A city report alleges they made $23.4 million more profit than expected

The waste hauler that holds the garbage collection monopoly in San Francisco faces another set of pointed questions, as a new report from the city’s comptroller says the company “made net profits of $23.4 million more dollars” from its pricing agreement with the city.

At Tuesday’s supervisory board meeting, supes will determine how to structure the new sanitation and streets department that will handle street cleaning within the public works department. This change comes in the wake of the ongoing Mohammed Nuru public corruption scandal, in which Nuru admitted to accepting bribes and, in one such instance, allegedly received bribes from a Recology executive to allow the waste management company to raise consumer rates.

Recology has agreed to reimburse SF customers up to $101 million to repair this loss of customer base. But now we are witnessing another, shall we say, “irregularity” with Recology’s rates. While it has nothing to do with the whole Mohammed Nuru mess, the Chronicle picks up on a report from the city comptroller that says Recology brought in $23.4 million more profit than was allowed in the as part of its city-approved 2017 rate application.

In short, this 2017 rate deal allowed Recology to make a 9% profit on its arrangement to collect all of the city’s residential and commercial trash pickups. As the City Comptroller’s comprehensive 49-page “Public Integrity Review” report asserts, “Recology’s actual profit margin was higher than the allowed 9% because its expenses were consistently below forecast.”

The report adds, “These are real profits even after Recology paid the $101 million settlement,” and that windfall would have been even greater if the business ventures hadn’t been shut down and needed. to pick up trash during the pandemic.

“Recology must make a course for taxpayers when erroneous projections allow profits well above the allowable margin,” City Attorney Davi Chiu said in a statement. “The rate-setting process must be transparent, accurate and include a mechanism to reconcile actual results with initial projections.”

It should be noted that Recology disputes these conclusions (although they have not yet said which conclusions they disagree with). Additionally, they say the 9% figure is a target rate, and not legally binding.

“We have shared these concerns with the Office of the Comptroller; we welcome continued discussions with the city, as we seek to usher in a new era of accountability,” Recology CEO Sal Coniglio said in a statement to The Chronicle. “Ultimately, we share the same goal: to provide the most environmentally responsible waste collection service, at competitive rates, with fair pay for our employee-owners.

The city probably can’t get a settlement similar to the $190 customer refund checks that stemmed from Nuru’s overpayments. But the city comptroller recommends that Recology put that $23.4 million “into a balancing account or comparable mechanism” that would offset any future rate increases. Recology currently has no obligation to do so, and they already have that money. would be recovered, and if they even accept these numbers, it will indicate whether they are still in a post-Nuru phase of penance, or whether they feel that all of that is over now.

But speaking of that Supervisory Board meeting today, the Chronicle reports that Supervisor Aaron Peskin will introduce a measure at the meeting to “request the start of a new trash rate-setting process where the credit will be used. “.

Related: Aaron Peskin certainly has questions about an unexplained check for $461,000 the city received from Recology [SFist]

Image: Recology.com

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