SF City Controller Questions Recology Monopoly Amid $100 Million Garbage Overcharge

Recology officials had no immediate comment on the report’s findings and recommendations

SF Chronicle via Getty Images

The San Francisco City Controller’s office issued a report Wednesday urging the city to reexamine its nearly 100-year-old monopoly relationship with the company that overcharged residents some $100 million for garbage collection over four years. 

The report, one of a series prepared in light of the city’s ongoing public corruption scandal, found the city’s garbage rate-setting process “lacks transparency and timely safeguards.” 

But the top recommendation is that the city consider whether the monopoly deal with Recology – which dates to 1932 – continues to “provide optimal benefits to ratepayers or whether another business model should be employed.”

Recology officials had no immediate comment on the report’s findings and recommendations. 

A ballot measure would be needed to end the monopoly, the controller’s report noted. 

Such a measure failed back in 2012, but the backers of a new effort said Wednesday they were encouraged by the controller’s conclusions. 

“The monopoly isn’t working,” said David Lee, a voting rights advocate in San Francisco Asian community. “Instead of all the finger-pointing from city officials, we should be looking at how to scrap the process and start anew.”  

Much of the report dealt with what went wrong after city officials learned about the overcharging.

It was back in late 2018, NBC Bay Area has reported, two city Public Works officials were notified by Recology about its mistaken overcharging. Documents show it took months, however, for those officials to hire a consulting firm to do a review. 

But even after the outside consultants confirmed the company had been improperly accounting revenue and had indeed been overcharging, the officials failed to act. 

Meanwhile, Recology continued to pour money into a $1 million off-the-books fund. 

As first reported by NBC Bay Area’s Investigative Unit, that fund was used by Public Works officials to pay for worker parties, swag, and even a DPW official’s funeral.

A former Recology official now charged in the federal corruption case, Paul Giusti, allegedly arranged money payments into the fund, boasting that it was his job to keep then Public Works Director Mohammed Nuru “happy.’’ 

Nuru, who oversaw the rate-setting process, is now the lead figure in the ongoing federal public corruption prosecution.

City Supervisor Matt Haney said Recology’s role aside, the city officials involved in the overcharging debacle need to be held accountable.  

“The public was getting screwed,” Haney said, “and even when they (city Public Works officials) were told about this, they didn’t do anything -- that is part of why we need a lot more sunlight on this whole thing, so something like that can’t happen again.”

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