A San Luis Obispo County Superior Court judge on Tuesday said he expects to rule in two weeks on whether Paso Robles illegally adopted its newest set of water rates to pay for its portion of the Nacimiento Water Project.
The suit alleges that the city illegally adopted the rates because it should have referred to them as a special tax, not as a charge on a water bill. If it were a special tax, it would have gone before the voters.
The plaintiffs aren’t seeking money from the city, but to have the water rate ordinance adopted in May declared invalid so it can be decided in an election.
If the judge upholds the rates, the new fees will start appearing on utility bills in January.
Judge Martin Tangeman, convening a hearing in the Paso Robles courtroom, heard arguments from the city attorney and Southern California-based lawyer Paul Heidenreich, who represents the Paso Robles-based citizens group that has actively fought proposals to raise municipal water rates.
The attorneys first debated what the charges should be called — a fee or a tax.
Heidenreich argued that the rates are taxes because they will pay for a series of capital improvement projects — the pipeline, a water treatment plant and various others.
“A special tax is setting aside money for special projects,” he said.
City Attorney Iris Yang argued that the rates would be charged for all water operations both new and existing for the city’s roughly 10,000 customers — including delivery infrastructure, meters and bill processing — which make them a fee.
“The revenues raised will fund all the costs associated with providing water to the customers,” she said.
Both also argued about how the rates would be disseminated among customers. The ordinance sets it up so existing customers and new ones split the cost.
Heidenreich argued that the city inputted numbers from the General Plan — its blueprint for growth — into the formula with no guarantee that new residents will come.
Yang argued that the city doesn’t have a crystal ball for development, and that the city bases its decisions on the General Plan.
The rates, finalized May 21, would raise costs to $2.50 from $1.32 per unit of water — or 748 gallons. Rates then increase gradually in subsequent years before reaching $4.40 per unit in 2015. It also drops the $18 fixed fee that appears on bills now.
Without the new rates, there’s a $3.3 million gap between the revenue and expenses, City Manager Jim App has said, which poses a risk to the city’s general fund for police, fire and parks.
The petitioners include residents John Borst, William Taylor, Brooke Mayo, Teresa St. Clair and Thomas Rusch. Except for Rusch, they are the same people who filed another suit in March 2009 alleging the city violated state law when it raised water and sewer rates in 2002 and 2004.
In it, they want to stop the city from collecting the fees and are seeking an $8 million-plus refund for the water and sewer rates water customers already paid.
The March 2009 case is pending until a similar case in Los Angeles is decided. Tangeman scheduled a hearing on Jan. 19 in the Paso Robles court because it will have been nearly a year since the stay.