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• 3. Term of Agreement. This Agreement shall be effective on July 1, 2003 and shall continue in effect for one year. The Agreement shall automatically renew for periods of one calendar year unless terminated by any or all of the parties hereto upon one (1) calendar year written notice. 4. Compensation for Annual Operations Costs. The local governing bodies agree to pay a reasonable fee to SPCA for board and associated costs for the City's and County's stray dogs and cats. Compensation will be based on the most recent annual Virginia Department of Agriculture and Consumer Services Animal Report filed prior to the local governing bodies' ensuing fiscal year's budget cycle submitted with the SPCA's budget request. Funding will be adjusted to reflect submission of the prior year's annual State animal record report numbers, if SPCA submits the report to the local governing bodies by January 15`h of each year. SPCA will maintain records regarding the number of cats and dogs received at the shelter from each local governing body. These records will be used to distinguish cost allocation for the City and the County and any adjustments on an annual basis. The local governing bodies agree to make payments to SPCA on a quarterly basis. 5. Payment Formula. -� The local governing bodies will pay SPCA an annual fee based on a specific formula and reimbursement rate. The formula is based on the cost of what the local governing bodies could reasonably expect to pay to provide an animal pound that meets Virginia law and regulations. The daily reimbursement rate may be reexamined and revised by written agreement of all parties to this Agreement. a. Calculation of Rate for Dogs: Rate paid per dog is based on SPCA's annual Virginia Department of Agriculture and Consumer Services Animal Report preceding the local governing bodies' annual budget submittal process. Rate is $100 per dog, in accordance with the following fee formula: b. Fee Formula for Dogs: 1. Identify total number of dogs identified on the annual Virginia Department of Agriculture and Consumer Services Animal Report 2. Subtract the number of dogs "surrendered by owners" 3. Subtotal, and subtract number of dogs "on hand" as of January 1 4. Subtotal, and subtract the number of dogs "reclaimed by owners" 5. Total remaining number of dogs and multiply by rate of $100 per animal for • total fee to be paid by local governing bodies 2