Town of Apple Valley likely to settle in trash rate lawsuit August 5, 2019

APPLE VALLEY — Residents using the town’s trash collection service will likely see some savings on upcoming bills due to a proposed settlement of a lawsuit.

The lawsuit alleged Apple Valley officials overcharged customers and used some of the excess money to fund other government services.

Current customers who had a solid waste/recycling account with Burrtec Waste Industries from July 24, 2016 may likely see monthly credits saving them roughly 10% on their trash and recycling fees, for a period of about 20 months.

Former customers would receive a lump sum refund if a San Bernardino Superior Court judge determines the settlement terms are fair and finalizes it at a hearing scheduled for October 16.

Under the settlement, the town denies any wrongdoing or unlawful conduct.

While the Town denies the allegations of improper or wrong action, it does recognize that solid waste bills were calculated incorrectly, Apple Valley spokesperson Charlene Engeron said.

The Town Council unanimously agreed to correct the inadvertent calculations with this settlement.

If the settlement is finalized, the town would create a common fund in the amount of $3.15 million, with more than $2 million going towards current and former solid waste customers.

It would also pay attorney’s fees for the plaintiff, Christina Lopez-Burton, which total over $1 million. Engeron said the town’s own legal costs exceed $226,000.

Lopez-Burton, of Apple Valley, filed the suit in December 2017, claiming that fees and charges the town imposed for solid waste collection through its franchisee, Burrtec, violated Proposition 218, an amendment to California’s constitution.

According to 218, a fee or charge cannot be imposed or increased if the fee’s revenues exceed the funds required to provide the service.

According to Lopez-Burton’s complaint, the town was paying Burrtec $13.69 per month for each residential 40 gallon container, but charging customers $23.71 for the service.

The suit contended that the difference amounted to millions of dollars per year.

The Town uses some of the excess to fund costs necessary for the provision of trash collection services …, the petition reads. But much of the excess is used to fund ‘costs’ unrelated to the provision of trash collection service.

Proposition 218, prohibits the use of revenues made from property-related fees or charges for any purpose other than for the charged service.

In fiscal year 2016-17, the suit said Apple Valley transferred more than $2 million from the Solid Waste Fund to the General Fund.

Over $700,000 of the funds were used to fund services totally unrelated to waste collection services, like services related to the Town’s golf course and park and recreation department, according to the complaint.

The suit also alleged that embedded in the rates was a franchise fee that was generating about $2 million a year.

The franchise fee is a percentage the town makes on all revenue it collects on behalf of Burrtec.

Lopez-Burton’s complaint argued that the fee was not an actual cost of providing service, but rather an artifice designed to generate surplus revenue for the Town.

In August 2014, Apple Valley raised solid waste rates from about 9.5% to 9.85%, which it said was partly due to the increased costs of Burrtec’s operation, according to a staff report.

The lawsuit claims, however, that in the agreement between Apple Valley and Burrtec, the franchise fee was tripled from 6% to 18% and that Burrtec made no attempt to negotiate against this increase because it understood it would not be affected by it.

Mailers sent out that year to inform affected customers did not inform them of the increase, according to the complaint.

In a June 24, 2014 staff report to consider the rate hikes and send out mailers, there is no mention the franchise fee tripling.

But in the Aug. 12, 2014 staff report to vote on the hikes, the reports says that these increases are inclusive of administrative or franchise fees passed through from the franchisor, the Town.

The December 2017 suit is the second Proposition 218-related action Lopez-Burton had filed against Apple Valley, the Daily Press reported.

The first litigation focused on sewer rate increases and alleged illegal transfers also. A settlement reached in that case cost the town $75,000 to cover Lopez-Burton’s attorney’s fees and resulted in a lowering of the wastewater rate for some 22,000 customers.

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Source: Martin Estacio, Daily Press