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WRD stands by its notification procedure for increasing water rates despite city protests

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Sean Belk
Staff Writer

Water Replenishment District of Southern California (WRD) officials said the agency was following state law when it sent out more than 800,000 public notices to parcel owners about a proposal to increase water-pumping fees by 22 percent.
However, the cities of Signal Hill, Downey and Cerritos, which are leading a contentious lawsuit against WRD about its rate-setting procedure, among others opponents, are planning to protest the agency’s proposal this week.
The cities have brought forward “discrepancies” regarding WRD’s budget documents and state the public notices are “confusing” and fall short of complying with state law.
The notices were mailed out in late March to inform property owners of a public hearing scheduled for today, May 10, starting at 2pm at the WRD’s headquarters, 4040 Paramount Blvd. in Lakewood, during which the WRD’s five-member board of directors will vote on the proposed fee hike.
The public notices indicate that the WRD plans to increase water-pumping fees from its current charge of $244 per acre-foot of water pumped up to $298 per acre-foot.
The notifications are the WRD’s first attempt to comply with Proposition 218, a landmark statewide law passed by voters in 1996 that aims to increase accountability and transparency.
The law requires, among other stipulations, that local governments notify property owners and give them the right to protest any proposed increases in assessments and taxes rather than simply post them before they’re voted on and approved.
WRD’s replenishment assessments (RAs) are imposed on municipal water utilities, water companies and others, known as “pumpers,” who own rights to use wells for pumping groundwater from aquifers.
Many of these pumpers, such as cities, pass RA expenses on to their customers, or parcel owners, who subsequently pay for the RA as a portion of their water bills. WRD, however, does not control how cities pass on RA expenses and does not charge an RA to anyone who does not operate a well and produce groundwater.
Proposition 218, however, is at the center of an ongoing lawsuit filed by Signal Hill, Downey and Cerritos against the WRD. The cities claim that the agency has successively increased its RA rates without following the law.
After Los Angeles Superior Court Judge James Chalfant ruled twice in favor of the cities in 2011, the cities and others have withheld RA payments (so far totaling about $13 million) and have kept accruing water fee revenues in “liability” accounts.
While the litigation, which has spawned other similar lawsuits, has yet to go to trial, WRD sent out its public notices anyway. The opposing cities tried to stop the WRD notices on the eve of their being mailed out, but another judge ruled in favor of WRD.
The cities claim that Proposition 218 requires WRD to send the mailers to the nearly 130 pumpers rather than to the more than 800,000 parcel owners within the WRD’s 240-square-mile service area, alleging that the notifications are a “waste of public funds.”
Exactly who receives the public notices is critical, since it refers to who has the right to protest any rate increase. Under Proposition 218, 50 percent of all “parcel owners” subject to the fee, plus one, would have to file a protest in writing by the day of the hearing for any increase to be invalidated.
City officials, however, said the likelihood for WRD to receive protests from more than 400,000 parcel owners (versus more than 65 pumpers) would be nearly impossible.
“It’s a guaranteed get [for WRD],” said Signal Hill City Councilmember Larry Forester. “If you send it to all these property owners, how many people are going to send it back? There’s no way you reach that number.”
Albert Robles, WRD board president, however, told the Signal Tribune in a phone interview that he stands by the agency’s decision to send the notices to parcel owners. He said, under Proposition 218, it’s the parcel owners who have the right to protest.
“I can tell you what Prop 218 law states very clear,” Robles said. “It says ‘parcel owners.’ It doesn’t say ‘water-right holders.’ It doesn’t say ‘where the well is located,’ which I understand some people are advocating. It doesn’t say ‘those cities that are suing.’ It says ‘parcel owners.’ That’s very clearly defined in the code. It’s clear to me as to who it should be counted in terms of the protest. It’s the parcel owners. It’s an undisputable fact, in my opinion.”
He said that, “The notice complied with each and every requirement of Proposition 218. The ironic thing is, this is what the cities have been demanding.”
Still, WRD’s own fact sheet about the public hearing states that “it is not clear who constitutes a ‘parcel owner’ in the context of the RA so, in the interest of public participation and to ensure that everyone entitled to notice receives notice, the [WRD] is widely distributing the notice to all stakeholders.”
WRD officials point to Signal Hill City Attorney David Aleshire, who said during a Feb. 19 Signal Hill City Council meeting that it “is not determined” who should receive the public notices, indicating that the issue is still up for interpretation.
WRD General Manager Robb Whitaker said the courts weren’t clear on to whom the notices should be sent, adding that the WRD decided to send them to parcel owners to fully comply with Proposition 218 and prevent any complaints.
“That’s how we read Proposition 218, and that’s how we understand the law,” he said. “It was to give the property owners, the parcel owners, a voice, and, if we had decided on our own to limit it to one notification universe versus another, we could have had property owners come in and complain that they weren’t given a voice.”
Patty Quilizapa, the lead attorney representing the cities in the case, however, said in the March 29 issue of the Signal Tribune that Judge Chalfant has already ordered WRD to send the notices to the pumpers.
“There is nothing to interpret,” she said. “We already know it’s the pumpers, but the WRD has really undertaken this as a sideshow.”
City officials also state that the notices have caused “confusion,” adding that a flood of residents, who normally pay much less in water bills than WRD’s RA rates, have called into City Hall asking about the exorbitant fee increases.
“Let’s be honest, what does the average citizen know about replenishment assessment?” asked John Oskoui, assistant city manager and director of public works for the City of Downey. “Procedurally, [WRD is] not doing it right.”
Oskoui added that he brought forward discrepancies regarding labor costs and other figures in the WRD’s “cost of service” report that don’t match budget documents but has yet to receive a response from WRD. “There are tons of unanswered questions we have,” he said.
In addition, a Signal Hill city staff report for the May 7 City Council meeting states that the WRD notices fail to comply with the transparency requirements found in Proposition 218, “particularly the requirement that the WRD must provide notice of how it calculated the proposed rate.”
“Not only are the notices confusing, there are discrepancies between the number of notices that we received and the parcels owned by the City, the former Redevelopment Agency and the Housing Authority,” according to the staff report.
The City also received 15 notices that were “mistakenly sent to the City,” including notices for the City of Long Beach, Signal Hill Village Investors, Signal Hill Village Homeowners Association, Brookfield Homes and the Alda Jones Trust, among other mistaken addresses. City employees who are also property owners in Signal Hill have indicated that they did not receive a notice.
Meanwhile, WRD officials state that the reason for proposing the RA rate increase is that there are higher water costs that WRD pays in order to replenish aquifers, adding that litigation costs of a little under $2.5 million to fight lawsuits brought by the cities have also contributed to the need to raise rates.
“The cost of water has gone up completely beyond our control,” Robles said. “If you look at the costs that we have direct control over, we’ve actually reduced our costs and expenditures. But, in terms of what things are out of our control, like the cost of water [and] the cost of litigation, that’s what’s causing us to pass that through to the rate payers.”
As of Wednesday, May 8, Robles said WRD had received about 200 letters regarding the proposed rate increase. Although he couldn’t confirm how many were protests, Robles suspects all are in opposition.

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WRD stands by its notification procedure for increasing water rates despite city protests