City of North Lauderdale residents and business owners overpaid almost $2.6 million for waste collection and disposal and recycling services for almost a decade, according to the Broward Office of the Inspector General.
The office, which aims to root out mismanagement within local governments, found the $2,589,753.48 overpayment to Waste Pro USA Inc. Investigators said the overpayments by North Lauderdale happened from January 2012 through September 2021.
The final report also issued a cautionary warning to Broward’s other cities: Assign a staffer to be “responsible for managing the agency’s solid waste services contract and doing so in a fiscally responsible manner.”
The agency said its report “serves as a stark reminder of what can happen when local governments fail to uphold their obligation to manage public monies responsibly.”
The investigation was part “of an ongoing effort to assist local governments in identifying and recovering misspent taxpayer funds,” according to the report.
The OIG report found that while Waste Pro did not engage in misconduct, “it did not abide by some financial obligations it had under the franchise agreement and subsequent amendments. Its management has not yet accepted responsibility for most of the overbilling we report here, maintaining that the City agreed — in action if not in words — to the rates it charged.”
The inspector general’s findings were outlined in a 372-page report.
Amy Shay, an attorney for Waste Pro, on Monday wrote a letter to Broward Inspector General Carol J. Breece that “Waste Pro, in good faith, billed the residents and businesses of the City the rates that Waste Pro understood were agreed to by the City.”
Shay also wrote that “Waste Pro disputes that City representatives were oblivious to disposal rates and would have relied upon Waste Pro for that information” and blames a “mutual mistake” by both sides.
Tracy Meehan, a Waste Pro spokeswoman, said Wednesday in an email that the company had been “faced with a significant issue after the previous hauler gave inaccurate disposal information to the city for the bid documents.” She said city staff had “cooperated with us to solve the problem that we did not cause. We negotiated an amendment in good faith as was our right. We wholeheartedly believe that we billed in good faith based upon rates we understood were agreed to by the city.”
Investigators also said that no one staff member in the city was responsible for managing the Waste Pro contract overall.
Investigators said that had the former finance director made sure the rates were correct and in accordance with the contract, the city would have known Waste Pro did not lower rates in October 2012 as it was required.
It also would have known that when the City Commission agreed to increase rates in January 2016, January 2017, and October 2018, the company applied a higher rate than agreed for commercial customers, the inspector general said.
The inspector general’s report found that a former finance director at the city of North Lauderdale had engaged in “gross mismanagement” for his failure to properly manage the financial aspect of a city contract for solid waste services when the service provider, Waste Pro, overbilled the city’s residents and commercial customers.
But the director “was basically a one-man band, and smaller cities like North Lauderdale do not have resources to be able to conduct such audits,” according to the investigation.
Starting in January 2012, the city billed the residents for the service through their utility bills, and the city remitted those funds to Waste Pro, according to the investigation.
The collection process switched later that year when residents were billed with an assessment charge, which it collected on the residents’ annual property tax bills.
But multiple oversights “left incorrect rates in place throughout the term of contract, exponentially increasing the overbilling over time,” Breece said in a prepared statement.
Investigators estimate that Waste Pro overbilled the city $599,707.68 for residential solid waste services and that it overbilled commercial customers a total of $1.99 million for container and compactor services.
Since the investigation, Waste Pro wrote the city a check for $92,000 for a franchise-fee payment discrepancy, “but, otherwise, the parties have not resolved the overbilling and underpayment described in the OIG’s report,” according to investigators.
The former finance director, who served from January 2009 until October 2014, disputes the dates of the contract issues, saying the mismanagement happened after he left.
North Lauderdale City Manager Michael Sargis said the director had been terminated without cause at the time, and it was not related to Waste Pro. He said there was not an immediate plan for reimbursement for residents and businesses for the overpayments, saying it was “under review.”
Still, Sargis said Wednesday the city has taken steps “to make sure it doesn’t happen again,” including hiring of a contract manager two years ago to assist departments with oversight of all city contracts.
In addition, the city now contracts with Waste Management for garbage service.
The city posted a letter to residents on its website Wednesday afternoon, ensuring them “that the necessary procedures and safeguards are in place to prevent a situation like this from happening again.”
Lisa J. Huriash can be reached at lhuriash@sunsentinel.com. Follow on X, formerly Twitter, @LisaHuriash