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COMPARISON OF MONTHLY RATES WITH REDUCED 35-GALLON ADJUSTMENT Across the Reduced 0/a Service Current Board Rate for 35- Difference Adjustment Type Rate Increase Galion (3.26%) Customers Required 35-Gallon $32.98 $34.06 $33.80 ($.26) 2.50% 96-Gallon $39.13 $40.41 $41.43 $1.02 5.88% If City Council decides to pursue the variable rate adjustment approach as noted in the above table, it would approve the rate resolution with the variable cart rate schedule included as Attachment 2. Franchise Discussions As indicated, when the City Council approved new collection rates in November 2012, it authorized discussions with PGS regarding amendments to the existing Franchise including such matters as modifications to the rate setting process, PGS's obligations regarding conducting operations consistent with approved rates, deficit recovery, service levels, rate structure, PGS's relationship with its related parties, and potentially a short term extension to the Franchise's term. In March 2014, the City Council authorized staff to continue meeting with PGS towards attempting to reach agreement on an amended Franchise and to begin the process of preparing a Request for Proposals (RFP) for a new franchised refuse and recycling hauler. In response to that direction, staff and PGS have continued to meet and are moving closer to agreeing on a term sheet that would meet all City objectives. However, discussions are still ongoing as it relates to recording expenses for PGS related parties engaged in providing truck repair and transporting material to the dump site and other locations. Assuming this matter can be addressed, staff intends to finalize the franchise term sheet and report back to the City Council for its review and direction which could include preparation of a new franchise document based on the term sheet. Commercial Recycling Update In 2012, the Alameda County Waste Management Authority (i.e.Stopwaste.org) adopted an ordinance mandating recycling for businesses, multi-family development, and self- haulers (Commercial Recycling Ordinance). The Commercial Recycling Ordinance is divided into multiple implementation phases. Phase I, in general, requires all Alameda County businesses that generate four cubic yards or more of garbage per week and all multi-family residential development with five or more units to segregate recyclable materials, including corrugated cardboard, newspaper, white paper, mixed recyclable paper, recyclable food and beverage glass containers, metal, food and beverage cans and PET containers. Phase II, which began on July 1, 2014, requires the segregation of organic materials. In October 2012, the City Council agreed to participate in Phase I and it is currently in place and in December 2013 the City Council agreed to not participate (i.e. opt-out) of Phase II. As a result, for Phase I, PGS implemented a commercial recycling program, similar to the current residential recycling program, allowing each commercial account to request Page 5 of 6