While San Diego Scrapes Bottom of Barrel for Budget Gap, Audit Reveals Millions Lost in Trash Hauler Deals

San Diego Audit Reveals Millions Lost in Trash Hauler Deals as City Faces Recycling Challenges

By San Diego Community Reportier

May 7, 2025

San Diego is losing millions of dollars annually and shortening the lifespan of its Miramar Landfill due to inadequate fees charged to private trash haulers and insufficient incentives to boost recycling, according to a new city audit released today by City Auditor Andy Hanau.

Key Findings

The comprehensive 59-page audit (OCA-25-08) reveals that San Diego is losing at least $4 million annually—possibly as much as $15 million—by failing to adjust trash hauler franchise fees to keep pace with inflation and by not properly accounting for the damage private trash trucks cause to city streets.

"Franchise fees have not kept pace with rising City costs, despite Municipal Code requirements that they compensate for the value of the franchise granted," states the audit report. The city has only raised hauler fees twice since 2010, once in 2020 and once in 2023. These increases amount to just 13% total, while inflation over the same period has been 54%.

The audit found that if city fees had kept up with inflation since 2010, San Diego would have received approximately $25 million more from haulers over that entire period.

The report also identified a second critical issue: "The City can do more to hold itself and private waste haulers accountable to meet the Climate Action Plan targets, which are designed to help limit poor air quality, extreme weather events, and other negative impacts of climate change."

Current Fee Structure

San Diego collected $14 million from haulers during the fiscal year that ended last June—$4 million less than the $18 million the audit indicates could have been collected if city fees had kept pace with inflation.

Currently, San Diego charges $17 per ton for high-volume haulers and $18 for low-volume haulers—rates that fall on the low end compared to other California cities:

1. San Jose charges $49 per ton
2. Chula Vista charges $41 per ton
3. Sacramento charges $32 per ton
4. Los Angeles charges $30 per ton
5. Long Beach charges $30 per ton

The audit suggests that the $14 million collected annually should actually be closer to $29 million if the city comprehensively studied the full costs of allowing private haulers to use public resources like city streets.

Infrastructure and Oversight Costs

The audit estimates that the city likely spends about $29 million per year repairing street damage from private waste hauler trucks and for oversight of the franchise hauler agreements. According to the audit, waste collection trucks cause significantly more damage to streets than passenger vehicles—with one hauler truck traveling at 35 miles per hour making as much noise as 19 cars.

A 2018 consultant study projected that haulers' commercial trash vehicles were responsible for 16.5% of the total vehicle impacts to city streets. Using cost data from the 2024 Pavement Management Plan, auditors estimate that $28 million in average annual street repair costs result from haulers' vehicle impacts.

The audit also estimates that the city spends approximately $720,000 annually on hauler oversight, including ESD monitoring hauler compliance and the Office of the City Treasurer conducting audits of franchise fee and AB939 revenue.

Recycling Challenges

San Diego's overall 67% recycling rate has remained stagnant for the past decade, failing to meet the city's target of 75% by 2020 and falling 14 percentage points below the upcoming 2030 target of 82%.

The audit found that while the haulers' collective diversion rate increased when ESD set and increased diversion rate requirements (reaching 37% in 2020), when ESD stopped increasing the requirement and kept it at 50%, haulers' collective diversion rates became relatively stagnant, averaging 42%.

Perhaps most concerning, the audit discovered that recycling rates for city crews, which handle trash and recycling for most single-family homes, are even worse than the private haulers at just 32% in 2023. The audit estimates that 80% of the waste taken to the landfill by city haulers could potentially be recycled.

The audit also found that four haulers have never met the minimum mandatory diversion rate requirements since 2016, yet were allowed to continue operating in the city despite franchise agreements stating that agreement extensions were contingent upon haulers meeting all performance requirements.

Hauler Market Breakdown

While San Diego has contracts with 21 private hauling companies, the market is dominated by three major players that control 90% of the city's hauling contracts:

• Republic Services: 40%
• EDCO: 27%
• Waste Management: 25%

These private haulers handle trash and recycling for San Diego businesses and most apartment and condominium complexes, while in-house city crews handle most single-family homes.

Recommendations

The audit makes eight key recommendations to help ensure the City recovers costs and reduces landfill waste, including:

1. Proposing an action to City Council to set franchise fees at the rate they would be if they had increased by CPI since FY2010
2. Conducting a fee study to assess appropriate franchise fee and AB939 fee rates
3. Proposing amendments to franchise agreements to include increases in diversion rate requirements
4. Presenting each hauler's performance in meeting diversion rate requirements before City Council extends franchise agreements
5. Setting a diversion rate performance goal for City Collections

City Management, led by Environmental Services Department Interim Director Kirby Brady, has agreed to all eight recommendations but notes that money will be needed for consultant studies and five new employees. They estimate full implementation will take until July 2028.

Impact on Residents

The audit indicates that raising fees on haulers would likely have minimal impact on customer rates, partly because San Diego uses a non-exclusive model where haulers compete for customers.

"If the city set the fee at $25 per ton, in line with increases in the consumer price index since 2010, we estimate the additional cost per household would increase by just $1.74 per month," the audit states. "If the City conducted a study and set the franchise fee at $30 per ton, potentially more in line with other large California cities, we estimate the additional cost per household would increase by $2.98 per month."

Context: Proposed Trash Fee for Single-Family Homes

The audit findings come amid ongoing controversy over proposed new trash collection fees for single-family homes. In 2022, San Diego voters approved Measure B, allowing the city to charge for trash collection services that had previously been free under the century-old "People's Ordinance."

After significant pushback from residents, the city recently reduced its proposed monthly fee from $53 to $47.59 for full-service customers. The revised plan would see fees rise to $59.42 by July 2027, down from the initially proposed $65.

Long-Term Landfill Concerns

The Miramar Landfill, which opened in 1959, is San Diego's only active landfill. Approximately 910,000 tons of trash are disposed of yearly at the facility, which spans over 1,500 acres.

According to city staff, the landfill is scheduled to close in 2031, though the city has already requested to extend its life. Improving recycling rates is seen as crucial to extending the landfill's operational timeframe.

"Landfill waste emits greenhouse gases as it decomposes, which contribute to negative impacts of climate change, such as poor air quality and extreme weather events," the audit notes, adding that "reducing landfill waste reduces greenhouse gas emissions, and reducing greenhouse gas emissions can help mitigate the frequency of extreme weather events and other negative impacts of climate change."

---

Sources:

1.      City of San Diego Office of the City Auditor, "Performance Audit of the City's Trash, Recycling, and Organics Collection and Handling" (OCA-25-08), Andy Hanau, City Auditor, May 2025.

2.      San Diego Union-Tribune, "San Diego's deals with trash haulers lose the city millions, send tons of recyclables to landfill, audit finds," David Garrick, May 7, 2025. https://www.sandiegouniontribune.com/2025/05/07/san-diegos-deals-with-trash-haulers-lose-the-city-millions-send-tons-of-recyclables-to-landfill-audit-finds/

3.      Inside San Diego, "Have Questions About the Proposed Trash Fees? City Responds to Common Questions on Paying for Waste Collection," April 2025. https://www.insidesandiego.org/have-questions-about-proposed-trash-fees-city-responds-common-questions-paying-waste-collection

4.      City of San Diego, "Refuse Disposal Fees," 2025. https://www.sandiego.gov/environmental-services/miramar/fees

5.      City of San Diego, "Miramar Landfill & Greenery," 2025. https://www.sandiego.gov/environmental-services/miramar

6.      Voice of San Diego, "Burying Trash in San Diego Is About to Get More Expensive," February 24, 2023. https://voiceofsandiego.org/2023/02/24/burying-trash-in-san-diego-is-about-to-get-more-expensive/

7.      OB Rag, "City of San Diego Just Knocked Off 10% of Proposed Trash Fee — Is That Enough to Placate Residents?", April 9, 2025. https://obrag.org/2025/04/city-of-san-diego-just-knocked-off-10-of-proposed-trash-fee-is-that-enough-to-placate-residents/

8.      San Diego Union-Tribune, "San Diego cuts trash pickup price after residents balk. Here's what it could now cost," April 9, 2025. https://www.sandiegouniontribune.com/2025/04/09/san-diego-cuts-trash-pickup-price-after-residents-balk-heres-what-it-could-now-cost/

9.      Voice of San Diego, "New Fee Means San Diego's Trash Bins Are About to Get Smarter Too," April 14, 2025. https://voiceofsandiego.org/2025/04/14/new-fee-means-san-diegos-trash-bins-are-about-to-get-smarter-too/