Recology to settle dispute with S.F. for $25 million
Trash hauler Recology has agreed to set aside $25 million as part of a proposed settlement to address unauthorized profits earned by the company.
Under the settlement announced Tuesday, Recology has agreed to put $25 million into an account that will pay for several months of costof-doing-business increases the company would otherwise collect from ratepayers, the city said.
It’s a response to a May report from the city Controller’s Office that found Recology had over a four-year period made $23.4 million more in profits than allowed by its agreement with the city. Recology previously paid San Francisco residents $94.5 million to reimburse them for overcharges officials discovered while investigating the City Hall corruption scandal linked to former Public Works director Mohammed Nuru.
Controller Ben Rosenfield in a statement thanked his employees and Recology leaders who “worked in good faith to do what was right.”
“Now we can turn to better managing this relationship going forward,” Rosenfield said.
Recology CEO Sal Coniglio said in a statement that the company “strongly supports efforts to increase transparency and improve the rate-setting process in San Francisco.” He said Recology was working with city officials toward “a new era of accountability.”
“Together, we share the same goal: providing the most environmentally sound refuse service, at competitive rates for our customers, with a fair wage for all Recology employeeowners,” Coniglio said.
In addition, the new settlement requires Recology to put any additional extra profits it earns into the account. Recology will be allowed to use those funds if its future profits end up being lower than targeted.
San Francisco voters in June overwhelmingly approved a ballot measure that reformed the city’s relationship with Recology, which has had a monopoly on local waste collection for nearly a century. The measure puts the city controller, instead of the Public Works director, in charge of proposing new trash-collection rates. It also gives the city the ability to cancel Recology’s monopoly if city officials want without going back to voters.
Rosenfield’s office said Tuesday that, per the terms of that ballot measure, it plans to “immediately initiate a new process that will result in new rates by October 2023.” Recology said it will submit an application to set new rates early next year.
Supervisor Aaron Peskin, who authored the ballot measure, said the new settlement “finally makes San Francisco refuse ratepayers whole.”
“We are continuing our work to restore the public’s trust in good governance, which ultimately leads to rooting out bureaucratic waste and maximizing effective delivery of quality public services,” Peskin said.
City officials said the settlement ends all disputes over Recology’s rates and charges from previous years. The Board of Supervisors and Recology lenders will each need to approve the settlement.
“We are continuing our work to restore the public’s trust in good governance.” S.F. Supervisor Aaron Peskin