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Councilmember Narum inquired as to the threshold for extraordinary migration. City Manager Fialho <br /> responded the City would prefer to allow the vendors to address their own operations, allowing them an <br /> opportunity to avail themselves of excess revenues as an incentive for efficient business operations, and <br /> have the vendor also assume a certain amount of risk for inefficiencies. The City has a vested interest in <br /> ensuring the health and safety of the community, and is supportive of business sustainability. Mr. Fialho <br /> stated the City cannot negotiate the franchise agreement as part of this action, certain amendments are <br /> subject to the meet-and-confer clause, and the City is providing collateral in the form of $1 million to <br /> protect the vendor from revenue fluctuations due to migration. <br /> Councilmember Brown noted that Pleasanton is higher than Dublin in every rate category out of 9, <br /> except 1, and expressed concern that PGS is projecting a possible revenue loss. <br /> Mr. Galvan stated PGS is seeking to protect itself from the impacts of migration due to Pleasanton's <br /> proposed rate reduction on the 35-gallon cart, as this would invite migration. He noted the City of Dublin <br /> is not served by PGS, but rather Amador Valley Industries, of which some owners are owners of PGS. <br /> The City of Dublin went about rate-setting with a blank slate, which is a different process than that which <br /> Pleasanton undertook. <br /> Discussion ensued among City Council and staff related to the proposed rates, particularly those <br /> articulated in Schedule G. City Manager Fialho again confirmed the any excess revenues, above the <br /> minimum base bid amount, belong to PGS pursuant to the proposed contract. Currently, the rates as <br /> proposed would generate $165,000 in excess revenue, which provide a revenue buffer, exclusive of the <br /> additional $1 million set-aside in year one. <br /> Mr. Hilton confirmed that every 300 customers is equal to approximately $90,000 per year. <br /> Mayor Thorne closed the public hearing. <br /> Councilmember Pentin stated he did not project massive migration as a result of the 35-gallon cart cost <br /> reduction. He recommended a ratio that would allow the City to dedicate funds toward recycling <br /> education. <br /> Councilmember Brown noted migration was discussed the last time the City Council raised rates, <br /> however, the possible impacts did not play out in actuality. <br /> Mayor Thorne stated he would like the Council Subcommittee involved in the six and twelve month <br /> meetings. <br /> Councilmember Brown stated the Subcommittee worked diligently to balance the residential and <br /> commercial rates. <br /> Councilmember Narum expressed concern regarding dropping rates on 96-gallon cart if migration does <br /> not occur, as it seems counter to the City's objective of encouraging recycling. <br /> Discussion ensued relating to incentives for users to commence recycling and the leveraging of funds if <br /> no migration occurs. City Manager Fialho noted the Council could decide how to leverage funds at the <br /> appropriate time in the contract. <br /> Councilmember Olson inquired whether PGS had an opportunity to run the proposed rates through their <br /> business model. Mr. Galvan said they had not. <br /> City Council Minutes Page 4 of 5 July 3,2018 <br />