San Franciscans will recover nearly $ 100 million in overpaid garbage disposal fees after an investigation by the city attorney’s office set out how waste manager Recology has incorrectly increased its prices over the past four years, city attorney Dennis Herrera said Thursday.
The settlement between the city and Recology is the latest twist in the city hall’s extensive corruption saga, focusing on former director of public works Mohammed Nuru, other city officials, contractors and non-profit groups.
Nuru has played a key role in the rate-setting process for Recology. According to the results of Herrera’s investigation and a separate federal investigation, Nuru accepted bribes from Recology in exchange for the company being able to increase its rates. A former Recology manager was fired in November and arrested in light of the allegations.
Officials said that in addition to the alleged bribes, Recology did not account for the revenue it would receive from taxpayers when applying for a tariff increase in 2017. According to officials, these underreported funds amounted to a rate increase of 14% instead of the 7% Recology should have received.
In a statement, Recology officials described the congestion as an unintentional mistake, saying they immediately reported it to the city attorney’s office.
As part of the settlement, Recology will pay $ 94.5 million to compensate taxpayers for excessive levies and interest costs, and will reduce rates for residential and commercial waste from April 1st. The compensation amounts to more than $ 100 million for San Francisco Recology customers, with the average household expected to receive about $ 190, officials said.
The company serves approximately 160,000 customers in San Francisco.
“With these legal actions, we are healing San Francisco taxpayers and sending us a clear message that the care of regulators will not be tolerated,” Herrera said in a statement. “Mohammed Nuru may have had his challenges keeping the streets clean, but he was clearly excellent at malice, sloppy funds and indifferent supervision.”
Sal Coniglio, CEO of Recology, said in a statement that the company “is grateful to the City Attorney for helping us reach a resolution that benefits our San Francisco clients. We are reviewing our internal processes and work. with the City to ensure that a problem never occurs again. ”
The amount each taxpayer will repay depends on how long they have been a Recology customer and the type of service you purchased. Both current and former customers are eligible for compensation, and current customers must receive their refund by September 1, Herrera said.
Recology will also have to report monthly on the status of the repayments and pay a $ 7 million fine to the city.
San Francisco cannot prevent Recology from doing business with the city, Herrera said, due to a 1932 ordinance granting exclusive rights as the city’s garbage collector.
“We think it’s a real success to get $ 100 million back for San Francisco taxpayers and commercial residents,” Herrera told a news conference on Thursday. “And what happens to future junk service in San Francisco is something I’m sure policymakers will investigate and debate.”
District Three Supervisor Aaron Peskin said his office is already investigating ways in which the city could break Recology’s monopoly. On Tuesday, Peskin will ask the city to put together a task force to study other garbage removal options, including municipal services or a competitive bid.
The purpose, according to him, is to present the decision to the voters as an upcoming voting right.
“This task force will eventually steer San Francisco’s outdated garbage collection management into the 21st century, where it can be cleaner, more efficient and more affordable,” he said.
The announcement comes about four months after federal prosecutors accused Paul Giusti, a former Recology executive, of bribery and money laundering, alleging that he had fed Nuru more than $ 1 million over a number of years. Nuru’s former post has enabled him to play a key role in approving tariff increases for garbage removal, and the intent of the bribe, prosecutors said, was to keep him happy.
The city’s civil investigation has revealed that Nuru has regularly asked for funds from Recology for the benefit of itself and city employees, despite a law in San Francisco prohibiting giving or receiving gifts from restricted sources.
Officials said that from 2016 to 2020, Recology and its affiliates regularly provided gifts of money, meals and accommodation to city employees, allegedly to influence decisions regarding Recology.
Some officials said the gifts were carried by a non-profit organization and used to pay the bill for holidays offered by Nuru.
“The consequences of our work with the city attorney on this investigation are not abstract – there are real financial consequences for San Franciscans,” said City Administrator Ben Rosenfield.
Nuru was arrested and charged last year after federal officials alleged he tried to bribe an airport commissioner and lie to the FBI. A federal investigation has revealed how he allegedly orchestrated a pay-to-play scheme in which contractors were involved in bribing public officials while bidding for lucrative city contracts.
Federal officials allege that Giusti quietly spent money from Recology on Nuru and the Department of Public Works, using nonprofit organizations such as the Lefty O’Doul’s Foundation as an intermediary. Both federal and city investigators went into zero on how money flowed between contractors and city departments, saying nonprofits helped launder alleged illegal payments.
Meanwhile, Herrera and Rosenfield have begun their own investigation into Nuru and several city departments, contractors and nonprofit groups focusing on violations of city rules.
Several members of the Council of Supervisors and Mayor London Breed praised the settlement as an important step in the city’s efforts to regain the trust of its residents.
“This is a terrible case for our residents and businesses who have been paying their garbage rates for years,” Breed said in a statement. “The good news is that thanks to the city attorney, they will now get their money back.”
Megan Cassidy is a staff writer for the San Francisco Chronicle. Email: [email protected] Twitter: @meganrcassidy