Recology customers in San Francisco are set to get refunds and lower rates from the company, and the city will get a $7 million payout under the terms of a settlement in a lawsuit from the city attorney.
The SF Board of Supervisors was taking a final vote Tuesday on a settlement in a case brought by City Attorney Dennis Herrera in March, in which Herrera sought reimbursement to SF ratepayers whom Recology overcharged as a result of a lack of oversight by former Department of Public Works Director Mohammed Nuru. Following the revelation of the overcharges, Recology agreed to pay back nearly $100 million to ratepayers in handshake deal. And as SFist earlier reported, the deal was sealed with a lawsuit and now the settlement is being made binding with the Board's vote.
Assuming the settlement is approved, all San Francisco ratepayers will receive an average of $190 apiece later this year, plus interest — with owners of larger buildings getting higher payments. San Francisco gets $7 million back, which stems from a miscalculation of garage collection rates — something else that was found in the Nuru probe by Herrera's office and the city controller.
[Note: Recology has reached out to say that Herrera did not discover the overcharges, they did, and they voluntarily reported this to Herrera.]
Also, ratepayers in the city should have already seen their garbage collection rates go down starting in April.
Promising that the negotiation of garbage rates would be examined through a public integrity review, City Controller Ben Rosenfield said in March, "The ramifications of our work with the City Attorney on this investigation are not abstract — there are real financial consequences for San Franciscans. It’s only right that our residents are repaid for the unjustified rates they were charged, but going forward we need stronger regulations that leave no room for systemic problems to occur."
Herrera was more salty in his March statement about the settlement, and the case against Nuru in general.
"With this legal action, we are making San Francisco ratepayers whole and sending a clear message that cozying up to regulators won’t be tolerated,” Herrera said. “Mohammed Nuru may have had his challenges keeping the streets clean, but he clearly excelled at cronyism, slush funds, and indifferent oversight. While ratepayers were taking a hit to their wallets, Mr. Nuru was soliciting money for lavish parties from the company he was supposed to be regulating. It’s outrageous. They say a fish rots from the head. Well, the head of Public Works was Mr. Nuru."
Nuru was indicted in January 2020 along with restaurateur and city contractor Nick Bovis in a wide-ranging — and often trifling — alleged scheme to funnel graft payments from Public Works contractors to pay for things like holiday parties and department swag. Multiple city department heads have been forced to resign since then, and Recology has figured heavily in both the ongoing federal corruption probe, and the separate audit by the city attorney and controller — and some of the sums they received in return are likely not to be so trifling.
Two former Recology executives have been charged by federal prosecutors, including, most recently, former vice president and manager of Recology's San Francisco group John Porter. Porter was charged last month with bribery and money laundering in connection with alleged payments made to Bovis's Lefty O'Doul's Foundation for Kids — money that investigators say went toward funding parties for Nuru's department, via Bovis's restaurant. One payment, according to investigators, went specifically to making Nuru "happy" in his role as regulator, as Recology sought to increase the "tipping fees" being paid to the company by the city for dumping large amounts of refuse.
In a March statement, recently promoted Recology CEO Sal Coniglio said, "We value our customers, and making them whole for this mistake is our top priority. As soon as we learned of the mistake, we took immediate action. We are grateful to the City Attorney for helping us reach a resolution that benefits our San Francisco customers."
Recology's monopoly over garbage collection in San Francisco dates back to 1932, when 97 independent garbage collectors around the city banded together to form the company that became known as Norcal Waste Systems and later Recology. Since that time, 89 years ago, the company has held a permanent no-bid, no-franchise-fee contract to collect the refuse and recyclables of San Francisco residents and businesses. In 2019, that translated to $370 million in revenue.*
*This article has been corrected to show that Recology San Francisco made $370 million in revenue in the 2019 rate year, not $1.9 billion. The larger figure, reported by the SF Business Times, was apparently revenue for the larger Recology enterprise beyond SF.