Findings released on the refuse rate-setting and rate reporting processes, and profits earned by Recology over and above allowed profit margins

San Francisco, CA (May 16, 2022) — The Controller's Office has released a public integrity assessment report on the review of rate-setting and rate reporting processes, and profits earned by Recology (a privately held waste management company that provides refuse services to residential and commercial customers) that were over and above established target profit margins.

Our assessment found that Recology netted profits of $23.4 million over and above the target profit margin set in the 2017 Rate Application. Even after taking into account the City Attorney’s 2021 $101 million settlement in restitution, penalties, and interest to ratepayers affected by the erroneous calculation of revenues in the rate application, Recology consistently netted profits above the profit margin targets set by the City’s rate orders.

Download the full report here.

View the press release. 

 

infographic about rate setting

 

What happens next?

The Controller’s Office will continue to assess selected City policies and procedures to evaluate their adequacy in preventing abuse and fraud. Future reports will assess the procurement and award of Recology’s landfill disposal agreement, San Francisco Public Utilities Commission’s contracting processes as they relate to the criminal charges against former General Manager Harlan Kelly, and an overview of citywide ethics rules and procedures. Other reviews may be conducted given future issues identified in the ongoing City Attorney and Controller investigation.

 

Tips

Investigators from the Controller’s Office consider every allegation of wrongdoing raised by city employees and members of the public. To report suspected public integrity abuses related specifically to the Mohammed Nuru investigation, please contact the Public Integrity Tip Line. You can provide information by:

All tips may be submitted anonymously and will remain confidential. Reports to this tip line, as well as tips to the Controller’s whistleblower hotline, are critical to the City’s ability to fight abuses and lapses of public integrity by city employees and contractors. As provided for by the San Francisco Charter, the Controller’s Whistleblower Program ensures complaints are investigated by departments with the appropriate jurisdiction and independence from the alleged wrongdoing.   

Information on city payments, searchable by department and vendor, are available on the Controller’s public transparency website at openbook.sfgov.org. Anyone may file any allegation of improper or illegal public activity with the City’s Whistleblower Program at sfcontroller.org/whistleblower-program. That program, administered by the Controller’s Office, often partners with the City Attorney’s Office on investigations.

 

For questions, please contact City Controller Ben Rosenfield at ben.rosenfield@sfgov.org.

For all press inquiries, please contact Communications Manager Alyssa Sewlal at alyssa.sewlal@sfgov.org.

 

Follow the San Francisco Controller’s Office @sfcontroller on Twitter and subscribe to our reports.


About the Office of the Controller

The Controller's Office works to ensure the City's financial integrity and to promote efficient, effective, and accountable government. We strive to be a model for good government and to make the City a better place to live and work. The Controller's Office is responsible for governance and conduct of key aspects of the City's financial operations, including operating the City's financial systems and issuing its financial procedures, maintaining the City's internal control environment, processing payroll for city employees, managing the City's bonds and debt portfolio, and processing and monitoring the City's budget. The department audits and produces regular reports on the City's financial and economic condition and the operations and performance of city government.