A solid waste company that contracts with the City of Fresno has allegedly overcharged the city and its residents by more than $3.35 million.
The Central Valley Tax Protection Group filed a complaint with the Fresno County District Attorney’s Office Public Integrity Unit on Tuesday alleging that Caglia Environmental has overcharged residents of the City of Fresno by $3.35 million and the city has not taken action because owner Richard Caglia has donated to the campaigns of city officials in the past.
The big picture: Gregory Wallis, the Chair of the Central Valley Tax Protection Group, said Tuesday that he submitted a complaint to the Fresno County District Attorney’s Office Public Integrity Unit on Tuesday.
- Wallis alleges that Caglia Environmental fraudulently submitted invoices to the city from 2018 to 2022 at new elevated rates that the city never approved, totalling over $3.351 million.
- The complaint alleges that City officials met with Caglia, threatening litigation in February 2023.
- Following the alleged confab, the city began disputing invoices for several months last year. Wallis obtained emails through a Public Records Act request which show city employees disputing the invoices in letters to Caglia throughout last year.
The backstory: Caglia Environmental’s contract with the city dates to February 2004, when the company’s subsidiary Orange Avenue Disposal Company, Inc. was brought on for the transfer, processing and disposal of municipal solid waste, construction and demolition waste and asphalt and concrete.
- In 2018, the Fresno City Council approved an amendment to the deal to allow Caglia Environmental to adjust rates with a fuel surcharge and an increase in the price per ton of processed waste.
But… The 2018 amendment was only supposed to be valid if the City Council approved the rate increases in conjunction with Proposition 218, which was passed by voters in 1996 and requires cities to hold protest hearings for proposed rate increases.
- If a majority of residents oppose the increase, the city is unable to move forward with the increase.
- The complaint comes just two weeks before the city is scheduled to hold a protest hearing on May 2 to consider raising solid waste fees from 2024 through 2028.
- Mayor Jerry Dyer’s administration has said the city needs to raise the garbage collection fees in order to keep up with inflation and other expenses, with a projected $50 million deficit for the Department of Public Utilities over five years if rates do not increase.
- Wallis points out in his complaint that the city never held Proposition 218 hearings from 2018 to 2022, which would make the amendment invalid.
- But Caglia Environmental sent invoices to the city for higher rates despite the absence of a rate increase through the Proposition 218 process.
Go deeper: According to emails that Wallis obtained, city staff discovered in February 2023 that the city had been overpaying to Caglia Environmental.
- Wallis alleges in the complaint that the city met with Caglia and threatened to sue him for the overbilling, yet Fresno County Superior Court records do not show that the city has filed such a lawsuit.
- Further, Wallis goes on to claim that the city is proposing the new rate increases to backfill the $3.3 million it overpaid to Caglia since 2018 and will not sue him because he has donated to Dyer and city councilmembers.
- Campaign finance documents filed in January show that Caglia donated $5,500 to Dyer’s 2024 campaign for the primary election and $149 for the general election. Some of that donation was made in 2023, after Senate Bill 1439 was implemented at the start of the year.
- SB 1439 prohibits elected officials from deciding on a proceeding involving a license, permit, use entitlement, franchise or other contract for a party that contributed over $250 to that official.
- Caglia also donated to the campaigns of all seven council members. However, all contributions occurred prior to the enactment of Senate Bill 1439.
What they’re saying: City Manager Georgeanne White disputed the claim that the city is looking to increase its garbage rates to cover for Caglia, noting that the overpayments started when Lee Brand was mayor and that litigation is on the table.
- “These overpayments began during the previous Administration, and when the Dyer Administration discovered the overpayments, we immediately applied the correct rates and informed Orange Avenue Disposal,” White said in a statement. “Councilmembers were also made aware of the situation immediately. The City continues to assess all legal avenues to resolve this issue.”
- Caglia did not respond to a request for comment from The Sun.
- A spokesperson for the Fresno County District Attorney’s Office said the office does not confirm or deny if a complaint has been made to the Public Integrity Unit to protect the integrity of any potential investigation.
- “Any submissions to our Public Integrity Unit will be given due consideration,” the spokesperson said. “Not every submission leads to a formal investigation, however those that do benefit from this type of discretion.”
