Water Fee Lawsuit Settled

By: 
Steve Propes

As far as water delivery is concerned, everything changed in 2006. According to ballotpedia.org, that’s when “The California Supreme Court ruled that the provisions of Proposition 218 apply to local water, refuse and sewer charges. This meant that a local jurisdiction cannot charge one group of water, refuse or sewer ratepayers in order to subsidize the fees of another group of water, refuse or sewer users.”

According to Water Department General Manager Chris Gardner, “The old formula was a flat rate based on the size of the pipeline in the streets. The argument was it wasn’t based on true cost to the city, it was based on an arbitrary number. This is not uncommon in the state and under Prop 218, you have to justify the cost impact.”

Ten years after that ruling, in September 2016, Long Beach resident and water department customer Diana Lejins filed suit that the city was not adhering to Proposition 218 requirements.

Asked why she chose to file suit, Lejins referred that question to her attorney, one-time Fifth District Councilwoman Gerrie Schipske. In her role on the council which ended in 2014, Schipske attempted to push this issue with her colleagues and city management, but did not meet with much success.

Schipske said that Lejins “protested the increases related to water and sewer because of the fee, and the water commission nor the city council would respond to her concerns.”

Asked if there might have been a perceived conflict of interest by involving herself in a suit over policy while she sat on the council that set the policy, Schipske replied, “There is absolutely no conflict of interest in my being on this case. I have been off the city council for over three years. When the pipeline fee was first raised in 2006, I specifically questioned its legality as Prop 218 requires there be a connection between a fee and the costs related to the fee. In other words, the city would have to spend what it charged in fees directly on the costs of having those pipelines in the city.

“At that time the fee was around $1 million annually. I was assured by then City Attorney Bob Shannon that the fee was legal.”

Shannon, who has since retired and currently serves as president of the Long Beach Board of Water Commissioners could not be reached to respond to Schipske’s statement.

“Since that time, the city has raised water and sewer rates several times and increased the fee to $10.4 million annually. It currently is 26 percent of the sewer budget. Additionally, the city/water department stopped placing in the rate increases an explanation that the fee accounted for a large portion of the rate increase. More than $50 million in fees were taken by the City of Long Beach since 2006.”

According to Gardner, “We’re renting space under the streets. A strong street protects our pipeline and we have to share our costs.” Up to the settlement, “We’ve been paying about $11.5 million a year.” Other utilities under the street pay through a franchise or pipeline permit fee. It’s not clear how the decision will affect those costs, or even if they do.

“Per the settlement, money is returned to the water department and rates are to be lowered,” said Schipske. “This is a big win for taxpayers who supported Prop 218 and for the water and sewer ratepayers of Long Beach.

“The city agreed to settle the matter and agreed to attorney fees of $480,000 being paid to attorney Benink’s firm. These fees are being paid out of a portion of the $12 million or so returned to the water department.”

In response to the fee question, San Diego attorney Eric Benink stated “The fees are being paid out of the rate reduction. The city agreed to stop charging the pipeline permit fees this year (i.e. reduce the rates), but the amount it is reducing is being offset with the attorney’s fee payment.”

Instead of the about $11.5 million the department annually passed on to the city in past years, in the future, “When we do our transfers, it will amount to $4.5 million per year to general fund for our use of streets,” said Gardner. “The city will be refunding to the water and sewer fund, $3 million per year from the city general fund in a four year period.”

On July 3, 2017, Long Beach City Manager Pat West wrote to the council, “Should this litigation be successful, there could be a significant adverse impact on city services.”

“I did expect us to win from the beginning,” said Lejins, who did not receive any portion of the settlement other than having her water reduced by about three dollars a month, as will all other water customers. “I did look at the attorney and his track record.”

steve@beachcomber.news

Editor’s Note: An ongoing contributor of historical features to the Beachcomber, Schipske has since announced her intention to run for State Senate District 34. Lejins is also a frequent contributor of photographs to the Beachcomber. 

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Comments

Water Fee Lawsuit
Published by admin on Thu, 12/07/2017 - 3:29pm
By:
Diana Lejins, Plaintiff
Please allow me to set the record straight re your front page article “Water Fee Lawsuit Settled” (Nov. 24) and hopefully clear up any confusion about the issue.

In 1996, California voters passed Proposition 218, the “Right to Vote on Taxes Act.” This constitutional amendment protects taxpayers by limiting the methods by which local governments can create or increase taxes, fees and charges without taxpayer consent. Proposition 218 requires voter approval prior to imposition or increase of general taxes, assessments and certain user fees.

Under Prop 218 governments cannot charge more than it costs to provide a service. This was the main premise of the lawsuit against the City of Long Beach. Basically, they were illegally assessing “Pipeline Permit Fees” as a method of taxing water and sewer consumers without their approval at a rate far greater than the costs of the service. These extraneous fees ended up in the general fund to be spent at will.

Since 2004, pipeline permit fees charged to the citizens of Long Beach have totaled $118,715,388. The assessment skyrocketed through the years from $2,499,184 in 2004 to $10,891,573 in 2017.

While City Manager Pat West insinuates that significant services may be cut because of this settlement, the truth is the city may be forced to grapple with their blatant waste of taxpayer dollars and live within a reasonable budget – just like the rest of us. And, rather than penalizing the taxpayers for exercising their rights under the law, constituent services should once again resume priority status.

The lawsuit is a decided victory for the taxpayers in Long Beach and the entire state of California. It serves to bolster transparency, set precedent for future budge

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