Meeting Date:

December 8, 2008





Darby Fuerst,




General Manager

Line Item No.:


Prepared By:

Rick Dickhaut

Cost Estimate:



General Counsel Approval:  Yes

Committee Recommendation:  The Administrative Committee reviewed this item on November 10, 2008 and recommended approval.

CEQA Compliance:  Notice of Exemption Adopted on November 17, 2008 – CEQA Guideline section 15273(a)(1)


SUMMARY:  The Board will consider adoption of Ordinance No. 138 to Re-Authorize a Water User Fee to Fund Aquifer Storage and Recovery (ASR) Facilities and Related Water Supply Projects (Exhibit 14-A).  The 1.2% fee on water bills of California American Water (CAW) customers was originally adopted as Ordinance No. 123 on August 15, 2005.


So long as this water user fee is collected, the Board of Directors shall hold a public hearing each calendar year in connection with review of the annual District budget to review the amounts collected and expended in relation to the purposes for which the fee is imposed.  The District will require the 1.2% CAW user fee to sunset in full or in part unless the Board determines that the purpose of the fee is still required, and the amount of the fee is still appropriate.  If the purpose had expired, the fee shall be required to sunset.  If the purpose for the fee is determined to continue, but the amounts needed to fund that purpose are decreased, the fee shall be reduced to that lesser amount. 


RECOMMENDATION:  District staff recommends that the Board:  1) approve the second reading of Ordinance No. 138, An Ordinance of the Board of Directors of the Monterey Peninsula Water Management District to Re-Authorize a Water User Fee to Fund Aquifer Storage and Recovery Facilities and Related Water Supply Projects; and 2) direct staff to file the previously approved Notice of Exemption with the County Clerk of Monterey County.


BACKGROUND:  The District has collected a user fee since 1983.  Exhibit 14-B is a history of the user fee percentages collected since that time.  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% to fund ASR Project costs 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 No. 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 to the Board 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. 


The Proposition 218 process only applies to the portion of the user fee adopted in 2005 to fund the completion of the Phase 1 ASR Project; this amounts to a 1.2% charge on the CAW water bill.  The remaining portion of the user fee pre-dated enactment of Proposition 218, and is therefore not be affected by this process.  The Board may choose either to re-authorize the 1.2% 2005 User Fee increase, or in the alternative, the Board may direct staff to modify the ordinance to reduce the user fee in like amount.


In accordance with Article XIII D of the California Constitution, Notice and majority protest proceedings were required before the Board adopts this ordinance.  Those proceedings were completed on November 17, 2008.  An election, however, was not required because a specific exemption applies to water services.  At its November 17, 2008 meeting, the Board of Directors approved the first reading of Ordinance No. 138 without any modifications and approved the Notice of Exemption to be filed after the second reading and final adoption of the Ordinance.



14-A    Draft Ordinance No. 138                     

14-B    User Fee History