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uncontrollable circumstances that must exist, the adjustment may not exceed 6%. Any annual rate adjustment is subject to City Council review and approval; • Rates will not be adjusted to compensate PGS for operating expense increases in prior years that are carried forward into a subsequent year; • PGS will establish a recycling and organics diversion public education, technical assistance and customer service programs including one additional dedicated full time position; • The City has the right to conduct two reviews of PGS' performance and three audits of its billing and payment of monies due to the City during the term of the Agreement to verify that PGS has fulfilled its obligations under the Agreement. PGS is also required to conduct self-reviews/audits and to submit the results to the City for its review; ▪ PGS may not enter into any discussions regarding the assignment of the Agreement for a period of at least three years. Any assignment is subject to the City Council's approval which may be approved or denied at its sole discretion; • PGS is required to secure all services to meet its obligations under the Agreement, including material collection and transport, securing of landfill access, processing organic and recyclable materials, equipment acquisition and repair, billing and accounts receivable, customer service, reporting, etc. Regarding the last above bullet, the current Franchise requires PGS to secure adequate sites to dispose of all refuse as well as, process and sell all recyclables and organics. However, PGS does not have and has expressed concern regarding its ability to obtain favorable costs for the processing of organics and PGS has agreed that it is more cost effective to process recyclables at a location other than the PGS transfer station with its low volume and relatively high costs of operation. As a result of these two issues, staff has agreed to conduct a public process to secure the required organics and recyclable material processing services. The objective of this process will be that the City will have actual market rate costs and long term arrangements for these services. In addition, once the City secures recycling process services, the area of the Busch Road Transfer station currently used for processing recyclable materials will be available for other uses including the transfer of recyclables and organic materials to transport vehicles. This contracting of recyclable materials processing will not however, impact the publics' access to the transfer station. PGS will be obligated to deliver the organics and recyclable material to the City contracted location as a provision of the Agreement. Rate Review Agreement The current franchise agreement provided for a Rate Reserve Account to help smooth annual fluctuations in cost that directly impact collection rates. The new agreement will eliminate the Rate Reserve Account introducing a new rate methodology tied to established price indexes as well as contractual requirements that must be met to seek any Rate adjustment. This moves the risk associated with cost fluctuations away from the rate payer and the City and is assumed to a greater extent by PGS. The negotiation with PGS regarding decreases in overall costs of services included extensive discussion of the use of the franchise rate reserve account which had a Page 4 of 6