Fresno City Manager Georgeanne White said the city overpaid for trash services from one local company. But, she is not saying why the error went undetected for nearly four years, or who was responsible.

On Tuesday, a vague watchdog group called Central Valley Tax Protection Group sent out a news release alleging that companies under Caglia Environmental overcharged the city for trash hauling services by more than $3 million.

The overpayment stems from a 2018 contract amendment approved by the Fresno City Council, paying Caglia Environmental higher rates. The vote included a caveat that the city would undergo the legal process allowing the public to weigh in on fee hikes.

The process, known as Proposition 218, allows landowners the right of refusal on increases by sending in protest cards. If a majority protest the fee, the raise is canceled.

That process never happened, and no one is saying why.

Caglia: We Followed the Rules Set by the City

“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. Councilmembers were also made aware of the situation immediately. The City continues to assess all legal avenues to resolve this issue,” White said in a statement earlier this week.

White did not respond to follow-up questions from GV Wire about how the overpayments were corrected, or who may be responsible. A city spokesperson referred questions to the City Attorney’s office, which declined comment on the matter.

Lee Brand was the mayor in 2018 when the council approved the higher rates for Caglia Environmental.

“Cedar Avenue Recycling and Transfer Station made a request due to increased operational costs. After a due diligence process with City staff, our issue was publicly noticed and brought to the Fresno City Council with a recommended approval for the rate increase. We followed all policies and procedures set forth by the City of Fresno,” owner Richard Caglia said.

CARTS is a related company to Orange Avenue Disposal, under the Caglia Environmental umbrella.

Trash Rates Now Under Prop. 218 Review

The city is currently undergoing a 218 process to raise residential trash rates. Protest cards are due June 20 — the city on Friday announced a delay from the initial May 2 deadline. Sources with knowledge of how the process works say the current 218 could retroactively cover the 2018 Caglia Environmental rate increase.

Without the rate hike, city officials said the solid waste enterprise fund would be $50 million in the red in five years.

The proposed rate increase for solid waste is gradual for a five-year period from 2024 through 2028. Customers with a 64-gallon gray trash cart will see a 114% increase (now $19.20 to $41.21 per month by 2028). The larger 96-gallon cart will see a 78% increase (now $25.37 to $45.24 in 2028).

In a public meeting to explain the Prop. 218 process, city officials never mentioned the Caglia Environmental situation.

Why did it take so long to perform a 218 process?

“It’s politics, right? No politician wants to go on record, raising rates when they’re running for office. And the problem is, when you don’t do that and when you don’t have gradual adjustments, then people are stuck with the dramatic adjustment,” Councilman Mike Karbassi speculated.

Related Story: See How High Your Garbage Rates Will Rise Under 5-Year Fresno Plan

2018 City Council Approval

The city council on Oct. 25, 2018, approved 6-1 an amendment to a 2004 contract with Caglia Environmental subsidy Orange Avenue Disposal “for the transfer, processing, and disposal of municipal solid waste, construction and demolition waste, and asphalt and concrete.”

The agreed-upon increases covered fuel and transfer station surcharges.

City trash trucks and workers pick up residential garbage, dumping it at a Caglia Environmental-owned facility. Caglia Environmental then transfers the trash to a county facility.

Only two members from the 2018 council remain in office — Luis Chavez who voted yes; and Garry Bredefeld who voted no.

“In 2018, I was the only councilmember that voted against the garbage rate hikes and retroactive hikes, unlike Steve Brandau who voted for all of them. Now there is an effort to raise residential garbage rates and when those increased rates come before the council again, I will oppose those as well,” Bredefeld told GV Wire.

Bredefeld is challenging incumbent Brandau for Fresno County Supervisor. The election is Nov. 5.

The city never underwent the 218 process for the Caglia Environmental raise. Documents provided by CVTPG through a public records act request show city officials’ internal communications in 2023, concerned about overcharges from Caglia Environmental company Orange Avenue Disposal. The city sent Orange Avenue Disposal several letters protesting invoices.

White, the Fresno city manager, asked city staff about the difference in what Caglia Environmental would pay based on the original 2004 contract versus the 2018 amendment as early as February 2023.

At one point, the city withheld $1.1 million from Caglia Environmental.

During the 2018 hearing, then assistant public utilities director Jerry Schuber Sr. said payments come from the city’s solid waste enterprise funds, which is separate from the general fund.

“We can maintain for about a year. But if we don’t have an increase when we go forward with our 218 process, by 2019 we will have gone ten years without a rate increase at the residential level. We can’t sustain it,” Schuber told the city council in 2018.

Schuber left Fresno to become solid waste and recycling director in Broken Arrow, Oklahoma in 2021. He did not return messages seeking comment for this story.

Mysterious Group Makes DA Complaint

CVTPG sent the Fresno County District Attorney’s Office Public Integrity Unit a letter, outlining its concerns. The group is asking for an investigation.

“Despite not pursuing a Proposition 218 protest process on residential solid waste rates between 2018 and 2022, Caglia Environmental knowingly and fraudulently began invoicing the City of Fresno at these new elevated and conditional rates prescribed in the fourth amendment to its contract,” the letter said.

A DA spokesperson would not confirm if the office received the complaint, but noted that anyone can file an inquiry.

The taxpayer watchdog, in its letter to the DA office and news release accused Caglia Environmental of “fraud” without providing evidence.

One legal analysis defines fraud as “an intentional deception made for unfair personal gain or causing harm or loss to another person.”

CVTPG has no discernable social media presence, website, physical address, or even a contact phone number. An email sent to the group’s chair, Gregory Wallis, went unreturned.

Karbassi wants to know how CVTPG learned of the information described in its letter.

“Some of the information included in that letter and that went out includes information from closed session. So, I can’t comment any further, but I want us to internally look into that and see who the leak was from,” Karbassi said.