h-i.m.\: .,.-1Kv,"-:-. -i . ¦ .-. . ... ¦¦ ¦
JOSLPH M FERGUSON INSPECTOR CI" hi I RAL
VIA I 1 LCTPONIC MAIL May 2, 2.019
John F. Tu I ly Commissioner
Department of Streets and Sanitation 121 North LaSalle Street, Room 1107 Chicago, Illinois 60602
Dear Commissioner Tu I ly.
An OIG inquiry has determined that the Department of Streets and Sanitation (DSSJTs ^ violating the Municipal Code of Chicago (MCC) by providing free garbage collection service to at least 1,182 nonprofit entities Section 7-28-235 ofthe MCC, effective January 1, 2016, requires all recipients of City garbage collection service to pay $9.50 per month. Because of DSS' noncompliance, the City is losing at least 5134,748 in garbage fees each year, totaling $449,160 as of April 30, 2019.
Furthermore, OIC found that DSS' list of nonprofit entities receiving free garbage collection is incomplete. OIG identified 25 properties not included on DSS' list that nonetheless receive free City garbage service, and there may be many more.1 Actual revenue loss is thus greater than $449,160 but cannot be calculated because the total number of properties receiving free service is unknown.
Finally, DSS' current provision of free garbage service only to those nonprofits fortunate enough to have received it in the past is inherently unfair. It perpetuates a discretionary benefit that DSS historically granted to entities who knew to request it, or otherwise acquired it, while similarly situated nonprofits are denied this benefit and must pay for private garbage collection.
OIG provided a lisl ol ihe 2S propei lies i:o uSS,
OKI i II. I-7 n 18-0879
Advisory Cor-.cer ning fro;; Ga' bage Collect ion ioi Certain Nonprofit Fririt.ii-.-r- . M;iy ~>„ 7'0:9
THE MUNICIPAL CODE LIMITS DSS'AUTHORITY TO PROVIDE GARBAGE COLLECTION SERVICE.
In our 2014 audit of garbage ordinance enforcement, OIG concluded that DSS was providing garbage collection service to approximately 1,393 nonprofit entities without legal authorization.-1 DSS disagreed, stating that its authorizing ordinance, MCC Chapter 2-100, gave it: broad discretion to provide service to these entities at an annual cost to the City of $3,316,274.
In response to OIG's January 2015 audit follow-up, DSS maintained its view that its Commissioner is authorized to provide garbage service to any nonprofit entity at their discretion.
In 2015, City Council adopted MCC §7-28-235, requiring properties receiving City garbage service to pay a fee of $9.50 per month per unit or premises. This requirement went into effect oh January I, 2016. Section 7-28-235 specifies that the City collects garbage for small residential buildings and "all other premises receiving city refuse collection services as of January 1, 2016."2 In other words, those nonprofit entities previously receiving City.service may continue receiving it, while other
nonprofits are treated the same as commercial and large residential buildings they
must hire a private garbage collector at their own expense.
At our request, the Department of Law corroborated OIG's interpretation ofthe ordinance: nonprofits continuing to receive City service are legally obligated to be charged and to pay $9.50 per month. DSS, however, told OIG it has "not instituted
r~i ci r K -zi n £2* fidor r\ r~\ r~\\ i r\ r\\-\._ rM-^f 11 ^rnoni7qtir\nc " HacnifQ tha K/1f*""f*~* rcn/~i i i i r/r* rY~\pi rst
v-JOi uuy^ i j wi \ * j i i y i i w i i |ji vji a vi yui iiz-ULivji i_>, uv^jpiL^ L t i*^- iv i i Ccj U n Ci i ICi i l.
DSS PROVIDES FREE GARBAGE COLLECTION TO AT LEAST 1,182 NONPROFITS, COSTING THE CITY $134/748 EACH YEAR IN LOST REVENUE.
DSS provided OIG with a list of 1,182 nonprofit entities whose garbage it collects, free of charge, as of January 2019. Based on DSS' descriptions, the entities include,
7 City of Chicago, Office of Inspector Ceneial, "Departrnenl of Streets and Sanitation Garbage Ordinance I'-nfoicemenc Audit," June 20>i; accessed Aprii 16. 2019, hi i os//iqchicaao orci/2014/Ofi/ZVtH.iriii-of-ri*,';--.-ciarbacie-service-en'oicoi -'leu;.-'
S;i'iMil residential buildings ir:'"iude individual hoi ues arid rnu!i i - unit buildings, up to four; :r ni.s. as wed as certain townhomes and bod and -breakfasts MCC. s 7-20-235(a)
I'AG I- 2
OIG Kill: .¦! 18-0879
Advisory Concerning F:ee Gatbnqe Collection ioi Coitam Monpioiil Entities May 2. 2019
9T1 religious entities,''
94 private schools,1,
48 uncategorizecl entities;"'
45 recreational or community centers;
28 government offices,
23 clay care centers;
17 shelters;
12 rneclical/rehab centers, and
4 other schools.7
DSS stated, "At this time, the continued service without charge to non-profits is seen as a courtesy to institutions that provide a community benefit. The adding of garbage fees to non-profits may be re-considered as part ofthe 2019 Budget Recommendations." OIC maintains, and the Department of Law concurs, that City Council already made the decision to add the fee, and amended the municipal code accordingly. In light ofthe clear legislation on this point, the position that the DSS Commissioner retains authority to waive the fee at their discretion is untenable. '
As a result of DSS' noncompliance with the plain language ofthe MCC § 7-28-235, the City loses $134,748 in uncollected revenue annually from these 1,182 entities alone, totaling $449,160 in the 40 months since the City instituted the fee.0
III. DSS' LIST OF NONPROFIT ENTITIES RECEIVING FREE GARBAGE SERVICE IS INCOMPLETE.
UIU lUUIIU LI Icl L UJJ lli>L LJI llun|JIUIIL Cl ILILICS VVI IU5C Cl I UCiyC IL OWI ICC. Li li II lOOM T I |OICLC
Using Google Maps and Google Street View in various neighborhoods, OIG identified 25 nonprofit properties with City of Chicago garbage carts and confirmed they were neither on DSS' list nor billed for garbage service. OIG did not conduct an exhaustive search, so there may be many more.
We conclude that DSS does not, in fact, know all the properties from which it collects garbage. We found similarly incomplete lists in our 2014 audit, as well as our 2015
'¦ The 911 religious entities consist of 909 categorized as "Religious entity." "I categorized as "Baptist Church," and 1 categorized as "Religious Entiw/School"
: A i eview of the erM ity names iggcsts 3 of the 94 are aci ually miscategonzeel day care facilities
':' Based on the entity names, i he uncaiegor .vsd er it,r;es include one corn; nunity garden, one park, one
library, one hrehcuse. and one Amei ican Log-on post
7 The four other schools are descr ibed as 'School" 'Girls High School." or' Elementary School''
''OIG searched City's gai bage billing i eoords for a san iple o( these prope'; ics ai id confirmed they were
not billed
PAGE
OIC FILE :M8-Oo7'-;
Advisory Coneernmg Fioo Garbage Collection ioi Certain Nonprofit Fntilies
audit of DSS' garbage collection performance measurement.0 In a follow-up to our 2015 audit, DSS stated that it had a complete inventory of its garbage and recycling carts,10 but these gaps in its nonprofit list suggest that it still cannot account for all properties with City carts
IV. SUGGESTIONS
DSS SHOULD COMPLY WITH THE MUNICIPAL CODE PROVISIONS LEGALLY REQUIRING IT TO BILL EVERY NONPROFIT CURRENTLY RECEIVING FREE GARBAGE SERVICE.
DSS is authorized by law to provide garbage collection service to nonprofit entities that were receiving it as of January 1, 2016, but only if it charges the monthly fee of $9.50 per premises. OIG suggests that DSS immediately notify those nonprofit entities ofthe required fee and begin to charge those that wish to continue to receive City service.
DSS SHOULD CONDUCT A FULL INVENTORY OF PROPERTIES RECEIVING FREE CITY GARBAGE SERVICES.
To ensure that it collects garbage only from those nonprofits that received City service as of January 1, 2016, DSS needs a complete and accurate list of those entities. OIC identified 25 nonprofits that are receiving service but are not on DSS' current list. The fact that the list is incomplete reveals that DSS still does not know all the properties from which it collects garbage—a problem OIG has raised several times in recent years.
OIG suggests that DSS identify all the properties missing from its list of nonprofit entities receiving free garbage collection and, unless it can prove that they received service as of January 1, 2016, require them to hire a private garbage collector. To ensure the integrity of the list going forward, DSS should develop written procedures for updating it as entities change ownership or location, and should terminate City service for properties no longer eligible.
- City of Chicago, Off:co of Inspector Geneial. 'Depsrtrneiu of Streets and Sanitation Garbage Collection
Performance Measure; nent Audi:.," Api il 201S, accessed Api il 16. 2019,
https //igcoicane a/2015/0''l/?7/audir-or-dss-ga: I ;ac;e-cohec; lon-oerfoi ma nee/
City of Chicago Ol 'ice of Inspector General. "Depot u r nail of Streets and San ita ton Garbage CoilecPoo Performance Mieasuremeni Follow-Up inquiry." September 2015, accessed April 16. 2019. httos //igchicaciQ oro/V.OIG/t)9/IS/loiiow-iio-0:'-ciss-ciarbaoe-coHeci ion -nc-i ;ormarice-auclit/
PAGE 4
C. IF DSS CONTINUES TO COLLECT GARBAGE FOR
NONPROFITS, IT SHOULD WORK WITH CITY COUNCIL TO CODIFY ELIGIBILITY CRITERIA.
DSS' current provision of' tree garbage service only to those nonprofits fortunate enough to have received it in trie past is inherently unfair 11. perpetuates a discretionary benefit that DSS historically granted to entities who knew to request if, or otherwise acquired if, while similarly situated nonprofits are denied this benefit and must pay for private garbage collection.
If DSS wishes to continue collecting garbage for nonprofits, it. should work with City Council to codify eligibility standards similar to MCC § 11-12-540(8), which provides water fee discounts to certain nonprofits based on size, charitable work, and other criteria DSS should then make all eligible entities aware of the benefit by publicizing it to the City's nonprofit community.
We invite you to respond in writing before June 3, 2019. Any such response will be made public along with this OIG Advisory.
Respectfully,
Joseph M. Ferguson Inspector General City of Chicago
Joe Deal, Chief of Staff, Office of the Mayor
Edward Siskel, Corporation Counsel, Department of Law
MISSION
The City of Chicago Office of Inspector General (OIG) is an independent, nonpartisan oversight agency whose mission is to promote economy, efficiency, effectiveness, and integrity in the administration of programs and operations of City government. OIG achieves this mission through,
administrative and criminal investigations by its Investigations Section;
performance audits of City programs and operations by its Audit and Program Review Section,
inspections, evaluations and reviews of City police and police account ability programs, operations', and policies by its Public Safety Section; and
compliance audit and monitoring of City hiring and employment activities by its Hiring Oversight Unit
From these activities, OIG issues reports of findings and disciplinary and other recommendations,
to assure that City officials, employees, and vendors are held accountable for violations of laws and policies;
to improve the efficiency and cost-effectiveness of government operations; and
to prevent, detect, identify, expose, and eliminate waste, inefficiency, misconduct, fraud, corruption, and abuse of public authority and resources.
AUTHORITY
OIG's authority to produce reports of its findings and recommendations is established in the City of Chicago Municipal Code §§ 2-56-030(d), -035(c), -110, -230, and 240.
Cover images courtesy of Chicago Department of Fleet and Facility Management and iStock.