S.F. to Recology: The rates are too damn high

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San Franciscans may soon be paying more for their trash pickup, under a city proposal presented Friday at a Refuse Rate Board meeting.

The city’s refuse rates administrator, a position within the city controller’s office, proposed a rate hike of almost 28 percent over the next three years, starting in October.

The proposed increase is the latest in a back-and-forth between San Francisco and Recology, which has a monopoly, enshrined by a voter-approved ordinance, on the city’s trash collection.

In January, Recology proposed a 32 percent  rate hike over three years, beginning with an 18 percent hike in the first year, effective from October.

On May 21, the refuse rates administrator argued in a report that those rates were too high. Instead, it proposed the 28 percent rate hike, beginning with a nearly 13 percent from October 2025 until October 2026. For a single-family home with standard service, that would increase monthly fees by $5.97. Recology’s original plan would have done so by $8.55. 

“The bottom line here is that the revenue from the rates have not really kept up with the cost,” refuse rates administrator Jay Liao said today to the Refuse Rate Board. 

The hearing Friday was the second of three that the city’s Refuse Rate Board is holding on the proposed rate increases. A final hearing is scheduled for June 25, when the board will likely approve the rate increase presented by the city. 

Because Recology operates as a monopoly in San Francisco, the Refuse Rate Board approves its rates, with input from city commissions and Liao.

Voters passed Proposition F in 2022 to create the Refuse Rate Board, after a federal investigation and prosecution uncovered that, in exchange for favors, Public Works supported a rate hike in 2017 of about 20 percent over a five-year period. Two Recology executives eventually pleaded guilty to bribery, and, in 2022, the Public Works director, Mohammed Nuru, was sentenced to seven years in prison. 

As a result of the investigation, Recology reimbursed San Franciscans nearly $100 million  in 2021 to make up for the inflated rates. A year later, it separately reached a $25 million settlement with the city, for making more than its agreed-upon 9 percent profit margin between 2018 and 2021. (San Francisco regulates how much Recology, which operates as a monopoly in this city, can make in profits.) 

In 2024, Recology self-reported a serious accounting error. It made two mistakes in its cost projections, related to vehicle leases that should have been discontinued, and cost-of-living adjustments for salaries and operating costs. That resulted in some $24 million of overcharges of ratepayers. The company paid back those overcharges as credits on San Franciscans’ refuse bills last year. 

Recology’s revenues have been lower than expected over the past two years. Its revenue is in large part based on how much waste it collects. Post-pandemic, fewer people than before are living, working and visiting San Francisco. Revenues are not expected to grow much through 2028, Liao said Friday. 

Since 2019, general Bay Area costs have increased by 17 percent, according to the report. Nationally, water, sewer and trash costs have increased by 22 percent over that same period. Recology’s rates have only grown 7 percent.

The city’s proposed rate increase would still put San Francisco refuse collection fees below Los Angeles, Oakland, and San Jose, according to the refuse rates administrator report.

Still, San Francisco managed to cut $52 million from Recology’s initial ask. The city factored in savings from positions that are vacant during staff turnover. It also trimmed the amount of money Recology pays its corporate parent company, and the amount Recology pays the city for things like its regulatory role. 

That doesn’t mean asking San Franciscans to pay more for their refuse collection is an easy ask, given Recology’s record.

When the board votes on a new rate, it will also vote on additional city oversight of Recology. Some of it is as basic as actually documenting what Recology is contracted to do for the city.

“It feels a little awkward to tout what should be baseline,” Liao said today, when proposing the new oversight rules. But, he said: “This moves us away from the handshake agreements of the last 100 years.”