Cost of towing deal is re-examined

0 Comments | Oakland Tribune, May 27, 2003 | by Robert Gammon, STAFF WRITER

"The problem is Oakland's contract with A&B," said Bob Berry, president of Berry Bros. Towing of Oakland, a competitor of A&B. "In other cities, contracts mandate that contractors have real auctions, one day a week, advertised in advance, so that everyone knows about it. Oakland has never done it right and they're paying for it. They're getting what they deserve."

Lien sale proceeds are at the heart of a lawsuit filed by San Francisco and the state Attorney General's Office against San Francisco's monopoly towing contractor. San Francisco alleges its towing contractor has fraudulently conducted its auctions so it can withhold lien sale proceeds.

A 2001 Tribune analysis found, however, San Francisco has a better deal than does Oakland in terms of revenues from towing cars. San Francisco, for example, pulled in $1.54 million in 2000 from its share of storage fees. Oakland gets no share of such fees from A&B.

An analysis also found Oakland receives far less revenue per car towed than other major cities in the Bay Area. San Jose, for example, collected about $2.7 million on its towing contracts in 2000 on approximately the same number of cars as Oakland, which took in $1.07 million.

Lien sale proceeds are a key issue Smith said he wants to examine in his audit of A&B. But Smith has been stymied by A&B's refusal to comply with subpoenas he issued beginning in February 2002.

Smith said his auditors must be able to examine A&B's account ledgers, bank statements and tax returns in order to validate that A&B is complying with the contract and the city is getting a fair deal.

But Taylor's attorney King has argued in court papers Smith has no legal authority to examine A&B's financial records and claims the subpoenas violate the Fourth Amendment's prohibition against unlawful searches.

The Oakland City Charter "does not give the city auditor independent authority to demand A&B's financial records unrelated to its contract," King argued in court documents. A&B's account ledgers are private and are none of Smith's business, King said.

Smith countered that without the account ledgers he cannot validate that information provided by A&B to the city about its towing practices is legitimate.

In a hearing last week, Alameda County Superior Court Judge James Richman appeared to agree with King, saying Smith's subpoenas would carry more weight if they were issued by the Oakland City Council or Mayor Jerry Brown, Smith said.

In a recent interview, City Council President Ignacio De La Fuente (San Antonio-Fruitvale) also questioned whether the city auditor was overstepping his authority.

"I don't know that the city auditor has the right to ask for confidential documents of any business that does business with the city, unless it's specified in the contract," De La Fuente said. A&B's contract with Oakland does not specify the city auditor can examine A&B's books.

Judge Richman, however, stopped short of completely denying Smith's demand that A&B turn over its account ledger. Instead, he said Smith and Taylor should meet further to see if they can reach a compromise.