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7.2.A. - Page 2 <br /> Franchise Agreement. The following is a summary of the recommended amendments <br /> and the justification for each recommendation: <br /> 1. Elimination of the Initial Missed Pick-Up Incentive/Disincentive is <br /> recommended. For 2011, the Member Agencies paid an incentive payment of <br /> $69,350 to Recology ($13,200 was owed from Redwood City). In 2012, the <br /> Company reported that Member Agencies owe an incentive payment of $193,950 <br /> (of that $34,900 is owed from Redwood City). Reporting requirements of the <br /> Company and the auditing requirements of the SBWMA are cumbersome and <br /> costly. By eliminating this specific incentive/disincentive, the risk to both the <br /> Member Agencies and Recology will be eliminated and the time and money <br /> spent auditing this specific performance criteria will also be eliminated. This <br /> would not eliminate the Missed Pick-Up Disincentive, which would remain in <br /> place, and has a zero tolerance, for which the company would have to pay $50 <br /> per event. <br /> 2. Modification of the 90 Second Maximum Call Hold Time Disincentive is <br /> recommended. Currently, Recology pays each Member Agency $5 for every call <br /> that is put on hold for over a maximum of 90 seconds. In 2011, the disincentive <br /> payment that Recology paid to the Member Agencies totaled $115,750 (of which <br /> $23,662 was paid to Redwood City). This payout number was especially high, <br /> due to the high volume of calls that the Company experienced in the first few <br /> months of the rollout of new services beginning on January 1, 2011. The number <br /> of calls significantly dropped in 2012, as residents and drivers became familiar <br /> with the new services, changes in routes, and collection times and questions <br /> from the public subsided. It is anticipated that this payout to the member <br /> agencies would continue to stay low in subsequent years. Additionally, there <br /> never was an incentive payment to the Company associated with this metric. It is <br /> proposed that this disincentive be eliminated and reactivated only if the quarterly <br /> average of the calls received that are on hold for over 90 seconds exceeds 5% of <br /> the total calls received that quarter. Once this quarterly standard is triggered, it <br /> remains in effect for the balance of that calendar year. In the subsequent <br /> calendar year, the Company would start over with a clean slate until it exceeded <br /> the thresholds established. If approved, then the amount of $4,563 due to <br /> Redwood City from Recology for 2012, would be eliminated. <br /> 3. Amendment of Article 8 is recommended. A new section, (Section 8.08(D)) <br /> would be added to Article 8 formalizing the City's ability to authorize future <br /> administrative changes to the Franchise Agreement that are programmatic and <br /> non-substantive from a financial perspective. Amending the Franchise <br /> Agreement to include this section, will allow the City Manager to authorize non- <br /> substantive modifications to the contract to ensure essential services are <br /> provided uninterrupted. An example of administrative changes that could be <br /> approved by the City Manager is provided in Attachment 2. These changes have <br /> been agreed to by Recology, SBWMA staff, and the Board. SBWMA staff and <br /> Recology have already made good faith agreements resulting in cost savings <br />