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City of Pleasanton Exhibit I: Cost-Based Rate Adjustment Mechanism <br /> Franchise Agreement with Pleasanton Garbage Service <br /> <br />City of Pleasanton Page I-2 June 7, 2022 <br />Allowable Total Annual Cost of Operations shall be reported in the cost categories <br />identified in Section 3.A.1 of this Exhibit. Non-allowable costs which shall be deducted <br />from actual costs include the following: <br />a. Labor and equipment costs for personnel and vehicles that are not specified in <br />Exhibit F or otherwise approved in writing by the City. <br />b. Payments to directors and/or owners of Contractor unless paid as reasonable <br />compensation for services actually rendered. <br />c. Travel expenses and entertainment (above $25,000 annually in total) expenses, <br />unless authorized in advance by the City. <br />d. Payments to repair damage to property of third parties or the City for which <br />Contractor is legally liable. <br />e. Fines for penalties of any nature. <br />f. Liquidated Damages assessed under this Agreement. <br />g. Federal or State income taxes. <br />h. Charitable or political donations. <br />i. Depreciation or interest expense for Collection vehicles, Containers, other <br />equipment, offices and other facilities if such items are leased as specified in <br />Exhibit F or otherwise approved in writing by the City. <br />j. Attorney's fees and other expenses incurred by Contractor in any court <br />proceeding in which the City and Contractor are adverse Parties, unless <br />Contractor is the prevailing Party in such proceeding. <br />k. Attorney's fees and other expenses incurred by Contractor arising from any act <br />or omission in violation of this Agreement. <br />l. Attorneys' fees and other expenses incurred by Contractor in any court <br />proceeding in which Contractor's own negligence, violation of law or regulation, <br />or wrong doing are in issue and occasion, in whole or in part, the attorneys' fees <br />and expenses claimed; and attorneys' fees and expenses incurred by Contractor <br />in a court proceeding in which the legal theory or statute providing a basis of <br />liability against Contractor also provides for separate potential liability for the City <br />derived from the action of its citizens or Rate payers (such as in a CERCLA lawsuit) <br />unless the Contractor is found not liable in such claims and such claims arise from <br />acts or occurrences within the Term of the Agreement. <br />m. Payments to Related Party Entities for products or services in excess of the Rates <br />identified in this Agreement. <br />n. Goodwill. <br />o. Unreasonable profit sharing distributions. <br />p. Depreciation and interest expenses in excess of that specified in Exhibit F <br />including costs for replacement of Containers because the useful life of such <br />Containers was less than anticipated, except as otherwise approved in writing by <br />the City. <br />q. Bad debt write-offs in excess of 0.5% of annual Gross Rate Revenues. <br /> <br />3. Forecasted Total Annual Cost of Operations. Forecasted Total Annual Cost of Operations <br />for the coming Rate Period shall be calculated based on allowed Total Cost of Operations <br />for the most-recently completed Rate Period determined in accordance with Section <br />3.A.2 of this Exhibit. The forecasts shall be performed in the following manner: