Alamo Square group alleges that Recology overbilled as board delays landfill decision
The Department of Public Health has scheduled a May 13 hearing to review allegations that Recology subsidiary Sunset Scavenger overbilled for trash collection at a condominium building for years, resulting in $84,544 in excess charges, erroneously charged the building commercial rates, and is refusing to make a full refund. Recology counters that the building's managers oversubscribed, and the company gave a three-month refund as a show of good faith, but considers additional refunds punitive.
The hearing should interest the 21 percent of San Francisco residents who own units in condominium buildings. According to the Assessor-Recorder's Office, 42,478 of the city's 200,409 recorded parcels are now condominiums, with 3,192 registered as live/work, 38,300 as market rate, 980 as below-market rate, and 958 as commercial condo parcels as of fall 2010.
This struggle between ratepayers and Recology, which controls almost all aspects of the city's $275 million-a-year waste stream, seems emblematic of the problems that can arise when a monopoly is only partially regulated by local officials (the city does not have oversight of commercial collection rates) and then only in a labyrinthine process.
DPH's May 13 hearing comes three weeks after the Board's Budget and Finance Committee voted to wait until July before deciding whether to award the city's next landfill disposal contract to Recology. And it hits 18 months after the Department of the Environment, which derives half its budget from Recology's rates, first tentatively awarded the city's landfill contract to the San Francisco based garbage giant.
Since then critics have questioned how Recology got its monopoly, whether the arrangement benefits rate payers, and whether it makes environmental sense to haul the city's trash all the way to Yuba County, as Recology is proposing.
In February, the budget and legislative analyst recommended that the city replace existing trash collection and disposal laws with legislation that would require competitive bidding on all aspects of the city's waste collection, consolidation, and recycling system.
The analyst also recommended requiring that refuse collection rates for residential and commercial services be subject to board approval, noting that competitive bidding could result in reduced refuse collection rates (see "Garbage curveball," 02/8/11).
"The latest report says that the current system has been in existence since 1932 and let's put it out to competitive bid," said budget and legislative analyst Harvey Rose.
A 2002 report by Rose noted that the city has no regulatory authority over commercial refuse rates. "Instead, commercial rates are subject to agreements between the permitted and licensed refuse collectors and individual commercial producers of refuse, commercial tenants and building owners,)" the report stated.
Rose's report also found that commercial building owners often pay commercial refuse fees to Recology, so tenants don't know how much they are paying. "Normally, if tenants occupy such buildings for commercial purposes, the commercial refuse fees are passed on to the tenants as part of the overall rent and operating costs. As a result, it is likely that many commercial tenants do not know how much they are actually paying for commercial refuse collection," the report found.
It also noted that when the analysts attempted to complain about commercial refuse collection and commercial refuse rates ("for audit procedure purposes") and to inquire how to lodge a complaints with the city, there was "nobody to call."
Fast-forward nine years, and Golan Yona, who sits on the board of the Alamo Square Board Homeowners Association, which represents 200 residents in a 63-unit building on Fulton Street, claims the city gave him the run-around when he complained that, over a four-year period, Recology subsidiary Sunset Scavenger billed his building to pick up two, two-yard compactor containers three times a week but only picked up one. "Each time one of the bins is being put out for collection, the second bin is connected to the trash chute," and thus not in service for pickup, Yona said.
But Recology claims that HSM Management, the company the homeowners association hired to manage its building, "oversubscribed" for waste collection. Recology also notes that the commercial rate the association paid resulted in the building being charged a lower monthly cost, but that Sunset recognized this as an "internal error" and therefore is not pursuing collection of the undercharged amounts.
Recology spokesperson Adam Alberti characterized the disagreement as "a pretty simple billing dispute," even as he claimed that HSM sometimes put two bins curbside.
"Recology has been providing a level of service that was not fully utilized," Alberti said. "They had two bins and were only setting out one, though there were numerous times throughout the year when they set out two bins."
Alberti said the responsibility lies with the condo group, which opted for that level of bin service. "At some point they called to discuss ways to reduce their bill, at which point Recology suggested they reduce their service to one bin. At that point, the homeowners association sought compensation," he said.
"No, this is based on actual consumption," Yona told the Guardian, claiming that Sunset has no problem charging extra if buildings put out extra bins.
Alberti claims it's "far more common" for buildings to oversubscribe. "They plan for peak times," he said. "As a good faith gesture, the company sought to come to terms with the customer — but they weren't able to do so."
DPH's Scott Nakamura confirmed that rate hearings are rare in his department. "This is the first time in 30 years that I have heard of a dispute like this going to the DPH — and I've been working here more years than I'd like to admit," he said.
Based on his experience and Rose's 2002 report, Yona suspects that the reason for this lack of hearings lies with a lack of process — not a lack of complaints.
Yona held up a flow chart that depicts 17 contacts he had with City Hall in a five-week period as he tried to find out how collection rates are set, how homeowners can determine what their building should be paying, and how they can register complaints.
These included calls to the City Attorney's Office, Department of Public Works, Department of Public Health, and the DPH's offices of Environmental Health and Solid Waste.
As a result of his persistence, Yona discovered that the city's refuse collection and disposal ordinance, adopted Nov. 8, 1932, stipulates that DPH's director can revoke the license of any refuse collector "for failure in the part of the refuse collector to properly collect refuse, or for overcharging for the collection of same, or for insolence toward persons whose refuse he is collecting."
In a complaint submitted to DPH director Barbara Garcia on behalf of Alamo Square Board HOA, Yona wrote: "We would like to note that our attempts to talk to the right authority in City Hall have met so far with difficulty. The seriousness of the matter requires intervention of the highest authority in City Hall."