The stench surrounding lawsuits over Oakland's garbage removal

In a rarity, Oakland goes to bat for rental property owners by settling a lawsuit with California Waste Solutions for overcharging them for bringing recycling carts out to the curb. As a thank-you gesture, landlords sue the city.

In an era when political rhetoric falls squarely on the side of tenants, we can’t immediately recall a time when local governments stepped up to advocate for rental housing providers, but this is an aberration. In City of Oakland v. California Waste Solutions, Inc., the city alleged that landlords were gouged for recycling collection services.

Under the 2015 Residential Services Contract, owners of multifamily dwellings were purportedly overcharged for premium backyard recycling cart services from July 1, 2015, through the end of 2021. It seems the math didn’t pencil out.

According to the lawsuit, CWS was supposed to charge rental property owners $27.85 but instead, ratepayers got a bill for $152.68 for the service, in an alleged breach of the recycling contract. These overcharging practices amounted to a 550% hike of what the agreement allowed and remarkably, the rates for these backyard recycling cart services were far higher for multi-family buildings than what was charged for single-family homes.

A settlement was reached in 2021, with CWS setting aside around $6M to pay out to aggrieved multi-family property owners. Fast forward years later, and no owner has been reimbursed a dime. When pressed to pony up rebates, the city and CWS have recently implemented a process to release those funds.

 

Act two: Landlords sue the city over “franchise fees” that waste collectors pay the city to do business with Oakland.

Apartment owners in Oakland contend that the waste-hauling fee is a disguised tax requiring two-thirds approval from voters. Waste collectors pay so-called “franchise fees” to get in bed with the city and do business. It’s argued that these fees inordinately impact landlords. The fee is passed down to rental property owners in the form of service rates that are higher than owners of single-family properties. We expect that there will be a resolution to this lawsuit in the Fall and will keep you in the know.

 

Can landlords pass on the rising costs of doing business to the tenant?

Typically, Oakland housing providers can only raise rents to the tune of each year’s annual allowable rent increase, calculated as 60% of the change in CPI, or 3%, whichever is lower. Effective August 1, 2023, the allowable rent increase is 2.5%.

In certain circumstances, however, an owner can file a petition with the Rent Adjustment Program (RAP) to raise the rent due to “increased housing service costs” relating to insurance, utilities, heat, water, and other services provided. Keep in mind that if the rental unit is subject to RAP, annual rent increases cannot exceed 10% no matter the reason and we caution owners that they cannot circumvent the carefully choreographed steps to raise rents; the owner must file a petition, and the tenant has the right to object to the petition.

Now is a good time to remind Oakland landlords that in order to file a petition or respond to petitions initiated by the tenant, for that matter, they must register their rental units and keep the information up to date.