The Capistrano Taxpayers Association (CTA) won a victory in its battle with the City to overturn water rates adopted by the City Council in February 2010. The City attempted to have the case dismissed on procedural grounds (statute of limitations) however, the Court overruled the City’s objection. Superior Court Judge Gregory Munoz will allow the CTA lawsuit to proceed to trial beginning June 17, 2013.
The CTA lawsuit asks the Court for the following findings;
1.”The CTA requests…the Court [declare] the water rates illegal under Proposition 218.”
Proposition 218 allows Cities to impose taxes or fees based on the actual cost of delivering the service to customers. If the fees are not cost-based, the fees are in reality a tax. Taxes must be approved by voters in an election.
The CTA claims that the Tiered water billing is not cost-based, because Tiers 2 through 4 are actually penalties meant to punish water users for exceeding the amount of water allocated to them by the City. Since these fees are not cost-based, the fees are an illegal tax.
2. “Unlawful Enforcement of Water Rate Structure; the CTA seeks [to prohibit] the City from continuing to implement or apply its water rate policy and practice of collecting funds to pay the debt service on the ‘Phantom Bond’.”
3. “The CTA petitions the Court [to compel] the City to comply with its mandatory duties and [to prohibit, prevent and correct] the City’s abuses of discretion.
CTA also seeks to compel the City to abandon its illegal water rate structure and to stop collecting the debt service for the ‘Phantom Bond’ ”.
The City needed to sell $18 million in bonds to pay for a planned water plant expansion however, the bonds were never sold because the City did not have sufficient reserves and was therefore not credit-worthy. Despite the failure to issue the bonds, the City has collected $1.3 million per year (for three years) from the ratepayers to repay the non-existent bonds. Since the City did not incur the cost of selling the bonds, the fee increase is actually an illegal tax.
4. “Waste Of / Injury To Taxpayer Funds; Civil Code allows taxpayers to [restrain and prevent] any illegal waste of or injury to ‘public funds.’ The CTA requests the Court to [compel] the City to stop collection of funds to pay debt service on the “Phantom Bond” and to refund all funds to the ratepayers… illegally collected from the imposition of the rate increase in February 2010.”
This asks the Court to compel the City to refund ratepayers for any illegally collected taxes and fees, as outlined above.
The CTA requests that residents join the effort to lower water rates by donating to the legal fund to help defray expenses. Please mail donations to:
Capistrano Taxpayers Association
P.O. Box 1452
San Juan Capistrano, CA 92675