City sued over water rates, use

By Tom Sakash
From page A1 | February 01, 2013 | Leave Comment

A class action lawsuit was filed Wednesday against the city of Davis in Yolo Superior Court, alleging that the city unlawfully fails to charge itself for water. The suit also alleges that Davis has adopted, and plans to adopt, illegal water rates to bill customers.

The plaintiffs — the Yolo Ratepayers for Affordable Public Utility Services and John R. Munn, past president of the Yolo County Taxpayers Association — are represented by attorney Michael Harrington. He is a former Davis City Council member who led the referendum campaign in late 2011 that forced the council to repeal rates it adopted to pay for the Woodland-Davis Clean Water Agency project.

The Yolo Ratepayers group is asking the court to order the city to begin paying for the water it uses, just like any other water customer.

The group also wants the city to throw out all current and proposed water utility rate structures and force Davis to develop a structure that’s proportional and fair under Proposition 218.

The complaint also asks that the city establish a common fund to be set aside for customers who want a refund on the money they have been overcharged.

Under Prop. 218, a ratepayer cannot be charged more than the cost of what it takes to supply water to their property. If the city pays nothing for the water it consumes, the remaining users connected to the utility essentially disproportionately overpay for their water service.

“The plaintiffs and their counsel believe that the city of Davis should fairly charge its ratepayers for high-quality and affordable public utility services,” Harrington said Thursday.

“It has come to our attention that the city has not been doing that and we believe that it is important to take the necessary legal steps to ask the court for assistance, because so far the city government has not been responsive to our requests that it protect the interests of all ratepayers.”

After receiving multiple requests from the media for information about whether the city pays for its own water, a city official admitted this week that it doesn’t.

City Attorney Harriet Steiner said Thursday, however, that while the city does not keep track of the water it uses “to the penny,” it makes every effort to offset its water usage costs by forfeiting costs the water division would owe to the general fund.

“Presently the city does not separately account for water used at city facilities,” the city’s statement said. “(But) the city also does not charge the water division rent for its use of city park space where some wells are located, and the reimbursement of other city services and facilities is overdue for reconciliation and an update.

“Over the past few years, the City Council has considered how to fund water used at city facilities in order to pay into the water enterprise fund and what is reasonable to charge for water division use of city park space and other city services and facilities.”

Added Steiner: “We’re working to make sure that we’re in compliance with (Prop.) 218 with respect to the city’s water service. We’ve been doing that for a while and we’re continuing to do it. At the end of the day the city will attribute the water (it uses) in a fair way.”

Sacramento case

In 2010, however, a similar lawsuit was filed against the city of Sacramento, which was charging itself only 15 percent of what it consumed in supplying water to city facilities, buildings, public parks and public landscaping, rather than the entire cost.

According to Timothy Bittle, one of the attorneys who filed that suit, the Sacramento city attorney admitted fault and quickly moved to settle with the taxpayers association that coordinated the class action suit.

“The city attorney agreed with us and so we had a couple of settlement meetings very early on and worked out a schedule that would phase in city compliance with the law over the period of three years,” Bittle told The Enterprise on Thursday.

“The city departments would start to pay for their use. There were some logistical things that needed to be worked out, meters needed to be installed, but eventually after the third year the city was treating itself just like any other utility customer.”

Harrington based much of the Yolo Ratepayers’ lawsuit on Bittle’s complaint.

However, the Sacramento suit asked for no common fund. Bittle said any customer after the settlement could have filed an individual claim with the city.

Further charges

The complaint against the city of Davis also alleges that the city’s proposed rate structure to fund the surface water project fails to comply with Prop. 218 because the rates “if collected, would be used to fund the construction of a new joint water project, which would constitute a charge for a service not actually used by, or immediately available to, the owner of the property in question in violation of Proposition 218.”

However, two attorneys not associated with the local situation believe this claim does not hold water.

“The service Davis’ ratepayers are being charged for is water service, and water service is used by and immediately available to all of the customers who pay for it,” said John Bakker of the Oakland-based Meyers Nave law firm. “The fact that the utility is collecting money now to pay for the construction of facilities necessary to provide water service in the future is consistent with Proposition 218. Planning for the future is part of the cost of providing water service.”

Michael Colantuono, of the Colantuono and Levin law firm based in Los Angeles and Penn Valley, said this particular line within Prop. 218 refers to a stand-by charge for vacant properties not connected to the public utility.

“The city is allowed to maintain … its utility by keeping it current,” Colantuono added.

As far as the rate structures the city has implemented and plans to implement, all of which are being challenged in the lawsuit, both attorneys found them proportional and constitutional under Prop. 218., including the innovative and untested consumption-based fixed rate model. That model was developed by local residents Frank Loge and Matt Williams, members of the Davis Water Advisory Committee.

The city’s own Prop. 218 attorneys have signed off on the rate structures as well.

It’s unclear whether the lawsuit will throw a monkey wrench into the timing and implementation of the Woodland-Davis surface water project, which is the subject of a March 5 mail-only election.

Steiner could not say Thursday if the suit would have any effect on the council’s plan to raise the revenue it needs for the project.

“The city hasn’t been served and (I) have not reviewed the complaint,” Steiner told The Enterprise. “Until we’re able to do that, the city has no comment in respect to (how) the lawsuit might (affect the current Prop. 218 process).”

Property owners began receiving Prop. 218 notices in the mail Thursday and have until March 19 to protest the five-year rate schedule the council signed off on in January. The rates likely will triple the average water bill in Davis.

The council plans to conduct a public hearing on March 19 where it will adopt the rates necessary to pay for the Woodland-Davis surface water project. If more than half of the roughly 16,500 property owners in Davis protest, the rates will not be adopted.

Steiner did say, however, that the claims would have no effect on the Measure I vote. Measure I, an all-mail election for which ballots are to be sent out starting Monday, asks residents whether they approve of the city moving forward with the surface water project.

The $113 million project will pump water from the Sacramento River, treat it and pipe it to Davis and Woodland, for each city to use as their primary source of potable water.

— Reach Tom Sakash at tsakash@davisenterprise.net or 530-747-8057. Follow him on Twitter at @TomSakash