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Santa Monica Monitoring Court Ruling on Tiered Water Rates

Santa Monica Real Estate Company, Roque and Mark

Pacific Park, Santa Monica Pier

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

By Hector Gonzalez
Staff Writer

April 23, 2015 -- City officials will be closely watching to see if any appeals are filed in a court ruling this week that cast a legal cloud over Santa Monica’s tiered water rates.

Officials are monitoring the legal fallout from Monday’s ruling by the California 4th District Court of Appeal that declared the City of San Juan Capistrano’s tiered water rate structure unconstitutional because the system charged more for water than it cost that city to provide the service.

Local officials are reviewing how the decision might impact Santa Monica’s four tiered water rates, said Santa Monica Water Resources Manager Gil Borboa.

“We’re waiting to see now what may or may not come of it (the court ruling), and whether the City of San Juan Capistrano will appeal the case to the state Supreme Court or if the state appeals it,” Borboa said.

San Juan Capistrano officials are analyzing the ruling, and its City Council “will consider the City’s options shortly,” the city’s website said.

“The appellate court’s decision confirmed the City’s position that Proposition 218 allows tiered rates,” the website said. “However, it affirmed the trial court’s conclusion that the City’s 2010 rate-making did not sufficiently show that it properly allocated its cost to its four price tiers.”

Specifically, the three-judge Appeal Court panel wrote that San Juan Capistrano’s water agency “did not try to calculate the cost of actually providing water at its various tier levels.

“It merely allocated all its costs among the price tier levels, based not on costs, but on predetermined usage budgets,” the judges wrote.
Hundreds of cities and water agencies across the state have implemented tiered water rates in response to Gov. Jerry Brown’s emergency drought declaration last year.

Brown initially set a voluntary 20 percent reduction goal last year, but when the drought intensified this past winter, the governor on April 1 ordered the state’s first-ever mandatory water reductions, setting a savings goal of 25 percent statewide by the end of this year.

The state’s lawyers are now reviewing the Monday’s court ruling, which could stymie conservation efforts at the local level, according to the governor’s website.

“The practical effect of the court’s decision is to put a straitjacket on local government at a time when maximum flexibility is needed,” Brown said following last week’s ruling. “My policy is and will continue to be: employ every method possible to ensure water is conserved across California.”

Santa Monica adopted its four-tier water rate structure as a conservation tool in 2008, but City Council members in January rejected a proposed steeper tiered billing structure, a decision that came shortly after a lower court ruled against San Juan Capistrano’s tiered rate structure.

For now, the City will keep its tiered rate structure as is, Borboa said.

“Tiered rates have been proven as a conservation incentive. They do work,” he said. “By charging people more for using more water, tiers have been shown to conserve water.”

The City also will move ahead with a water allocation program that sets reduction goals of 20 percent from April 2013 for single- and multiple-family households.

The target for single-family residences is 274 gallons per day, while apartment dwellers will be limited to 137 gallons per day. Households that go over their water allotments could face fines of $10 for every 750 gallons above their allotment.

Penalties for over-consumption will start going out this summer, as planned, Borboa said.

On the conservation front, state agencies in California met their goal of reducing overall water consumption by 20 percent, the Department of General Services (DGS) reported Wednesday.
Water use by all state agencies fell from 19.4 billion gallons in 2013 to 14.9 billion gallons in 2014, according to the DGS’ website.

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