City Has Opened the Door to Criticism on Water Rate and Prop 218 Timing

It is increasingly looking like Davis Enterprise columnist Bob Dunning is intent on running part of the No on the Water Project campaign from the second page of the Davis Enterprise.  Under existing rules, he largely has the right to do so.

From the Vanguard‘s perspective, our goal is to make sure the public has the most accurate information possible about a highly complex project whose election overlaps multiple constitutional constraints.

The Vanguard agrees with Mr. Dunning’s latest column, that it is problematic that the voters will not know the rates prior to their casting their votes.  The council chose to listen to legal counsel on the timing of the electoral ballot measure versus the timing of the Proposition 218 process.

However, Mr. Dunning, in correctly and properly criticizing the city council and city staff on this issue, goes beyond simple criticism to infer motive that he cannot really sustain on the facts.

Writes Bob Dunning, “For obvious reasons, the City Council – which chose the exact wording on the ballot – decided it was better if the general public was kept out of the loop on the actual financial facts and figures. So much for informed consent.”

Mr. Dunning implies nefarious intent here – and perhaps the city deserves that criticism simply because they left it open – but my reading of the meeting and decision-making process is that the council followed legal advice where it should have been receiving political advice from someone, anyone.  They left the issue open, and now Mr. Dunning is going to make them pay for it.

But Mr. Dunning needs to be more careful with his innuendos suggesting that this is some sort of intentional deception – from our perspective, it is more a comedy of errors.

He writes, “The city claims if it puts a firm dollar figure for the project on the ballot it will be locked permanently into that amount, but there’s nothing that would prevent the city from including an ‘estimated range’ to give us an idea what we’re voting on.”

That is actually only one of the explanations that the council gave for their rationale.

City Attorney Harriet Steiner advanced her belief that the Prop 218 process must be separate and distinct from the voting process.  She does not believe – as she argued last year – that you can referendize the water rates.

This has been a sort of a moving target.  In a previous staff report, Ms. Steiner attempted to steer the council away from a binding vote where she did argue: “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.”

The city council overruled these concerns through the drafting of a generic ballot measure.

At the last meeting, City Attorney Harriet Steiner explained that Proposition 218, passed by the voters, provides for the adoption of water and sewer rates because those rates are deemed to be property-related.

She argued that those who get to participate in the Prop 218 process “are the people who are legally responsible for paying those rates.  In Davis that is the property owner.”

“The rates are proposed by the city council, notices are sent out to all of the property owners because they are the rate payers,” she said, and they can file protests.  If more than half file protests, then the rates cannot go forward.  “There is no provision in Proposition 218 to allow a direct vote by the voters on rates.”

This is where we get to the point about timing of the rates.  Ms. Steiner claims that what the council is proposing to do “is go to the voters and ask all of the voters… whether the city should move forward on this project in light of the proposed rates.  All voters will get to participate in that process.”

The Prop 218 process “is moving forward concurrently and the actual public hearing on the rates will happen after the election.  We felt that that complied with both the state constitutional requirement of Prop 218 together with the process that allows everyone in the city who is a registered voter within the city to participate in a vote on whether or not the project and therefore the costs of the project should move forward.”

The question is really why you cannot have the ballot measure ratify the Prop 218 water rates.  The answer appears to be not a legal one, but one of timing.

As the city staff report explains: “Proposition 218 requires specific procedures for increasing the utility service charges administered by the City. Its provisions call for formal written notification to each affected property owner of current and proposed charges and the opportunity for a property owner to file a formal, written protest of the proposed fees. Proposition 218 specifies that the proposed increases may not be implemented if 50 percent of Davis customers file a written protest. A public hearing on the proposed fees is required to be held not sooner than 45 days after the notices are received.”

So the real answer is not that they cannot be locked into the specific rates (which is a concern), but that it would take the city past their self-imposed March deadline if they ran the election after the Prop 218 process.

So, basically, there are three reasons why the city is proceeding the way it is – not wanting to be locked into the rates (it is easier to run a new Prop 218 process to change the rates than run a new election), legal questions that the city attorney has argued about referendizing the Prop 218 process, and finally timing.

None of this gets to the point that Mr. Dunning tries to exploit: “Then again, when the proposed project is expected to hit $113 million, perhaps more, it may be wise to keep the unwashed masses in the dark.”

He argues, “What the city wants here is a blank check, just in case the project runs to, say, $125 million or $150 million or whatever the final figure may be.”

There is no blank check here.  Any new rate increase would have to go through the flawed Prop 218 process.  Moreover, it is unclear that the project running over budget by even $37 million is going to necessitate a massive change in the Prop 218 rates.

He argues, “The ballot language could have included an upper range ‘not to exceed’ figure, but the potential for that figure to scare off ‘yes’ voters apparently was more than the city could bear.”

In fact, that’s what the Prop 218 process is for.  Right now the not-to-exceed price is the $113 million.  If they end up having to upwardly revise rates, they would run a new Prop 218 process.

Bob Dunning continues, however, noting as we did, “City leaders would have us believe the language of Prop. 218 prevents them from listing the proposed rates on the ballot, but 218 has no such prohibition.”

The Vanguard does not disagree on this point – we believe that the city attorney concocted this argument a year ago based on her interpretation of the law, but with no case law to back it up.

We, in fact, see no reason that this would be the case.  The voters would simply have the final decision on whether to reject the project with the rate hikes or approve it.  It is hard to imagine that this would conflict with Prop 218 law, so long as that process is properly conducted.

That is why I believe this is probably a timing issue as much as anything else.

Mr. Dunning notes, “The city will argue, the rate study still hasn’t been completed and the ballot language was due in the county clerk’s office some time ago. Talk about putting the cart before the horse, it seems elementary that you first know what the cost to individual ratepayers will be before you ask them to vote on a project.”

Again, the city has left themselves open to this criticism.  We still believe that the timing is such that a May vote could maintain the timeline.  Some others who are familiar with the process agree, but General Manager Dennis Diemer believes otherwise.

“And if the rate information isn’t available in time for a March 5 vote, then postpone the election until the rate information is available,” Mr. Dunning argues.  “A couple of months delay won’t make any difference in the grand scheme of things. Especially when the grand scheme is slated to cost $113 million.”

The whole timing issue is a bit strange.  The city of Woodland seems willing to walk away, even though walking away costs them another $70 to $90 million – something that would require a third Prop 218 for their additional rate hikes.

But by pushing the election up two months, issues like this hang out there for Bob Dunning and others to swing away at.  Worse yet, from the city’s perspective, it seems unlikely they will be able to respond until January.  That likely means that Bob Dunning will have free and open season to shape the issues as he sees fit.

The city may survive this, but they are taking a huge and unnecessary risk.

—David M. Greenwald reporting

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