California Association of Sanitation Agencies

CASA joined a number of other local government organizations, including the League of California Cities and the Association of California Water Agencies, in an amicus brief arguing that local public agencies have the right to challenge the legality of Proposition 218 rate initiatives prior to the election. The case, Mission Springs Water District v. Verjil (Case No. E055176), is on appeal in the California Court of Appeal for the Fourth District.

The case involves a motion to strike and anti-Strategic Lawsuit Against Public Participation (SLAPP) motion filed on behalf of the initiative proponents. In late 2010, the Mission Springs Water District began a water rate adjustment process in compliance with Proposition 218. The District was operating with over $3 million in annual losses. Rate adjustment ballots were sent out and less than one percent of property owners and ratepayers objected to proposed increases. Shortly after the rates were adopted, a voter initiative was proposed to set lower rates and restrict future rate increases to the Consumer Price Index. The District projected the initiative would cause the District to be insolvent by fiscal year 2015-2016.

The District brought a declaratory relief action seeking to invalidate the initiative on the basis that if passed, the measure would substantially impair delivery of essential government services and render the District insolvent by 2016. The Howard Jarvis Taxpayers Foundation filed a anti- SLAPP motion, arguing that the proponents of the initiative had been sued for engaging in the protected activity of petitioning the government for reduced rates.

The District prevailed in the trial court. In overruling the demurrer, the court relied on Bighorn-Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205. In Bighorn, the California Supreme Court concluded that local voters by initiative may reduce a public agency’s water rate and other delivery charges, but that the Constitution does not authorize an initiative to impose a requirement of voter approval for future rate increases or new charges for water delivery. Initiatives may “reduce” or “repeal” rates, but may not impose a voter approval requirement on future actions by a Board to increase existing water rates or impose new charges.

CASA’s brief provides background on the local rate setting process, and argues that the trial court got it right. Bighorn precludes initiatives that interfere with future rate-setting, regardless of the means of that interference. Pre-election review to enforce these rules is authorized by law and appropriate to avoid the significant disruptions that can arise from proposals such as the initiative at issue. The full brief is available here.