Sanitation district audit flags rates

Consultant says it can't be sure that CR&R Environmental Services is overcharging until reasonable comparisons are made.

May 21, 2013|By Bradley Zint

The Costa Mesa Sanitary District's contract for solid waste and recycling services is acceptable, but there is room for improvement, particularly when it comes to rates, according to an independent audit presented Tuesday to the district's board.

Michael Balliet Consulting's 57-page review specifically addressed the Sanitary District's fiscal year 2011-12 agreement with CR&R Environmental Services, a Stanton-based company that has had a long-standing contract with the district. The document said it was "unclear" whether CR&R, which earned about $4.45 million from ratepayers that fiscal year, was charging a "reasonable" amount compared with other cities' trash-collection rates.

"Such an assessment is highly subjective, as 'reasonable' is a relative term," company owner Michael Balliet wrote. "What CR&R believes is reasonable may be quite different than what the CMSD considers reasonable. An objective criterion is needed, and in the auditor's opinion, no definitive data has ever been submitted to the CMSD (by CR&R) that would allow for an accurate assessment of rate reasonability."

Costa Mesa households receive two 60-gallon bins at a monthly rate of $19, which includes a $1.80 city fee. Additional bins are $8 per month.

Based on March 2013 data, Balliet said Costa Mesa residents pay the ninth-highest trash rates among 32 Orange County cities included in the assessment and are in the top three for cities that contract with CR&R.

"In the auditor's opinion, that could be considered reasonable or unreasonable depending upon the criteria used," he wrote.

Balliet also said there isn't an apples-to-apples comparison among city rates without comparing the scope of services and including more specifics, such as tacked-on city fees.

He also wrote in a PowerPoint presentation that any requirements that CR&R's rates be among the lowest of similar programs are problematic because the requirements fail to "define these potentially ambiguous terms."

Balliet's audit cost the district $21,000. General Manager Scott Carroll suggested the independent audit in November.

It addressed 31 questions prepared by the sanitary district's board last year, reviewing the contract within four general categories: finances, operations, administration and systems, and overall compliance. He found that 25 of the questions, or about 80%, could be answered satisfactorily.

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