cubic yard per unit as part of the bundled rate. Performance Bond. The haulers will keep a performance bond with the City in the amount of $1,000,000 for the citywide single-family exclusive collection service agreement and $1,000,000 for each of the commercial / multi-family zone collection service agreements. Insurance Requirement. The haulers will secure and maintain the following insurance coverage throughout the term of the collection service agreements: CONCLUSION General Liability: $5,000,000 single limit per occurrence / $10,000,000 annual aggregate; Automobile Liability: $3,000,000 combined single limit per accident (bodily injury & property); Workers Compensation and Employers Liability: $1,000,000 per accident; and Hazardous Waste and Environmental Impairment Liability: $10,000,000 per occurrence / $20,000,000 policy aggregate. The City Council is being asked to consider the information presented and provide direction to staff and R3 as follows: Option 1: Option 2: Authorize the proposed franchise system key points and direct the City Attorney to prepare an ordinance modifying applicable chapters of the Chico Municipal Code allowing for a citywide collection service franchise system. Propose changes to the key points of the franchise system and direct staff and R3 to renegotiate the proposed changes with the haulers. Option 3: Reviewed by: Keep the existing permit system. Approved and Recommended by: Deborah M. Collins, Management Analyst Mark Orme, City Manager DISTRIBUTION: City Clerk (3) ATTACHMENTS: Attachment 1 Draft SFD Collection Service Agreement - USA Waste of California, Inc. dba Waste Management Attachment 2 Chico Territory Realignment Map March 2017 Attachment 3 Draft Commercial Collection Service Agreement USA Waste of California, Inc. dba Waste Management Attachment 4 Draft Commercial Collection Service Agreement Recology Butte Colusa Counties FILE: PS / L-AGR ATTACHMENT 1

10 SINGLE-FAMILY RESIDENTIAL COLLECTION SERVICE AGREEMENT Executed Between the City of Chico and USA Waste of California, Inc. This day of, 2017 ATTACHMENT 2

11 Chico - Waste Management SFD Collection Service Agreement Draft of 5/27/2017 This page intentionally left blank. City of Chico Page 2 of 67 ATTACHMENT 2

12 Chico - Waste Management SFD Collection Service Agreement Draft of 5/27/ TABLE OF CONTENTS SFD COLLECTION SERVICE AGREEMENT... 1 ARTICLE 1. DEFINITIONS... 6 ARTICLE 2. TERM OF AGREEMENT ARTICLE 3. SERVICES PROVIDED BY THE CONTRACTOR ARTICLE 4. CHARGES AND CONTRACTOR COMPENSATION ARTICLE 5. DIVERSION REQUIREMENTS ARTICLE 7. SFD COLLECTION SERVICES ARTICLE 8. RESERVED ARTICLE 9. RESERVED ARTICLE 10. SFD COLLECTION ROUTES ARTICLE 11. COLLECTION VEHICLES ARTICLE 12. CUSTOMER SERVICE ARTICLE 13. PUBLIC OUTREACH SERVICES ARTICLE 14. EMERGENCY SERVICE PROVISIONS ARTICLE 15. RECORD KEEPING & REPORTING REQUIREMENTS ARTICLE 16. NONDISCRIMINATION ARTICLE 17. SERVICE INQUIRIES AND COMPLAINTS ARTICLE 18. QUALITY OF PERFORMANCE OF CONTRACTOR ARTICLE 19. CONTRACT COMPLIANCE AND PERFORMANCE REVIEWS ARTICLE 20. PERFORMANCE BOND ARTICLE 21. INSURANCE ARTICLE 22. INDEMNIFICATION ARTICLE 23. DEFAULT OF AGREEMENT ARTICLE 24. MODIFICATIONS TO THE AGREEMENT ARTICLE 25. LEGAL REPRESENTATION ARTICLE 26. FINANCIAL INTEREST ARTICLE 27. CONTRACTOR'S PERSONNEL ARTICLE 28. EXEMPT WASTE City of Chico Page 3 of 67 ATTACHMENT 2

13 Chico - Waste Management SFD Collection Service Agreement Draft of 5/27/ ARTICLE 29. INDEPENDENT CONTRACTOR ARTICLE 30. LAWS TO GOVERN ARTICLE 31. CONSENT TO JURISDICTION ARTICLE 32. ASSIGNMENT ARTICLE 33. COMPLIANCE WITH LAWS ARTICLE 34. PERMITS AND LICENSES ARTICLE 35. OWNERSHIP OF WRITTEN MATERIALS ARTICLE 36. WAIVER ARTICLE 37. PROHIBITION AGAINST GIFTS ARTICLE 38. POINT OF CONTACT ARTICLE 39. CONFLICT OF INTEREST ARTICLE 40. NOTICES ARTICLE 41. TRANSITION TO NEXT CONTRACTOR ARTICLE 42. CONTRACTOR S RECORDS ARTICLE 43. ENTIRE AGREEMENT ARTICLE 44. SEVERABILITY ARTICLE 45. RIGHT TO REQUIRE PERFORMANCE ARTICLE 46. ALL PRIOR AGREEMENTS SUPERSEDED ARTICLE 47. HEADINGS ARTICLE 48. EXHIBITS ARTICLE 49. REPRESENTATIONS AND WARRANTIES ARTICLE 50. EFFECTIVE DATE EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 EXHIBIT 4 Reserved Contractor Designated Facilities Vehicle Replacement Schedule Maximum Service Rates City of Chico Page 4 of 67 ATTACHMENT 2

14 Chico - Waste Management SFD Collection Service Agreement Draft of 5/27/ CITY OF CHICO This Agreement made and entered into this day of, 2017, by and between the City of Chico, a municipal corporation under the laws of the State of California, hereinafter referred to as "CITY" and USA Waste of California, Inc. dba Waste Management, a Delaware corporation hereinafter referred to as "CONTRACTOR". RECITALS WHEREAS; the Legislature of the State of California, by enactment of the California Integrated Waste Management Act of 1989 ( Act ) and subsequent additions and amendments (codified at California Public Resources Code Section et seq.), has declared that it is in the public interest to authorize and require local agencies to make adequate provisions for garbage collection within their jurisdiction; and, WHEREAS; the State of California has found and declared that the amount of garbage generated in California, coupled with diminishing landfill space and potential adverse environmental impacts from landfilling and the need to conserve natural resources, have created an urgent need for State and local agencies to enact and implement an aggressive integrated waste management program. The State has, through enactment of the Act, directed the responsible State agency, and all local agencies, to promote disposal site diversion and to maximize the use of feasible garbage reduction, re-use, recycling, and composting options in order to reduce the amount of garbage that must be disposed of in disposal sites; and, WHEREAS; pursuant to California Public Resources Code Section 40059(a) as may be amended from time to time, the CITY has determined that the public health, safety, and wellbeing require that exclusive rights be awarded to qualified contractors to provide for the collection of garbage, recyclable materials, and organic waste materials, except as may be excluded by the CITY S Municipal Code, or other services specifically excluded as set forth in this Agreement; and, WHEREAS; the CITY further declares its intent to regulate and set the maximum rates CONTRACTOR will charge customers for the collection, transportation, processing, recycling, composting, and/or disposal of garbage, recyclable materials, and organic waste materials; and, WHEREAS; the City Council has determined that CONTRACTOR, by demonstrated experience, reputation and capacity, is qualified to provide for the collection of garbage, recyclable materials, and organic waste materials within the corporate limits of the CITY, the transportation of such material to appropriate places for processing, recycling, composting and/or disposal; and City Council desires that CONTRACTOR be engaged to perform such services on the basis set forth in this Agreement; and, WHEREAS; the CONTRACTOR has represented that it has the ability and capacity to provide for the collection of garbage, recyclable materials, and organic waste materials within the corporate limits of the CITY; the transportation of such material to appropriate places for processing, recycling, composting and/or disposal; and the processing of materials; and, WHEREAS, this Agreement has been developed by and is satisfactory to the CITY and the CONTRACTOR; and, Now, therefore, in consideration of the mutual covenants, conditions and consideration contained herein, the CITY and CONTRACTOR hereby agree as hereinafter set forth: City of Chico Page 5 of 67 ATTACHMENT 2

15 Chico - Waste Management SFD Collection Service Agreement Draft of 5/27/ ARTICLE 1. Definitions For the purpose of this Collection Service Agreement, hereinafter referred to as "Agreement", the definitions contained in this Article shall apply unless otherwise specifically stated. If a word or phrase is not defined in this Article, the definition of such word or phrase as contained in the CITY Municipal Code shall control. When not inconsistent with the context, words used in the present tense include the future, words in the plural include the singular, and words in the singular include the plural. Use of the masculine gender shall include the feminine gender AB 939. The California Integrated Waste Management Act (California Public Resources Code Sections et al.), as amended from time to time Agreement. This written document and all amendments thereto, between the CITY and the CONTRACTOR, governing the provision of Collection Services as provided herein Agreement Year. Each twelve (12) month period from July 1st to June 30th during the Term of this Agreement Alternative Daily Cover (ADC). Landfill cover material and at least six (6) inches of earthen material, placed on the surface of the active face of the refuse fill area at the end of each operating day to control vectors, fires, odor, blowing litter and scavenging, as defined in Title 27 of the California Code of Regulations (C.C.R) Section 20164) Applicable Law. All local, state and federal laws that govern the parties performance under this Agreement Biohazardous or Biomedical Waste. Any waste which may cause disease or reasonably be suspected of harboring pathogenic organisms; included are waste resulting from the operation of medical clinics, hospitals, and other facilities processing wastes which may consist of, but are not limited to, human and animal parts, contaminated bandages, pathological specimens, hypodermic needles, sharps, contaminated clothing and surgical gloves Brown Goods. Electronic equipment such as stereos, televisions, VCRs, Personal Data Assistants (PDAs), telephones, and other similar items not containing cathode ray tubes (CRTs) Bulky Waste. Includes Large Items; Large Green Waste; discarded furniture; carpets; mattresses; household appliances including refrigerators, ranges, washers, dryers, water heaters, and dishwashers and other similar items; large household goods including lawn and garden equipment (drained of fluids), bicycles and other similar large personal items. Bulky Waste does not include Exempt Waste, and must be able to be safely lifted by two people into a collection vehicle Change in Law. Any change in (or any new) laws, ordinances, rules, regulations, orders, judgments, decrees, interpretations, decisions or permit requirements, of or by any federal, state or local governmental entity, after the date hereof CITY. The City of Chico, California City Representative. The City Manager, or his/her designee, authorized to administer and monitor the provisions of this Agreement Collection. The process whereby Garbage, Recyclable Materials, and Organic Waste are removed and transported to a Disposal Facility, an Organic Waste Processing Facility, or a Materials Recovery Facility, as appropriate. City of Chico Page 6 of 67 ATTACHMENT 2

16 Chico - Waste Management SFD Collection Service Agreement Draft of 5/27/ Collection Services. Single-Family Collection Service (SFD) Composting. The controlled biological decomposition of Organic Waste into a specific mixture of decayed organic matter used for fertilizing or soil conditioning Construction and Demolition Debris (C&D). Commonly used or discarded materials removed from construction, remodeling, repair, demolition, or renovation operations on any pavement, house, commercial building, or other structure, or from landscaping. Such materials include, but are not limited to, dirt, sand, rock, gravel, bricks, plaster, gypsum wallboard, aluminum, glass, asphalt material, plastics, roofing material, cardboard, carpeting, cinder blocks, concrete, copper, electrical wire, fiberglass, formica, granite, iron, lad, linoleum, marble, plaster plant debris, pressboard, porcelain, steel, stucco, tile, vinyl, wood, masonry, rocks, trees, remnants of new materials, including paper, plastic, carpet scraps, wood scraps, scrap metal, building materials, packaging and rubble resulting from construction, remodeling, renovation, repair and demolition operations on pavements, houses, commercial buildings and other structures. Construction and Demolition Debris does not include Exempt Waste Consumer Price Index (CPI). The index published by the U.S. Department of Labor, Bureau of Labor Statistics, Series Id: U.S. Department of Labor, Bureau of Labor Statistics, Series Id: CUUR0000SA0, Not Seasonally Adjusted, All Items, All Urban Consumers U.S. Cities Average (CPI-U) CONTRACTOR. USA Waste of California, Inc. dba Waste Management, a Delaware corporation County. Butte County, California Customer. Means a Service Recipient that receives Collection Services under the terms of this Collection Service Agreement Disposal Facility. Any facility selected by CONTRACTOR that is operated and legally permitted for the purpose of accepting materials for disposal. The initial Disposal Facility is listed in Exhibit 2 of this Agreement Dwelling Unit. Any individual living unit in a single-family dwelling (SFD) structure or building intended for, or capable of being utilized for, residential living other than a Hotel or Motel E-Waste. Discarded electronics equipment such as cell phones, PDAs, computers, monitors, televisions, and other items containing cathode ray tubes (CRTs), LCD or plasma screens and monitors Exempt Waste. Biohazardous or Biomedical Waste (including Sharps), Hazardous Waste, Sludge, automobiles, automobile parts, boats, boat parts, boat trailers, internal combustion engines, and those wastes under the control of the Nuclear Regulatory Commission Food Waste. Food scraps and trimmings and other putrescible waste that results from food production, preparation, storage, consumption or handling, and that has been separated at the source of generation from other types of Solid Waste including Garbage, Recyclable Materials and Green Waste. Food Waste includes but is not limited to: meat, fish and dairy waste, fruit and vegetable waste, and grain waste. Compostable paper products may be included as appropriate if processing facilities capable of processing such materials are used in the future and are commercially viable. Food Waste does not include Exempt Waste. City of Chico Page 7 of 67 ATTACHMENT 2

17 Chico - Waste Management SFD Collection Service Agreement Draft of 5/27/ Garbage. All putrescible and non-putrescible solid, semi-solid and associated liquid waste, as defined in California Public Resources Code Section Garbage does not include those items defined herein as Recyclable Materials, Organic Waste, or Bulky Waste that have been source-separated for purposes of diversion, or Exempt Waste Garbage Bin. A metal or plastic container, with a capacity of one (1) cubic yard up to, and including, four (4) cubic yards, designed or intended to be mechanically dumped into a loader packer type garbage truck that is approved for such purpose by the CITY Garbage Cart. A heavy plastic receptacle with wheels and a rated capacity of at least thirty-two (32) gallons and not more than ninety-six (96) gallons, having a hinged tightfitting lid and wheels, that is approved by the City Representative (if different from those currently in use by CONTRACTOR) for use by Service Recipients for Collection Services under this Agreement Green Waste. Any vegetative matter resulting from normal yard and landscaping maintenance that is not more than three (3) feet in its longest dimension or two (2) inches in diameter and fits in the Organic Waste Cart utilized by the Service Recipient, and that has been separated at the source of generation from other types of Solid Waste including Garbage, Recyclable Materials and Food Waste. Green Waste includes plant debris, such as, ivy, grass clippings, leaves, pruning, weeds, branches, brush, non-flocked Christmas trees, and other forms of vegetative waste and must be generated by and at the Service Unit wherein the Green Waste is collected. Green Waste does not include items herein defined as Exempt Waste or Yucca or Cactus Gross Revenue. All revenue amounts collected by CONTRACTOR for the provision of Collection Services pursuant to this Agreement, calculated in accordance with Generally Accepted Accounting Procedures (GAAP). The term Gross Revenue, for purposes of this Agreement, does not include any revenues generated from the sale of Recyclable Material, compost product or energy, or other receipts from state and local government accounts (e.g. grants, cash awards and rebates) resulting from the performance of this Agreement Hazardous Waste. Any material which is defined, regulated or listed as hazardous, toxic, a pollutant, or words of similar import waste under California or United States law or any regulations promulgated pursuant to such law, as such as state or federal law or regulations may be amended from time to time; and designated waste as defined in California Water Code Section Household Hazardous Waste (HHW). HHW includes dry cell household batteries, cell phones and PDAs; used motor oil; used oil filters when contained in a sealed plastic bag; cooking oil; compact fluorescent light bulbs contained in a sealed plastic bag; cleaning products, pesticides, herbicides, insecticides, painting supplies, automotive products, solvents, strippers, and adhesives, auto batteries, and Universal Waste. Items will be added or removed from this list pursuant to changes in state or federal law Large Items. Those materials including furniture, carpets, mattresses, White Goods, Brown Goods, E-Waste, clothing, tires (maximum of four per collection), Green Waste, and Large Green Waste which are attributed to the normal activities of a SFD Service Unit. Large Items must be generated by and at the Service Unit wherein the Large Items are collected. Large Items do not include items herein defined as Exempt Waste Large Green Waste. Oversized Green Waste such as tree trunks and branches with a diameter of not more than two (2) feet and a length of not more than six (6) feet in its longest dimension, and not weighing more than fifty (50) pounds, which are attributed to the City of Chico Page 8 of 67 ATTACHMENT 2

18 Chico - Waste Management SFD Collection Service Agreement Draft of 5/27/ normal activities of a SFD. Large Green Waste must be generated by and at the Service Unit wherein the Large Green Waste is collected Materials Recovery Facility (MRF). Any facility selected by the CONTRACTOR designed, operated, and legally permitted for the purpose of receiving, sorting, processing, storing, or preparing Recyclable Materials for sale. The initial MRF is listed in Exhibit 2 of this Agreement Non-Collection Notice. A form developed and used by the CONTRACTOR, as approved by the CITY (if different from the form commonly used by CONTRACTOR), to notify Service Recipients of the reason for non-collection of materials set out by the Service Recipient for Collection by CONTRACTOR pursuant to this Agreement Organic Waste or Organic Materials. Refers to Food Waste, or Green Waste, or both Food Waste and Green Waste, together, separately and not commingled with each other, that has been separated at the source of generation from Garbage and Recyclable Materials Organic Waste Bin. A metal or plastic container, with a capacity of one (1) cubic yard up to and including three (3) cubic yards, designed or intended to be mechanically dumped into a loader packer type truck that is approved for such purpose by the CITY Organic Waste Cart. A heavy plastic receptacle with wheels and a rated capacity not exceeding ninety-six (96) gallons, having a hinged tight-fitting lid, and wheels, that is approved for such purpose by the CITY Organic Waste Processing Facility. Any facility selected by the CONTRACTOR operated and legally permitted for the purpose of receiving and processing or digesting Food Waste, Green, Organic Waste and/or Large Green Waste. The initial Organic Waste Processing Facility is listed in Exhibit 2 of this Agreement Garbage Overage. Excess Garbage placed on top of a Garbage Container or around a Garbage Container that requires manual collection of Garbage by CONTRACTOR s personnel prior to emptying the Cart or Bin CONTRACTOR S the collection vehicle Party or Parties means the CITY and/or CONTRACTOR Recyclable Materials. Those discarded materials which are capable of being recycled by CONTRACTOR and are part of the CITY-approved recycling program and which have been separated at the source of generation from other types of Solid Waste including Garbage, Green Waste and Food Waste. Recyclable Materials included in the CITY-approved recycling program include: newsprint (including inserts); mixed paper (including magazines, catalogs, envelopes, junk mail, corrugated cardboard, brown bags and paper, paperboard, paper egg cartons, office ledger paper, aseptic containers, gable-top cartons, and telephone books); glass containers; aluminum beverage containers; small scrap and cast aluminum (up to 20 pounds); steel including tin cans, empty aerosol cans (empty, non-toxic products) and small scrap (up to 20 pounds); bimetal containers; plastic food containers, #1-7 plastics that have commercial value regardless of form or mold (including but not limited to plastic containers, bottles, and wide mouth tubs, except #6), aluminum foil and pans. Recyclable Materials do not include Exempt Waste Recycling Bin. A plastic or metal container, with a capacity of one (1) cubic yard up to and including four (4) cubic yards, designed or intended to be mechanically dumped into a loader packer type recycling truck that is approved for such purpose by the CITY and is appropriately labeled as a Recycling Bin. City of Chico Page 9 of 67 ATTACHMENT 2