A Wave Of Public Agencies Statewide Are Swept Up In A New Water-Rate Lawsuit

02.27.2020

On November 5, 1996, California voters approved Proposition 218, the “Right to Vote on Taxes Act” (“Prop 218”).  Prop 218 amended the California Constitution by adding elements that affect the ability of public agencies, such as special districts and local governments, to levy and collect taxes, assessments, and property-related fees and charges.  With a few exceptions, “fee” or “charge” means any levy imposed by an agency upon a parcel, including a user fee or charge for property-related service.  Prop 218 generally prohibits the imposition of fees for property-related services that exceed the cost of the service.  Any public agency proposing to adopt a new, or increase an existing, property-related fee or charge must comply with both the substantive and procedural requirements of Prop 218. 

Although Prop 218 legal challenges are not new, on or about February 17, 2020, a unique class action lawsuit was filed on behalf of approximately eighty-one (81) plaintiffs against eighty (80) water agencies throughout the State of California, alleging violations of Prop 218 regarding water rates (“Complaint”).  A copy of the Complaint/Petition can be reviewed here.

The Complaint alleges three causes of action:  (1) mandamus; (2) violation of Constitutional rights; and (3) enjoining illegal expenditures.  Each cause of action generally argues that defendants are unlawfully setting water rates for plaintiffs that exceed the cost of water service.  The Complaint alleges that the water rates paid by the plaintiffs subsidize water service provided to the government and for general governmental service, including public fire hydrant service.  Additionally, plaintiffs allege that their payment for water service funds subsidizes special agricultural water rates.  The plaintiffs pray for damages, an accounting, declaratory relief, and injunctive relief. 

If your agency has questions about this particular lawsuit or would like guidance regarding the legal, procedural and substantive requirements of Prop 218, feel free to contact our office.   AALRR has a long track-record of helping its public clients determine the revenue sources available to them and counsels clients on how to impose such assessments lawfully under the procedural and substantive requirements of Proposition 218.  This can mean assisting throughout the process or advising on a particular legal issue.  We also defend clients in court from challenges to taxes and other revenue sources.  AALRR’s attorneys are also well versed in the interplay between the revenue generating provisions under the Sustainable Groundwater Management Act (“SGMA”) and the requirements of Propositions 218.