As of Thursday morning, Davis city officials still have not officially been served with the lawsuit filed two weeks ago by the Yolo Ratepayers For Affordable Public Utility Services.
But that didn’t stop the city’s legal staff from releasing a statement earlier this week defending the city’s water rate billing models and the way it pays, or doesn’t pay, for water.
The class action lawsuit alleges that the city’s failure to pay for water directly violates state law, namely Proposition 218, by unfairly unloading those unpaid costs onto the rest of the city’s ratepayers.
However, as City Attorney Harriet Steiner said two weeks ago, while the city doesn’t cut checks to its water fund, it does waive payment from the water division to the city’s general fund, thereby offsetting the costs.
“(The city) provides land and services to the water division, which are offsets to the water costs,” the city’s statement said. “The water division uses city lands for well sites and other water division activities and has not paid rent for these lands. The city believes these costs approximate the cost of the city’s water use.”
The statement reports that the city consumed about $778,000 worth of water in 2012, the majority for irrigation, but only 85 percent of city facilities have water meters in place to track overall consumption.
Michael Harrington, the attorney who represents the group that filed the suit in late January, based much of his complaint on a similar suit lodged against the city of Sacramento in 2010, which had been charging itself only 15 percent for its overall water consumption.
After the suit was filed, Sacramento city officials admitted fault and settled with terms that forced the city to meter and pay for all of the water it uses when providing city services.
It took the city of Sacramento about three years to fully comply.
Davis city officials claim they have been in the process, since that ruling in 2010, of metering their own water consumption. However, according to Bob Clarke, the city’s interim public works director, that process has slowed largely due to a recent one-third reduction in water distribution field crews.
“The majority of meters have been addressed, but there are still some of the larger, more labor-intensive connections to be done,” Clarke said in an email Thursday.
He added that the city has budgeted money for the 2013-14 fiscal year to pay for the water it uses.
Harrington responded to the city’s statement Thursday, saying he believes the case is sound.
“Prop. 218 requires the city to meter its water use, bill itself and that there be a clear and transparent payment back to the water fund by the various city users of water,” Harrington said. “We do not have that situation here.
“I think the city’s explanation is flat-out unbelievable and false and the case will demonstrate that.”
When asked why he and the parties suing the city — John Munn and Don and Nancy Price are the only named plaintiffs — haven’t served the complaint yet, Harrington cited “strategic purposes” on which he would not elaborate.
The complaint was filed with the Yolo Superior Court on Jan. 31.
Meanwhile, throughout the community and within the pages of The Enterprise, a debate rages on over the legality and proportionality of the rate structures the City Council will adopt on March 19 at a public hearing, assuming the Prop. 218 protest process doesn’t foil its plans.
More than half of the 16,000 ratepayers in Davis would have to file written protest with the city clerk’s office by March 19 to stop the council from adopting the rates.
In a recent Enterprise article, two separate attorneys familiar with Prop. 218 offered opinions that the city’s current rate model, in addition to the forthcoming three-tier inclining block and consumption-based fixed rate models, would all pass muster.
“There has to be a rational basis on how you set up your customer classes,” explained attorney Michael Colantuono about the tiered structure. “How you set up your tiers and how you increase the tiers, if there’s a rationale behind it — and it’s not political — the courts will support it.
“If you can stomach the complexity (of CBFR),” he added, “you end up with a powerful tool to establish equity and discourage waste.”
Further, Tom Ash, a consultant who has worked on setting rates for several agencies throughout California, told The Enterprise Thursday in a phone interview that “If Prop. 218 is a question, there’s probably nothing more proportional than CBFR. … I think it would set the new standard for proportionality under Prop. 218.”
City leaders, then, continue to stand by the Prop. 218 attorney they have consulted with throughout the rate-setting process, Kelly Salt, who maintains CBFR’s legality.
The CBFR model, approved by the council in mid-January, would break down water bills into three components once it takes effect on Jan. 1, 2015: a fixed, readiness-to-serve charge determined by water meter size, a uniform block variable fee that charges water customers the exact same amount per hundred cubic feet (ccf) of water consumed and a third piece called the supply charge.
The supply charge distributes the city’s projected annual fixed revenue requirement proportionally, among all water customers, based on how much water they consume total during the peak period of the prior year, May through October.
The reason for setting the CBFR by peak usage, according to proponents of the model, is because a water system and all of the associated infrastructure must be built as large as demand deems necessary. That “necessary” capacity is determined by the most extreme periods of water use, otherwise known as “peak.”
And Salt says, “those who use water during peak times cause the overall system to cost more.”
The rates are being raised to pay for the Woodland-Davis Clean Water Agency project.
The $113 million project will pump water from the Sacramento River, treat it and pipe it to Davis and Woodland to largely replace their well-produced drinking water supplies.
Water bills are expected to triple over the next five years if the project is approved in the March 5 Measure I election. They’ll double, the city says, if the water project measure fails, to pay for deferred water utility infrastructure maintenance.
— Reach Tom Sakash at [email protected] or 530-747-8057. Follow him on Twitter at @TomSakash