Report: Local recycling company overcharged San Francisco
The report released Monday is the latest problem for Recology – which last year had to pay more than $100 million in restitution, interest and penalties to ratepayers as part of a settlement with the city. The company is contracted by San Francisco to collect and recycle waste.
That settlement, announced in March 2021, came after then-City Attorney Dennis Herrera investigated public corruption connected to former Department of Public Works director Mohammed Nuru.Nuru was charged with wire fraud by federal prosecutors and oversaw the rate-setting process. He pleaded guilty to one charge of fraud in January.
The city controller's reportfound that Recology's profit margin was higher than the nine percent allowed in a 2017 rate order because its expenses were regularly lower than projected. This led to more than 23 million dollars in profits above that nine percent margin for rate years 2018 through 2021.
The report says Recology and its legal counsel have argued that the company is entitled to keep profits above that margin since that is only a target. However, the city controller is recommending that Recology deposit the 23 million dollars in a balancing account that would be used to offset future rate increases.
San Francisco's rate-setting process for Recology could change depending on the outcome of Proposition F on the city's June 7 ballot. That ballot measure would establish the city controller as the refuse rate administrator rather than the DPW director, among other changes.