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June 7. 1990
THE HONORABLE CITY COUNCIL
Palo Alto, California
Refuse collection Services and operation of Reeyel log
contract -Amendment No. 3 to Contract No. 4688
:Members of the Cou,ncll:
Program
This report recommends that Council amend the c'ontract with the
Palo Alto sanitation Company (PASCO).. The cOl"ltract is for
providing refuse collection services and operation of the CUrbside
Recyoling Proqram. The amendment would increase the percentage of
revenue to be paid to PASCO during FY 19-90-91 from. the present
47.l1 percent to SO.95 percent.
Background
Ia March 1981. the present contract vas neqotiated between PASCO
and the city to pr~Tide refuse collection services, operation of
the Recycling Center~ operation of the curbside recycling program,
and the emptying and maintenance of trash receptacles located in
the City, including downtown and California Avenue business
dist:ricts~ This contr-act~ 'Which extends throuqh 19'92, provides for
a percentage of refuse billing revenue to be paid to PASOO for its
services~ ThIs contract is amended annually to either increase or
decrease tbe percentage of revenues to be paid to PASCO. City
staff from Public Works and Finance have analyzed PASCO's cost data
to project the operating cost requirements for FY 1990-91 and
determine the percentage of revenue PASCO is to receive. For the
purpose of rate settIng and calculating allowable PASCO profits,
the contract specifies PASCO is to receive a pre-tax rate of return
based on PASCO's undepreciated fixed assets and is targeted at 5
percent~ Any pre-tax profit exceeding 8 percent viII be divided
equally with the city. The City's share of any such profit will be
credited aqainst the succeeding year's revenue requirement for
PASCO. If PASCO were to receive more profit than the agreed rate
of return in any particular fiscal year. the disallo'Wed excess
would be applied as an offset to next year's payment to PASCO ..
This ensures against excessive profits by PASCO.
The percentage of '('evenue to be paid to PASCO ..-ill he increased
from 41.)1 to SO.85 percent for FY 1990-91. This increase is to
compensate PASCo for new equipment authorized by City staff tor the
recycling center to improve material processing.. The new equipment
increases the undepreciated fil::ed assets base by which PASCO's rate
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of return Is calculated. It also reflects increases in PASCO's
operating budget of approximately 5 percent for F:i 1990-91, and
.xpectea .inor increases in extra labor re~lred for the curbside
~post program Which starts on July 11 1990.
RecolDIIiendatiQn
Staf:f recommends that council approve and authorize the Mayo·r to
execute Amendment No. 3 to Contract No. 468B to change the
compensation to Palo Alto Sanitation company for FY 1990-91 from
47.31 percent to 50.85 percent, effective with the first billing
cycle of July 1990.
Respectfully submitte~1
KICHAEL H. KILLER
Deputy Director l Public Works Operations
DAVID G. ADAKS
'" o<o,~
JIJNE FLOIING / J
Apsistant City ~n~
ttachments: A1!Jec.dment
CHR: 34e:o
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AME"DI<ENT NO. 3 TO CONTRACT NO. HSS
BETWEEN CITY OF PAUl ALTO AND PALO ALTO
SAN~TATION COMPANY
FOR COLLECTION AND TRANSPORTATION OF REFUSE
PROOOCED, KEPT AND ACCtJKUIATEO IN CITY
Fiscal Year 1990-1991
THIS AME~ to contract NQ. 4688 is made and entered
into this _____ day of , 1990, by and bet~een the CITY
OF PALO ALTO, a municipal corporation of California, hereinafter
re.ferred to as -CITY, -and PALO ALTO SANITATION COMPANY, a
corporation organ!zed under the laws of the State of California,
bereir.after referred to as -CONTRACTOR-;
R Eel TAL S:
WHEREAS, Contract No. 4688 was previously entered into
between CI~Y and CONTRACTOR.. under libich CONTRACTOR provides
certain specified services for the collection and transportation of
refUse produced, kept. or accumulated in CITY; and
WHEREAS .. both parties desire to modify said agreement as
set forth below;
NOW, THEREFORE, in consideration of their mutual
covenants, the parties bereto agree that Contract No. 4688 shall be
amended as follows:
SECTION 1. The first paragraph of section 9 is hereby
amended to read as follows:
"9. COMPENSATION
"As full and complete compensation for the services to be
provided by CONTRACTOR hereunder, CITY shall pay CONTRACTOR as
follows:
(1] Effective the first billing cycle of July 1990 ..
with respect to the revenue derived each calendar month from CITY
refuse service rates described in Section 8 .. above ... CITY shall
compute and pay-to CONTRACTOR on or before the tenth of thE!
f"ollow-ing month, an amount equal to fifty and eighty-five one
hUndredths percent {50.BS\) of revenue billed under refuse rate
scbedules, less any liquidated damages assessed u,nder section
E(e)(3) of the refuse collection specifications.-
SECTI~. Except as herein
provisions of and exhibits and amendments
shall remain in f~ll force and effect.
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modified.. all other
to Contract No. 4689
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sgCTIQN 1. The Council of"tbe City of PalG Alto finds
that this Is not .. project under the requirements of the callf,ornia
Environmental Quality Act and~ therefore I no environmental
asses&ment is necessary_
IN" W:rrJlESS WHEREOF" the parties hereto have executed this
Amendment the day and year first above written.
ATTEST:
City Clerk
APPROVED AS TO FORM:
Assistant City Attorney
APPROVED:
Assistant city Kanager
Director of Finance
Risk Manager
APPROVED AS TO CONTENT:
Director of Public Works
kk: OS/25/90: j am
2
CITY OF PALO ALTO
Kayor
PALO ~ANITATION COKPAN~
By: &tc2zo. ~&~
Its: Q3if&+ z--;
Taxpayer Identification No.
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