Santa Cruz County Superior Court Superior Court Nos. CV168936, CV169080 Hon. Timothy Volkman.
Counsel for Plaintiff/Appellant: Harold Griffith In pro. Per.
Counsel for Plaintiffs/Appellants: Joseph P. Pendry, James Spain, Yuet-Ming Chu, William McGrath, Henry Schimpeler Johnson & James Robert K. Johnson.
Counsel for Defendant/Respondent: Pajaro Valley Water Management Agency Colantuono & Levin Michael G. Colantuono Amy C. Sparrow Michael R. Cobden Atchison, Barisone, Condotti & Kovacevich George J. Kovacevich Anthony P. Condotti S. Adair Paterno.
Amicus Curiae on behalf of Respondents for Association of California Water Agencies and California State Association of Counties Aleshire & Wynder Patricia J. Quilizapa.
After defendant Pajaro Valley Water Management Agency enacted ordinance No. 2010-02 that increased groundwater augmentation charges for the operation of wells within defendant’s jurisdiction, plaintiff Harold Griffith challenged the ordinance on the grounds that the increase (1) was procedurally flawed because it was not approved in an election required by Proposition 218 (Cal. Const., art. XIII D, § 6),  (2) did not conform to certain substantive requirements of Proposition 218, and (3) was to be used for a purpose not authorized by the law under which defendant was formed. Thereafter, plaintiffs Joseph Pendry, James Spain, Yuet-Ming Chu, William J. McGrath, and Henry Schepeler (Pendry) challenged the ordinance on similar grounds and on the ground that it was void because one of the directors who voted for the ordinance had a disqualifying conflict of interest within the meaning of the Political Reform Act (PRA) (Gov. Code, § 87100 et seq.). They also challenged an ordinance passed in 2002, which imposed an augmentation charge, and a 1993 management-fee ordinance. The trial court rendered judgments for defendant. Plaintiffs have appealed and reiterate their challenges. We are considering the two appeals together for purposes of briefing, oral argument, and disposition. After conducting an independent review of the record (Silicon Valley Taxpayers Assn., Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 448 (Silicon Valley)), we affirm the judgments.
We have previously detailed an historical background to this case in Pajaro Valley Water Management Agency v. Amrhein (2007) 150 Cal.App.4th 1364, 1370-1375 (Amrhein). We therefore decline to repeat it and will instead begin with the trial court’s succinct summary.
“The Pajaro Valley Groundwater Basin supplies most of the water used in the Pajaro Valley. The water is being extracted faster than it is being replenished by natural forces, which leads to saltwater intrusion, especially near the coast. Once the water table drops below sea level, seawater seeps into the groundwater basin. [Defendant] was created [in 1984 by the Pajaro Valley Water Management Agency Act (Stats. 1984, ch. 257, § 1 et seq., p. 798 et seq., Deering’s Wat.--Uncod. Acts (2008) Act 760, p. 681 (Act))] to deal with this issue. At present, the strategy is to use recycled wastewater, supplemental wells, captured storm runoff, and a coastal distribution system. The purpose is to reduce the amount of water taken from the groundwater basin (for example, the amount taken from wells), by supplying water to some [coastal] users. The cost of this process is borne by all users, on the theory that even those taking water from [inland] wells benefit from the delivery of water to [coastal users], as that reduces the amount of groundwater those [coastal users] will extract [from their own wells], thereby keeping the water in [all] wells from becoming too salty.”
Ordinance No. 2010-02 describes “three supplemental water projects that work together to provide supplemental water to reduce overdraft, retard seawater intrusion, and improve and protect the groundwater basin supply: (1) Watsonville Recycled Water Project, which provides tertiary treated recycled water for agricultural use and includes inland wells that are used to provide cleaner well water that is blended with the treated water in order to improve the water quality so that it may be used for agricultural purposes; (2) Harkins Slough Project, which diverts excess wet-weather flows from Harkins Slough to a basin that recharges the groundwater, which then is available to be extracted and delivered for agricultural use; and (3) Coastal Distribution System (‘CDS’), which consists of pipelines that deliver the blended recycled water and Harkins Slough Project water for agricultural use along the coast.”
“The Act specifically empowers [defendant] to adopt ordinances levying ‘groundwater augmentation charges on the extraction of groundwater from all extraction facilities within the agency for the purposes of paying the costs of purchasing, capturing, storing, and distributing supplemental water for use within [defendant’s] boundaries.’ ” (Amrhein, supra, 150 Cal.App.4th at p. 1372; see Act, § 1001.)
Ordinance No. 2010-02 describes that the augmentation charge is necessary to cover the costs of “supplemental water service” described as follows: “(a) the purchase/acquisition, capture, storage and distribution of supplemental water through the supplemental water projects [Watsonville Recycled Water Project; Harkins Slough Project; CDS] and including the planning, design, financing, construction, operation, maintenance, repair, replacement and management of these project facilities, and (b) basin management monitoring and planning to manage the existing projects and to identify and determine future water projects that would further reduce groundwater overdraft and retard seawater intrusion. The cost of the service also includes ongoing debt payments related to the design and construction of the completed supplemental water projects.”
In 2002, defendant approved ordinance No. 2002-02, which established an augmentation charge of $80 per acre-foot. Several citizens challenged the ordinance on the ground that the approval procedure did not comply with the notice, hearing, and voting requirements of Proposition 218. The trial court dismissed the case on the ground of a special statute of limitations, and the plaintiffs appealed to this court. We reversed the judgment after finding that part of the augmentation charge was not subject to the statute of limitations. (Scurich v. Pajaro Valley Water Management Agency (May 27, 2004, H025776) [nonpub. opn.] (Scurich); see Eiskamp v. Pajaro Valley Water Management Agency (2012) 203 Cal.App.4th 97, 100-101 (Eiskamp).) We remanded the case for trial.
In 2003, defendant approved ordinance No. 2003-01, which increased the augmentation charge to $120 per acre-foot. It did not comply with the notice, hearing, and voting requirements of Proposition 218. But it filed Amrhein as a validation proceeding seeking a declaration as to the validity of the ordinance. The trial court declared the ordinance valid, and citizens who had objected appealed to this court.
In 2004, defendant approved ordinance No. 2004-02, which increased the augmentation charge to $160 per acre-foot. It did not comply with the notice, hearing, and voting requirements of Proposition 218. Griffith challenged the ordinance and a 1993 management-fee ordinance. San Andreas Mutual Water Company and others also challenged the ordinance. The two actions were consolidated with Scurich (Consolidated Lawsuits) and the Consolidated Lawsuits were stayed pending our decision in Amrhein.
In May 2007, we reversed the judgment in Amrhein after holding that “the augmentation fee is a fee or charge ‘imposed... as an incident of property ownership’ and thus subject to [the Proposition 218] preconditions for the imposition of such charges.” (Amrhein, supra, 150 Cal.App.4th at p. 1370.)
In October 2007, defendant repealed ordinance Nos. 2003-01 and 2004-02.
“In January 2008, the Scurich plaintiffs, the San Andreas plaintiffs, Harold Griffith, and the Amrhein defendants wanted to resolve all disputes in the Amrhein Lawsuit and the Consolidated Lawsuits. They and [defendant] then entered into a stipulated agreement for entry of judgment (stipulated agreement). The stipulated agreement provided: ‘all matters raised in the Consolidated Lawsuits and the Amrhein Lawsuit (collectively the “Pending Litigation”) as to [defendant’s] actions shall be resolved by entry of judgment in the Pending Litigation’; [defendant] would pay $1.8 million to the Scurich plaintiffs, the San Andreas plaintiffs, Harold Griffith, and the Amrhein defendants for legal fees, costs, and expenses; and the augmentation charges collected pursuant to ordinance Nos. 2003-01 and 2004-02 would be refunded. It also stated that the ‘settlement extinguishes any and all claims arising out of the Pending Litigation all issues, transactions and/or related claims or actions including all claims that the parties have made or could have made with respect to the validity of any Augmentation Charge or Management Fee ordinances currently in effect....’ The stipulated agreement did not provide for either the repeal of [ordinance No. 2002-02] or the refund of augmentation charges imposed under [that] Ordinance.
“In February 2008, judgment was entered pursuant to the terms of the stipulated agreement.” (Eiskamp, supra, 203 Cal.App.4th at p. 102.)
In May 2010, defendant mailed notice of a public hearing on a proposed three-tier augmentation charge increase to all parcel owners. At the hearing, defendant tallied 291 written protests from 1, 930 eligible parcel owners. Defendant then enacted ordinance No. 2010-02, which imposed the increased augmentation charges.
In June 2010, defendant began an all-mail election on the ordinance. It mailed ballots to all owners of land parcels served by a well who would be subject to the augmentation charge. Each ballot was accorded weighted votes proportional to the parcel’s financial obligation as measured by average annual water use over the prior five years. And each ballot stated its number of votes. The weighted votes approved the ordinance 72 percent to 28 percent. But, if counted one vote per parcel, 324 votes were in favor of the ordinance and 608 votes were against the ordinance. Plaintiffs then filed the instant actions to challenge ordinance No. 2010-02.
challenges to ordinance no. 2010-02
“Proposition 218 was passed in 1996 by the electorate to plug certain perceived loopholes in Proposition 13. [Citations.] Specifically, by increasing assessments, fees, and charges, local governments tried to raise revenues without triggering the voter approval requirements in Proposition 13.” (Silicon Valley Taxpayers’ Assn. v. Garner (2013) 216 Cal.App.4th 402, 405-406.)
Relevant here is the component of Proposition 218 that undertakes to constrain the imposition by local governments of “assessments, fees and charges.” (§ 1.)
Proposition 218 restricts “the power of public agencies to impose a ‘ “[f]ee” or “charge, ” ’ defined as any ‘levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service.’ [Citation.] The phrase ‘[p]roperty-related service’ is defined to mean ‘a public service having a direct relationship to property ownership.’ [Citation.] ‘Property ownership’ is ...