October 29, 2013 -- Client Alert
In its recent decision, Griffith v. Pajaro, the Sixth District of the Court of Appeal answered questions about Proposition 218 that it did not have the opportunity to address in its 2007 decision, Pajaro Valley Water Management Agency v. Amrhein (2007) 150 Cal.App.4th 1364. In Griffith, which was a consolidated appeal with related case, Pendry v. Pajaro, the Court reaffirmed its holding that Proposition 218 (specifically, article XIII D, § 6 of the California Constitution) applies to fees imposed upon groundwater production and further clarified that such fees are not subject to the ratification election required for all property-related fees, except fees for “sewer, water, and refuse collection services.”
The Court rejected Plaintiffs’ argument that groundwater management service, which included use of recycled water, supplemental wells, capture of storm runoff, and a coastal distribution system, is distinguishable from domestic water service for purposes of the election exemption. The Court relied upon its analysis in Amrhein, concluding that groundwater production fees are indistinguishable from domestic water service fees for purposes of Proposition 218. It also explained that the Legislature intended for a broad interpretation of “water service,” when it defined “water” in the Proposition 218 Omnibus Implementation Act as “any system of public improvements intended to provide for the production, storage, supply, treatment, or distribution of water.” (Cal. Gov. Code, § 53750, subd. (m).)
The Court provided additional clarifications helpful both in the context of groundwater production fees and generally to all property related fees subject to Proposition 218, including:
PROCEDURAL REQUIREMENTS OF ARTICLE XIII D, SECTION 6:
- Notice and protest rights for fees imposed upon groundwater production must be given to "record owners of parcels" with wells directly subject to the fee;
- Groundwater production fees are subject to a majority protest of all "record owners of parcels" with wells directly subject to the fee; and
- Although a property-related fee that survives a majority protest hearing is then subject to a ratification election, fees for groundwater basin management service are exempted from the election requirement as fees for “water service” (article XIII D, section 6, subdivision (c) exempts fees for “sewer, water and refuse collection services” from the ratification election).
SUBSTANTIVE REQUIREMENTS OF ARTICLE XIII D, SECTION 6:
- The proportionality required by Proposition 218 does not mandate a “parcel-by-parcel” study. City of Palmdale v. Palmdale Water Dist. (2011) 198 Cal.App.4th 914 does not require such a specific study of costs or benefits. Instead, the District’s approach of identifying certain categories “according to usage” is a reasonable way to apportion the cost of service. The Court highlighted that what is meaningful in a review of proportionality is the record justifying the categories or groups of users;
- Payment of ongoing debt does not exceed the cost required to provide groundwater management service, as prohibited by Proposition 218, if the debt was incurred to build facilities necessary to provide the service; and
- Although Proposition 218 prohibits use of property-related fees for any purpose other than that for which the fee was collected, payment of general administrative services necessary to provide the service does not violate the prohibition.
Although the Griffith decision will undoubtedly provide great guidance for Proposition 218 hearings, its interpretation of “water service” may also provide guidance regarding funding of various projects, including storm water capture.
For further information, please contact partner Patty Quilizapa.
 This firm represented amici curiae Association of California Water Agencies (ACWA) and California State Association of Counties (CSAC) in Pendry v. Pajaro.