Howard Jarvis Taxpayers Ass'n v. Coachella Valley Water Dist.
| Decision Date | 10 February 2023 |
| Docket Number | E078411 |
| Parties | HOWARD JARVIS TAXPAYERS ASSOCIATION, Plaintiff and Appellant, v. COACHELLA VALLEY WATER DISTRICT, Defendant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED
APPEAL from the Superior Court of Riverside County No. PSC1904774. Sunshine S. Sykes, Judge. Affirmed.
Costell &Adelson Law Corporation, Jeffrey Lee Costell Joshua S. Stambaugh and Sara M. McDuffie for Plaintiff and Appellant.
Colantuono, Highsmith &Whatley, Michael G. Colantuono Pamela K. Graham and Liliane M. Wyckoff for Defendant and Respondent.
SLOUGH J.
Howard Jarvis Taxpayers Association (association) appeals from a judgment entered in favor of Coachella Valley Water District (district) after a bench trial on its reverse validation action. (Code Civ. Proc., § 860 et seq.) The association's lawsuit challenged the district's decision to use undesignated reserves from one of its accounting funds to finance a capital improvement project designed to conserve groundwater.
Groundwater conservation is a major concern for water agencies in Southern California, and this is especially true for the district, whose service area lies in the Colorado Desert region of Riverside County. To reduce the use of groundwater for irrigation purposes, in 2009 the district completed the first phase of construction on its Mid-Valley Pipeline (pipeline), a system of conveyance and storage facilities designed to deliver nonpotable water to golf courses and other irrigators. Rather than issuing debt to finance the project, the district used available reserves from its domestic water fund, an accounting device for the revenues from the rates, charges, and property taxes domestic customers pay for drinking water. A decade later, the district approved an interfund loan to repay the domestic water fund from the reserves of a fund for revenues from groundwater replenishment charges in the region the pipeline services.
On appeal, the association argues the interfund loan is invalid for multiple reasons, including that it violates Propositions 26 and 218 by assigning to domestic customers the costs of a project that benefits golf courses and other irrigators.[1] We agree with the trial judge's conclusion that Propositions 26 and 218 don't apply in these circumstances because the loan did not result in the imposition or increase of any water rates or charges. California's voter initiatives limiting local governments' taxing authority apply to revenue raising activities, not spending or the budget process. (Citizens for Fair REU Rates v. City of Redding (2018) 6 Cal.5th 1 (Redding).) Because we also conclude the association's other grounds for invalidating the loan lack merit, we affirm.
I FACTS
Operating under the County Water District Law (Wat. Code, § 30000 et seq.) and Coachella District Merger Law (Wat. Code, § 33100 et seq.), the district is the public agency responsible for supplying water to the Coachella Valley-a desert region in Riverside County that lies between the San Jacinto and San Bernardino Mountains and borders the Salton Sea. Home to over 290,000 people, the Coachella Valley contains nine cities, including Palm Springs, and over 120 golf courses.[2] (See Operating and Capital Improvement Budget for FY 2019-2020 [the district's service area contains nearly 14 percent of the state's golf courses].) On average, the region receives less than four inches of rainfall a year.
One of the district's duties is to provide potable water to over 100,000 domestic customers. (Coachella Valley Water District v. Superior Court (2021) 61 Cal.App.5th 755, 760 (Coachella).) The area's main source of potable water is the groundwater in the Coachella Valley aquifer. However, because the aquifer is a limited resource in a desert region, groundwater conservation is crucial. Before the district built the pipeline, Coachella Valley's groundwater levels had been steadily declining for 50 years and the aquifer was in "overdraft"-the state of a basin when pumping or extraction exceeds replenishment. (Wat. Code, § 10735, subd. (a); City of Santa Maria v. Adam (2012) 211 Cal.App.4th 266, 279.) In addition to obvious cost and supply ramifications, overdraft can affect water quality and cause the gradual collapse of the gravel and silt layers overlying the aquifer (subsidence), which can in turn permanently destroy an aquifer's capacity to store water. (Santa Maria, at p. 291.)
The district is responsible for managing the aquifer and seeking a supplemental water supply for the Coachella Valley. One way the district manages the aquifer and reduces subsidence is through "replenishment," the spreading or injecting water from other sources, like captured mountain runoff, into the aquifer. The district has three main replenishment facilities or subbasins-the West Whitewater River Subbasin, the Mission Creek Subbasin, and the East West Whitewater River Subbasin. Water Code section 31630 gives the district authority "to levy and collect water replenishment assessments . . . for the purpose of replenishing ground water supplies." The district does so through three different "replenishment assessment charges"-imposed on the customers in each of the three areas benefited by the subbasins who pump more than 25 acre-feet of water from the aquifer in any year. The revenues from these charges cover a portion of the costs of obtaining water for replenishment, as well as the operation and maintenance of the subbasins.
Another way the district conserves groundwater is through "in lieu programs," which require or encourage customers to use alternative sources of water. The district has two alternative, or supplemental sources of water: recycled water (wastewater that has been treated and sanitized) and imported water purchased from third parties. This case concerns Colorado River water the district obtains from the Metropolitan Water District of Southern California (MWD).[3] (Wat. Code, §§ 31630.5, subd. (g), 31631.) Both recycled and Colorado River water are nonpotable. Colorado River water can be treated to become potable, but it requires more treatment than groundwater does. The district receives its Colorado River water either through the Coachella Canal, which it owns and operates, or through MWD's Colorado River Aqueduct.
In 2006, the Legislature enacted sections 32600 through 32603 of the Water Code to empower the district to conserve groundwater by requiring certain customers to convert to nonpotable water. The Legislature found it a "waste" to use potable domestic water "for nonpotable uses for cemeteries, parks, highway landscaped areas, . . . and golf course irrigation." (Wat. Code, § 32601, subd. (a).) To avoid such waste, Water Code section 32601 authorizes the district to order any customer to convert to nonpotable water when doing so is safe, feasible, and costs no more than what the customer would pay for groundwater. As a result, the district's charge for nonpotable water is 85 percent of the relevant replenishment assessment charge plus pumping costs.
The district's revenues come from the rates and charges it imposes for water and water-related services, as well as from various tax assessments on property within its service area. (Wat. Code, §§ 31007, 31701, 31702; Coachella, supra, (2021) 61 Cal.App.5th at p. 760.) The district separately accounts for its revenues by allocating them to funds related to their purpose.[4] For example, the district's domestic water and canal water funds contain revenues from related property taxes and the rates and various charges associated with delivering drinking water and with delivering nonpotable water via the Coachella Canal, respectively. The revenues from the replenishment access charges associated with the district's three subbasins are allocated to three corresponding funds: the West Whitewater Replenishment Fund, the Mission Creek Replenishment Fund, and the East Whitewater Replenishment Fund.
Each year, the district's board approves a budget that identifies authorized capital improvement projects scheduled for the upcoming fiscal year and their funding sources.[5]Though there are several funding options, the district prefers to finance capital improvement projects with its own reserves when feasible, to avoid incurring the higher interest and other debt expenses associated with borrowing from a third party. For example, in 2016, the district approved an interfund loan requiring the East Whitewater Replenishment Fund to repay the domestic water fund the costs of constructing a groundwater replenishment facility at the East Whitewater River Subbasin.
The district conceived of the pipeline as a way to convert more customers to nonpotable water by supplying them with imported Colorado River water and recycled water. As noted, the district receives Colorado River water through two delivery systems, the Colorado River Aqueduct and the Coachella Canal. These systems are in different areas of the valley and are not connected. The Colorado River Aqueduct runs along the northern edge of the district's service area. It delivers water to a turnout at Whitewater River, which is then used to recharge groundwater for pumping in the western part of the valley. The Coachella Canal is a 123-mile-long branch of the All American Canal that runs south of the Colorado River Aqueduct. Before the district built the pipeline, the Coachella Canal delivered water to the southern and eastern parts of the valley, which included over 77,000 acres of farmland, but only a small percentage of the region's golf courses.
The district first proposed the pipeline in 2000,...
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