Carlton Santee Corp. v. Padre Dam Mun. Water Dist.

• Decision Date: 02 June 1981
• Citation: 174 Cal.Rptr. 413,120 Cal.App.3d 14
• Court: California Court of Appeals Court of Appeals
• Parties: CARLTON SANTEE CORPORATION, a California corporation, Plaintiff and Appellant, v. PADRE DAM MUNICIPAL WATER DISTRICT, et al., Defendants and Respondents. Civ. 22014.

Page 413

174 Cal.Rptr. 413

120 Cal.App.3d 14

CARLTON SANTEE CORPORATION, a California corporation, Plaintiff and Appellant, v. PADRE DAM MUNICIPAL WATER DISTRICT, et al., Defendants and Respondents.

Civ. 22014.

Court of Appeal, Fourth District, Division 1, California.

June 2, 1981.

Procopio, Cory, Hargreaves & Savitch and Thomas M. Fiorello, San Diego, for plaintiff and appellant.

Jennings, Engstrand & Henrikson and Wallace R. Peck, San Diego, for defendants and respondents.

WIENER, Associate Justice.

Carlton Santee Corporation (Carlton) appeals from the judgment entered after it unsuccessfully challenged the validity of an ordinance of the Padre Dam Municipal Water District (District) establishing the time of payment and charge to connect a completed dwelling unit for water and sewer services and the fee charged for inspection and engineering. The trial court found that in enacting the ordinance the District did not act in an illegal, arbitrary or capricious manner as the challenged procedures and charges are fair, reasonable and non-discriminatory in character.

Carlton claims that where Water Code section 71670 ¹ authorizes the District to charge for services furnished, and where the District has a revolving fund financial policy, the court abused its discretion in refusing to set aside the regulation requiring payment of connection fees possibly years before connections to the District's facilities are actually furnished and in refusing to set aside rules requiring payment of engineering and inspection fees in excess of the cost of providing such services.

In light of the quasi-legislative nature of the District's actions, its promulgation of the rules in controversy are "reviewable only by means of ordinary mandate (Code Civ. Proc., § 1085) where the court is limited to a determination of whether District's actions were arbitrary, capricious or entirely lacking in evidentiary support, or whether it failed to follow the procedure and give the notices required by law. (Citations.)" (Swanson v. Marin Mun. Water Dist. (1976) 56 Cal.App.3d 512, 519, 128 Cal.Rptr. 485; see Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 34, fn. 2, 112 Cal.Rptr. 805, 520 P.2d 29; Mountain Defense League v. Board of Supervisors (1977) 65 Cal.App.3d 723, 727, 135 Cal.Rptr. 588; Kahn v. East Bay Mun. Util. Dist. (1974) 41 Cal.App.3d 397, 409, 116 Cal.Rptr. 333.) Upon reviewing the record in its entirety, we conclude the rules are neither arbitrary nor capricious in nature as the reasonableness of the enactments are supported by substantial evidence. (See City of Santa Cruz v. Local Agency Formation Com. (1978) 76 Cal.App.3d 381, 393, 142 Cal.Rptr. 873.) We affirm the judgment.

Factual Background

Carlton owns most of the vacant land within the Santee area, about 2,800 acres located northeasterly of Carlton Hills and the Santee Lakes. It plans to use this land for development of residential projects. It could construct 12,864 dwelling units if it were to build according to the maximum densities allowable. Sewer capacity is only available from the District.

The District is a municipal water district established in 1955 under the Municipal Water District Law of 1911 (Div. 20 of the Water Code, § 71000 et seq.) and encompasses the San Diego County communities of Santee, Lakeside, Riverview, Flinn Springs, Harbison Canyon, Alpine and a portion of El Cajon. It supplies water, both as a wholesaler and a retailer, and operates a sewerage system, a wastewater reclamation plant and recreational facilities at the Santee Lakes. The District is governed by an elected, five-member, board of directors which is responsible for the establishment of the policies and procedures of the District, as well as the management of the entity's 78 employees and assets, having a net book value on June 30, 1978 of about $40,000,000.

The District is divided into improvement districts of which Improvement District A is the only district involved here. It was formerly the Santee County Water District, an independent agency which was merged into the District on December 31, 1976. Separate financial books and accounting records are maintained for each improvement district, as each depends solely upon its own revenues. Improvement District A supplies approximately 11,000 water services and 11,000 sewer services to a population in excess of 42,000. There is no reliance upon tax revenues for the operation and maintenance of these facilities or for construction of capital improvements. Instead, a variety of fees and charges have been levied for water and sewer use, connections to the respective systems, recreational facilities use, meters, laterals, reinstatement of service, process and approval of tentative maps, engineering, inspection, soil testing, availability letters, and environmental studies.

Connection Fees:

The amount of the connection fee is based upon the District's determination of its average cost in providing sewage treatment plant capacity, sewer trunk lines, water storage facilities, and major water transmission lines to each user. A uniform connection fee of $675 is charged for every residential unit throughout the improvement district. This fee cumulatively represents a $490 water connection fee for each single family residence, which includes a $375 credit to water storage capacity and $115 to water transmission capacity, and $185 sewer connection for each single family dwelling, which includes an $150 credit to sewer plant capacity and $35 to sewer trunk capacity. Originally, the fee was collected when a customer desired the physical connection to the District's facilities. This policy was changed in 1975, however, when the Santee County Water District found itself with insufficient sewer capacity to serve all those desiring service. In 1973 the Regional Water Quality Control Board imposed water discharge requirements on the District resulting in a two-year moratorium on all new connections to the system. In order to secure additional capacity, the Santee County Water District, and later the District, entered into a series of agreements with the City of San Diego to dispose of sewage through the city's facilities. Each of these agreements specified and restricted the amount of sewage which could be discharged. At no time did the allocated capacity equal or exceed the demands upon the system.

This shortage required successive governing boards of the District to balance the parties' respective interests and to devise methods to fairly allocate this essential, finite, resource. Property owners desiring to subdivide and develop their property had to know whether they could proceed with assurance that upon completion of their project, houses could be physically connected to the system. On the other hand, procedures had to be devised which would prevent hoarding and speculating of capacity by large developers who did not immediately intend to undertake their own project but who desired a commitment of capacity. To be fair and nondiscriminatory, capacity had to be made available only to those who were in need and could reasonably guarantee they were prepared to immediately develop their property. At the same time, the District needed funds to plan for and provide the off-site facilities essential to service the subdivisions when they were ready to actually connect. This resulted in the 1975 adoption by the Santee County Water District of new procedures for the allocation of sewer capacity. These procedures required the filing of an application and a minimal filing fee. As capacity became available, applicants were to be so notified in chronological order of their applications. If the applicant wished to proceed at that time, the District agreed to reserve capacity upon the payment of all connection fees attributable to the project. If the applicant did not wish to proceed, the next person on the list was given the opportunity to go ahead. To further assure utilization of the capacity within a reasonable period, physical connection to the system was required within 24 months.

After the merger of the Santee County Water District into the District, the Board in 1977 reviewed existing sewer application procedures at a series of public meetings, resulting in the modification of the rules. It retained the requirement that connection fees be paid within two months of date of notification of availability of capacity in order for an application to receive a sewer service commitment from the District. Further, failure to pay such fees constituted a withdrawal of the application, with the capacity then being allocated to the next property owner on the list.

In late 1978, the District negotiated a more extensive agreement with the City of San Diego, securing an augmented capacity sufficient to supply service to approximately 10,472 additional units in Improvement District A. However, at that time, the District had on file approximately 20,529 unsatisfied applications for service to dwelling units. Thus, after an extensive investigation and several public hearings, the Board concluded it was necessary to continue the sewer allocation system. It unanimously adopted Ordinance No. 79-1 on January 23, 1979, which made certain changes in the existing rules of Improvement District A, but which continued in effect the requirement connection fees be paid within two months of notification of availability of sewer service. An applicant could also elect to defer all or a portion of his application for sewer service provided the applicant delivered written notice of such intent to the District within one month of receipt of the notice of availability and, where more than five units are being deferred, deposited with the District in cash an amount equal to the multiplication of the number of units times $50. The application then is deemed not withdrawn, but placed on a supplemental list. Upon reinstatement of the application, it...