More than two months after the group originally filed the lawsuit in Yolo Superior Court, the first amended complaint was finally served on the city late on Thursday. Michael Harrington, a former councilmember and the attorney filing the suit, repeated claims of strategic considerations as reasoning for the delay in service.
The lack of serving the lawsuit led critics of Mr. Harrington and his suit to assert that the Vanguard should not cover the suit until it was served on the city. While the Vanguard can understand the sentiment, our belief has been that a lawsuit filed, and amended, against the city is news and it should be covered as such.
With that discussion over, we can turn to the examination of the city’s response to the suit.
The suit makes five essential claims, first that the current water rates from August 2010 until April 30, 2013 violate Prop 218 in that “they impose a fee or charge incidental to property ownership which exceeds the proportional cost of services attributable to the parcel.” They then make the same claims regarding the two years of Bartle Wells and the three years of Loge-Williams from the current Prop 218 rates.
The last two claims are that the city is not paying its proportional fair share for its water use and that the wastewater rates, which are based on average water usage for the four winter months, are based on a flawed assumption that the water usage is indoors and therefore it is unconstitutional to use it as the basis for wastewater charges.
The city’s response is perhaps uncharacteristically strong. The city argues that “the City firmly believes the water and sewer rates are legally valid and the lawsuit is without merit.”
They add, “This is based on legal analysis by state-wide experts on rate structure legalities.”
This response is clearly overly-broad. The city cannot assert flatly that the lawsuit is without merit, because there are five parts to the lawsuit and at least three of them appear to have at least some merit.
Clearly, the city is responding here to the second and third causes of action, which are really the only causes of action that have the potential to stop the water project from going forward.
But the first cause of action is more difficult for the city to justify. One observer, not connected with the city, believes that the city may well punt on the first cause of action, believing that it may be cheaper for the city to pay the penalty rather than attempting to justify the rates with a consultant study from 2006 when the original Cost of Service analysis would have been performed.
However, city staff, rate consultants, the city’s attorneys and the WAC all spent a tremendous amount of time on both the Bartle Wells rates, based on a more traditional fixed-rate model, and the Loge-Williams rates, based on CBFR.
The city clearly refers to this when they argue, “The Surface Water Project and the water rates were determined and approved by the citizen-based Water Advisory Committee.”
It is here that we believe it highly unlikely that the court would overturn the Bartle Wells rate structure, which is based on a pretty traditional model of water meter size as the fixed rate, plus a volumetric charge. While this does not appear to be the most fair way of assessing the fixed charges to system, if the court overturned the traditional rates on that basis, we would see much of the state thrown into disarray.
Loge-Williams, based on CBFR, has a stronger rate structure in terms of estimating the actual impact on the fixed system. Given that the city is using the Bartle Wells rates for only two years as a transition, it is hard to imagine that a court would throw out Bartle Wells but leave Loge-Williams intact.
The fourth and fifth claims clearly have merit. The city has acknowledged that, like every other municipality following the 2010 City of Sacramento case, they are moving toward metering their water use. It is rightly characterized as an accounting problem. The question is, what will the court do, particularly since the city has acknowledged the problem and has been working for three years to correct it?
It is certainly not going to alter the surface water project, but it may mean the city has to make fund transfers to balance their books.
Mr. Harrington may, in fact, argue that the city does not get to, after the fact, attempt to bill the water fund for facilities. However, the 2010 Sacramento case clearly shows that the ultimate remedy was to meter and bill for water use, which is where the city has been headed for some time.
Finally, the last contention is the wastewater contention. Clearly there is a problem with this, regarding El Macero. Will a court find that this is a problem citywide, a problem strong enough to throw out the Wastewater Prop 218?
That remains to be seen, but clearly the only impact from this would be that the city would have to devise a more fair way of assessing wastewater impact.
The report from Bartle Wells notes, “The higher water use by El Macero residents in the winter months is used for irrigation purposes, and therefore does not return to the collection system for treatment but either infiltrates into soil, runs off or evaporates.”
“The contention of the Bartle Wells study is that El Macero is unique and has a far higher amount of winter water usage than the typical Davis customer,” City Manager Steve Pinkerton said. “It does not question the validity of our rates for Davis customers.”
“The City does not directly bill El Macero customers,” the city manager said. “The City’s customer is Yolo County. It is the responsibility of Yolo County to conduct a Prop 218 hearing and adopt rates for El Macero customers.”
In the meantime, Bartle Wells argues that, in effect, the city of Davis is overcharging the county for the El Macero impact on the sewer system. The purpose of the Bartle Wells report was to figure out how to fix this problem.
After exploring three options, the report recommends charging the county for El Macero’s proportional share of sewer expenses based on population.
“(Population ratio) may be the best option for all parties involved. It is easy to calculate, simple to implement as a billing option and most efficiently recovers costs of service for a block user group, like the El Macero County Service Area,” the report finds.
That won’t work for Davis, but, regardless, it is not going to impact either the city’s wastewater project or the surface water project.
The interesting thing about the city’s response is that it is not a legal response, but rather a political response.
“The citizens asked for a binding vote on the Surface Water Project. On March 5th, Measure I was approved authorizing the City to move forward on the project,” the city argues. They then note, “It is unfortunate that the Yolo Ratepayers for Affordable Public Utility Services group are not satisfied with the outcome of the Measure I election.”
In other words, the city is attempting to attack the litigants for failing to respect the will of the people.
This is a troublesome view, in some ways. Obviously the city believes that the rates are legal and that this suit is more of a nuisance, but as a general matter, I am uncomfortable with the assertion that the people have spoken, and therefore it is irrelevant if laws have been broken.
The system of governance necessarily has to function through a series of checks and balances. The public voted to support the project, but the public (at least the vast majority of them) had no way of assessing whether the underlying rates, which were not even on the ballot, were legally valid.
We agree that “the City has a duty to move forward” and that it ought to “vigilantly defend itself and the rate payers against this lawsuit.”
The city also points out, however, that “the Davis ratepayers will bear the cost of defending this lawsuit.”
That may, in fact, depend largely on who wins the case. But to me, as the core parts of the case involve the Prop 218 issues, I do not believe the plaintiffs are likely to prevail about the current rates, but the rest of the suit appears to have a good deal of merit. What ultimately happens with those causes of action is less clear.
—David M. Greenwald reporting
