As we await Judge Maguire’s ruling on the constitutionality of the water rates, one of the big questions moving forward is whether the overturning of the water rates is simply a nuisance that can quickly be corrected, or whether it could actually force the city into a new vote.
The key to this question is language within the ballot measure itself. The ballot asked, “Shall Ordinance No. 2399 – be adopted, which grants permission to the City of Davis to proceed with the Davis Woodland Water Supply Project, to provide surface water as an additional supply of water, subject to the adoption of water rates in accordance with the California Constitution (Proposition 218)?”
The key language here is “subject to the adoption of water rates…”
Michael Harrington has been arguing that this process is not over until the courts ratify the water rates. He argued back in July, “The Measure has a clause making an affirmative vote for the Measure also ‘subject to’ the adoption of rates conforming to Prop 218. Since the rates litigation has not been decided, the rates are not final. Measure I is not final.”
It is a view that was shared by CBFR (consumption-based fixed-rate) developer Matt Williams in a July post, “I’m not sure that the City has actually completed (satisfied) the conditions set out by the words you quoted from Measure I, ‘subject to the adoption of water rates in accordance with the California Constitution (Proposition 218).’”
He added, “I have no trouble arguing that there is a conditional adoption of the water rates, but until the water causes of action of the YRAPUS [Yolo Ratepayers for Affordable Public Utility Services] case are resolved by Judge (Maguire), then the legality of both the rates and their adoption is subject to conditions, and those conditions could indeed result in the rates never being fully adopted.”
While it is unlikely a court would put an injunction on the financing of the project now, if Judge Maguire invalidates the rates, that becomes another matter.
Some have speculated that the city’s best option might be to concede the loss and simply attempt to pass new rates. But that might be problematic itself. For one thing, a large number of municipalities rely on water rates similar to the Bartle Wells rates. For another, there is a reasonable question as to how much time the city would have after Measure I was passed to approve the water rates.
The legal bind is in part due to belief by City Attorney Harriet Steiner that the water rates themselves could not be put on the ballot and, in an effort to link the ballot measure to the water rates, they inserted a subject clause.
In November 2012, Ms. Steiner wrote, “Staff has concluded that in order for the measure to be binding, the limitations of the language must not render the project infeasible, impede desirable procurement methods, preclude advantageous financing options and recognize that final design, final costs and final rates (approved by the rate customers) are not yet available.”
All of this speculation hinges on whether Judge Maguire rules that the rates violate the constitution. That is a tough call, but as we have argued a number of times, it is quite clear that Bartle Wells is heavily disproportionate, with low end users paying far more on a per gallon basis than high end users.
This is a point that came up during the arguments a few weeks ago where the plaintiffs argued that this amounted to a subsidy by low end users.
The plaintiffs would argue that the meter size, in effect, forces low end users, most of which they claim are seniors, to subsidize the costs for water use by larger users. As Michael Harrington argued, “That’s just not fair, not proportional.”
But one of the key questions here is what exactly is the proportionality requirement under the law. As Judge Maguire noted, there are three potential levels of generality in which we could (a) compare costs user by user, (b) compare costs parcel by parcel, or (c) compare costs class by class.
John Morse would argue that the effective per CCF rates for the low end users, which were at times double or triple those of high end users, took this out of the realm of reasonableness.
On the other hand, the city very clearly argued that, in their view, this was a class by class comparison. Ms. Steiner argued that this is what the case law states.
Judge Maguire, however, noted that the case law actually seems at odds with the actual language of Prop 218, which defines proportionality: “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.”
Ms. Steiner argued that the system charges the same across user classes and noted that the city builds to capacity, to peak usage during the summer, so that when a customer turns on the water, they are guaranteed that water will flow. The meter is therefore not based on the usage of CCF but rather on the ability to use the water.
The city argued in its response brief, saying, “The City is not, as Plaintiffs contend, required to, nor reasonably able to set, a rate for each individual customer based on the customer’s then current use pattern. Indeed, by setting water rates that account for peak demand and peak use, the City is harmonizing its dual constitutional obligations to promote water conservation (Article X, §2) while not charging users more than their proportional cost of service under Proposition 218.”
In our view, if the plaintiffs had simply argued that the Bartle Wells rates were disproportionate and showed how the Loge-Williams rates fixed those problems, they would have a pretty strong case.
The Loge-Williams rates, as we have shown, do not completely fix the problem, but they strongly mitigate it.
However, had the plaintiffs used that argument, they would likely not be able to invalidate the whole of Measure I by cutting out the “subject to” plank that is required for passage.
This analysis necessarily depends on how Judge Maguire views the whole of the rates and, if he invalidates the rates, whether the city at this late point can satisfy the “subject to” clause by simply approving rates that meet the constitutional threshold.
—David M. Greenwald reporting