By Phil Matier

OAKLAND (CBS SF) — You pay your trash bill every month. But do you know where that money goes?

In Oakland, a third of the tab goes directly to the city, not the trash company.

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And that’s leading to a lawsuit.

According to a just-released Alameda County Civil Grand Jury Final Report, a third of what Oaklanders pay on their monthly garbage bills winds up going straight to city hall.

It’s called a franchise fee. And in this case the garbage company pays the city $30 million a year in return for having an exclusive monopoly on service in the city.

Oakland resident Rich Lundy said, “It’s typical of the leadership in Oakland.”

Other cities have similar franchise fees. Alameda for example has a 10 percent fee, San Jose has a 20 percent fee, but only for commercial garbage.

Why is Oakland’s so high?

Oakland City Councilman Noel Gallo said, “We needed it to raise money and that was an avenue of doing it. The $30 million plus goes to public works … fixing potholes, picking up illegal trash.”

For years no one seemed to care, but when the latest garbage contract kicked in and with it a rocket rise in rates, people started to scream.

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And the rates really went up for landlords like Robert Zolly whose rates on this 31 unit apartment building went up $9,900 in a year.

Landlord Robert Zolly said, “It went from June of 2015, where I was paying $736 to today I’m paying $1,566 per month for even less service.”

Zolly said that when new tenants come in it will unfortunately get passed on to them, because somebody has got to pay it.

Zolly and other landlords have filed a suit challenging the fee.

Landlord and attorney Andrew Zacks, said “The contract in fact is a disguised tax.”

Gallo said, “Some have been sued and stopped it, but Oakland continues to do it. The argument I’ve been given has been wait until someone sues us.”

And now someone has sued.

The civil grand jury report also faulted the city for not following its own contract guidelines in awarding the garbage contract.

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And, for setting the $1.5 billion deal behind closed doors.