Lawsuit against Apple Valley alleges Prop 218 violations related to Wastewater Division (April 21, 2016)

Legal filing says town has illegally transferred funds, among other claims

APPLE VALLEY — A lawsuit filed in the Superior Court of San Bernardino alleges Proposition 218 violations related to Apple Valley’s Wastewater Division, which provides sewer service to more than 22,000 town residents.

Town resident Christina Lopez-Burton filed the suit on March 28. One of the accusations includes the illegal transfer of nearly $5 million from the town’s wastewater fund to its general fund between 2012 and 2015. More than $1.8 million is budgeted for transfer in 2015-16, according to lawsuit documents.

Town Spokeswoman Kathie Martin said the town is not able to comment on current litigation, but the suit showed that the town contends that these transfers represent reimbursement of expenses that the general fund has incurred on behalf of the wastewater enterprise and are justified as a result.

The lawsuit alleges, however, that expenditures identified in the General Government budget include costs that are not related to providing wastewater service and claims a transfer of $1,072,660 to the town’s struggling Parks & Recreation fund, as well as a nearly $350,000 transfer to the Apple Valley golf course fund.

Neither the Parks and Recreation Department, the suit said, nor the town’s golf course support wastewater operations.

In addition to the illegal transfers, Lopez-Burton’s lawsuit alleges that the town’s imposing of fees and charges exceed the cost of providing wastewater services to its customers and that those fees and charges are not proportionate among customers.

Lopez-Burton’s attorney, Eric Benink of the San Diego-based Krause Kalfayan Benink & Slavens law firm, told the Daily Press on Wednesday that the suit’s allegations are all related to the town’s violations of California constitutional requirements.

Among (the allegations) is the fact that the town is not carefully ascertaining costs and, thus, are overcharging some of its customers for sewer fees, Benink said. I think each one of the allegations is important in its own right, with the bottom line being residential customers are not supposed to be charged more than the proportionate costs.

The alleged overcharges referenced by Benink are in relation to what the suit claims are flawed rate increases given that the town has not conducted a rate study, cost of service study, or an internal analysis to ensure it complies with Prop. 218.

Instead, the suit showed, over the past 20 years (the town) has periodically imposed increases on an ‘original sewer rate,’ which was set at $8 for single-family residential customers in 1980, before the passage of Prop. 218.

The original sewer rates would not have been Prop. 218 compliant, according to the suit, because the town set rates higher than necessary to subsidize town funds.

The monthly rate for sewer service — as of July 1, 2015 — is $35.04 per equivalent dwelling unit, according to the town’s website.

A resolution adopted in 2014 allowed for incremental sewer service rate increases totaling 48 percent from 2014 to 2019, as shown in lawsuit documents.

At the time, the town listed cost increases for Victor Valley Wastewater Reclamation Authority water treatment services as the cause for the rate increases, but the suit claims the town’s math is wrong because VVWRA expenses represent approximately 25 percent of total wastewater costs.

Prop. 218 imposes a number of restrictions on municipally owned sewer utilities, Benink said. It’s important under Prop. 218 that the town carefully determine how much it charges customers in relation to the cost of the services that it provides.

Lopez-Burton’s aim is to get the town to comply with California constitutional mandates before imposing further wastewater fees and charges, the lawsuit showed.

Source: Matthew Cabe, Daily Press