City Finally Served in Water Lawsuit

The Vanguard learned early on Thursday that the city was finally served with a lawsuit originally filed on January 31, 2013, with an amended complaint filed on March 29, 2013, by the Yolo Ratepayers for Affordable Public Utility Services.

In addition to the previous contention that the Prop. 218 process was unconstitutional under the provision’s proportionality clause, and the continued charge that the city has failed to pay for its own water use, the suit claims that in May of 2008, when the city established wastewater rates based on a “winter water usage” calculation, the rates established were “not rationally related to the amount of wastewater used by a particular property owner.”

The city responded in a statement Thursday morning, “The City firmly believes the water and sewer rates are legally valid and the lawsuit is without merit. This is based on legal analysis by state-wide experts on rate structure legalities.”

The city claims that it has been working on water service delivery options for more than two decades and the Surface Water Project and the water rates were determined and approved by the citizen-based Water Advisory Committee.

“The citizens asked for a binding vote on the Surface Water Project,” the city stated.

On March 5, 2013, Measure I was approved authorizing the City to move forward on the project. In addition, the water rates were approved by the City Council on March 19th after the legally required Proposition 218 process resulted in less than 11% of the ratepayers protesting.

“It is unfortunate that the Yolo Ratepayers for Affordable Public Utility Services group are not satisfied with the outcome of the Measure I election,” the city stated.  “Based on the Measure I vote, the City has a duty to move forward and meet the City’s future water needs. The City will vigilantly defend itself and the rate payers against this lawsuit. Regretfully, the Davis ratepayers will bear the cost of defending this lawsuit.”

“The City is required to meet California water quality standards and obligated to provide a clean sustainable water supply for its citizens. The newly approved water rates will go into effect May 1, 2013,” the statement read.

The suit 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.”

The suit continues, “Plaintiff contends that Current Water Rates are in violation of Proposition 218 and therefore unconstitutional and illegal. The City disputes this contention.”

The suit also contends that the city is illegally not paying for its own water use, pointing to the 2010 case involving the city of Sacramento.

The city has acknowledged that it does not directly pay for the water use, but instead the balance of funds between the two accounts – enterprise and general fund – largely balance.

“The City knows how much water it is using,” a statement by the city received by the Vanguard in February. “Over the past decade, the City has been installing meters for all of its facilities, so that we can accurately measure our water use. The City has approximately 85% of its meters in place, and installation of the remainder is in process. The meters are read just like all other meters in the city. The water use for the areas that are not yet metered is estimated based on water use for similar facilities.”

The city claims, “The City’s water use and payment by the City is included in the current and proposed rate structures. Individual ratepayers are not subsidizing the City’s water use. If the City does not pay its bill, it is money owed to the Water Fund.”

The city manager told the Vanguard that claims of non-payment are “a gross oversimplification.”

Mr. Pinkerton said that while “no check’s been cut… we believe that once we do the final accounting that the taxpayers do not owe themselves anything.”

He added, “I don’t think the taxpayers are going to owe the ratepayers, I think it’s going to balance out.”

The amended complaint noted the city’s failure to establish water rates that are “rationally related to the amount of wastewater used by a particular property owner.”

They argue, “A substantial portion of the property owners use outdoor irrigation during the winter months, and the water thus used goes into the ground and is not returned to the system for wastewater treatment.”

Thus they contend, “The consumption of potable water during the winter months is not an appropriate basis to charge for treatment of wastewater that only flows from inside a home or commercial building.”

“The City has been well aware of this structural defect in its wastewater rate structure,” the suit charges. “Most recently, on or about December 2, 2012, the City received a Report from its consultants, Bartle Wells, concerning the wastewater rates being charged to residents of El Macero.”

In that report, the suit contends, “Bartle Wells made it clear to the City that it was inappropriate to charge El Macero residents for wastewater service based on the water usage during the winter months, and recommended that an adjustment be made for the residents of El Macero, making no adjustments for any of the residents of Davis.”

The suit notes that the ratepayers of El Macero successfully brought a Prop. 218 protest against Yolo County in 2008.  This prevented the rate hike that was approved on May 20, 2008.

The suit charges that the city has been billing the county at the higher rates since 2008, but because of the Prop. 218 challenge, the county only receives the lower rate from El Macero.

“The County has refused to make up the difference, and the City has a growing receivable on its books,” the suit contends. “The difference is approximately $100,000 per year, and this City-County standoff means that the City has not been paid more than $500,000, still increasing.”

“The statute of limitations has probably expired on some of this debt,” they note. “Since the City is not enforcing the debt, there is a growing shortfall in the wastewater rates enterprise account, and the Davis wastewater ratepayers are effectively subsidizing via the County the property owners in EI Macero.”

“The failure to enforce the $500,000 in missing wastewater treatment money is a flat out giveaway of public money to political cronies in the County, and is actionable in and of itself,” Michael Harrington told the Vanguard.  “The damages are whatever the City has lost due to statute of limitations defenses the County might have.”

The report from Bartle Wells notes, “The higher water use by El Macero residents in the winter months is used for irrigation purposes, and therefore does not return to the collection system for treatment but either infiltrates into soil, runs off or evaporates.”

“The current billing methodology employed by the City is based on winter water use,” the report continues. “While generally a more accurate and just methodology for cost recovery from individual customers, this process has several extra unique billing steps as applied to the CSA and eliminates much of the accuracy and resolution of the winter water use method’s intent.”

In short, the report argues that the winter water usage method is not suitable for “the City’s block use customers,” such as those in El Macero.

City Manager Steve Pinkerton noted that the method of billing for wastewater is both fairly common as an industry practice and generally more accurate for individual customers.

“The contention of the Bartle Wells study is that El Macero is unique and has a far higher amount of winter water usage than the typical Davis customer,” Mr. Pinkerton said. “It does not question the validity of our rates for Davis customers.”

“The City does not directly bill El Macero customers,” the City Manager said.  “The City’s customer is Yolo County.  It is the responsibility of Yolo County to conduct a Prop. 218 hearing and adopt rates for El Macero customers.”

The Bartle Wells report recommends a more effective billing methodology to mitigate the overcharging of El Macero residents.

After exploring three options, the report recommends charging the county for El Macero’s proportional share of sewer expenses, based on population.

“(Population ratio) may be the best option for all parties involved. It is easy to calculate, simple to implement as a billing option and most efficiently recovers costs of service for a block user group, like the El Macero County Service Area,” the report finds.

—David M. Greenwald reporting