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ATTY/AGR.2018.054/Recology of San Mateo ATTACHMENT K CONTRACTOR'S COMPENSATION AND RATE SETTING PROCESS Cost _.Wipven r 21) Contractor's Compensation - -2035) . E. Depreciation - Containers • Contractor projected its Container replacement needs and Same method as shown for Rate Year Eleven (2021). costs and related depreciation for Rate Years Eleven (2021) through Twenty -Five (2035), which are specified in Attachment N for 2021. This amount ($1,178,150) shall be the fixed annual Container Depreciation Costs for Rate Years Eleven (2021) through Twenty -Five (2035). F. Allocated Indirect Costs (e.g., General and Administrative, Operations, Vehicle Maintenance, and Container Maintenance costs including all non -route personnel CBA and non -CBA labor) excluding Allocated Depreciation and Interest G. Total Allocated Indirect Depreciation Costs (e.g., depreciation costs related to General and Administrative, Operations, Vehicle Maintenance, and Container Maintenance services) • These depreciation amounts shall not be adjusted annually unless new Containers are purchased beyond the replacement quantities estimated by Contractor, subject to Agency or SBWMA approval (which shall not to be unreasonably withheld). If additional Containers are purchased, the depreciation expense shall be based on ten (10) year period or other period agreed upon by the Parties. The annual Allocated Indirect Costs amount shall equal $17,429,667, which is the projected amount for Rate Year Eleven (2021) as specified in Attachment N. • Contractor projected its equipment acquisition needs, costs, and depreciation expense related to indirect services for Rate Years Eleven (2021) through Twenty -Five (2035). The depreciation expenses is the Allocated Indirect Depreciation Cost of $117,650, which is specified in Attachment N for 2021. • Step One: Annually adjust Allocated Indirect Costs by 100% of the Annual Index Change using CPI -U. • Step Two: Annually adjust Allocated Indirect Costs to reflect service level changes by adjusting (increasing or decreasing) costs by 65% of the average service level change in accounts, lifts, and pulls as described in Table 2. • The annual Allocated Indirect Depreciation Costs for Rate Years Twelve (2022) through Twenty -Five (2035) shall be fixed and shall equal the Rate Year Eleven (2021) amount of $117,650. • These depreciation amounts shall not be adjusted during the Term unless new equipment is purchased subject to SBWMA approval (which shall not to be unreasonably withheld). If additional equipment is purchased, the depreciation expense shall be based on ten (10) year period or other period agreed upon bythe SBWMA and Contractor. Collection Services Franchise Agreement with Recology San Mateo County Attachment K Model Agreement for Adaptation by Member Agencies Contractor's Compensation and Rate Setting Process REV: 03-16-18 MI Page 12 of 24