Opponents to the surface water project and Measure I have filed a suit against the City of Davis alleging “unconstitutional and illegal conduct” and have filed a lawsuit seeking “relief for Davis citizens.”
According to a press release, a group calling themselves Yolo Ratepayers for Affordable Public Utility Services believes “the City of Davis has defrauded Davis ratepayers for years by failing to pay for any of the City’s own water use as required by Proposition 218.”
The suit was filed in Yolo County Superior Court on Wednesday by Davis residents John Munn and Nancy Price. It asks the court to declare that the city’s existing rate structure violates Proposition 218.
In addition, “Yolo Ratepayers’ suit seeks a declaration that the City’s use of Present Water Rates to obtain illegal subsidies for itself at the expense of other ratepayers is in violation of Proposition 218 and is unconstitutional and illegal.”
The plaintiffs ask the court “to order the City to set up a fund to pay refunds to ratepayers for the overcharges caused by the City’s failure to pay for its own water.”
The group is represented by Jonathan Morse of the Morse Law Group located in Westlake Village, and Michael Harrington located in Davis.
In their release, Yolo Ratepayers argue, “California taxpayers adopted Proposition 218 in 1996, which requires all utility ratepayers to pay proportionally for utility services according to use. Several years ago in a well-publicized Sacramento case, the City of Sacramento was sued for reducing its payments for its own water use (to) 15 percent (of what they would have owed).”
They allege, “After this case, all municipalities and counties were on notice that they had to pay for their own water use. In contrast to Sacramento which provided to itself a 15 percent reduction in rates, the City of Davis did not pay at all for water and has continued to not pay up until the present date.”
“Among other relief, the Yolo Ratepayers’ suit seeks a refund to Davis ratepayers of the funds that the City failed to pay for its own water use,” the group continues.
They allege, “The City’s illegal conduct in overcharging Davis ratepayers for its own water use shows that the City cannot be trusted about any of the City’s claimed water needs and the validity of the proposed water rates. It was only through great effort that Yolo Ratepayers uncovered the City’s illegal overcharges to Davis ratepayers.”
The group adds, “The rates proposed in the Proposition 218 notices will end up higher because the City and the Davis Joint Unified School District will find ways not to pay their share, which is assumed in the City’s proposed rate structure to be very substantial.”
Additionally, the group adds, “The design of the proposed Woodland-Davis water treatment plant has not been finalized, and State Health Department required studies may make the plant substantially more expensive.”
Furthermore, they declare: “The Bartle Wells Rates that go into effect in March 2013 for two years violates Proposition 218, and that the Loge-Williams rate structure (CBFR) that goes into effect for the succeeding three years violates Proposition 218.”
In their suit, Yolo Ratepayers cite a January 15, 2013 letter “advising that the Current Water Rates as well as the Bartle Wells Water Rates and the Loge Williams Water Rates are contrary to Proposition 218.”
Two days later, “The City, acting through its City Council, at the request of Councilmember Rochelle Swanson, discussed the YRAPUS letter and specifically whether the current and proposed water rates met the requirements of Proposition 218. The City Attorney, Harriet Steiner, Esq., unequivocally opined that the letter’s concerns were unfounded and that numerous courts had approved similar rate structures.”
The Yolo Ratepayers cite a January 22, 2013 email from Tim Bittle, Director of Legal Affairs for the Howard Jarvis Taxpayers Association, saying that “public agencies are not exempt from paying for water supplied to their properties.”
In his letter, Mr. Bittle writes, “You are correct that Proposition 218 does not exempt public. agencies from paying for property related services such as water, sewer, and garbage collection.”
He adds, “A few years back, the Sacramento County Grand Jury investigated the City of Sacramento for doing the very same thing that you say Davis is doing; namely, overcharging private customers to subsidize its own free use of utility services. The Grand Jury found that the City was acting illegally.”
Mr. Harrington in the suit alleges, “Not content with Sacramento’s mere 15% discount, the City of Davis knowingly helps itself to the value of 100% of the water used, which effectively illegally subsidizes the City’s General Fund and other departments within the City, to the detriment of the City’s ratepayers, including Plaintiffs.”
He adds that representatives from the city confirmed in an email that “presently the City does not separately account for water used at City facilities,” which he claims is, “effectively admitting that the City is getting a free ride from ratepayers, including Plaintiffs, in contravention of Proposition 218.”
Mr. Harrington further claims, “The Current Water Rates violate Proposition 218 and are unconstitutional and illegal in that, inter alia, they impose a fee or charge incidental to property ownership which exceeds the proportional cost of the services attributable to the parcel. The City knows this, and staff and/or paid city water consultants acknowledged such constitutional deficiencies at various meetings of the City Water Advisory Committee.”
He adds, “Plaintiff contends that Current Water Rates are in violation of Proposition 218 and therefore unconstitutional and illegal. The City disputes this contention.”
A January 15, 2013 letter to the City Clerk from Nancy and Don Price writes, “We believe that the current rate system, adopted in 2010, and the new proposed structure unfairly charge some classes of uses differently than others, are terribly confusing and, for the many reasons outlined in the documents submitted to the Water Advisory Commission, city files, and the City Council, the current and proposed rates otherwise do not conform to law.”
The suit argues, “The Loge Williams Rates do not comply with Proposition 218 and are unconstitutional and illegal in that, inter alia, they impose a fee or charge incidental to property ownership which exceeds the proportional cost of the services attributable to the parcel.”
They cite the column of Bob Dunning from Sunday where they argue, “Mr. Dunning did what few have done: he pulled out his calculator, created five hypothetical water account users whose first names coincide with five city leaders, and factually demonstrated using grade school arithmetic how annual charges vary wildly for a uniform amount of annual water used.”
However, as Mr. Dunning himself notes, the definition of proportionality in so far as Prop 218 is concerned is that “The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.”
The critical point is: “[T]he city can’t charge you more for a gallon of water than it actually costs the city to deliver that gallon of water to you specifically.”
Neither Mr. Dunning nor the litigants make the showing that the rate, even if it varies in cost depending on time of usage, fails to capture the actual costs of service.
As Matt Williams, who helped design the city’s CBFR system notes, “Proposition 218 proportionality means that all ratepayers should shoulder their fair share of not only the variable costs but also the fixed costs of the water system that reliably delivers our water to us.”
Mr. Williams writes, “The example Bob provides, is a mathematically well-crafted hypothetical with consumption amounts for each of the five ‘stars,’ but everyone in Davis knows that the water system in Davis isn’t built to reliably deliver water to just 5 custumers, but rather to over 16,000 customers.”
“Bottom-line, Bob’s examples, as fun as they are to contemplate, represent less than two one-thousandths of one percent (0.002%) of the Davis water consumption,” he adds.
The Vanguard reached Will Arnold, spokesperson for the Yes on Measure I campaign; he deferred comment, citing that he had not yet been sent a copy of the suit.
Mayor Joe Krovoza declined comment at this time, and City Manager Steve Pinkerton said he was out of the office on Wednesday and not seen the suit.
—David M. Greenwald reporting
Months ago many scoffed at Mr. Dunning’s prediction that lawsuits would be filed. What do you all have to say now?
I say: Lawsuits can always be filed against anything. That’s not a real measure. The only question is whether they will be sustained in court. Any scoffing is likely aimed at the latter and not the former.
I’ll add this: my conversations with the city over the last few months, they have been planning for multiple challenges to the project. So I don’t think anyone is caught off guard by a lawsuit.
Naive ?:
How does this affect (if at all) the March 5 vote and the 218 notices? will they proceed as planned?
So how many knew before now that the city wasn’t paying for its water?
Well I think that will be an interesting question in the suit as to whether the city is in violation there. I don’t think the proportionality issue is going anywhere however.
SODA: Unless a judge puts a stop to them – as I said to Rusty, I don’t think the proportionality issue has legs, but the other issue may.
Maybe Mike Harrington will now cease his hateful, error filled posts on this blog, since he is now involved in a lawsuit. We can only hope.
David, followup
Is it expected that the court will rule on the validity of the suit BEFORE March 5; if so, how is the vote affected? if not, same question?
thx!
So Mike is suing himself in a way.
[i]”Months ago many scoffed at Mr. Dunning’s prediction that lawsuits would be filed. What do you all have to say now?”[/i]
I don’t know who scoffed at Mr. Dunning’s prediction.
Are you asking if we’re surprised that Mike Harrington filed a lawsuit?
Are you asking if we’re surprised that he filed it to time with the news cycle just as the ballots are arriving?
Is that what you’re asking?
No, and no. The question I’m asking is whether Mike is acting [i]pro bono. [/i]
Good story, but it should emphasize that the City bears the burden of proof on showing the Court that its rate systems, and their application in practice, comply with Prop 218.
Is anyone concerned about the City knowingly taking our water for free since Prop 218 passed in 1996?
The case gives the City a pass back before the current rates were adopted on August 1, 2010.
The Sacramento civil case by the Howard Jarvis Taxpayer Association was filed Jan 15, 2010, and widely reported and discussed. Chances are 99% our city professional staff had notice of it. THe case was settled — fast — and dismissed only 6 months later. The Grand Jury Report was scathing, and widely reported.
Sorry to say, again, but our City Attorney and water staff certified those August 1, 2010 rates and city practices as complying with Prop 218, when those professionals knew or had to know what happened in Sacramento, right across the river.
Anyway, in the current case, the Plaintiffs are the Yolo Ratepayers for Affordable Public Utility Services, and John Munn. THey asked the Court to order the City to establish a common fund of money wrongfully taken from the ratepayers back to August 1, 2010, and set up a claim process to obtain refunds.
David, BTW, there are several lawyers involved here, but we do not allege anything … the Plaintiffs do, in their verified complaint.
The case is being brought as a Class Action in order to protect and promote the rights of all city ratepayers, including renters who are often excluded from these kinds of decisions about their utility bills.
Don: timing? I get to these things when I do, around my aviation law cases. Yesterday I got to the water case.
How does this action benefit the citizens of Davis? If the City loses and is forced to pay refunds to the rate payers (property owners), the costs of the refunds (plus attorney’s fees on both sides) will come from the General Fund. That will mean higher taxes or reduced services, with the poorer residents being impacted the most either way. So we are looking at a proposed transfer of money from the tax payers in Davis (everyone), directly to the pockets of the plaintiffs attorneys and the landlords. So much for the claim that our friendly ‘no on everything’ bunch is looking out for the poor.
This is nothing but a cynical attempt to sow distrust and confusion in advance of the election, done by a group willing to use any means to win.
As I have repeatedly stated, I personally commit to all of you that we will work with the City to have the best, most cost effective, and highest quality affordable water system in Northern California, if not the state.
The rates are a mess, but I am committed to working with the Court and the City to come up with an excellent rate system that pays for our water system in a fair and lawful manner.
In the end, my best guess is that the system that the Court ends up approving might be some version of the Loge Williams Rate System.
Mark: actually, the water project is a transfer of vast wealth from the pockets of the poor, middle class, and renters in Davis to the wealthy elites. Somone in the Sociology Dept at UCD should do a study about this. I’m a 1984 graduate of UCD Sociology, a wonderful major that prepared me for civic involvement like this water case. The major teaches students to look at the big picture …
No Michael. You can put as much lipstick on this pig as you want, it will still be a pig. In my opinion, you are simply acting for your own personal gain (and to stroke your own ego), not for the citizens of Davis. The ‘[i]poor, middle class, and renters in Davis[/i]’ will gain nothing from this lawsuit.
Mike, Do your clients know that you are posting repeatedly here and discussing issues related to their lawsuit here on this blog?
It is no surprise that members of the Yolo Taxpayers Association would file a lawsuit in this campaign. This is the same conservative group that is against any public spending, whether for schools, parks, roads or clean water. They filed a lawsuit during the Measure E school campaign and are going back to the same playbook. When a campaign fails to gain public support, they changed to a hail-mary strategy of filing frivolous lawsuits. Their goal is to prevent this important public investment in our infrastructure. We think it will fail, just like their other lawsuits to stop investment in Davis public schools.
Ryan: I have removed references to Mr. Harrington’s private finances, it is not an appropriate topic for this forum. Thank you.
Will: why don’t you stick to the issues, and explain why, since August 2010, the City has done three certifications of its rates and implementation systems as lawful, when they obviously are not, and all the while the City knowingly was taking your and my rate money to subsidizew city use? This should make your business owner participants on Yes on I go a little nuts …
Attacking the messengers of bad news shows how weak the attacker’s hand is.
“when they obviously are not”
Perhaps it would be wise to explain in what way they are obviously are not lawful? And who makes that determination? Absence some sort of finding, it is difficult to sustain this claim, no?
David: fair enough. Let me get back to you. Gotta work on a plane case now
While you are dismissive, David, of Bob Dunning’s previous column on the subject, may I suggest that in his DE column today BD makes a plausible, if not compelling, argument that the rate structure as laid out in 218 does not meet constitutional muster:
http://www.davisenterprise.com/local-news/dunning/bob-dunning-were-subsidizing-citys-water-use/
Furthermore given the (self-inflicted) time pressures on the city, and above all, given the history of dubious legal advice that the city has got in the past I’d not write off the chances of this lawsuit succeeding.
David: I think we should write an article for you discussing some of these legal issues for the readers. Don and others have wanted me to go into these matters since the fall 2011, and as we turn cards over, there should be more detailed discussions of the issues. So let me get with the clients, and they can write up a nice piece for everyone’s review and comment. Wish I had had time to get the piece done for publication when the complaint went to the clerk’s office, but there is only one of me here.
That would be a great idea
Quickly, the current rates and Bartel Wells are easy: the data are in the formal city record showing that the rates do not comply with Prop 218. Ask the City Clerk.
As to the Loge Williams, I think this rate system has excellent promise, but it needs to be amended. I am sure the Court will order the parties to a mediation or settlement conference at some point, and that is when the solutions are discussed. The sausage factory is ugly, but the end product should be tasty.
I think the points raised by Bob Dunning can be addressed within the Loge Williams.
I think the look-back has got to be changed, but I dont have a solution yet. There will be one, I hope.
The rate system that gets a seal of approval from a judge of the Yolo Superior Court should be good to go, and can be exported to other water agencies around the court. The traditional tier system of the Bartle Wells is going to go the way of the dinosaurs.
The upside to this local rate system process is that I firmly believe when our system is approved by the Court, it will be used throughout the state and will save billions and billions of dollars by rate user classes that right now are heavily subsidizing other users, like what has happened here for years. But I dont mean to pick on Davis alone. Many cities and water agencies have been doing these things for many years.
We have already succeeeded on one cause of action: the City is using water for free, and forcing all of us to pay extra into the water trust fund to make up the difference. The city has admitted this already, in writing. We can immediately file a motion for summary judgment on this one.
We have a very good shot at success on the cause of action to establish a common fund, where the city pays the water fund back for city water taken for free since August 1, 2010. This would be repayment to all users, since the Complaint was filed as a Class Action.
Plaintiffs are not seeking damages in this case, just fair application of the law equally to all ratepayers.
rusty, no surprise here that Michael would file a lawsuit timed to influence the election. He is so obsessed that nothing is beyond him. He’s been making the same false claims for months and tosses in new innuendo at each turn–failing to even try to justify the past untruths.
This simply is another tactic to generate publicity for an underfunded, poorly supported attack on our elected leaders and our city’s ongoing effort to get the water decision right. Little he has done during this time has been helpful to the citizenry.
SODA’s question is a good one; what’s your guess, Michael, about whether a court will get around to your suit before the election? Why did you file it before the election, rather than to wait to find out the will of Davis residents? What was your motive?
Why don’t you answer questions about the allegations you toss around on the Vanguard?
“
biddlin
10/06/11 – 09:22 AM
…
The most expensive components of this project could be the egos !
“
Justsaying: the rate litigation is not about Measure I, or even specifically this project. We brought the case because we feel that the current and proposed rate systems need improvement in order to comply with Prop 218. The case establishes that the rates are removed from the CC’s political pressures, and we get a neutral forum.
“We have already succeeeded on one cause of action: the City is using water for free, and forcing all of us to pay extra into the water trust fund to make up the difference. The city has admitted this already, in writing. We can immediately file a motion for summary judgment on this one. “
Say you win then what? People lose jobs, services get cut, other taxes rise. So what do you win? Harrington. Price, Munn and the Taxpayers Association save a few bucks but the smell of victory might be like the smell of napalm in the morning.
Just as I asked Mr. Harrington, I’d ask you to substantiate this claim: “People lose jobs, services get cut, other taxes rise.”
[quote]Ryan: I have removed references to Mr. Harrington’s private finances, it is not an appropriate topic for this forum. Thank you. [/quote]
So, you will go back and remove all of Mike’s references/accusations the I and others are personally benefiting financially from the water project and his posted comments regarding spending his personal “rainy day” money to fund the referendum, etc? At least my information is available to all on the County’s website. What I think really happened is that you received a phone call from Mike.
David Greenwald: “[i]Ryan: I have removed references to Mr. Harrington’s private finances, it is not an appropriate topic for this forum. Thank you.[/i]”
David,
I support your removing Ryan’s comment. Can we anticipate that you will be similarly vigilant the next time Mr. Harrington makes unsubstantiated claims of financial impropriety on the part of others, or will you only act when he is the victim?
“I’d ask you to substantiate this claim: “People lose jobs, services get cut, other taxes rise.”
Where do you think the money will come from if not from higher taxes or reduction in services. Last I checked the City does not get to print money, it comes from all of us.
Michael Harrington said . . .
[i]”We have already succeeeded on one cause of action: the City is using water for free, and forcing all of us to pay extra into the water trust fund to make up the difference. The city has admitted this already, in writing. We can immediately file a motion for summary judgment on this one.”[/i]
Michael, do you really see the City’s statement as an admission? Having gotten a bit into some of the numbers that are part of their current accounting between General Fund and the Water Enterprise Fund, I wonder whether the “net” that is the result of a consolidated reconciliation will support your assertion that the City is getting water for free. For instance, the General Fund provides half a million dollars of services per year to the Water Enterprise. When the City gets finished with a current period reconciliation of the debits and credits, will the result validate your assertion or negate it? There are quite a few more steps to traverse before anything like a summary judgment is merited. Patience is in order as this plays out.
I very rarely remove/ edit posts – I have generally let Don do it for a variety of reasons. He was not available this morning and I did it. I don’t know how he has handled such things in the past, but if you believe that a post should be removed put it to his or my attention and we will consider it. We try to remove/ edit as little as possible.
[i] I’d ask you to substantiate this claim: “People lose jobs, services get cut, other taxes rise.”
[/i]
From your article: [i]The plaintiffs ask the court “to order the City to set up a fund to pay refunds to ratepayers for the overcharges caused by the City’s failure to pay for its own water.”[/i]
Where is the money in the fund going to come from? If it comes from general revenues, I can see the logic of cuts to jobs and services. If it comes from ratepayers, I don’t see the point in setting up the fund. In fact, while I don’t understand the legal issues here, it does not seem rational to make the city pay for water the city provides.
Okay I see the point here. As I understand it, the general fund has to pay the enterprise fund for the water. The next question is how much are we talking about and for how long – if anything? I doubt that people would lose jobs over a one-time payment.
Well David, you have allowed him to repeat his false and unsubstantiated claims unchallenged for the past two years so I will just assume that it is your pro-MH double standard showing.
Mark: As I said, I do not generally handle board moderation issues. I have asked Don Shor to do that and I generally defer because I do not have time on a consistent basis to do so. Today was probably the first time in at least six months if not a year that I have done so and did so at the request of Michael Harrington.
[quote]Mike Harrington: “We have a very good shot at success on the cause of action to establish a common fund, where the city pays the water fund back for city water taken for free since August 1, 2010. This would be repayment to all users, since the Complaint was filed as a Class Action.” [/quote]
Just where do you think the money will come from to establish a common fund? People are questioning where in the City’s budget should this come from and what would have to be cut to afford your goal of refunds, attorney/client award and also payment for water-use going forward? Which parks would we abandon or buildings should we shutter or which employees should we lay off or which programs should we cease to offer? There has to be a reorganization of the budget somewhere. Your answer?
[quote]I doubt that people would lose jobs over a one-time payment. [/quote]
The city would then have to continue to pay for water going forward.
I really think that Mike is trying to make it unaffordable for the City to go forward with the water project or require that citizens not only increase their personal water bills, but also have to pay more in either taxes or fees to maintain City services. This is a very clever strategy and not very honest.
With the Rifkin in me motivated, Ryan’s finances comment got me doing some internet surfing. I didn’t know Mike Harrington was a developer and I didn’t know property tax information was so freely available on the internet. Huh…
“The city would then have to continue to pay for water going forward.”
In theory, but back pay would be more obviously.
@Mark West, I agree with the issue you raised regarding the impact this lawsuit could potentially have on low/moderate income. The first thing to go is usually social services and other community-oriented services. If this succeeds, nonprofits and faith communities better be ready for the influx of people in need.
Maybe if the suit succeeds, a push can be made for people to donate the refunded money to help w/ the likely cuts to low/moderate income services. People who believe in the “common good” (@Michael Bisch, a wink to you my friend) could make a move like that.
I realize that fact checking is not required for expressing one’s opinion in a blog, but I am disappointed by Will Arnold’s remarks about the Yolo County Taxpayers Association. It is true that I am a YCTA member, but the Association has nothing to do with the current lawsuit. Will is not clear about who the “They” are who filed a lawsuit against Measure E, but it was not me or the Yolo County Taxpayers Association. In fact, YCTA supported the first “emergency” or “temporary” parcel tax measure in Davis because there was a clear need. The Association has stayed neutral on all of the other parcel tax measures that I can remember, except the most recent measure that combined the enhancement parcel tax with what had been originally billed as a temporary tax into a larger, single assessment. YCTA did oppose this on the grounds that it was converting a temporary tax into an on-going tax. It is also interesting that Will does not mention his position as the Yes On I campaign manager while he denigrates the intentions and goals of people involved in the No On I campaign. I don’t know where Will is getting the inside information to support these insights, but his version is very different than I have observed.
John Munn
Is it too much to ask that the City of Davis obey the law and have the City Leaders make the best of the situation.
I don’t know the details and interpretation of Prop 218. If Prop 218 does not exist, and someone asks me if ratepayers in Davis should pay for the water bill of City of Davis, I would say no. Because that bill should be paid not only by ratepayers (who receives a water bill), but by the general tax revenue of the City.
The water bill of the city should not be absorbed by those who pay water bills. It should be absorbed by the pool of the revenue.
When the city pays its water bill this way, there is an intuitive sense of proportionality:
Water Plant has yearly expense of $100K.
o Person A uses 1% of the water, so he pays $1K, from his revenue.
o Company B uses 5% of the water, so it pays $5K, from its revenue.
o City uses 10% of the water, so City pays $10K, from its revenue.
Intuitive and kindergarten-proof.
No one is getting a free-ride of the water, every one should conserve.
If there is a law that requires the City to show these numbers on the bill, the doubts on whether the bills are fair should disappear.
1) Total expense of the water system for the billing period.
2) Total revenue of the water system for the billing period.
3) Total water processed for the billing period.
4) Total water consumed for the billing period.
I believe the City must necessarily have these numbers. Without these numbers, they can’t logically know how much each bill should be. But I think it is acceptable if the City shows the numbers for the previous billing period on the current bill.
An honest City has no reason not to show these numbers because these numbers would eliminate the question on whether the billing structure is disproportional.
If the City wants to cheat, they would have to show false numbers, which would require a high level of corruption than simply not giving the data, hoping people would forget, and hoping that people are confused.
For the sake of accountability for the water project (any water project), the City should show the estimated expense as approved by the voters. A chart of estimated expenses should show on every bill along with the actual expenses. An honest City would want to show such a chart because it allows everyone to pay attention to the progress of the development. If the developer slacks and tries to juice the City for more money, everyone in the City will see the effect and demand the developer to stick to the budget that they should have agreed.
Give the people the data, and the people will protect the City, because the City is the people.
jrmunn said . . .
[i]”I realize that fact checking is not required for expressing one’s opinion in a blog, […] Will is not clear about who the “They” are who filed a lawsuit against Measure E, but it was not me or the Yolo County Taxpayers Association.”[/i]
John, your comment above confuses me. Can you help me out of my confusion? Page one of the complaint appears to list you as one of the Plaintiffs in two different places. How is that consistent with your statement above?
[IMG]http://i1104.photobucket.com/albums/h321/mwill47/Complaint-VerifiedSIGNED30Jan13_zpsdc1b3389.jpg[/IMG]
Edgar Wai said . . .
[i]”I don’t know the details and interpretation of Prop 218. If Prop 218 does not exist, and someone asks me if ratepayers in Davis should pay for the water bill of City of Davis, I would say no. Because that bill should be paid not only by ratepayers (who receives a water bill), but by the general tax revenue of the City.
The water bill of the city should not be absorbed by those who pay water bills. It should be absorbed by the pool of the revenue.
When the city pays its water bill this way, there is an intuitive sense of proportionality:
Water Plant has yearly expense of $100K.
o Person A uses 1% of the water, so he pays $1K, from his revenue.
o Company B uses 5% of the water, so it pays $5K, from its revenue.
o City uses 10% of the water, so City pays $10K, from its revenue.
Intuitive and kindergarten-proof.
No one is getting a free-ride of the water, every one should conserve.”[/i]
Edgar, until I see the accounting detail of both debits and credits, I’m holding my counsel. Why? That is simple. In 2011 based on the information that the rate consultant reviewed as part of the cost of service study that underlies the rates, the Water Enterprise Fund “purchases” approximately $500,000 of Administrative/Billing services from the General Fund (the Finance Department) as well as other services from the General Fund. In addition, the meter readings for City-owned locations resulted in approximately $500,000 in water billings. Further, in the data provided to the WAC by the rate consultant on 4/12/2012 there is an entry for Fund 511 – Water Operations in Account 7565 Water Inter-Department Charges for significantly less than $500,000. There appears to be “netting” of debits and credits in order to create that Account 7565 entry. So until we see the detail it is premature to say there is a free-ride being gotten.
Interesting. It certainly would be ironic if the suit was dismissed as being without merit, but that happened after the election. That could lead one to the conclusion that the suit was primarily a political tactic rather than actually having substance. But of course, we won’t know for months.
Re: Joe
[i]”So until we see the detail it is premature to say there is a free-ride being gotten.”[/i]
I understand what you say. I did not think that my statement was accusational. I was saying that regardless whether anyone was cheating, an honest City has an intention to readily disclose the data to protect itself and to protect others against itself.
I hope that my second post was enough to show this explanation if it is read again in this light.
Matt William gave me some numbers for the expenses and projected revenue, but that only goes to 2019. Do you have data that we could combine? I want to see a chart that goes to 2045 and plot the yearly water bill for a household that uses 100 ccf each year.
I also asked Matt to do the estimation for that. I think he is working on it.
Will Arnold: [i]”It is no surprise that members of the Yolo Taxpayers Association would file a lawsuit…
“They filed a lawsuit during the Measure [b]E[/b] school campaign”[/i]
JRMunn
“[i]Will is not clear about who the “They” are who filed a lawsuit against Measure [b]E[/b][/i]”
Joe Friday:
“[i]John, your comment above confuses me. Can you help me out of my confusion? Page one of the complaint appears to list you as one of the Plaintiffs in two different places. How is that consistent with your statement above?[/i]”
Joe: If you read the quotes above it is clear that John Munn was referring to Will Arnold’s comment regarding the Measure [b]E[/b] lawsuit, not the current one. John is not saying he did not file the current lawsuit, only that he was not involved with the Measure [b]E[/b] suit.
That said, I have always respected John Munn, even when I did not agree with his point of view. With this suit however, he has lost that respect, and I hope that he, and everyone else involved with this frivolous piece of political theater, receives nothing but the public scorn that they deserve. You don’t sue someone and then claim that you are helping them. What a complete pile of used cow feed.
“… a group calling themselves Yolo Ratepayers for Affordable Public Utility Services….”
David, have you been able to determine the true identity of this supposed organization? What is the source of the “news release” you received? Were there any contact names, addresses or telephone numbers that would give you a hint of the origin?
Knowing how you were able to track those responsible for the infamous Sue Greenwald mailer, I expect you would have little trouble determining who really is generating this lawsuit as well as the PR company attempting to get media outlets to publicize the suit prior to the election.
Is there any relationship between the “Yolo Ratepayers” and the “Yolo County Taxpayers”? Do you think you’ll ever be able to locate someone to question why the perpetrators would time this suit just before the measure vote that Michael claims is unrelated? What is John R. Munn’s role in this? Has the “Yolo Taxpayers” filed a political fund report yet? Inquiring minds and all.
I think one of the problem in this dispute is the notion of “fair billing”.
From the perspective of WAC (?), it is fair for a ratepayer to pay for the distribution cost even if no water is used.
But from the perspective of a ratepayer, not necessarily all ratepayer, the system is just a Black Box. The ratepayer does not care what happens inside that black box, the ratepayer just wants to pay a bill proportional to his water use.
In the following I try to point out the concerns.
[b]Concern:[/b] The billing is unintuitive and there exists ratepayers who would rather pay proportional to use only.
Observation: The ratepayer isn’t talking about not paying bills. He wants to pay, and if everyone is billed like this, the system costs will be all covered. So… Why not?
Resolution: Change the water rate to be proportional to use. Keep the maintenance work, but charge all of them proportional to use. The ratepayer is not complaining about this simple scheme. There is no reason to have a more complicated scheme.
[b]Concern:[/b] In the summer, some people who have large irrigation would use a lot more water, and in order to meet those demands, the water system is sized a larger than it would be if no one had those large irrigation. It is unfair to the normal small household ratepayer to pay the same rate as the large irrigation ratepayer.
Observation: There are two factors that would make this issue significant. Factor 1: Water costs a lot higher in the summer – If water costs the same as in winter, there will be no discrepancy. Factor 2: The seasonal water consumption pattern drastically differ for some ratepayers – If everyone use more water in the summer, there is less need to tell who is using more.
Resolution: It seems that once a new water plant is built, all of the uses will be within the capacity of the plant. In that case Factor 1 does not exist, and proportional billing can be used. If Factor 1 exists, it would be good to check if any type of ratepayers in Davis uses significantly more water in the summer.
“David, have you been able to determine the true identity of this supposed organization? What is the source of the “news release” you received? Were there any contact names, addresses or telephone numbers that would give you a hint of the origin?”
The true identity? I think just about everything was laid out, I listed the names of the lawyers, the names of the plaintiffs, the press release came from Michael Harrington, which was stated in the article, what exactly do you want that was not provided already?
“Knowing how you were able to track those responsible for the infamous Sue Greenwald mailer, I expect you would have little trouble determining who really is generating this lawsuit as well as the PR company attempting to get media outlets to publicize the suit prior to the election.”
I’m confused by this comment. I don’t know exactly what was not reported here that should have been.
Here is what I wrote:
[quote]According to a press release, a group calling themselves [b]Yolo Ratepayers for Affordable Public Utility Services[/b] believes “the City of Davis has defrauded Davis ratepayers for years by failing to pay for any of the City’s own water use as required by Proposition 218.”
The suit was filed in Yolo County Superior Court on Wednesday by Davis residents [b]John Munn and Nancy Price[/b]. It asks the court to declare that the city’s existing rate structure violates Proposition 218.
….
The group is represented by [b]Jonathan Morse of the Morse Law Group located in Westlake Village, and Michael Harrington[/b] located in Davis.[/quote]
As these things go, this was pretty transparent.
What else do you want to know?
“Is there any relationship between the “Yolo Ratepayers” and the “Yolo County Taxpayers”?”
Only that John Munn appears to be in both groups. And apparently Michael Harrington wrote a letter to Bittle. I don’t think Yolo Ratepayers is affiliated with Yolo County Taxpayers.
“Do you think you’ll ever be able to locate someone to question why the perpetrators would time this suit just before the measure vote that Michael claims is unrelated?”
I’m skeptical of Mr. Harrington’s claim that the suit is unrelated.
“What is John R. Munn’s role in this?”
He signed the complaint as a plaintiff.
“Has the “Yolo Taxpayers” filed a political fund report yet?”
If their purpose was to file the lawsuit, they wouldn’t need to.
“Inquiring minds and all.”
I don’t think you’re questions are particularly illuminating and in fact, I have to question how well you actually read this story in light of most of those questions. I don’t think there is any mystery here that needs probing. My efforts will focus on whether the city has paid for its water not who is a member of the group when there are signatures all over the complaint that tell us that.
Actually, I think you did an excellent job. My cynical queries evolved from the reactions to your story. The little Arnold-Munn dust-up and the fact that Michael again decided to deflect a legitimate question with a questionable assertion that the suit and its timing is unrelated to the measure.
I do think (especially now that we’ve seen the reactions) that talking with Mr. Munn could be illuminating. What is his role in the lawsuit and the “Yolo Ratepayers”? Was the group also formed to conduct a political battle against the current measure? Who is financing the suit?
I still don’t see that the news release came from Michael Harrington although I read the story several times, only that it it came from “Yolo Ratepayers.” But, the fact that Michael serves as the public relations firm as well as law firm for some group that grow’d like Topsy seems instructive.
I certainly support your intention to keep your eye on the ball about “whether the city has paid for its water.” The Vanguard’s coverage does coninue to trigger an interest about the behavior and roles of the players in the Davis water wars.
David,
[quote]According to a press release, a group calling themselves Yolo Ratepayers for Affordable Public Utility Services[/quote]
[quote]As these things go, this was pretty transparent.
[/quote]
Overall I would agree with most of what you wrote about this issue. I do think that there could be one exception and I suspect that you may know the answer off the top of your head. If it were the case that the two groups, the Yolo Ratepayers for Affordable Public Utility Services and the Yolo County Taxpayers had exactly the same membership ( as opposed to John Munn just belonging to both groups), then the disavowal of involvement of the Yolo County Taxpayers involvement would have been disingenuous at best. My question would be are these two groups identical or significantly different in their membership?
Yeah I don’t think the membership overlaps other than John Munn.
Edgar Wai said . . .
[i]”I think one of the problem in this dispute is the notion of “fair billing”.
From the perspective of WAC (?), it is fair for a ratepayer to pay for the distribution cost even if no water is used.
But from the perspective of a ratepayer, not necessarily all ratepayer, the system is just a Black Box. The ratepayer does not care what happens inside that black box, the ratepayer just wants to pay a bill proportional to his water use.
In the following I try to point out the concerns.
Concern: The billing is unintuitive and there exists ratepayers who would rather pay proportional to use only.
Observation: The ratepayer isn’t talking about not paying bills. He wants to pay, and if everyone is billed like this, the system costs will be all covered. So… Why not?”[/i]
Well laid out thoughts Edgar. Let me do my best to address them.
One valuable component of the water system is fire protection. In a perfect world none of us will ever experience a fire, but we all know that there is no such thing as a perfect world and fires do happen.
Further, when a fire does happen, in most cases the fire trucks pull up to the fire hydrant, connect their hoses and pour copious amounts of water onto the property that is ablaze. How is that water use metered? Will the owner of the building that experienced the fire see the hydrant water use on his/her next bill? No, he/she won’t.
So, since fireline protection costs are totally independent from metered use amounts, how do you propose they be paid for?
Edgar Wai said . . .
[i]”Concern: The billing is unintuitive and there exists ratepayers who would rather pay proportional to use only.
Observation: The ratepayer isn’t talking about not paying bills. He wants to pay, and if everyone is billed like this, the system costs will be all covered. So… Why not?” [/i]
Another aspect of a water system that needs to be considered is what is the true value of the system. Said another way, what are we purchasing? Or from the perspective of the purveyor, what is the product/service that they are selling?
As a customer, is the water itself what you value? If you knew you were going to use 1,000 gallons of water in a period of time and that half the time you turned on your tap water would come out and the other half of the time water would not come out, what would your level of customer satisfaction be?
The reality of what the water district supplies us is reliability first and foremost. We want what we want whenever we want it. That reliability is again not related to actual metered use. How do you propose that we pay for the reliability “value” that we all receive from the water system?
Edgar Wai said . . .
[i]”Concern: In the summer, some people who have large irrigation would use a lot more water, and in order to meet those demands, the water system is sized a larger than it would be if no one had those large irrigation. It is unfair to the normal small household ratepayer to pay the same rate as the large irrigation ratepayer.
Observation: There are two factors that would make this issue significant. Factor 1: Water costs a lot higher in the summer – If water costs the same as in winter, there will be no discrepancy. Factor 2: The seasonal water consumption pattern drastically differ for some ratepayers – If everyone use more water in the summer, there is less need to tell who is using more.
Resolution: It seems that once a new water plant is built, all of the uses will be within the capacity of the plant. In that case Factor 1 does not exist, and proportional billing can be used. If Factor 1 exists, it would be good to check if any type of ratepayers in Davis uses significantly more water in the summer.”[/i]
Another superb question Edgar. Let’s look at your resolution and dig into it a bit. If you [u]think like an engineer[/u] your resolution is 100% accurate. The plant is built and that is the end of things.
The problem is that the bricks and mortar assembly process that engineers focus on is only the end of the story if we pay for all those bricks and mortar with a one-time cash payment. If we did that then all of us would be much poorer, but we would know that the ongoing costs of the system would not include any debt repayment or interest costs. So the heavy irrigator would pay a much larger portion of that one-time cash payment and the normal small household would pay less.
In reality, as a community we are not prepared to dig into our pockets and pay the construction costs all at once. Instead we are taking out a 30-year loan (mortgage) to pay for those construction costs. So now we have the heavy irrigator starting with their larger portion of the capital costs and therefore their mortgage payment each year is going to be higher than the normal small household’s mortgage payment will be for their lower share of the construction costs.
Said another way you need to [u]think like an accountant[/u] to get a true multi-year perspective on the annual cost sharing associated with building a water system infrastructure. That is true whether you are looking at the construction costs of the six deep aquifer wells, or the construction costs of the two above ground storage tanks we have, or the construction costs of the surface water plant. Thinking like an engineer only tells you the beginning of the story. Thinking like an accountant tells you the whole story . . . beginning, middle and end.
[DV] ([url]http://davisvanguard.org/index.php?option=com_content&view=article&id=6066:water-project-opponents-file-suit-against-prop-218&catid=50:elections&Itemid=83&cpage=60#comment-175078[/url])
Q: Who will pay for fireline expenses when that water use is not metered?
A: The City will pay for all City water use and unmetered water use using its revenue, which is a mix of a few sources including taxpayers that are not ratepayers.
Explanation by numbers:
[img]www.skylet.net/docs/2013-02-01-2033-FirelineCost.png[/img]
Q: How does the City pay for that additional expense?
A: There are a number of possible ways. The best option is one that causes least disturbance for the situation. The following choices are not ranked in any particular order.
a) Ask for monetary donation
b) Do nothing and wait for the a surplus next year to cover the debt
c) Ask the State government to pay for it
d) Ask for the Federal government to pay for it
e) Ask for the Federal government to ‘write it off’
f) Ask Ratepayers to absorb that expense
g) Ask Taxpayers to absorb that expense
h) Divert money from City services by reducing services
i) Divert money from City services by reducing pay to City workers
j) Ask for help and donation from neighboring city to rebuild
k) …
To context is important in deciding which option is best for a given situation.
Link to the picture that is not displayed: [PNG] ([url]http://www.skylet.net/docs/2013-02-01-2033-FirelineCost.png[/url])
Edgar Wai said . . .
[i]”Q: Who will pay for fireline expenses when that water use is not metered?
A: The City will pay for all City water use and unmetered water use using its revenue, which is a mix of a few sources including taxpayers that are not ratepayers.”[/i]
Edgar, do you really see the City as the beneficiary of the water dispensed from a fire hydrant to put out a fire in an individual’s home? Wow. I certainly do not see it that way. If we use your logic, then why doesn’t the City pay the fire insurance premiums for every resident in the City?
For the most part fire is a very personal experience. Why should I as a citizen pay for the water used to put out your fire?
Re: Matt,
I do not understand your question.
The People pays for the City, and the City pays for services that benefits the people. It is a [b]Cycle[/b]. The City represents an account common to the people. In my example, I intentionally specified that it was a natural fire, such that there is no “why should I pay to put out your fire?” in that scenario.
Do you want to specify a scenario?
If a homeowner overloaded his circuits and burned down his house, does it make sense for the transactions to go in this sequence:
1) The City pays for the water used to fight the fire.
2) Then the City figures out that the homeowner is at fault.
3) The City asks the homeowner to pay for that expense.
In my scenario, suppose there is a big natural fire.
Who should pay for that bill?
Edgar, fire protection is a “common good” that is provided to all the property owners by the City. Therefore all the property owners should contribute to covering the costs of that common good according to the value that they receive from the common good.
It is like fire insurance. An actuary calculates up the costs of providing the common good to the policy holders. Each policy holder chooses a coverage that is consistent with the value of their asset. Fireline works the same way. A larger home will require more water to put out a fire when and if there is a fire. Rather than try and selectively bill the actual property owners who experience a fire, when and if they do experience that fire, the principles of actuarial science spread the cost risk across the entire population of rate payers.
Do you really want the City to be going through the process of figuring out whether the homeowner is at fault or not? Will the City have the investigatorial skills in its cadre of employees to be able to make such a determination? What happens if the homeowner disagrees with the City’s determination. Then the City has to spend the money to either hire lawyers as employees to represent the City in court or pay for outside counsel to defend the City against the homeowner’s assertion that the City’s decision about fault is either uninformed or incorrect or both. If the court finds that the City’s determination is either uninformed or incorrect then the City will be liable for a product liability suit for its wrongful determination as well as damages for the mental anguish that its wrongful determination has caused the homeowner.
Given all the above, why not simply spread the fireline costs proactively across the entire customer base? That is much, much simpler. It is actuarially much less risky. It mitigates the City’s exposure to embarassing itself due to differences of opinion about fault.
That way, regardless of whether the fire is natural or not natural in its origins, the costs of the water used to fight the fire are prepaid.
[b]Re: Cost of Reliability[/b] [DV] ([url]http://davisvanguard.org/index.php?option=com_content&view=article&id=6066:water-project-opponents-file-suit-against-prop-218&catid=50:elections&Itemid=83&cpage=60#comment-175079[/url])
Q: Who should bear the cost of readiness to serve?
A: This question depends on whether the Ratepayer has a choice to choose different readiness levels. If the Ratepayer cannot choose, the Ratepayer’s bill should have a component proportional to that.
Comparison by numbers:
[ Comparison of Effect of Fixed Rates and Proportional Rates] ([url]http://www.skylet.net/docs/2013-02-01-2208-FixedReadiness.htm[/url])
When the City charges the consumers on readiness regardless of consumption, some consumers will have “unfair” bill.
The table also shows additional effects caused by fixed water consumption rates, when there is a fixed expense.
Edgar, let’s talk a bit about the numbers in your examples from Comparison of Effect of Fixed Rates and Proportional Rates.
First we have the proportions of costs
In your example you have a total of $125 of expenses.
The Cost of Service analysis completed by Bartle Wells computed that $25 of those costs are Variable Coats and $100 of those costs are Fixed Costs.
Of the $100 of Fixed Costs in your example $5.65 are Readiness to Serve costs.
The new customer arrives under your scenario, the City must incur the expenses of installing and connecting the new customer’s meter. Those incremental costs associated with the new meter are charged to the customer in the form of the Readiness to Serve portion of the customer’s Distribution Charge.
Of the $100 of Fixed Costs in your example $84.38 are Supply Infrastructure costs.
Again the new customer arrives under your scenario. Since the whole purpose of the Supply Charge is to capture 100% of the Fixed Costs associated with the supply infrastructure, and no more and no less, in your example where the $84.38 is spread over 100 units of demand, each customer is paying $8.44 per unit of demand before the new customer arrives and only $5.63 per unit of demand after the new customer arrives. ($8.44 x 100 = $84.40 and $5.63 x 15 = $84.45) So the “profit” increase for the system is $0.01, and that is only due to rounding.
The Variable Costs in your original scenario are $20 and the Variable Revenue is $20. After adding the new customer the Variable Costs rise to $30 and the Variable Revenues also rise to $30.
So the total amount of the “unfairness” in your scenario under CBFR would be $0.01 out of $135.00. That is less than on one-hundredth of one percent, and only exists because of the rounding of pennies. If we could pay in portions of a penny, then the “unfairness” would be reduced to $0.00.
Edgar, my bad. The “profit” due to rounding is $0.05 not $0.01 and the percentage is less than four one-hundredth of one percent.
[b]Re: Construction Costs[/b] [DV] ([url]http://davisvanguard.org/index.php?option=com_content&view=article&id=6066:water-project-opponents-file-suit-against-prop-218&catid=50:elections&Itemid=83&cpage=60#comment-175080[/url])
Q: If the City wants to build a larger water system, who should pay for it?
A: It can be paid in any method as long as the people agrees. In general, it can be paid gradually by the City and the Ratepayers proportional to their on-going water consumption.
Q: If the rates are proportional to use, wouldn’t it be unaffordable to the consumer who uses a lot water?
A: In that case the people of the City could decide to subsidize those consumers, or dealt with in any other way the people sees fit.
Comparisons by numbers:
Due to the details needed to show the results, a spreadsheet is attached.
[ Simulation of Water Rates and Tax Rates (.xls) ] ([url]www.skylet.net/docs/2013-02-02-PIControllerForTax.xls[/url])
Please note that this Excel sheet may be updated as more realistic data are available.