San Juan Capistrano

    Why Only One Year of Water Refunds?
                                  By Kim Lefner
While the SJC City Council voted on June 16 to refund to ratepayers an estimated $4.1 million in illegally billed water fees, some residents are questioning why they are only being refunded for overcharges for a one year period. After all, they say, a previous council majority implemented tiered rates in 2010 that were later ruled illegal by the courts. Therefore, they should be refunded the fees illegally collected from 2010 to the date of the court ruling in 2014. 
The reason for the one year limit appears to be based on a case cited by City Attorney Jeff Ballinger in which utility customers in Los Angeles won a lawsuit over whether interest rates applied to overcharged and voluntarily refunded sewer fees. The case, “Utility Audit Company, Inc. v. City of Los Angeles, B163797*,” was heard by the Second District Court of Appeals and cited Government Code about limitations on refunds. A cursory review of the code however, does not readily reveal the answer about what the statute of limitations may be in this case. A call to the City Attorney seeking clarification had not yet been returned prior to publication.
The refund process was outlined in the most recent water bills, and is also posted on the City website. Customers who were charged in Tiers 2 to 4 can choose to receive a refund or a credit on future water bills. Claim forms must be received within 90 days, and customers must agree to waive their right to sue to recoup additional refunds which they feel they may be owed.

Councilman John Perry who voted for the refunds, stated “I am supportive of residents obtaining refunds of what they were overcharged,” but said that he would defer to the City Attorney regarding the statute of limitations issue. Perry, who was instrumental in bringing the water rate lawsuit against the City as a Board member of the Capistrano Taxpayers Association, also expressed concern about the impact that 3 years of water rate refunds would have on City finances. “It was never my intention to harm the City by filing a lawsuit,” said Perry. “However, the rates being charged were clearly illegal and repeated attempts to get the City Council at the time to recalculate the rates were ignored and dismissed. They left us no choice but to sue on behalf of the residents.” 

Mayor Pro Tem Pam Patterson who is an attorney, voted against the refund, saying she did not have enough information to make a determination as to what is really owed to ratepayers. “I absolutely support residents being refunded what they were overcharged however, because it amounts to so much money, I just want to make sure that we get the numbers right,” said Patterson.

Councilman Sam Allevato was the other “no” vote. During the meeting he stated his belief that the Tier 1 rates were too low and were in effect subsidized by the higher tiered rates, a position he said was supported by the court.

*To read the lawsuit, visit: and click on “LA Utility Refund Lawsuit” under Community Links.


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