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Proposition 218 Is The Fastest Way To Raise Money, But Is It Right?

 

“I have never understood why it is ‘greed’ to want to keep the money you’ve earned, but not greed to want to take somebody else’s money.”

—Thomas Jefferson

Proposition 218

Ventura Water will push the boundaries of the law as it tries to use Proposition 218 to raise money to meet the Wishtoya Foundation Consent Decree.

In the next 12 months, Ventura Water will ask the City Council to increase water rates for 30 wastewater projects and 28 water projects by 2024. These costly projects will benefit some property owners. Other projects will help the community at large.

As of June 30, 2018, Ventura Water accumulated $115,000,000 for projects they planned to build between 2012-2018. Still, they need $449,586,000 more before 2024. How did we commit to spending almost $450 million, and why weren’t you asked to vote on it?

WHAT WILL THIS COST YOU?

These new rate increases will come on top of the increases imposed over the last six years. In 2012, Ventura Water wanted to increase rates to:

  1. Replacing aging pipelines and facilities
  2. Building projects to improve water quality
  3. Constructing new groundwater wells

In 2012 the average homeowner and family of 4, received a bi-monthly bill of $73.27 and sewer charges of $72.45 for a total of $145.72. That same family is paying $105.03 for water in 2018.  Add sewer charges of $104.64 and their total bill is $209.67.  This is a 43% increase over the 2012 rates.

From 2018-2024, expect a similar rate of growth. Your new water bill may look like this:Proposition 218

HOW DID WE GET INTO THIS SITUATION?

Propoosition 218In March 2012, the Ventura City Council signed a Consent Decree that requires Ventura Water to stop putting 100% of its treated wastewater into the Santa Clara River estuary by January 2025. The decree stems from a Federal complaint filed by Wishtoya Foundation. Former City Manager, Rick Cole and Ventura Water General Manager, Shana Epstein, signed the consent decree on behalf of the city. The city no longer employs either of them.

Keep in mind that voters had no voice in the City Council consenting to the decree in 2012. Now, Ventura Water wants to deny voters the chance to say how we spend the money to meet the order, too. It plans to use Proposition 218 to get those funds.

HOW AND WHY CAN VENTURA INCREASE MY RATES?

So how can Ventura Water impose such large fees against its citizens without the traditional right to vote on such matters? The answer lies in how Ventura implements Proposition 218. Approved by the voters in 1996, Proposition 218 allows Ventura to raise money in one of three ways:

  1. General taxes. Those taxes used for general governmental purposes. Prop 218 requires the traditional voting procedure, notice, a ballot and an election measure. 51% of the voters must approve it. Ventura’s Measure O sales tax was one such example.
  2. Special Taxes. Any tax imposed for specific purposes and placed in a general fund. A Special Tax requires a 2/3 (66.67%) majority vote. The City sought this type of tax in 2009. It was Measure A on the ballot. It was a 1/2 cent sales tax for public safety and other specific projects. Monies would have been placed in the city’s General Fund. It failed.
  3. Special Assessments, Fees and Charges. Fees or charges means an assessment imposed as an incident of owning property which receives a unique benefit. The city can only impose such fees by affirmative voter approval. The exception being that prior voter approval is not required for “any assessment imposed exclusively to finance capital costs or maintenance and operation expenses for sidewalks, streets, sewers, water…”

VENTURA WATER TURNS A NON-VOTE INTO A YES VOTE

Ventura wants to use option C, Special Assessments, Fees and Charges to impose higher water rates.

Here’s how they’ll do it. Instead of putting it on the ballot, Ventura Water sends a water bill. Somewhere in the body of that bill, it tells you why the rate increase is necessary. You may dispute the rate increase by voting “NO” within 45 days, but the process is cumbersome. To disagree, you must download a protest form, complete and mail it or take it to City Hall by a specific date. Fail to jump over those hurdles and the City doesn’t care what you think or want. If 51% of the ratepayers have not voted ‘NO,’ that is the end of the matter. There are 32,000 ratepayers. Sixteen thousand one must vote NO to defeat an increase.

Proposition 218, now Article XIII C and D of the California Constitution, made the following findings:

         “The people of the State of California hereby find and declare that Proposition 13 was intended to provide effective tax relief and to require voter approval of tax increases.  However, local governments have subjected taxpayers to excessive tax, assessment, fee and charge increases that not only frustrate the purposes of voter approval for tax increases but also threaten the economic security of all Californians…This measure protects taxpayers by limiting the methods by which local governments exact revenue from taxpayers without their consent.”

When the City sought the last rate increase they took the position that they had the right to raise the rates without prior voter approval. They believed the procedures they followed were consistent with Prop 218 language, as interpreted by the California Supreme Court.  They maintain that they “may raise other fees or impose new fees without prior voter approval” for anything they chose to label a water or wastewater project.

But it doesn’t end with this interpretation alone. A California Supreme Court challenge goes further.

TESTED IN THE COURTS

The California Supreme Court in Bighorn-Desert View Water Agency v. Verjil (2006)39 Cal.4th 205, at page 205, addressed the question of whether voters had the right to put an initiative on the ballot to reduce water rates. The court ruled in favor of the water agency and interpreted Prop 218’s language to mean a city “may raise other fees or impose new fees without prior voter approval.”  The Court’s decision was specific. It didn’t involve the question of whether imposing fees to deal with a Consent Decree are valid.

Notwithstanding the protective measures of Prop 218, the City of Ventura conveniently interprets Prop 218 to still impose fees and charges beyond the simple costs of service to the homeowner. However, the court never went that far.

The City of Ventura’s interpretation of Proposition 218 is overreaching when it comes to any matter about water, wastewater and related environmental projects.

That decision by the Supreme Court only involved the issue of water delivery through a pipeline and whether voters could use an initiative process to require prior voter approval for the costs of that delivery.   It did not involve a question of whether fees imposed to deal with a $500 million water and wastewater projects together with environmental costs, expert studies, attorneys fees and a plethora of expenses arising out of a ConsentDecree decided by a City Council in 2012, and in which the voters had no voice.

What if the costs are not exclusively operational costs? What if the expenditures benefit the entire community, not just ratepayers? Does Proposition 218 apply in those circumstances? Bighorn-Desert View Water Agency v. Verjil does not answer these questions.

No Precedent For What They Plan To Do

In determining whether to seek prior voter approval, we hope that the new City Council will keep in mind the following the language from the Supreme Court in Bighorn case:

            “…the agency’s governing board may … raise fees or impose other fees and new fees without prior voter approval.  Although this power-sharing arrangement has the potential for conflict, we must presume that both sides will act reasonably and in good faith, and that the political process will eventually lead to compromises that are mutually acceptable and both financially and legally sound.”        (Emphasis added).

THE CITY MAY FACE A SERIOUS LEGAL CHALLENGE

If the City is considering rate increase of this magnitude without prior voter approval they should be mindful of the language in Prop 218. It provides that “in any legal action contesting the validity of an assessment, the burden is on the agency (Ventura Water) to demonstrate that the …properties in question receive a special benefit over the benefits conferred on the public at large…”

Complying with the Consent Decree by not putting wastewater into the Santa Clara River benefits all citizens, not just ratepayers.

Editor’s Comments

Ventura Water is proposing a mix of costly projects. Some will benefit property owners, and some will help the community at large. Building a pipeline and related infrastructure to import state water at the cost of $50 million benefits all property owners. Ratepayers generally accept this. Spending beyond that to build projects to satisfy a federal judgment on the Santa Clara Estuary to protect the ecology of the estuary is a problem.

Proposition 218 may not cover projects to meet a federal judgment on the Santa Clara Estuary to protect the ecology. We recommend a vote of the citizens in that instance.

Warn The City Council Of Ventura Water’s Potential Error

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

Let then know that Venturans must vote on a water rate increase to pay for the consent decree. Not participating in government makes us worse because our city government isn’t working for all of us.

Councilmembers Councilmembers
Councilmembers Councilmembers
Councilmembers Councilmembers

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Keeping track of the City Council

Keeping You Up-to-Date On The City Council Decisions

SUMMARY UPDATE OF CITY COUNCIL DECISIONS

In our last several publications we treated issues that are important to our community. We now provide updates on those issues as they have evolved and as information has become available:

(A) The 911 Fee

You refused to pay, filled out the forms and opted out, but you are being charged monthly. What more could happen? Out of town residents have been ensnared in the program. Those who purchased their cell phones in Ventura are being billed. The City has no jurisdiction over them but they are being charged the fee. The official response of the City is “we are working on it, or it is the fault of the telephone company”.

If you are one of the 27,000 that opted out you should check your bill and write a letter to the Council.   At $1.49 a month, the City is collecting approximately $40,000 per month from you and they are not entitled to it. What a mess!

There is light at the end of this dark tunnel. The Howard Jarvis Taxpayers Association has drafted a civil complaint to determine that this ordinance is a tax under Proposition 218 and therefore illegal. The complaint is to be filed in the next two weeks.  Reported in today’s Ventura County Star another lawsuit is planned to compete with this one.

(B) Increased Fees

[A Quest — “Who’s got the soap”?]

In our last three monthlies we reported to you that the City Council is seeking to increase fees and raise another $2.6 million dollars, and that the early June Council meeting the issue was tabled after Councilmen Fulton and Summers commented that there had not been sufficient time for the community to address this issue.  Another important point was the inability of anyone to obtain and read the MAXIMUS REPORT(s) [the experts hired by the City), which was designed to be the “legal” for the fee increases in the first place. These reports could not be found.

Somehow that lack of critical financial data did not stop the Council from increasing fees in 2006 and 2007. So, good reader, ask yourself how an elected official can vote to increase fees based on a report that they don’t have? Or, you ask rhetorically how an elected official can ask the community to pay another 2.6 million dollars if they are not able to provide logical answers?

In July VREG received the MAXIMUS 2004 AND 2007 reports. These reports only provide conclusions and none of the basic financial data that led to those conclusions. For example, the 2007 report incorporates a “Cost Plan which has been provided as a separate document”. That plan is not available. Another example, the 2004 report says that MAXIMUS “used the standard methodology that we have employed for hundreds of similar studies: MAXFEE”. At page 29 the reports says “MAXIMUS provided the voluminous detail and background materials behind all of the calculations and analysis to the City under separate cover. Appendix 5 of this report contains the summarized results (potential fees)”.

VREG has not been able to locate the basic cost report that served as the foundation for the MAXIMUS reports. Officials at the City have been helpful, and now have provided all eleven (11) appendices. The cost report has not surfaced. It is hoped that the Council will not race to judgment until all parties have a chance to evaluate the data.

(C) The Firefighters’ Pension

In a vote of 4 to 3. the Council approved the Memorandum of Agreement and the new pension contract with the firefighters of this city giving them a pension equal to 3% of their highest salary times the number of years in service plus all medical, dental. The yeas were Councilmen Fulton, Brennan, Summers and Monahan. The neighs were Mayor Weir, Councilmen Andrews and Morehouse. It should be of grave concern to all when one councilman says, before he cast his “NO” vote – “I HAVE GRAVE CONCERNS TO COMMIT WHEN WE DON’T KNOW WHERE THE FUNDS WILL COME FROM”.

Editors Comment:

Councilmen this was an increase of 33 1/3%!

The councilmen casting the yea votes and our fire chief, Mike Lavery, defend their position by saying that they need more benefits because they must remain competitive with other cities and counties, using as a current example the fact that they have unfilled openings. When asked why they are not filled, the answer is that the Chief REQUIRES all firefighters to be trained paramedics.

We all want qualified firemen and police officers and certainly want Councilman Summers “to sleep well at night knowing that he has the best public safety officers” (quote from his speech on August 4th) but somewhere a limit must be established on how much of our general revenues will be devoted to this purpose. The City of Vallejo is in bankruptcy because they devoted 80% of their budget to this purpose compared to Ventura at 51%.

How much of your tax dollar do you want to pay out for police and fire? You only have 49 cents left to pay for streets, recreation, other employees and widgets, so what are your priorities? We at VREG would like to hear from you.

(D) The Sale Of State Water Options

 As previously reported we annually pay $950,000 to the State Water Project for the option to obtain 10,000 acre feet. Since 1972, we have paid $22,582,371. We are committed to pay another $25,650,000 through 2035.      The reality is that we will never build a pipeline, and that as a category A user we will only get a fraction of the entitlement because there is not enough water to meet all entitlements under drought conditions. Make no mistake – the Governator has declared a drought.

Since 1972, we have paid $22,582,371.

VREG last year proposed that the rights be marketed to meet our annual cost AND put money in the bank to help defer our water costs, and/or to hopefully fund and build a desalination/filtration plant. We are happy to report that the Council has commissioned Kennedy-Jenks Consultants to assist in an attempt to market Ventura’s contractual rights. There is precedent for such a step. Butte County recently received approval of the sale of their water rights on a one year plus one year option basis to Palmdale Water District. This was accomplished over the objection of the Los Angeles Metropolitan Water District, which charges $425 am acre foot for untreated water. This 800 pound gorilla objected to the Butte-Palmdale contract and you can expect them to object to any sale by the City of Ventura in any sum below that which is charged by the MWD.

Editors’ Comment:

Doesn’t take a lot to grasp the market opportunity here so we encourage the City Council to forge ahead with “viga”, all due dispatch and total disregard for the MWD.

WHAT’S ON THE HORIZON FROM THE CITY COUNCIL

(A) Rate Increase For Water and Sewer

Enclosed with your last bill was a notice that you will be paying more unless you object by SEPTEMBER 22, 2008. The following is a summary and what it will mean to you as an owner or renter:

SINGLE FAMILY HOME
Current FY2008-09 FS2009-10 Increase/%
Water Bill $59.46 $63.66 $68.63
Wastewater bill $64.16 $68.52 $73.27
Total 2 month bill $123.62 $132.18 $141.90 $18.28 = 14.7%
MULTI-FAMILY DWELLING (10 UNITS) -89,700 GALLONS
Water Bill $282.10 $300.38 $321.96
Wastewater bill $437.80 $467.50 $500.00
Total 2 month bill $719.90 $ 767.88 $821.96 $102.06=14.1%
COMMERCIAL OFFICE – 29,920 GALLONS
Water Bill $137.03 $142.85 $154.16
Wastewater Bill $83.71 $ 92.98 $100.23
Total 2-month Bill $216.74 $235.83 $254.39 $ 37.65/17.4%

* Rates include assessment for the contractual right to obtain water from the State Water Project. If that entitlement is sold to another user that income would go a long ways in lessening the impact of water costs on this community.

If you oppose the rate increase then by SEPTEMBER 22, 2008, you must mail your name, property address or parcel number to:

 

WATER RATES

CITY CLERK’S OFFICE

City of Ventura

P.O. Box 99

Ventura, CA 93002-0099

 

If you object you can also attend the City Council meeting on September 22, 2008, and/or can obtain information from Gary Lee at (805) 652-4253, or email him at glee@cityofventura.net.

(B) The “Crime-Free Rental Housing Program”

[Specter of Aldous Huxleys “Brave New World” of

The City Council has asked its staff to appear at the council meeting on October 20, 2008, to consider implementation of a new program called the ”Crime Free Rental Housing Program”. The draft proposal seeks more fees, purportedly revenue neutral – meaning it will only cost what it costs to enforce – projected at $400,000 from our citizens who own rental housing. The proposal seeks to force owners to have all of their apartments or rental home inspected to make sure there is no criminal activity and/or to make sure that all buildings are in compliance with building codes and all City regulations. Here’s the proposal:

 

  1. The owners of apartment will have to pay an annual fee for each apartment in order to raise $400,000. The fee is for inspecting each apartment to make sure it is crime free. The City has not said how much the fee will be, and they don’t know how many rental units there are in the City.
  2. The owners will have to attend formal training on how to prevent crime and to show them how they can manage their property and rental agreements.
  3. Initially and every 47 months afterward each apartment is required to be inspected (searched) by the Fire Department and/or the Police Department and/or Code Enforcement Officer [all law enforcement] to determine if any crime is being committed or to determine if there are any building code violations.
  4. If you don’t get the certificate you can’t operate your apartments and penalties will be imposed. If you get the certificate the City Manager is given the power to revoke your certificate, along guidelines that his office is to develop, you will suffer penalties The penalties that can be imposed:
    1. You may be cited for a misdemeanor, jailed and/or fined
    2. The property, summarily declared a public nuisance by this ordinance if it does not have a certificate, can be sold, the nuisance abated at the owners expense or destroyed at the owner’s expense
    3. If your certificate is not timely renewed you will receive an Administrative Citation, and penalties will be imposed for each day beyond the expiration.

A large number of owners have expressed strong objections to this program, and a committee has now been established to try to determine if such a program should be modified or abandoned as a bad idea. Initial indications are that some type of enforcement is being considered but it is not clear what form this will take. Information can be obtained from Andrew Stuffler (654-7837), the lead person for the City. He has stated that since the initial proposal their data has shown that 93% of owners with rental units have not had any code enforcement or law enforcement issues.

Editors Comment:

Another 911 fee fiasco? This proposal seeks to impose new fees for police, fire and code enforcement, the costs of which by law are paid by general tax revenue. New “taxes” require a citizens 2/3 vote, whereas “fees” don’t. Now the city wants to re-label the police, fire and code enforcement officer’s inspections as a service to prevent crime and/or enforce the law against wrongdoers (7%) by imposing the costs (fees) of enforcement on citizens (93%) who are law abiding. Just who comes up with these ideas in the first place?

In case they haven’t thought about it our new city attorney might review California Code of Civil Procedure 1822.5, which requires Inspection Warrants before a residence can be searched to enforce regulations, and the decision of CURRIER v. CITY OF PASADENA (1975) 48 C.A. 3d 810, which held a similar regulatory scheme unconstitutional.

If passed as presented we predict that the lawsuits will fly. We citizens will have to pay for the attorneys fees and costs on both sides.

 

Editors:

B. Alviani          S. Doll               J. Tingstrom

K. Corse            B. McCord         T. Cook

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