ITEM:		PUBLIC HEARING
12.	PUBLIC HEARING FOR PROPOSED RE-AUTHORIZATION OF WATER USE FEE TO FUND AQUIFER STORAGE AND RECOVERY FACILITIES AND RELATED WATER SUPPLY PROJECTS
Meeting Date:			November 17, 2008	Budgeted:	N/A
From:			Darby Fuerst,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Rick Dickhaut	Cost Estimate:	N/A
General Counsel Approval: Yes
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: The Board is required to convene a public hearing and review written protests to determine whether or not a majority protest exists relating to re-authorization of the 1.2% existing water use fee used to fund water supply projects. Notice and majority protest proceedings are required under Article XIII D of the California Constitution before the Board may adopt an ordinance to re-authorize this user fee.

A Notice of Public Hearing for Proposed Re-Authorization of Water Use Fees (Exhibit 12-A) was mailed to 33,529 CAW customers within its applicable services areas in late September 2008. This complied with the provisions of Article XIII D, §6(a) of the California Constitution, as construed by the California Supreme Court in Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205 (2006) and as clarified by the Proposition 218 Omnibus Implementation Act (A.B. 1260 of 2007), codified in California Government Code §53750 et seq. A majority protest would need to tally at least 16,765 written protests. As of the date of preparation of this staff note, November 10, 2008, only sixty (60) written protests have been received by the District.

If a majority protest is not received, the Board of Directors shall hold authority to adopt an ordinance to re-authorize the 1.2% user fee. The first reading of such an ordinance is set as the next public hearing on this agenda. If a majority protest is received, the Board of Directors is required to rescind the 1.2% portion of the user fee.

RECOMMENDATION: The Board shall determine whether or not a majority protest exists relating to re-authorization of the 1.2% existing water use fee used to fund water supply projects. If a majority protest is not received, the Board holds authority to approve the first reading of an ordinance to re-authorize the 1.2% portion of the user fee. If a majority protest is received, the Board is required to revise to the first reading of the ordinance to rescind the 1.2% portion of the user fee.

BACKGROUND: The District has collected a user fee since 1983. The current user fee of 8.325% has been in effect since 2005. At that time Ordinance No. 123 increased the user fee by 1.2% (from 7.125% to 8.325%) to fund ASR and related water supply expenditures.

At the time Ordinance 123 was adopted, it was widely interpreted that Proposition 218, approved by the California electorate on November 5, 1996, did not apply to water related charges because they did not meet the definition of “property related fees”. However, since enactment of Ordinance 123, the California Supreme Court in Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205 (2006) determined that Proposition 218 does apply to fees imposed upon consumption of utility services such as water related charges. Bighorn reversed a long-standing practice followed by water agencies. Previously the Supreme Court held such utility fees to not be “property related” and subject to Proposition 218 as those fees could be avoided by means such as not taking water.

This matter is brought forward at this time as substantial questions posed by the Bighorn decision have now been answered by enactment of the Prop. 218 Omnibus Implementation Act (A.B. 1260 of 2007) which took effect in 2008 by amending amended Government Code § 53750. This Act clarified the type and manner for which notice of the fee authorization is to be given to water users.

Notice and majority protest proceedings are required to be completed before the Board may adopt an ordinance in accord with Article XIII D of the California Constitution. An election, however, is not required because a specific exemption applies to water services. The Proposition 218 process only applies to the portion of the User Fee adopted in 2005 to fund the ASR Project; this amounts to a 1.2% charge on the CAW water bill. The remainder portion of the User Fee pre-dated enactment of Proposition 218 is not affected by the recommended process. This matter was brought to the Board at its May 22, 2008 meeting and at that time the Board approved proceeding with the re-authorization process. Ascertaining whether or not a majority protest exists is a critical precursor to the Board’s ability to re-authorize the 1.2% 2005 User Fee.

EXHIBITS

12-A Notice of Public Hearing for Proposed Re-Authorization of Water Use Fees

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