INVESTIGATIVE

SF Public Works Finance Head Was Alerted to Recology Overcharge: Documents

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Documents obtained by NBC Bay Area’s Investigative Unit indicate that top Public Works financial officials were alerted back in 2018 that Recology had been overcharging garbage collection customers by millions of dollars.

City Attorney Dennis Herrera said Thursday that ousted DPW director Mohammed Nuru had learned about the overcharging by Recology, but he did not provide details.  “It was something that was known – DPW did nothing about it,” he said. “Recology knew about it at the time and did nothing about it.”

In a Jan. 8, 2019 e-mail -- obtained under the Public Records Act -- Recology’s vice president John Porter refers to a financial accounting and explains what the company now calls a “mistake” in how it determined rates based on revenue. Porter addressed the email to retired DPW finance head Ann Carey, who was working part time for DPW at the time. He also sent it to newly installed DPW finance head Julia Dawson.

In the e-mail attachment, Porter highlights budget line items totaling nearly $25 million in yearly revenues that he says was not included in how Recology calculated rates. Nearly $20 million came from an impound account and $4.5 million came from zero waste incentive dollars.  

Factoring in that revenue, according to Herrera, the fee hike should have been 7%, instead of 14%, and ratepayers ultimately will get back $100 million in overcharges and rate cuts.

The e-mails show it was Carey who had requested the accounting from Porter, following a December 2018 meeting. Carey told Porter: “I want to review the revenue and … calculations to make sure I follow your logic.”

Porter called the accounting his “best attempt to visualize my comments.”

It is unclear what Carey or Dawson did after being alerted to the apparent overcharges. Neither could be reached for comment.

Public Works spokeswoman Rachel Gordon said in a statement late Friday that the department has been and will continue to cooperate with the ongoing investigations. “On the matter concerning Recology rates, we are conducting an internal investigation, as well, and will take appropriate action, as warranted, based on the facts.”

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