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HomeMy WebLinkAboutAGENDA REPORT 2017 1206 CC SPC ITEM 05A ITEM 5.A. CITY Or.IV.1O ,R,CALIWOi NIA City Counei's c/tea--4-PK? MOORPARK CITY COUNCIL lie'"'" w' �`�'J AGENDA REPORT TO: Honorable City Council 40 FROM: Brian Chong, Assistant to the City Manage co, DATE: December 5, 2017 (Special CC Meeting of 12/6/17) SUBJECT: Consider a Memorandum of Understanding between the City of Moorpark and G.I. Industries, Inc. regarding a new Solid Waste Franchise Agreement, extension of the existing Solid Waste Franchise Agreements, transfer of the Moorpark Rubbish Disposal Solid. Waste Franchise Agreement to G.I. Industries, Inc., and the acquisition of open space located east of Moorpark College BACKGROUND The City is currently working with G.I. Industries on a variety of projects related to the City's Solid Waste Franchise Agreements, some of which are contingent on each other, and to the City's acquisition of open space from Waste Management, the corporate owner of G.I. Industries. The attached Memorandum of Understanding (MOU) between the City and G.I. Industries would document in writing all of the agreements made on each of these projects, to give both sides assurance of what guarantees are being made by each side and what actions are required to be taken. It is recommended that the City Council approve the MOU, subject to final language approval of the City Manager and City Attorney. DISCUSSION In 2002, the City granted exclusive Solid Waste Franchise Agreements to G.I. Industries (GI) (for generally the western half of the City) and to Charles Anderson and SEA/SUE, Inc. (for generally the eastern half of the City). In 2004, the City consented to the transfer of the Charles Anderson and SEA/SUE, Inc. franchise agreement to Moorpark Rubbish Disposal LLC. These franchise agreements have been amended and extended numerous times and are currently set to expire on December 31, 2017. Negotiations for a long-term replacement Solid Waste Franchise Agreement are currently underway. Additionally, GI is currently in the process of acquiring Moorpark 1 Honorable City Council CC Special Meeting of 12/6/17 Page 2 Rubbish Disposal LLC. Separately, the City is also in the process of purchasing open space east of Moorpark College from Waste Management, the corporate owner of GI. As such, the following projects are active and requiring action by the City Council: Project 1 — Consent to Transfer of Moorpark Rubbish Disposal Solid Waste Franchise Agreements to GI: On November 14, 2017, the City received a request from Moorpark Rubbish Disposal requesting transfer of its Solid Waste Franchise Agreements to Gl. Such a transfer requires City Council review and approval. Project 2 — Approval of new Solid Waste Franchise Agreement with GI: The City and GI each need to approve a new long-term Solid Waste Franchise Agreement. Project 3 — Approval of extension of existing Solid Waste Franchise Agreements during negotiations for new Solid Waste Franchise Agreement: Both the City and GI recognize that it is not possible to negotiate and implement a new Solid Waste Franchise Agreement before the current Solid Waste Franchise Agreements expire on December 31, 2017. Therefore, extensions of the existing Agreements must be executed to ensure continued solid waste service in Moorpark. Project 4— Acquisition of Open Space: In 2014, the County of Ventura and the City of Moorpark executed a Memorandum of Understanding whereby.the County would provide $1,500,000 in funding toward the acquisition of open space in the vicinity of Moorpark College. The City is currently in negotiations with Waste Management for the City to acquire 125 acres of open space for $1,500,000, as well as separate negotiations to purchase an adjacent 131 acres of open space from Waste management. MOU Provisions for Project 1 (Transfer of Franchise Agreements) The attached MOU would commit the City to approving the transfer of the Moorpark Rubbish Disposal Solid Waste Franchise Agreements to GI, subject to certain conditions related to guaranteeing the service, waiving certain potential claims, providing evidence of insurance, and other related matters. This approval would enable GI's corporate acquisition of MRD, effective as soon as practicable. This acquisition would leave GI as the sole provider of solid waste services throughout the entire City of Moorpark. Such a situation would lead to some operational efficiencies for GI, as fewer duplicative administrative functions would be required. The City would also experience some administrative relief, as City staff would have a single point of contact and single set of workflows and reporting mechanisms throughout the entire City, whereas two are sets of each are currently required. 2 Honorable City Council CC Special Meeting of 12/6/17 Page 3 Having a single solid waste franchisee in the City would also place the City at a slight risk of problems if the sole franchisee was unable to provide service for any reason. With two franchisees active, the second franchisee would more easily be able to step in and provide service in the event of a service disruption by the other. As a solid waste service provider in Moorpark, as well as Simi Valley, Thousand Oaks, and unincorporated Ventura County, GI has a consistent record of providing quality service. Waste Management, as corporate owner of GI, is also a multi-billion dollar corporation that provides solid waste services nationally. Staff has no concerns about GI's ability to meet all of the obligations contained in the Moorpark Rubbish Disposal Solid Waste Franchise Agreements. It should also be noted that the Moorpark Rubbish Disposal Solid Waste Franchise Agreements contain provisions for a Franchise Transfer Fee to be paid to the City in the event the Agreements are transferred. City approval of the transfer would result in one- time General Fund revenues of$135,424.12. MOU Provisions for Project 2 (New Solid Waste Franchise Agreements) The MOU binds the City and GI to use diligent good faith efforts to draft and negotiate a new Solid Waste Franchise Agreement. The MOU is intended to establish the points in the new Agreement that have been mutually agreed to by the City and GI. While a full listing of the provisions of the new Agreement are included in Section 5 of the MOU, a discussion of the key points is provided below: • Term: The new Solid Waste Franchise Agreement would have a twelve-year term. • New Rates: The MOU would set solid waste rates based on the Simi Valley rates. The concept is that the average home/business in Moorpark is roughly the same distance from the Simi Valley Recycling and Landfill Center as the average home/business in Simi Valley. As such, the amount of money received by GI from the typical Moorpark customer should be about the same as from the typical Simi Valley customer. However, rates in Moorpark will be generally higher than Simi Valley rates because Moorpark has a higher AB 939 Fee than Simi Valley. Passed by the State of California in 1989, AB 939 required local agencies to develop and implement recycling plans designed to divert trash from landfills. Local agencies established AB 939 Fees to fund these efforts. Moorpark's AB 939 Fee is set at between $1.14 and $1.20 per month (depending on service level) for residential customers and at 8% of revenues for commercial customers. This fee results in more revenue for Moorpark's AB 939 3 Honorable City Council CC Special Meeting of 12/6/17 Page 4 programs than Simi Valley's programs, and the revenues manifest themselves in expanded services available in Moorpark that are not available in Simi Valley, such as tri-annual free paper shredding events, tri-annual free electronic waste collection events, fluorescent light bulb drop-offs, household battery collection, discounted pricing for backyard corn posters, and annual used cooking oil drop-off events. A comparison of the most typical proposed monthly Moorpark rates with monthly rates in the adjacent Cities of Simi Valley and Thousand Oaks is provided below: Customer Type Moorpark Current (Prorpark posed) Simi Valley Thousand Oaks (Current) sed p ) * Residential, Standard Service $26.36 $30.63 $29.88 $30.83 Commercial Trash (3.0-cu. yd. bin, 1x/week) $142.02 $168.50 $152.86 $161.80 Commercial Recycling $74.31 $113.75 $103.19 $48.54 (3.0-cu. yd. bin, 1 x/week) *Thousand Oaks residential and recycling rates will likely increase again later in 2018 due to changes in the international recyclables markets, as explained later in this staff report. Thousand Oaks also reduces recycling rates to encourage commercial recycling. The 2002 Franchise Agreements contain formulas for rate escalators over the lifetime of the Agreements, which are intended to account for inflation and the costs of doing business that increase over time. However, GI, Moorpark Rubbish Disposal, and the City each agreed to defer rate increases since 2011, when the last rate increases were implemented. This has allowed Moorpark residents and businesses to currently pay less for solid waste services than other nearby cities. The deferral of rate increases has also saved Moorpark customers significant amounts of money over the past six years, as follows: Customer Type Savings Due to Deferred Rate Increases Residential, Standard Service $172.84 Commercial Trash $1,026.00 (3.0-cu. yd. bin, 1x/week) Commercial Recycling $745.20 (3.0-cu. yd. bin, 1x/week) Commercial Trash + Recycling $1,771.20 (3.0-cu. yd. bin, 1 x/week) 4 Honorable City Council CC Special Meeting of 12/6/17 Page 5 A comparison of the proposed rates and what the rates would have been if the rate escalator formulas from the 2002 Franchise Agreements were applied is provided below: Customer Type 2018 Monthly Rate Proposed 2018 Difference (2002 Formulas) Monthly Rates Residential, Standard Service $30.04 $30.63 +$0.59 Commercial Trash • (3.0-cu. yd. bin, lx/week) $162.88 $168.50 +$5.62 Commercial Recycling $89.57 $113.75 +24.18 (3.0-cu. yd. bin, 1x/week) There is a significant gap between the 2018 monthly rates based on the 2002 formulas and the proposed rates. This is gap is related to a shift in the global recyclables commodity markets, which is affecting the solid waste industry throughout California. China is the end market that purchases many recyclables commodities generated by the California solid waste industry, including such commodities as scrap paper, plastics, and metals. The Chinese government has established contamination standards, whereby recyclables commodities may only have a certain amount of contamination to be accepted. In essence, this means that a recyclable pizza box should be mostly cardboard and not mostly dried out cheese and grease. China is currently in the process of tightening its limits on recyclables contamination. For example, China currently accepts a 1.5% contamination rate for scrap paper; they are currently reducing it to between 0.3% and 1.0%. Standards for other materials are similar. In practice, this "green sword" affects the domestic recyclables markets in two ways that both drive the cost of recycling up. First, in order to meet the lower contamination rates, recycling companies must better sort and more thoroughly clean what they collect. This drives up their costs of doing business. Second, recycling companies currently exporting to China will have fewer options to sell their commodities, thereby driving down the prices received for the commodities. To offset the higher costs and lower revenues associated with the current recycling industry market, local agencies are approving one-time adjustments to ensure the continued viability of recycling in California. Simi Valley, for example, set its 2018 rate incorporating a one-time adjustment of $1.64 per month for residential and a $1.95 per cubic yard, per month commercial rate (so a 3.0-cubic yard bin serviced once per week increased by $25.37 per month). Thousand Oaks approved its 2018 rates without making an adjustment, but advised its City Council that "policy changes in the Chinese market for recyclables...will likely necessitate adjustments in processing methods and a request to City Council for additional increases." 5 Honorable City Council CC Special Meeting of 12/6/17 Page 6 • Effect of Phasing New Rates: The MOU maintains the City's choice to increase solid waste rates over a two-year period, by 50% of the total increase each year. Phasing in rate increases would allow for a "soft landing" whereby Moorpark residents and businesses will have more time to absorb the rate increases. However, it would be unreasonable for GI to have to start incurring the full expenses required by the MOU before receiving the corresponding revenues to cover them. The MOU includes language that, if the City opts to phase in solid waste rate increases over two years, then various fees and reimbursements will be adjusted downward correspondingly to place GI in substantially the same financial position it would have occupied in the event the City had not phased in the new rates. While the precise financial impact of phasing in rates is difficult to calculate due to the number of variables involved, phasing the MOU over two years would result in approximately $400,000 of foregone revenue for the City, as the City would provide GI with the corresponding revenue needed to provide additional services required by the MOU. • Rate Escalators: The MOU contains provisions for rate escalators to be substantially the same as those in effect in Simi Valley. Based on the same logic that the cost of providing solid waste services will be similar in Moorpark and Simi Valley, so , too will the cost increases over the term of the new Solid Waste Franchise Agreement. It should be noted that an escalator will need to address the continued volatility in the international recyclables commodity markets (such that recycling rates would increase when the prices of recyclables commodities decrease, and recycling rates would decrease when the prices of recyclables commodities increase). The rate escalators are based on the Consumer Price Index (to account for inflation) and on the Landfill Tipping Fees, which are costs paid by the solid waste haulers to dispose of waste at the Simi Valley Landfill and Recycling Center that are passed through to the customers generating the waste. - • Commercial Organics Collection: State law now requires a phased implementation of commercial organics collection, with the intent that commercial producers of food waste (such as restaurants and grocery stores) divert food waste from landfills. The state's phased implementation affects large-scale producers of food waste, then affects medium-scale producers of food waste, and so on. The MOU requires GI to initiate commercial organics collection service in Moorpark, at rates approved by the City.. • Free Landfill Days: Moorpark residents currently receive two Free Landfill Days per year at the Simi Valley Landfill and Recycling Center. The MOU would increase that to three Free Landfill Days per year. • Free Bulky Item Pickups: Moorpark residents currently receive two free bulky item pickups per year, with up to two bulky items per pickup. The MOU would increase 6 Honorable City Council CC Special Meeting of 12/6/17 Page 7 the number of bulky items per pickup from two to three. Moorpark residents would still be limited to two pickups per year, though. Additional bulky item pickups may be scheduled for a fee. • Hard-to-Access Service and Fee: At several locations in the City, homes are located such that it is tedious for residents to move their trash cans to a street curb for pickup. These are typically homes located on flag lots or along streets that predate modern road standards, resulting in residents having to place their trash cans on a different street for pickup. The MOU requires GI to offer a service to retrieve trash cans from the front of a house, regardless if the trash cans are curbside, for a monthly fee subject to review and approval by the City. Residents would not be required to obtain this service or pay the fee. • Street Sweeping: The MOU requires GI to provide street sweeping services on public streets and City-owned parking lots at the same frequencies that the City currently provides. This would result in a savings to the City of approximately $111,700 per year. Additionally, the MOU requires GI to make an offer to sweep private residential streets, which are typically under ownership by homeowners' associations, once per month, at no cost to the City or the homeowner's associations. Under the MOU, the City and GI would develop a standard agreement template between GI and a homeowners' association to facilitate the creation of such agreements to standardize such issues as liability and insurance. • Freeway Litter Control: The MOU requires GI to provide a litter control program along the 23 and 118 Freeways, and interchanges, through Moorpark. • Local Streets Access Agreement: The City currently has a Local Streets Access Agreement with the Simi Valley Landfill and Recycling Center (SVLRC), which is owned by Waste Management (which also owns GI), whereby the SVLRC pays a monthly fee to the City (approximately $60,000 per year) to offset the damage done by garbage trucks to City streets. The MOU requires that the Local Streets Access Agreement be extended for the duration of the new Solid Waste Franchise Agreement. • Community Service Contribution: The MOU requires GI to provide the City with a one-time contribution of$210,000 to be used for community services provided by the City. • Annual Impact Fee: The MOU requires GI to provide the City with $187,300 per year to be used at the City's discretion, to offset the impacts of solid waste service on the community. 7 Honorable City Council CC Special Meeting of 12/6/17 Page 8 • Household Hazardous Waste Contribution: The MOU requires GI to reimburse the City $35,000 per year toward its household hazardous waste collection programs. • Reimbursement for Annual Rate Reviews: The MOU requires GI to reimburse the City $2,700 per year toward the staff costs of completing the annual rate review. • Environmentally Preferred Vehicles: The MOU requires GI to convert its entire fleet of collection vehicles to comply with all applicable California Air Resources Board (CARB) requirements. MOU Provisions for Prosect 3 (Extension of Current Solid Waste Franchise Agreements) If the City Council consents to the transfer of the Moorpark Rubbish, Disposal Solid Waste Franchise Agreements to GI, then GI will be in control of all of the Solid Waste Franchise Agreements in Moorpark. All of the Agreements would also be set to expire on December 31, 2017. Although the MOU would address many of the key points of a comprehensive new Solid Waste Franchise Agreement, the actual Agreement must be created and reviewed legally by both sides. Additionally, a number of administrative- level points must be negotiated, crafted, and reviewed, including but not limited to: standards for containers and carts; performance reviews; records and reporting requirements; rights during disasters and emergencies; indemnification and insurance requirements; rights and remedies, transfer provisions, and performance bonds. Both GI and the City recognize that it is not reasonably possible to negotiate, develop, approve, and implement a new Solid Waste Franchise Agreement by December 31, 2017. Both parties wish to continue solid waste services in Moorpark until a new Agreement may be implemented, and the MOU would require extensions to both sets of Agreements. The MOU requires both sides to execute an extension of the GI Agreements to March 31, 2018. Both sides anticipate being able to fully negotiate and execute a new Solid Waste Franchise Agreement within that timeframe. The MOU states that the new Agreement could be implemented on March 1, 2018, provided the Agreement is executed by February 12, 2018. The MOU requires both sides to execute an extension of the MRD Agreements for a period of ten years, to December 31, 2027, with a provision that all the MRD Agreements will be replaced by a new GI Agreement once executed. By agreeing to this lengthier extension, the City will facilitate quick completion of GI's acquisition of MRD without having to wait for the final new Solid Waste Franchise Agreement to be 8 Honorable City Council CC Special Meeting of 12/6/17 Page 9 negotiated and executed. Doing so will enable more efficient negotiations with a single party, and both parties will continue to be incentivized to complete a new Agreement in the absence of a long-term Agreement with GI. MOU Provisions for Project 4 (Open Space Acquisition) In 2014, the County of Ventura and the City of Moorpark executed a Memorandum of understanding whereby the County would provide the City with $1,500,000 to fund the acquisition of open space in the vicinity of Moorpark College. On October 18, 2017, the City Council authorized the expenditure of the $1,500,000 to purchase 125 acres of open space from Waste Management, located east of Moorpark College and immediately north of the 118 Freeway. The City Council further directed staff to negotiate the purchase of an additional 131 acres of open space owned by Waste Management, immediately north of the initial 125-acre purchase area. The MOU would lock in the price of the 125-acre purchase area, in writing, at $12,000 per acre and also establish the same price of $12,000 per acre for the remaining open space purchase. The MOU would also require one acre of the open space area, located at the southeast corner of Campus Park Drive and Beragan Street, to be given to the City at no cost. This parcel was previously agreed to for dedication to the City for either a public park, a fire station, or another public purpose. The City has already completed civil engineering work to identify the three parcels to be purchased (125-acre, 130-acre, and one-acre lots). The City is also completing a Phase 2 environmental site assessment to complete its due diligence of the three lots. The MOU would recognize the three separate phases of purchasing of the open space. Review of MOU by Solid Waste Franchise Ad Hoc Committee The Solid Waste Franchise Ad Hoc Committee (comprised of Mayor Parvin and Councilmember Mikos) met multiple times regarding the proposed MOU and recommends approval of the MOU. FISCAL IMPACT In and of itself, approving the attached Memorandum of Understanding will not have a fiscal impact on the City. However, the actions being committed to in the MOU will have a multitude of fiscal impacts. Approving the transfer of the MRD Solid Waste Franchise Agreements would result in one-time revenue to the City's General Fund of$135,424.12. 9 Honorable City Council CC Special Meeting of 1.2/6/17 Page 10 Agreeing conceptually to the various components of a new Solid Waste Franchise Agreement will have long-standing fiscal impacts to the City. Fees and contributions from GI to the City would result in $220,000 in one-time revenue and $225,000 in annual revenue. Increased solid waste fees will also yield higher franchise and AB 939 fees to the City, although the amount will depend on inflation and future rate escalations throughout the term of the agreement. Shifting the costs of street sweeping from the City to GI will also save the City approximately$111,700 annually. Extending the current Solid Waste Franchise Agreements will continue existing revenue streams and solid waste services until a new Solid Waste Franchise Agreement is executed, but it will have no net fiscal impact on the City. Establishing a price of $12,000 per acre for the open space, less one acre of open space for free as described in the staff report, would set a total acquisition price of approximately $3,060,000. Of that, the City Council has already appropriated $1,500,000 of funding received from the County of Ventura for open space purchases • for the initial 125-acre purchase. Approval of the final purchase of the remaining approximately 130 acres, as well as identifying a funding source(s), will be subject to subsequent City Council review and action. STAFF RECOMMENDATION Approve the attached Memorandum of Understanding with G.I. Industries regarding a new Solid Waste Franchise Agreement, extension of the existing Solid Waste Franchise Agreements, transfer of the Moorpark Rubbish Disposal Solid Waste Franchise Agreement to G.I. Industries, Inc., and the acquisition of open space located east of Moorpark College, subject to City Manager and City Attorney approval of final language. Attachment: Draft Memorandum of Understanding 10 MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding ("MOU") is entered into, by and between the City of Moorpark, a California municipal corporation ("City") and GI Industries, a Utah corporation ("GI") (collectively,the "Parties"), as of December , 2017. RECITALS A. WHEREAS, on September 18, 2002, the City Council granted two exclusive Franchise Agreements with GI Industries (the "GI Agreements") and two exclusive Franchise Agreements with Charles Anderson and SEA/SUE Inc., a General Partnership, Doing Business as Moorpark Rubbish Disposal (the "MRD Agreements", together with the GI Agreements, the "Current Franchise Agreements"), for the collection, transportation, recycling, and disposal of residential solid waste and commercial solid waste in designated areas within the City limits; and B. WHEREAS, on July 28, 2004 the City consented to the transfer of the MRD Agreements to Moorpark Rubbish Disposal LLC, a California limited liability company. C. WHEREAS, the Current Franchise Agreements have been amended and extended numerous times and are currently set to expire on December 31,2017; and D. WHEREAS, on November 14, 2017, Moorpark Rubbish Disposal requested the City's consent to transfer the MRD Agreements to GI as part of GI's acquisition of Moorpark Rubbish Disposal's parent company; and E. WHEREAS, the MRD Agreements and Moorpark Municipal Code Section 8.36.345 requires City Council approval of such a transfer, among other requirements, and the MRD Agreements require that such approval be by resolution; and F. WHEREAS, the City is willing to consent to the transfer of the MRD Agreements to GI, subject to the terms and conditions of this MOU; and G. WHEREAS, the Parties desire to enter into a new long-term Franchise Agreement for the collection, transportation, recycling, and disposal of residential and commercial solid waste; and H. WHEREAS, the Parties have agreed in concept to proposed major terms of a new Franchise Agreement; and I. WHEREAS, the City desires to purchase approximately 256 acres of open space owned by Waste Management of California, Inc., an affiliate of GI, located east of Moorpark College,north of the 118 Freeway, and within the City limits (the"Land"); and J. WHEREAS, Waste Management of California, Inc. is willing to sell the land to the City; and K. WHEREAS, time is of the essence for the City to complete its acquisition of the open space to ensure availability of funding sources for the acquisition; and -1- 12853-0001\2141855v4.doc 1 1 L. WHEREAS, the Parties wish to memorialize the proposed terms and the required steps and timing for City Council consideration of the Purchase and Sale Agreement and New Franchise Agreement, as contemplated herein. AGREEMENT NOW, THEREFORE,the Parties mutually agree as follows: 1. The above recitals are true and are incorporated by reference and made part of this MOU. 2. The provisions of this MOU shall become effective upon the City's approval and execution of a consent to the assignment and transfer of the MRD Agreements, specifically the Franchise Agreement Between the City of Moorpark and Charles Anderson and SEA/SUE Inc., a General Partnership, Doing Business as Moorpark Rubbish Disposal, for Providing Multi-Family and Commercial Solid Waste Services dated October 1, 2002, including all amendments thereto, and the Franchise Agreement Between the City of Moorpark and Charles Anderson and SEA/SUE Inc., a General Partnership, Doing Business as Moorpark Rubbish Disposal, for Residential Solid Waste Services dated October 1, 2002, including all amendments thereto, to GI. Pursuant to the MRD Agreements, City Council consent for the transfer shall be provided and effective by the adoption of a resolution. 3. GI agrees, as a condition to the effectiveness of the consent to transfer the MRD Agreements, to execute and deliver to the City, and to cause MRD Rubbish Disposal LLC to execute and deliver to the City, a release and waiver, in form acceptable to the City Attorney, releasing the City from all claims and causes of action that related to or arise from the Current Franchise Agreements. 4. By its signature below, Waste Management of California, Inc. (WM) (affiliate of GI) agrees to negotiate, diligently and in good faith, the terms of a Purchase and Sale Agreement for the sale of the Land (exclusive of mineral rights) to the City, subject to the following terms: a. The purchase price shall not to exceed $12,000 per acre, except as set forth in subsection"b"; b. One acre of the Land, located at the eastern terminus of Campus Park Drive, will be conveyed to the City at no cost to the City for the purpose of future public park, fire station, or other public purpose as determined by the City, with a release of all rights to future oil exploration or drilling on or under the property; this transaction must occur.within 30 days after the effective date of a New Franchise Agreement described in Section 5, below; c. The acquisition of the Land may occur in multiple phases; and d. Standard escrow terms commonly used in Ventura County. -2- 12 WM agrees to use diligent good faith efforts to present to the City Council draft Purchase and Sale Agreements, as described above, that is acceptable to WM and the City Manager's Office, as quickly as reasonably possible and before March 31, 2018. 5. The Parties agree to use diligent good faith efforts to draft and negotiate a new Franchise Agreement for Residential and Commercial Solid Waste Services ("New Franchise Agreement"), to include substantially the following terms and conditions: a. Term: The term of the New Franchise Agreement would be from its effective date through March 31, 2030. b. New Solid Waste Fee Schedule: The New Franchise Agreement would include a New Solid Waste Fee Schedule. GI has proposed that the maximum rates contained in this New Fee Schedule be based on the base rates (exclusive of franchise fees and other fees) in effect for 2018 in the City of Simi Valley, with the intent of having the same base rates being received by GI in the City of Simi Valley and the City of Moorpark, and asserts that the costs of providing solid waste services in the two cities are similar. The City is willing to accept the approach to rates proposed by GI. c. Potential Phasing of 2018 Rate Increases: The City would have the option to phase in the New Solid Waste Fee Schedule equally over a two-year period, such that the Simi Valley rates may not be matched in 2018 and instead be matched in a subsequent year. If the City elects to phase in the rate increases, the City understands that the fees, contributions, and reimbursements described in subsections (r), (s), and (t), below, will be adjusted downward accordingly as needed to place GI in the substantially same financial position it would have occupied in the event the City had not elected the phase in. When calculating the rates for the second year of the New Franchise Agreement, the rate escalator calculations shall be applied after the remaining 50%.of the phase rate increase is added to the base rate. d. Escalator Formulas: The annual rate escalator formulas shall be substantially the same as those in effect in Simi Valley. The Parties agree to include a rate escalator for recyclables costs that accounts for the volatility in recyclables commodities markets, such that rates would increase when the prices of recyclables decrease and decrease when the prices of recyclables increase. The escalator formulas shall include provisions to ensure that base rates received by GI from Moorpark customers does not become significantly higher than the base rates received by GI in other nearby communities. In addition, the New Franchise Agreement would provide that, in the event that the City is unable by operation of applicable law to approve a -3- 13 rate increase pursuant to the specified escalator provisions, the Parties would meet in good faith to resolve the issue, and that if unable to do so within a reasonable time, GI would have the option to terminate the agreement, with twelve-month notice to the City. e. Commercial Organics Collection: Beginning on April 1, 2018, or as soon as practicable, GI will offer commercial organics collection to all non- residential customers. Rates for such service shall be in accordance with the New Solid Waste Fee Schedule. f. Free Landfill Days: Beginning in 2018, GI shall offer Moorpark residents three Free Landfill Days (currently two) per year at the Simi Valley Landfill and Recycling Center. g. Bulky Item Pickups: Beginning on the effective date of the New Franchise Agreement, GI shall increase the number of bulky items per free bulky item pickup from two items to three items. The number of bulky item pickups will remain at two per year, allowing a maximum of six bulky items to be picked up per year for free. Additional pickups shall be at rates contained in the New Solid Waste Fee Schedule. h. Holiday Clean-Up Services: Moorpark residents will receive free extra curbside pickup for two weeks immediately following Christmas. Hard to Access/Custom Service and Fee: GI will offer all residential customers a service to retrieve trash containers from the front of a house to the street to enable curbside pickup. GI may collect a monthly fee for providing this service, which shall be determined on a case-by-case basis, subject to review and approval by the City. The Parties recognize that unusual circumstances for individual customers may necessitate a custom service not included in the New Solid Waste Fee Schedule. The Parties agree that the New Franchise Agreement will provide for GI the option to provide the custom service and collect an associated fee, on a case-by-case basis, subject to review and approval by the City. j. Electronic Copies of Bill Inserts: GI will make copies of bill inserts available to customers who receive their statements electronically instead of by mail. k. Street Sweeping: GI shall provide street sweeping services, either directly or through a vendor acceptable to the City, to the. City at no cost as follows: i. GI shall sweep all existing and future public streets twice per month, at the same day/time intervals as are currently in effect. ii. GI shall sweep all existing and future City owned parking lots (such as those located at parks, the train station, and buildings) -4- 14 once per month, at the same day/time intervals as are currently in effect. iii. GI shall make an offer to sweep private residential streets, typically under ownership by homeowners' associations, once per month at no cost to the City or the homeowners' associations. Agreements to provide such sweeping services shall be between GI and individual homeowners' associations, and GI shall not unreasonably withhold, delay, or otherwise burden the creation of such an agreement for sweeping private streets. The Parties shall jointly develop a standard agreement template between GI and a homeowners' association to facilitate the creation of such agreements. 1. Freeway Litter Control: GI agrees to coordinate with Caltrans to provide a litter control program along the 118 Freeway from Collins Drive to Los Angeles Avenue, and on the 23 Freeway from the Tierra Rejada Road to Los Angeles Avenue. The plan shall include litter removal on at least a twice per month basis and include the full freeway interchanges within the program area. m. Roll-Off Containers for City Use: GI will provide the City with the equivalent of ten, 40-cubic yard loads of roll-off container collection, transportation, and disposal service annually at no cost to the City. n. Streetside Container Service: The City may place trash containers along sidewalks at bus stops or in high pedestrian areas, and GI will service such trash containers at no cost to the City. The City will not seek to add such trash containers on major streets where there is not sufficient space for a garbage truck to safely pull over(such as a bus turnout or parking area). o. High Street Trash Containers: The Parties agree to use good faith efforts to create and implement a plan to remove curbside trash containers from High Street. P. Local Streets Access Agreement: The New Franchise Agreement would be conditioned on WM, the owner of the Simi Valley Landfill and Recycling Center (SVLRC) executing an extension of the current Local Streets Access Agreement between the City and SVLRC for a period coterminous with the term of the New Franchise Agreement. The City also agrees to consent to extending that agreement. q. Community Services Contribution (One-Time): Within 30 days of execution of the New Franchise Agreement, GI shall provide the City with a one-time contribution of $210,000 to be used for community services provided by the City. The expenditure of the funds shall be at the discretion of the City. -5- 15 r. Annual Impact Fee: Beginning in on April 1, 2018, GI shall provide the City with$187,300 per year to be used at the discretion of the City. s. Household Hazardous Waste Contribution: GI to provide the City with $35,000 per year to offset the City's expenditures associated with disposal of household hazardous waste. t. Annual Rate Review Reimbursement: GI to provide the City with $2,700 per year to offset the City's expenditures associated with calculating, implementing, and preparing staff reports for annual rate reviews. u. Administrative Fee: GI shall provide the City an Administrative Fee upon effectiveness of the New Franchise Agreement, to reimburse the City for the staff time and out-of-pocket costs it incurred in connection with entering into the New Franchise Agreement. The Administrative Fee shall be $10,000. v. Alternative Fuel Vehicle Fleet: Within two years, GI's collection vehicles shall conform to applicable California Air Resources Board requirements. w. Mandatory Collection Campaign: The City will discontinue its biannual Mandatory Collection Campaign contacting residents who do not have required solid waste service, and GI will conduct its own campaign on at least a biannual (twice per year) basis, at no cost to the City. The Parties will use diligent good faith efforts to develop procedures to complete the Campaign similar to the City's current procedures. x. City's Right to Increase Franchise Fees: The City shall have the unilateral right to increase its Franchise Fees, and GI shall implement any such increase within 90 days of notice from the City. The rates for services shall be adjusted to reflect the increased Franchise Fee. y. Standard Provisions: Commonly used provisions in solid waste franchise agreements in Southern California, such as those included in the draft documents prepared during the negotiations of the New Franchise Agreement that predate this MOU, including by not limited to carts and containers, grants, compliance with state law, performance reviews, records and reporting requirements, rights during disasters and emergencies, indemnification and insurance requirements, rights and remedies, liquidated damages, transfer provisions (including a transfer fee),performance bonds, and a guarantee from GI's parent company. 6. Approval of New Franchise Agreement: The Parties agree to use diligent good faith efforts to present to the City Council a draft New Franchise Agreement, as described above, that is acceptable to GI and the City Manager's Office, as quickly as reasonably possible and before March 31, 2018. The Parties acknowledge that approval of the New Franchise Agreement requires compliance with all applicable laws, including but not limited to Chapter 8.36 of the -6- 16 Moorpark Municipal Code. Nothing herein obligates the Parties to enter into the New Franchise Agreement. The City is under no obligation to consider approval of the New Franchise Agreement unless it is also presented with a Purchase and Sale Agreement consistent with Section 3. 7. Early Implementation of New Franchise Agreement: If the City Council approves and the Parties execute a New Franchise Agreement by February 12, 2018, then the effective date of the New Franchise Agreement may be changed to March 1, 2018, and the various commencement dates set forth in Section 4 would be accelerated by one month. Conversely, if the Parties enter into the New Franchise Agreement after March 31, 2018, the various commencement dates set forth in Section 4 would be deferred by a commensurate period. 8. Extensions of Current Franchise Agreements: The Parties will execute amendments to the current Franchise Agreements between GI and the City to extend the term of the Agreements to March 31, 2018. The parties will execute amendments to the current Franchise Agreements between Moorpark Rubbish Disposal and the City to extend the terms of the Agreements to December 31, 2027. However, in the event that a new Franchise Agreement between GI and the City is executed, then all obligations contained in the Moorpark Rubbish Disposal Franchise Agreements will be replaced with all obligations contained in the new GI Franchise Agreement. The foregoing provision shall survive the termination or expiration of this Memorandum of Understanding, however brought about. 9. Cooperation: The Parties agree to cooperate and coordinate with each other in all activities covered by this MOU. 10. Indemnity: To the fullest extent permitted by law, GI shall, at its sole cost and expense, defend, hold harmless and indemnify the City and its elected officials, officers, attorneys, agents, employees, designated volunteers, successors, assigns and those City agents serving as independent contractors in the role of City officials (collectively "Indemnitees"), from and against any and all damages, costs, expenses, liabilities, claims, demands, causes of action, proceedings, expenses, judgments, penalties, liens, and losses of any nature whatsoever, including fees of accountants, attorneys, or other professionals and all costs associated therewith and the payment of all consequential damages (collectively "Liabilities"), in law or equity, whether actual, alleged or threatened, which arise out of, are claimed to arise out of the acts or omissions of GI as they pertain to, or relate to this MOU, except for Liabilities arisingfrom the sole negligence or willful misconduct of the Indemnitees, as determined by judicial decision or by the agreement of the Parties. GI shall defend the Indemnitees in any action or actions filed in connection with any Liabilities with counsel of the Indemnitees' choice, and shall pay all costs and expenses, including all attorneys' fees and experts' costs actually incurred in connection with such defense. GI shall reimburse the Indemnitees for any and all legal expenses and costs incurred by Indemnitees in connection therewith. -7- 17 11. Attorneys' Fees: The Parties agree to be responsible for their own attorneys' fees and costs in the event of any legal challenge by a third party relating to adoption of this MOU. The Parties agree to this provision recognizing that, if there is a lawsuit, and the Parties prevail on the merits, costs and/or fees may be awarded by a court against an unsuccessful petitioner/plaintiff. 12. Authority to Execute: Both Parties represent to the other that they have the requisite power and authority to conduct their business and to execute, deliver, and perform the requirements of this MOU. Each Party warrants that the individuals who have signed this MOU have the legal power, right, and authority to enter into this MOU and bind each respective Party. 13. Venue and Governing Law: This MOU is made, entered into, and executed in Ventura County, California, and any action filed in any court or for arbitration for the interpretation, enforcement, or other action of the terms, conditions, or covenants referred to herein shall be filed in the applicable court in Ventura County, California. The Parties understand and agree that the laws of the State of California shall govern the rights, obligations, duties, and liabilities of the Parties and also govern the interpretation of this Agreement. 14.. Joint Drafting: Each Party has cooperated in the drafting and preparation of this MOU with the aid of legal counsel. Hence, in any construction to be made in this MOU, it shall not be construed against either party. 15. Severability: If any provision of this MOU is invalid or unenforceable with respect to either Party, the remainder of this MOU or the application of such provision to persons other than as to whom it is held invalid or unenforceable, shall not be affected and each provision of this MOU shall be valid and enforceable to the fullest extent permitted by law. Notwithstanding the foregoing, if Section 3 of this MOU shall be determined to be invalid or unenforceable by City, this MOU shall terminate. 16. Amendments: Any amendment to this MOU shall be in writing and shall be effective only upon approval by the Parties. 17. Expiration of MOU Upon Execution of New Franchise Agreement: This MOU shall expire upon the first to occur of(a) June 30, 2018, or(b) execution of a New Franchise Agreement by the Parties and execution of the Purchase and Sale Agreement by the City and WM. -8- 18 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first above written. CITY OF MOORPARK, G.I. INDUSTRIES, a California municipal corporation a Utah corporation Janice S. Parvin, Mayor Mike Smith, Director of Operations ATTEST: BY ITS SIGNATURE BELOW, WASTE MANAGEMENT OF CALIFORNIA, INC. AGREES TO COMPLY WITH SECTION 3 Maureen Benson, City Clerk OF THIS MOU WASTE MANAGEMENT OF CALIFORNIA, INC., a California corporation Its: -9- 19 ITEM 5.A. (Final MOU) MEMORANDUM OF UNDERSTANDING This Memorandum of Understanding ("MOU") is entered into, by and between the City of Moorpark, a California municipal corporation ("City") and GI Industries, a Utah corporation ("GI") (collectively, the "Parties"), as of December , 2017. RECITALS A. WHEREAS, on September 18, 2002, the City Council granted two exclusive Franchise Agreements with GI Industries (the "GI Agreements") and two exclusive Franchise Agreements with Charles Anderson and SEA/SUE Inc., a General Partnership, Doing Business as Moorpark Rubbish Disposal (the "MRD Agreements", together with the GI Agreements, the "Current Franchise Agreements"), for the collection, transportation, recycling, and disposal of residential solid waste and commercial solid waste in designated areas within the City limits; and B. WHEREAS, on July 28, 2004 the City consented to the transfer of the MRD Agreements to Moorpark Rubbish Disposal LLC, a California limited liability company. C. WHEREAS, the Current Franchise Agreements have been amended and extended numerous times and are currently set to expire on December 31, 2017; and D. WHEREAS, on November 14, 2017, Moorpark Rubbish Disposal requested the City's consent to transfer the MRD Agreements to GI as part of GI's acquisition of Moorpark Rubbish Disposal's parent company; and E. WHEREAS, the MRD Agreements and Moorpark Municipal Code Section 8.36.345 requires City Council approval of such a transfer, among other requirements, and the MRD Agreements require that such approval be by resolution; and F. WHEREAS, the City is willing to consent to the transfer of the MRD Agreements to GI, subject to the terms and conditions of this MOU; and G. WHEREAS, the Parties desire to enter into a new long-term Franchise Agreement for the collection, transportation, recycling, and disposal of residential and commercial solid waste; and H. WHEREAS, the Parties have agreed in concept to proposed major terms of a new Franchise Agreement; and I. WHEREAS, the City desires to purchase approximately 256 acres of open space owned by Waste Management of California, Inc., an affiliate of GI, located east of Moorpark College, north of the 118 Freeway, and within the City limits (the "Land"); and -1- J. WHEREAS, Waste Management of California, Inc. is willing to sell the land to the City; and K. WHEREAS, time is of the essence for the City to complete its acquisition of the open space to ensure availability of funding sources for the acquisition; and L. WHEREAS, the Parties wish to memorialize the proposed terms and the required steps and timing for City Council consideration of the Purchase and Sale Agreement and New Franchise Agreement, as contemplated herein. AGREEMENT NOW, THEREFORE, the Parties mutually agree as follows: 1. The above recitals are true and are incorporated by reference and made part of this MOU. 2. The provisions of this MOU shall become effective upon the City's approval and execution of a consent to the assignment and transfer of the MRD Agreements, specifically the Franchise Agreement Between the City of Moorpark and Charles Anderson and SEA/SUE Inc., a General Partnership, Doing Business as Moorpark Rubbish Disposal, for Providing Multi-Family and Commercial Solid Waste Services dated October 1, 2002, including all amendments thereto, and the Franchise Agreement Between the City of Moorpark and Charles Anderson and SEA/SUE Inc., a General Partnership, Doing Business as Moorpark Rubbish Disposal, for Residential Solid Waste Services dated October 1, 2002, including all amendments thereto, to GI. Pursuant to the MRD Agreements, City Council consent for the transfer shall be provided and effective by the adoption of a resolution. 3. GI agrees, as a condition to the effectiveness of the consent to transfer the MRD Agreements, to execute and deliver to the City, and to cause MRD Rubbish Disposal LLC to execute and deliver to the City, a release and waiver, in form attached as Exhibits A and B, releasing the City from all claims and causes of action that related to or arise from the Current Franchise Agreements. 4. By its signature below, Waste Management of California, Inc. (WM) (affiliate of GI) agrees to negotiate, diligently and in good faith, the terms of a Purchase and Sale Agreement for the sale of the Land (exclusive of mineral rights) to the City, subject to the following terms: a. The purchase price shall not to exceed $12,000 per acre, except as set forth in subsection"b"; b. One acre of the Land, located at the eastern terminus of Campus Park Drive, will be conveyed to the City at no cost to the City for the purpose of future public park, fire station, or other public purpose as determined by the City, with a release of all rights to future oil exploration or drilling on or under the property; this transaction must occur within 30 days after the -2- effective date of a New Franchise Agreement described in Section 5, below; c. The acquisition of the Land may occur in multiple phases; and d. Standard escrow terms commonly used in Ventura County. WM agrees to use diligent good faith efforts to present to the City Council draft Purchase and Sale Agreements, as described above, that is acceptable to WM and the City Manager's Office, as quickly as reasonably possible and before March 31, 2018. 5. The Parties agree to use diligent good faith efforts to draft and negotiate a new Franchise Agreement for Residential and Commercial Solid Waste Services ("New Franchise Agreement"), to include substantially the following terms and conditions: a. Term: The term of the New Franchise Agreement would be from its effective date through March 31, 2030. b. New Solid Waste Fee Schedule: The New Franchise Agreement would include a New Solid Waste Fee Schedule. GI has proposed that the maximum rates contained in this New Fee Schedule be based on the base rates (exclusive of franchise fees and other fees) in effect for 2018 in the City of Simi Valley, with the intent of having the same base rates being received by GI in the City of Simi Valley and the City of Moorpark, and asserts that the costs of providing solid waste services in the two cities are similar. The City is willing to accept the approach to rates proposed by GI. c. Potential Phasing of 2018 Rate Increases: The City would have the option to phase in the New Solid Waste Fee Schedule equally over a two-year period, such that the Simi Valley rates may not be matched in 2018 and instead be matched in a subsequent year. If the City elects to phase in the rate increases, the City understands that the fees, contributions, and reimbursements described in subsections (r), (s), and (t), below, will be adjusted downward accordingly as needed to place GI in the substantially same financial position it would have occupied in the event the City had not elected the phase in. When calculating the rates for the second year of the New Franchise Agreement, the rate escalator calculations shall be applied after the remaining 50% of the phase rate increase is added to the base rate. d. Escalator Formulas: The annual rate escalator formulas shall be substantially the same as those in effect in Simi Valley. The Parties agree to include a rate escalator for recyclables costs that accounts for the volatility in recyclables commodities markets, such that rates would increase when the prices of recyclables decrease and decrease when the -3- prices of recyclables increase. The escalator formulas shall include provisions to ensure that base rates received by GI from Moorpark customers does not become significantly higher than the base rates received by GI in other nearby communities. In addition, the New Franchise Agreement would provide that, in the event that the City is unable by operation of applicable law to approve a rate increase pursuant to the specified escalator provisions, the Parties would meet in good faith to resolve the issue, and that if unable to do so within a reasonable time, GI would have the option to terminate the agreement, with twelve-month notice to the City. e. Commercial Organics Collection: Beginning on April 1, 2018, or as soon as practicable, GI will offer commercial organics collection to all non- residential customers. Rates for such service shall be in accordance with the New Solid Waste Fee Schedule. f. Free Landfill Days: Beginning in 2018, GI shall offer Moorpark residents three Free Landfill Days (currently two) per year at the Simi Valley Landfill and Recycling Center. g. Bulky Item Pickups: Beginning on the effective date of the New Franchise Agreement, GI shall increase the number of bulky items per free bulky item pickup from two items to three items. The number of bulky item pickups will remain at two per year, allowing a maximum of six bulky items to be picked up per year for free. Additional pickups shall be at rates contained in the New Solid Waste Fee Schedule. h. Holiday Clean-Up Services: Moorpark residents will receive free extra curbside pickup for two weeks immediately following Christmas. Hard to Access/Custom Service and Fee: GI will offer all residential customers a service to retrieve trash containers from the front of a house to the street to enable curbside pickup. GI may collect a monthly fee for providing this service, which shall be determined on a case-by-case basis, subject to review and approval by the City. The Parties recognize that unusual circumstances for individual customers may necessitate a custom service not included in the New Solid Waste Fee Schedule. The Parties agree that the New Franchise Agreement will provide for GI the option to provide the custom service and collect an associated fee, on a case-by-case basis, subject to review and approval by the City. j. Electronic Copies of Bill Inserts: GI will make copies of bill inserts available to customers who receive their statements electronically instead of by mail. -4- k. Street Sweeping: GI shall provide street sweeping services, either directly or through a vendor acceptable to the City, to the City at no cost as follows: i. GI shall sweep all existing and future public streets twice per month, at the same day/time intervals as are currently in effect. ii. GI shall sweep all existing and future City owned parking lots (such as those located at parks, the train station, and buildings) once per month, at the same day/time intervals as are currently in effect. iii. GI shall make an offer to sweep private residential streets, typically under ownership by homeowners' associations, once per month at no cost to the City or the homeowners' associations. Agreements to provide such sweeping services shall be between GI and individual homeowners' associations, and GI shall not unreasonably withhold, delay, or otherwise burden the creation of such an agreement for sweeping private streets. The Parties shall jointly develop a standard agreement template between GI and a homeowners' association to facilitate the creation of such agreements. 1. Freeway Litter Control: GI agrees to coordinate with Caltrans to provide a litter control program along the 118 Freeway from Collins Drive to Los Angeles Avenue, and on the 23 Freeway from the Tierra Rejada Road to Los Angeles Avenue. The plan shall include litter removal on at least a twice per month basis and include the full freeway interchanges within the program area. m. Roll-Off Containers for City Use: GI will provide the City with the equivalent of ten, 40-cubic yard loads of roll-off container collection, transportation, and disposal service annually at no cost to the City. n. Streetside Container Service: The City may place trash containers along sidewalks at bus stops or in high pedestrian areas, and GI will service such trash containers at no cost to the City. The City will not seek to add such trash containers on major streets where there is not sufficient space for a garbage truck to safely pull over(such as a bus turnout or parking area). o. High Street Trash Containers: The Parties agree to use good faith efforts to create and implement a plan to remove curbside trash containers from High Street. P. Local Streets Access Agreement: The New Franchise Agreement would be conditioned on WM, the owner of the Simi Valley Landfill and Recycling Center (SVLRC) executing an extension of the current Local Streets Access Agreement between the City and SVLRC for a period -5- coterminous with the term of the New Franchise Agreement. The City also agrees to consent to extending that agreement. q. Community Services Contribution (One-Time): Within 30 days of execution of the New Franchise Agreement, GI shall provide the City with a one-time contribution of $210,000 to be used for community services provided by the City. The expenditure of the funds shall be at the discretion of the City. r. Annual Impact Fee: Beginning in on April 1, 2018, GI shall provide the City with$187,300 per year to be used at the discretion of the City. s. Household Hazardous Waste Contribution: GI to provide the City with $35,000 per year to offset the City's expenditures associated with disposal of household hazardous waste. t. Annual Rate Review Reimbursement: GI to provide the City with $2,700 per year to offset the City's expenditures associated with calculating, implementing, and preparing staff reports for annual rate reviews. u. Administrative Fee: GI shall provide the City an Administrative Fee upon effectiveness of the New Franchise Agreement, to reimburse the City for the staff time and out-of-pocket costs it incurred in connection with entering into the New Franchise Agreement. The Administrative Fee shall be $10,000. v. Alternative Fuel Vehicle Fleet: Within two years, GI's collection vehicles shall conform to applicable California Air Resources Board requirements. w. Mandatory Collection Campaign: The City will discontinue its biannual Mandatory Collection Campaign contacting residents who do not have required solid waste service, and GI will conduct its own campaign on at least a biannual (twice per year) basis, at no cost to the City. The Parties will use diligent good faith efforts to develop procedures to complete the Campaign similar to the City's current procedures. x. City's Right to Increase Franchise Fees: The City shall have the unilateral right to increase its Franchise Fees, and GI shall implement any such increase within 90 days of notice from the City. The rates for services shall be adjusted to reflect the increased Franchise Fee. y. Standard Provisions: Commonly used provisions in solid waste franchise agreements in Southern California, such as those included in the draft documents prepared during the negotiations of the New Franchise Agreement that predate this MOU, including by not limited to carts and containers, grants, compliance with state law, performance reviews, records and reporting requirements, rights during disasters and emergencies, indemnification and insurance requirements, rights and -6- remedies, liquidated damages, transfer provisions (including a transfer fee), performance bonds, and a guarantee from GI's parent company. 6. Approval of New Franchise Agreement: The Parties agree to use diligent good faith efforts to present to the City Council a draft New Franchise Agreement, as described above, that is acceptable to GI and the City Manager's Office, as quickly as reasonably possible and before March 31, 2018. The Parties acknowledge that approval of the New Franchise Agreement requires compliance with all applicable laws, including but not limited to Chapter 8.36 of the Moorpark Municipal Code. Nothing herein obligates the Parties to enter into the New Franchise Agreement. The City is under no obligation to consider approval of the New Franchise Agreement unless it is also presented with a Purchase and Sale Agreement consistent with Section 3. 7. Early Implementation of New Franchise Agreement: If the City Council approves and the Parties execute a New Franchise Agreement by February 12, 2018, then the effective date of the New Franchise Agreement may be changed to March 1, 2018, and the various commencement dates set forth in Section 4 would be accelerated by one month. Conversely, if the Parties enter into the New Franchise Agreement after March 31, 2018, the various commencement dates set forth in Section 4 would be deferred by a commensurate period. 8. Extensions of Current Franchise Agreements: The Parties will execute amendments to the current Franchise Agreements between GI and the City to extend the term of the Agreements to March 31, 2018. The parties will execute amendments to the current Franchise Agreements between Moorpark Rubbish Disposal and the City to extend the terms of the Agreements to December 31, 2027. However, in the event that a new Franchise Agreement between GI and the City is executed, then all obligations contained in the Moorpark Rubbish Disposal Franchise Agreements will be replaced with all obligations contained in the new GI Franchise Agreement. The foregoing provision shall survive the termination or expiration of this Memorandum of Understanding, however brought about. 9. Cooperation: The Parties agree to cooperate and coordinate with each other in all activities covered by this MOU. 10. Indemnity: To the fullest extent permitted by law, GI shall, at its sole cost and expense, defend, hold harmless and indemnify the City and its elected officials, officers, attorneys, agents, employees, designated volunteers, successors, assigns and those City agents serving as independent contractors in the role of City officials (collectively "Indemnitees"), from and against any and all damages, costs, expenses, liabilities, claims, demands, causes of action, proceedings, expenses, judgments, penalties, liens, and losses of any nature whatsoever, including fees of accountants, attorneys, or other professionals and all costs associated therewith and the payment of all consequential damages (collectively "Liabilities"), in law or equity, whether actual, alleged or threatened, which arise out of, are claimed to arise out of the acts or omissions of GI as they pertain to, or relate to this MOU, except for Liabilities arising from the sole negligence or -7- willful misconduct of the Indemnitees, as determined by judicial decision or by the agreement of the Parties. GI shall defend the Indemnitees in any action or actions filed in connection with any Liabilities with counsel of the Indemnitees' choice, and shall pay all costs and expenses, including all attorneys' fees and experts' costs actually incurred in connection with such defense. GI shall reimburse the Indemnitees for any and all legal expenses and costs incurred by Indemnitees in connection therewith. 11. Attorneys' Fees: The Parties agree to be responsible for their own attorneys' fees and costs in the event of any legal challenge by a third party relating to adoption of this MOU. The Parties agree to this provision recognizing that, if there is a lawsuit, and the Parties prevail on the merits, costs and/or fees may be awarded by a court against an unsuccessful petitioner/plaintiff. 12. Authority to Execute: Both Parties represent to the other that they have the requisite power and authority to conduct their business and to execute, deliver, and perform the requirements of this MOU. Each Party warrants that the individuals who have signed this MOU have the legal power, right, and authority to enter into this MOU and bind each respective Party. 13. Venue and Governing Law: This MOU is made, entered into, and executed in Ventura County, California, and any action filed in any court or for arbitration for the interpretation, enforcement, or other action of the terms, conditions, or covenants referred to herein shall be filed in the applicable court in Ventura County, California. The Parties understand and agree that the laws of the State of California shall govern the rights, obligations, duties, and liabilities of the Parties and also govern the interpretation of this Agreement. 14. Joint Drafting: Each Party has cooperated in the drafting and preparation of this MOU with the aid of legal counsel. Hence, in any construction to be made in this MOU, it shall not be construed against either party. 15. Severability: If any provision of this MOU is invalid or unenforceable with respect to either Party, the remainder of this MOU or the application of such provision to persons other than as to whom it is held invalid or unenforceable, shall not be affected and each provision of this MOU shall be valid and enforceable to the fullest extent permitted by law. Notwithstanding the foregoing, if Section 3 of this MOU shall be determined to be invalid or unenforceable by City, this MOU shall terminate. 16. Amendments: Any amendment to this MOU shall be in writing and shall be effective only upon approval by the Parties. 17. Expiration of MOU Upon Execution of New Franchise Agreement: This MOU shall expire upon the first to occur of(a) June 30, 2018, or(b) execution of a New Franchise Agreement by the Parties and execution of the Purchase and Sale Agreement by the City and WM. -8- IN WITNESS WHEREOF,the parties have caused this Agreement to be executed the day and year first above written. CITY OF MOORPARK, G.I. INDUSTRIES, a California municipal corporation a Utah corporation Janice S. Parvin, Mayor Mike Smith, Director of Operations ATTEST: BY ITS SIGNATURE BELOW, WASTE MANAGEMENT OF CALIFORNIA, INC. AGREES TO COMPLY WITH SECTION 3 Maureen Benson, City Clerk OF THIS MOU WASTE MANAGEMENT OF CALIFORNIA, INC., a California corporation Its: -9- EXHIBIT A RELEASE AND HOLD HARMLESS AGREEMENT THIS AGREEMENT is entered into, by and between the City of Moorpark, a California municipal corporation ("City") and GI Industries, a Utah corporation ("GI") (collectively, the "Parties"), as of December , 2017. RECITALS WHEREAS, on September 18, 2002, the City Council granted two exclusive Franchise Agreements with GI Industries (the "GI Agreements") and two exclusive Franchise Agreements with the predecessor-in-interest of Moorpark Rubbish Disposal, LLC (the "MRD Agreements", together with the G.I. Agreements, the "Current Franchise Agreements"), for the collection, transportation, recycling, and disposal of residential solid waste and commercial solid waste in designated areas within the City limits; and WHEREAS, City and GI have entered into a Consent Agreement of substantially even date, specifying the conditions under which City would approve a transfer of the MRD Agreements to GI ; and WHEREAS, the City and GI have entered into a Memorandum of Understanding of substantially even date, which, among other things, sets forth the requirements for an extension of the terms of the Current Franchise Agreements, and sets forth the basic terms and conditions for a new agreement to replace the Current Franchise Agreements; and WHEREAS, issues and concerns have arisen from time to time regarding the performance and implementation of various provisions of the Current Franchise Agreements; and WHEREAS, the Parties agree that it is in their best interests to fully and finally resolve any and all disputes arising under the Current Franchise Agreements, including the MRD Franchise Agreements. THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged,the parties agree as follows: 1. GI's General Release. GI hereby releases, discharges and holds City harmless from any and all claims, liabilities, demands, obligations and causes of action, known or unknown, likely or unlikely, which it may have or claim to have against City, without limitation, related to one or more of the Current Franchise Agreements, including all claims, liabilities, demands and causes of action against the City arising from the MRD Agreements (collectively, "GI's Claims"). GI acknowledges that it was a condition of the Consent Agreement that all of MRD's claims, liabilities, demands and causes of action against the City be included in the transfer of the MRD Franchise Agreements to GI, and released pursuant to this Agreement. -10- 2. GIs's Civil Code Section 1542 Waiver. GI expressly waives all rights and benefits afforded by Section 1542 of the Civil code of the State of California, which states as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." GI acknowledges and agrees that the provisions of Section 1 herein are intended to include and discharge each and all of GIs's Claims, including those which it does not know of or suspect to exist at the date of execution of this Agreement. 3. City's General Release. City hereby releases, discharges and holds GI harmless from any and all claims, liabilities, demands, obligations and causes of action, known or unknown, likely or unlikely, which it may have or claim to have against GI, without limitation, related to one or more of the Current Franchise Agreements and GI's (or its predecessor-in-interest) providing of services to City thereunder(collectively, "City's Claims"). 4. City's Civil Code Section 1542 Waiver. City expressly waives all rights and benefits afforded by Section 1542 of the Civil code of the State of California, which states as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." City acknowledges and agrees that the provisions of Section 3 herein are intended to include and discharge each and all of City's Claims, including those which it does not know of or suspect to exist at the date of execution of this Agreement. 5. General Provisions. 5.1 As to the MRD Franchise Agreements, the waivers and releases in Sections 1 and 2 of this Agreement shall be effective as of the assumption by GI of all of the rights, interests, and obligations of the Grantee (as that term is defined in the MRD Franchise Agreements) under the MRD Franchise Agreements. 5.2 This Agreement is the entire Agreement between GI and the City relating to the subject matter hereof Any oral or any other written representations, understandings or agreements covering the same subject matter, which are in conflict with this Agreement, are hereby merged into and superseded by the provisions of this Agreement. 5.3 No provision of this Agreement may be amended, modified or waived unless such amendment, modification or waiver shall be agreed to in writing and signed by GI and City. 5.4 The headings of Sections and subsections hereof are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. -11- 5.5 This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of California. 5.6 This Agreement may not be assigned, partitioned, subdivided, pledged, or hypothecated in whole or in part without the express prior written consent of the GI and the City. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first above written. CITY OF MOORPARK, G.I. INDUSTRIES, a California municipal corporation a Utah corporation Janice S. Parvin, Mayor Mike Smith, Director of Operations ATTEST: Maureen Benson, City Clerk -12- EXHIBIT B RELEASE AND HOLD HARMLESS AGREEMENT BETWEEN MOORPARK RUBBISH DISPOSAL,LLC AND THE CITY OF MOORPARK THIS AGREEMENT is entered into, by and between the City of Moorpark, a California municipal corporation ("City") and Moorpark Rubbish Disposal, LLC, a California Limited Liability Company ("MRD") (collectively, the "Parties"), as of December , 2017. RECITALS WHEREAS, on September 18, 2002, the City Council granted two exclusive Franchise Agreements to the predecessor-in-interest of Moorpark Rubbish Disposal, LLC (the "MRD Agreements") for the collection, transportation, recycling, and disposal of residential solid waste and commercial solid waste in designated areas within the City limits; and WHEREAS, concurrent with this Agreement, the City has consented to the transfer of the MRD Agreements to G.I. Industries ("GI"); and WHEREAS, issues and concerns have arisen from time to time regarding the performance and implementation of various provisions of the MRD Agreements; and WHEREAS, the Parties agree that, in connection with the transfer of the MRD Agreements from MRD to GI, it is the collective best interests of MRD, GI and the City to fully and finally resolve any and all disputes arising under the MRD Agreements. THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. MRD's General Release. MRD hereby releases, discharges and holds City harmless from any and all claims, liabilities, demands, obligations and causes of action, known or unknown, likely or unlikely, which it may have or claim to have against City, without limitation, related to one or more of the MRD Agreements, including all claims, liabilities, demands and causes of action against the City arising from the MRD Agreements (collectively, "MRD's Claims"). MRD acknowledges that it was a condition of the City's consent to the transfer of the MRD Agreements to GI that all of MRD's claims, liabilities, demands and causes of action against the City be released by MRD. 2. MRD's Civil Code Section 1542 Waiver. MRD expressly waives all rights and benefits afforded by Section 1542 of the Civil code of the State of California, which states as follows: -13- "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." MRD acknowledges and agrees that the provisions of Section 1 herein are intended to include and discharge each and all of MRD's Claims, including those which it does not know of or suspect to exist at the date of execution of this Agreement. 3. City's General Release. City hereby releases, discharges and holds MRD harmless from any and all claims, liabilities, demands, obligations and causes of action, known or unknown, likely or unlikely, which it may have or claim to have against MRD, without limitation, related to one or more of the MRD Agreements or MRD's providing of services to City thereunder(collectively, "City's Claims"). 4. City's Civil Code Section 1542 Waiver. City expressly waives all rights and benefits afforded by Section 1542 of the Civil code of the State of California, which states as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." City acknowledges and agrees that the provisions of Section 3 herein are intended to include and discharge each and all of City's Claims, including those which it does not know of or suspect to exist at the date of execution of this Agreement. 5. General Provisions. a. This Agreement is the entire Agreement between MRD and the City relating to the subject matter hereof. Any oral or any other written representations, understandings or agreements covering the same subject matter, which are in conflict with this Agreement, are hereby merged into and superseded by the provisions of this Agreement. b. No provision of this Agreement may be amended, modified or waived unless such amendment, modification or waiver shall be agreed to in writing and signed by MRD and City. c. The headings of Sections and subsections hereof are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. d. This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of California. -14- e. This Agreement may not be assigned, partitioned, subdivided, pledged, or hypothecated in whole or in part without the express prior written consent of the MRD and the City. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first above written. CITY OF MOORPARK, Moorpark Rubbish Disposal, a California municipal corporation a California Limited Liability Company By: Janice S. Parvin, Mayor , President ATTEST: By: Maureen Benson, City Clerk -15-