City and YRAPUS Await Judge Maguire’s Ruling – Despite claims to the contrary last week and this week, a group of petitioners looking to qualify an initiative for the June ballot are not ready to turn in their signatures yet, Michael Harrington confirmed on Thursday.
To qualify for the January ballot, the initiative backers would need to submit their signatures within the next two weeks. In order to qualify they would need five percent of the numbers of votes cast for candidates for governor in the city of Davis in 2010 – a figure which is 1161.
The initiative seeks to invalidate water rates that were set during the joint Measure I – Prop 218 process in the spring of 2013.
“New rates approved by the City Council this year increase annually for the next five years,” the initiative backers, Pam Nieberg and Ernie Head write in their initiative statement of proposed action. “After the five year increase, the water bill paid by a typical, single-family residential customer (including new base rates and consumption fees) will have at least tripled.”
They also attack the Prop 218 process, arguing, “Voters have not been given the opportunity at a regular, direct election to approve recent water rate increases, despite the voters’ clear statement in the successful Fall 2011 water rates referendum that the voters desired to repeal or vote upon such large increases.”
They add, “The people of the City of Davis desire to establish reasonable water rates that accurately represent the cost of providing water services to residents and business. By approving this initiative, voters will repeal the confusing, unfair and onerous CBFR rates that the City Council deliberately kept away from the voters by excluding these rates from the March 5, 2013 ballot with the surface water project.”
The initiative seekers are running out of time to get the initiative on the June ballot. In the meantime, we still await Judge Maguire’s ruling.
On Thursday, a local columnist noted, “A recent case in Southern California may shed some light on the situation … in a case decided several months ago, Orange County Superior Court Judge Gregory Munoz found the city of San Juan Capistrano’s water rates “invalid because the fees imposed on each parcel or property exceed the proportional cost of the services attributable to each parcel.” …”
In September 2013, Orange County Superior Court Judge Gregory Munoz issued a final ruling in a lawsuit brought against the city by the Capistrano Taxpayers Association. What is less clear is whether it would have any bearing at all on Davis’ water rates.
The issue in San Juan Capistrano does not appear to be congruent with the issues raised in the Davis Case.
The Capistrano Taxpayers Association argues that in the tiered rate system, that has four tiers and substantially raises the water rates under Tiers 2, 3, and 4, “the City failed to provide any evidence to justify the new rates as required by Proposition 218.”
Judge Munoz ruled that the city failed to carry its burden by proving that the Tier 2, 3 and 4 water rates were “proportional to the costs of providing water services to its customers.”
As the local paper noted, “Like many cities, San Juan’s tiered water rate structure is not designed to accurately reflect cost of service, but to discourage high-volume water use and encourage conservation by charging more to rate payers for excessive use. This is social policy, not cost recovery. If that was the only question, there would be no dispute and no litigation.”
Interestingly enough, the paper notes that Prop 218 is in conflict with the California Constitution, which “requires that public policy encourage water conservation.”
The Orange County Register notes, “A grand jury convened to study water issues in Orange County said in April that, essentially, you should be. A 36-page report issued by the grand jury recommends more cities implement tiered rate systems, calling them ‘one of the best practices in the search for new methods of conservation.’”
The paper goes on to note, “Munoz’s ruling didn’t declare all tiered systems illegal. It simply said San Juan Capistrano’s is illegal because it’s not based on the cost of service. The fix seems simple: provide better support for the higher costs in the tiers by connecting them to costs. But the essence of a tiered system has nothing to do with costs.”
This is a different issue than what emerges in the Davis case. In fact, the very idea behind the CBFR rate structure is to find a better way to measure the impact of water usage on capacity.
As City Attorney Harriet Steiner explained, “We do not build a water system based on gallon by gallon. We build a water system so that in August when you turn on your tap you get water.
“And so we build a water system based on two factors: capacity demands on the system and usage. And so between those two, there are both costs that go to capacity. If you have a house and you have a meter or you have a business and you have a meter, you have the capacity. And we build for that capacity.”
At the same time, the argument made by YRAPUS (Yolo Ratepayers for Affordable Public Utility Services) Attorneys Jon Morse and Michael Harrington is that the disproportionality is at the lower end of the usage, rather than the upper end of the usage.
As Mr. Morse argued, “Under Proposition 218 there’s a requirement that the revenues that they collect from these fees can’t exceed the cost of providing the services. We are not here challenging the way they calculated the costs; that’s for another forum and another time. However, we are challenging whether these fees are proportional.”
He argued, “Arguably the system of setting rates fixed fees by meter size fails Proposition 218’s proportionality test by requiring low water use customers to pay fixed costs for water they have the theoretical potential to use but do not have the actual capacity to use while giving those customers who have a larger share of the water infrastructure based on meter size an incentive to do so.”
Mr. Morse made it clear that his argument is not “in order for there to be proportional costs, everyone has to pay the same per ccf,” but rather that “it’s totally out of whack to hit everybody with a huge fixed rate when there is such a discrepancy, such a diversity, in how much water they use.”
As the Vanguard demonstrated last year, CBFR greatly reduces that disproportionality in the per ccf charge for water, but the plaintiffs here argue that this is not enough.
This is a very different argument, from our perspective, than the one put forward in San Juan Capistrano. Judge Maguire may indeed invalidate these rates based on the above argument. The only thing that the San Juan Capistrano ruling shows is that a Superior Court judge may make rulings that upend long-standing policies.
If Judge Maguire ends up invalidating the Bartle Wells rates, that will likely impact municipalities up and down the state that rely on similar rate structures.
There is also a clear tension in the law, as the Orange County Register noted, between Prop 218’s proportionality requirements and conservation requirements, particularly in a time of impending drought.
—David M. Greenwald reporting