Oakland Businesses Fume Over Trash Fees

OAKLAND, Calif. (CN) — Oakland politicians are gouging apartment owners and local businesses with soaring trash collection fees to subsidize homeowners, according to landlords who sued the city on Wednesday.

Robert Zolly, Ray McFadden and Stephen Clayton, who own apartment buildings around the city, say Oakland officials of slapped apartment and business owners with what amounted to an illegal tax while letting homeowners off the hook when they negotiated a $1.5 million garbage-hauling deal that saw collection rates rise by more than 150 percent.

The city's garbage collector, Waste Management of Alameda County, sued Oakland in 2014 when it awarded a new trash deal to California Waste Solutions, saying the City Council had "derailed" its procurement process by allowing new bids.

The City Council responded by awarding separate components of the contract to both haulers, but in doing so failed to determine how much collection services would cost, the complaint says.

"In handling the selection process for these critical and highly valuable contracts, City Council would proceed to deviate sharply, and impermissibly, from their own procurement process, resulting in the approval and imposition of an improper tax on unwitting Oakland ratepayers through manipulation," the plaintiffs say.

Apartment owners have been reeling under the skyrocketing fees, which have increased by more than 150 percent, the plaintiffs say. McFadden, who owns a 12-unit property on Telegraph Ave., saw his trash bill rise from $356 a month to $908, an increase of 155 percent.

The plaintiffs say the extra money Oakland is making off a franchise fee earmarked for cleaning up illegal dump sites — and the steeper collection fees — amount to a tax that must be approved by voters. Under California law, revenue from garbage collection services cannot exceed the cost to provide those services.

The franchise fee accounts for 30 percent of a ratepayer's bill and funnels $30 million a year into the city's general fund.

Councilmember Noel Gallo called the franchise fee "taxation without representation," saying that Oakland's use of franchise fee revenues amounted to an illegal tax.

"If we need support on this, we need to go straight to the voters," Gallo said, agreeing with the plaintiffs that the fee requires the public's approval.

A grand jury report released earlier this month found that the collection fees paid by Oakland apartment owners and businesses — and the city's franchise fee — are much higher than in surrounding cities, and that the contracting process had been shrouded in secrecy.

"The grand jury is troubled that these [franchise] fees, which represent 30 percent of the ratepayers' monthly bills, were not transparently reported or openly discussed with the public at any time during the contracting process," the report said.

The city has until Sept. 20 to respond to the grand jury's report.

Plaintiffs also contend the city shielded homeowners from the skyrocketing trash rates by shifting most of the additional costs to apartment owners and businesses. However, Gallo said homeowners are also seeing their trash bills rise.

"I'm a homeowner and my garbage bill went up substantially," Gallo said.

The plaintiffs accuse the city of violating Article D of the California constitution. They want the extra garbage collection fees lifted and to be reimbursed for the additional fees they have already paid.

They are represented by Andrew Zacks, Scott Freedman and Michael Corbett of Zacks, Freedman & Patterson in San Francisco, who did not return a request for comment on Wednesday.

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