SAN FRANCISCO (Legal Newsline) — A California appeals court in March ruled in favor of Oakland landlords challenging the legality of garbage collection franchise fees paid to the city by private companies.
The landlords claimed in their lawsuit that a $28 million franchise fee paid to the city by Waste Management and California Waste Solution was passed on to property owners in the form of higher garbage collection fees. They claimed Oakland’s franchise fees were illegal under the California Constitution and amounted to an improperly imposed tax.
An Alameda County grand jury found the franchise fees paid to Oakland by haulers were “disproportionately higher” than franchise fees paid to other cities in the Bay Area. The grand jury also found that Oakland’s procurement process for garbage college was mishandled and subject to political consideration.
The trial court dismissed the lawsuit, ruling that the franchise fees were in fact fees from private companies, not taxes. The landlords appealed.
The First Appellate District reversed the trial court's decision to dismiss the case, holding that “a franchise fee may constitute a tax to the extent it is not reasonably related to the value received from the government.”
The appeals court also noted the plaintiff’s assertion that during the grand jury investigation, “no evidence was presented to the grand jury that the City analyzed service or disposal costs.”
The appeals court did, however, rule in favor of Oakland in the landlord’s challenge of future increases in the amount of money the city receives from the franchise fee for “preparing, adopting, and implementing,” the Alameda County Integrated Waste Management Plan.
The lower court dismissed that part of the lawsuit and the appeals court agreed that the issue is not yet ripe for a decision because it’s uncertain whether or when those increases might occur.
Zolly v. City of Oakland, California Court of Appeal, First District