OAKLAND — Residential building owners in Oakland say they are being ripped off by “illegal and exorbitant” garbage and recycling collection rates that far exceed the cost of the services being provided, and renters will soon be paying the price.

Three Oakland landlords on Wednesday filed a lawsuit against the city of Oakland that asks a court to intervene in the ongoing conflict over the city’s $1.5 billion Zero Waste garbage and recycling collection contract. The lawsuit asks for rates to be dropped to what the City Council promised multifamily dwelling ratepayers at public meetings — a 40 percent increase — and reimbursement for alleged illegal payments since the contract with Waste Management and California Waste Solutions took effect last year. It also takes issue with ratepayers being on the hook for a $25 million franchise fee under the contract that the landlords say has never been explained.

Wayne Rowland, president of the East Bay Rental Housing Association, said garbage pickup rates for multifamily dwellings have skyrocketed by between 50 and 500 percent, depending on the property, and rates are scheduled to go up another 20 percent next month. Rates for single-family homes also went up 30 percent.

Because of rent control and the fact the trash rates have not been in effect a full year, the additional costs have only been passed on to new renters so far, Rowland said, but that won’t be the case if the situation continues where landlords are paying up to $30,000 a year in some cases.

The rates for garbage service are illegal because they exceed the cost of business and therefore are a tax that’s required to be approved by voters under California law, according to Andrew Zacks, attorney for the plaintiffs.

“The fees imposed under the trash and recycling contracts were approved arbitrarily with no understanding of the actual costs,” Zacks said. “Clearly, they are illegal under the law.”

The Oakland city attorney’s office could not be immediately reached for comment on Wednesday. The lawsuit is boosted by a recent Alameda County grand jury report that says much of the same: that the council essentially abandoned its contracting process and let Waste Management and California Waste Solutions set its own rates without any real assessment as to how those rates are justified.

“The city council owed a duty to, among other things, safeguard the ratepayers’ financial interests. Nevertheless, the city council failed its duty,” the grand jury report reads. “Reasonable financial analysis of numerous ancillary collection services directly impacting rates was not performed, and there was little to no public debate concerning disproportionately high franchise fees.”

The rental housing association, whose members own more than 18,500 rental units in Alameda and Contra Costa counties, is sponsoring the lawsuit. Rowland said its members were ignored when they formally contacted Mayor Libby Schaaf and the City Council several times about their concerns, including unreasonable penalty fees and payments for services they aren’t receiving.

“It’s the largest contract at $1.5 billion, to be paid for by city residents, so you would think that if those ratepayers were complaining that they would be concerned,” Rowland said. “If you aren’t going to address the property owners at all, that’s how you, I believe, end up provoking a lawsuit.

“We were not interested in suing the city, we just wanted the rates as they were advertised to be,” Rowland said.

In 2014, over the objection of its own staff, the City Council awarded a 10-year garbage and recycling contract to California Waste Solutions, despite the small company’s lack of experience and equipment to handle the job. The city’s previous contractor, Waste Management, sued, and the city settled the suit by splitting the contract between the two companies, with Waste Management handling the garbage and green waste, and CWS handling recycling.

Waste Management spokesman Paul Rosynsky declined to comment on the lawsuit Wednesday, noting that the company has not yet seen the complaint.

Contact Malaika Fraley at 925-234-1684. Follow her at Twitter.com/malaikafraley.