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BACKGROUND The Refuse Collection Agreement between the City of Pleasanton and PGS dated May 16, 1989, as amended, allowed PGS to accumulate a rate reserve to cover fluctuations in annual costs to the company. The new agreement for solid waste, recyclable materials, and organic materials collection services dated March 20, 2018, went into effect on July 1, 2018, and eliminated the franchise rate reserve. The Rate Reserve Agreement was entered into on March 20, 2018, by the City and PGS to outline the process for the dissolution of the franchise Rate Reserve. On February 4, 2020, the City Council approved the $5,342,285 PGS Rate Reserve calculation and approved $2 million to be deposited into the City's General Fund and the remaining $3,342,285 to be placed in a special revenue fund which would be allocated at a later date. After the City Council approval, PGS provided the funds owed to the City and the Rate Reserve Agreement was completed. DISCUSSION The allocation plan seeks to use the money received from the previous Franchise Agreement with PGS and the Rate Reserve to pay for new costs related to waste and recycling. The primary purpose of the plan is to provide a strategic approach to passing on new costs to the rate payers and if needed smooth those costs over a period of time. Four areas are proposed for use of these funds: implementation of State law SB 1383, street maintenance costs incurred from collection vehicles, smoothing garbage rates, and landfill related issues. Implementation of SB 1383. On June 15, 2021, the City Council adopted the SB 1383 Action Plan which outlines the City's plan for implementing the law. The SB 1383 Action Plan estimates a variety of one-time and ongoing costs. These costs include new services and staff time (Table 1). The costs outlined in the Action Plan were City costs only with most of the costs allowable to be passed onto the rate payer through the garbage rates. Table 1. Costs Fiscal Year Low F— High 2021-2022 $222,439 $ 336,411 2022-2023 $416,288 $ 760,647 2023-2024 $521,418 $ 1,005,960 2024-2025+ $609,962 $1,219,547 Additionally, there are anticipated increases in costs for PGS that were not contemplated in the current agreement that are specifically related to SB 1383 implementation which may also be passed onto the rate payers. Page 2 of 4