Bighorn-Desert View Water Agency v. Verjil

• Decision Date: 24 July 2006
• Docket Number: No. S127535.,S127535.
• Citation: 46 Cal.Rptr.3d 73,39 Cal.4th 205,138 P.3d 220
• Court: California Supreme Court
• Parties: BIGHORN-DESERT VIEW WATER AGENCY, Plaintiff, Cross-defendant and Respondent, v. Kari VERJIL, as Registrar of Voters, etc., Defendant and Cross-defendant; E.W. Kelley, Real Party in Interest, Cross-complainant and Appellant.

46 Cal.Rptr.3d 73

39 Cal.4th 205

138 P.3d 220

BIGHORN-DESERT VIEW WATER AGENCY, Plaintiff, Cross-defendant and Respondent, v. Kari VERJIL, as Registrar of Voters, etc., Defendant and Cross-defendant E.W. Kelley, Real Party in Interest, Cross-complainant and Appellant.

No. S127535.

Supreme Court of California.

July 24, 2006.

Sweeney, Davidian, Green & Grant, Eric Grant and James F. Sweeney, Sacramento, for Real Party in Interest, Cross-complainant and Appellant.

Nick Bulaich as Amicus Curiae on behalf of Real Party in Interest, Cross-complainant and Appellant.

Trevor A. Grimm, Los Angeles, Jonathan M. Coupal and Timothy A. Bittle, Sacramento, for Howard Jarvis Taxpayers

Association as Amicus Curiae on behalf of Real Party in Interest, Cross-complainant and Appellant.

Harold Griffith as Amicus Curiae on behalf of Real Party in Interest, Cross-complainant and Appellant.

Lagerlof, Senecal, Bradley, Gosney & Kruse, Timothy J. Gosner and James D. Ciampa, Pasadena, for Plaintiff, Cross-defendant and Respondent.

McCormick, Kidman & Behrens, Janet Morningstar, Newport Beach; Daniel S. Hentschke, Oceanside; Colantuono & Levin, Michael G. Colantuono. Los Angeles; Alisa Renee Fong; Ruth Sorensen, Alturas; and Jennifer B. Henning for Association of California Water Agencies, League of California Cities and California State Association of Counties as Amicus Curiae on behalf of Plaintiff, Cross-defendant and Respondent.

No appearance for Defendant and Cross-defendant.

KENNARD, J.

[138 P.3d 208]

In November 1996, California voters adopted Proposition 218, which added articles XIII C and XIII D to the California Constitution. In Richmond v. Shasta Community Services Dist. (2004) 32 Cal.4th 409, 9 Cal.Rptr.3d 121, 83 P.3d 518 (Richmond), we construed article XIII D as it applies to fees that a local public water district charged for making new service connections to its domestic water delivery system. We concluded that those connection charges were not "assessments" or "property-related fees or

[138 P.3d 209]

charges" within the meaning of article XIII D. (Richmond, supra, at pp. 425, 428, 9 Cal.Rptr.3d 121, 83 P.3d 518.)

Here, we consider a related issue, one that involves section 3 of article XIII C, which provides that "the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." Does this provision grant local voters authority to adopt an initiative measure that would reduce a local public water district's charges for delivering domestic water to existing customers and that also would require voter preapproval for any future increase in those charges or for the imposition of any new charge?

As explained below, we conclude that section 3 of article XIII C grants local voters a right to use the initiative power to reduce the rate that a public water district charges for domestic water. We also conclude, however, that this new constitutional provision does not grant local voters a right to impose a voter-approval requirement on all future adjustments of water delivery charges, and that the proposed initiative at issue here was properly withheld from the ballot because it included a provision to impose such a requirement.

I

In 1969, the California Legislature formed the Bighorn-Desert View Water Agency (Agency) as a special district under the Bighorn Mountains Water Agency Law.¹ (Stats.1969, ch. 1175, p. 2273 et seq.) The Agency provides domestic water service to residents in a roughly 42-square-mile area north of Yucca Valley in San Bernardino County.

E.W. Kelley is a resident of San Bernardino County and the proponent of a local initiative measure to reduce the Agency's water rate and other charges. Kelley's initiative proposed to reduce the Agency's water rate from $4.00 to $2.00 per 100-cubic-foot billing unit,² to reduce the "non-cap recovery charge" from $4.65 to $2.50 per month, and to reduce the "MWA

[138 P.3d 210]

pipeline charge" from $13.62 to $11.50 per month. The initiative also would have required the Agency to obtain voter approval before increasing any existing water rate, fee, or charge, or imposing any new water rate, fee, or charge.

Kelley succeeded in qualifying the initiative for the ballot. On October 24, 2002, Sharon Beringson, as the Interim Registrar of Voters for San Bernardino County, certified the initiative, and the next day by letter she informed the Agency of its duty under Elections Code section 9310 to either adopt the initiative or submit it to the voters at a special election. The Agency did neither, however. Instead, on November 20, 2002, it filed a complaint for declaratory relief in the superior court naming Beringson as the defendant and Kelley as the real party in interest.

In the complaint, the Agency asked the court to declare the initiative impermissible under California law, and beyond the power of the Agency's electorate to enact, because it would interfere with the statutory responsibility of the Agency's board of directors to set the water rate high enough to cover its costs. (See Stats.1969, ch. 1175, § 25, pp. 2285-2286, 72 B. West's Ann. Wat.-Appen., supra, ch. 112, p. 203 ["The board of directors, so far as practicable, shall fix such rate or rates for water in the agency . . . as will result in revenues which will pay the operating expenses of the agency, . . . provide for repairs and depreciation of works, provide a reasonable surplus for improvements, extensions, and enlargements, pay the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of such debt as it may become due."].)

Kelley answered the complaint and filed a motion for judgment on the pleadings and a cross-petition for writ of mandate seeking to compel the Agency to either adopt the initiative as an ordinance or submit it to the voters at a special election. Asserting that the Agency was challenging the legality of the proposed initiative both on its face (insofar as it asserted that its board of directors had the exclusive power to set the agency's water rates and charges) and as applied (insofar as it asserted that the particular rates and charges that the initiative would set would leave the Agency with insufficient net revenues), Kelly argued that the as-applied challenge could not be raised before the election and that the facial challenge failed because the initiative was authorized and protected by section 3 of article XIII C of the California Constitution. In its opposition to Kelley's motion for judgment on the pleadings, the Agency argued, essentially, that it was raising only a facial challenge to the proposed initiative.

At the hearing on the motion for judgment on the pleadings, the parties agreed that the only issue was the validity of the initiative on its face, that the facts relevant to that issue were undisputed, and that the issue could be decided as a matter of law. The trial court, declaring that voters in the area served by the Agency lacked power to affect its water rates and fees and charges, denied Kelley's motion and cross-petition and entered a judgment of declaratory relief for the Agency.

Kelley appealed the judgment to the Court of Appeal, arguing that his initiative was authorized by article XIII C, section 3 of the California Constitution. The Court of Appeal affirmed the superior court's ruling, and Kelley petitioned this court for review. We granted review and then transferred the case back to the Court of Appeal with directions to vacate its decision and to reconsider the issues in light of Richmond, supra, 32 Cal.4th 409, 9 Cal. Rptr.3d 121, 83 P.3d 518.

The Court of Appeal again found in favor of the Agency, holding that article XIII C did not authorize Kelley's initiative because the initiative did not deal with special or general taxes, which the Court of Appeal held to be the only subject matter article XIII C covers. The court held that the Agency's rate, fees, and charges were not subject to Proposition 218, and thus could not be reduced by voter initiative. Kelley again petitioned this court for review, which we again granted.

II

Article XIII C of the California Constitution is entitled Voter Approval for Local Tax Levies. Section 1 of article XIII C defines the terms "`[g]eneral tax,'" "`[s]pecial tax,'" "`[l]ocal government,'" and "`[s]pecial district.'" Section 2 of article XIII C provides, in subdivision (b), that "[n]o local government may impose, extend, or increase any general tax unless and until that tax is submitted to the electorate and approved by a majority vote," and it provides, in subdivision (d), that "[n]o local government may impose, extend, or increase any special tax unless and until that tax is submitted to the electorate and approved by a two-thirds vote." Section 3, the provision at issue here, states: "Initiative Power for Local Taxes, Assessments, Fees and Charges. Notwithstanding any other provision of this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments and neither the Legislature nor any local government charter shall impose a signature requirement higher than that applicable to statewide statutory initiatives."³ (Italics added.)

With a single sentence, the Court of Appeal rejected Kelley's reliance on article XIII C as authority for the proposed initiative. The Court of Appeal stated: "Article XIII C governs special and general taxes, which are not at issue here." Kelley argues that this statement is erroneous because section 3 of article XIII C is not limited to special and general taxes, but applies by it terms to "any local tax, assessment, fee or charge."

When interpreting a provision of...