As frustrating as it is to consider the volume of lost revenue, it is good that the city continues to identify instances in which it is undercharging for services so that it can correct them.
In the latest oversight, the city discovered it has been undercharging the majority of downtown businesses for trash collection for years, leaving thousands of dollars per month uncollected.
Last year, the city discovered that it had not billed for property leases for years, missing hundreds of thousands in rent payments. The city has since reached agreement with tenants in those cases.
This time, an audit conducted by city staff found that 150 downtown businesses are being charged incorrect rates and that in almost all cases the rates are lower than they should be. It is unclear how much the under-billing has cost the city, but it likely is at least $5,000 per month, based on a preliminary analysis of the rates.
City Manager Tom Markus said the rate formula, which was created 40 years ago, is complex and that mistakes were made years ago and carried forward.
“Quite frankly, they didn’t spend the time necessary to research what it should be and do the appropriate calculations, even in the field, that were necessary to make sure that they were doing it the right way,” Markus said. “And this goes back. In some respects, I imagine it was carried forward year after year.”
City staff began looking into the rates amid discussions of the new downtown commercial recycling program. Some downtown business owners questioned why the recycling rates — about $130 per month — were more than their trash collection rates. Staff then discovered that some businesses were mistakenly being charged as little as $23 per month for trash collection.
Solid Waste Division Manager Kathy Richardson said the city charges the base rate of $23 while a shop is vacant, and that the audit found that some downtown businesses were not bumped out of that $23 base rate once they became occupied. She said in some cases restaurant and bars, which are charged more than other businesses, were never increased to the higher rates.
As in the billing for lease agreements, the city has likely missed out on hundreds of thousands of dollars in trash collection fees because of the rate errors. But in both instances, the city deserves credit for being forthcoming about the errors and acting quickly to fix them.
“We are trying to be transparent,” Markus said. “We are asking and encouraging staff to bring this stuff forward; we need to correct it. And I want to make sure the public knows that I deal with this stuff from a personnel level very seriously.”
It isn’t clear if the current rate structure covers the city’s costs. The city is accepting proposals for a study designed to identify the true cost of trash collection and determine a fair rate structure for businesses that share a dumpster. Downtown businesses will have the chance to offer input on the rate structure.
The current rate structure was developed in 1978. A reassessment of the rates is overdue to make sure all businesses are being charged equitably and appropriately.