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-38- <br />charges, and thus not subject to the requirements of Article XIIID regarding notice, hearing and <br />protests in connection with any increase in the fees and charges being imposed. However, three <br />recent cases have held that certain types of water and wastewater charges could be subject to <br />the requirements of Proposition 218 under certain circumstances. <br /> <br />In Richmond v. Shasta Community Services District (9 Cal. Rptr. 3rd 121), the California <br />Supreme Court addressed the applicability of the notice, hearing and protest provisions of <br />Article XIIID to certain charges related to water service. In Richmond, the Court held that <br />connection charges are not subject to Proposition 218. The Court also indicated in dictum that a <br />fee for ongoing water service through an existing connection could, under certain <br />circumstances, constitute a property-related fee and charge, with the result that a local <br />government imposing such a fee and charge must comply with the notice, hearing and protest <br />requirements of Article XIIID. <br /> <br />In Howard Jarvis Taxpayers Association v. City of Fresno (March 23, 2005), the California <br />Court of Appeal, Fifth District, concluded that water, sewer and trash fees are property-related <br />fees subject to Proposition 218 and a municipality must comply with Article XIIID before <br />imposing or increasing such fees. The California Supreme Court denied the City of Fresno’s <br />petition for review of the Court of Appeal’s decision on June 15, 2005. <br /> <br />In July 2006 the California Supreme Court, in Bighorn-Desert View Water Agency v. Verjil <br />(39 Cal. 4th 205), addressed the validity of a local voter initiative measure that would have (a) <br />reduced a water agency’s rates for water consumption (and other water charges), and (b) <br />required the water agency to obtain voter approval before increasing any existing water rate, <br />fee, or charge, or imposing any new water rate, fee, or charge. The court adopted the position <br />indicated by its statement in Richmond that a public water agency’s charges for ongoing water <br />delivery are “fees and charges” within the meaning of Article XIIID, and went on to hold that <br />charges for ongoing water delivery are also “fees” within the meaning of Article XIIIC’s <br />mandate that the initiative power of the electorate cannot be prohibited or limited in matters of <br />reducing or repealing any local tax, assessment, fee or charge. Therefore, the court held, Article <br />XIIIC authorizes local voters to adopt an initiative measure that would reduce or repeal a public <br />agency’s water rates and other water charges. (However, the court ultimately ruled in favor of <br />the water agency and held that the entire initiative measure was invalid on the grounds that the <br />second part of the initiative measure, which would have subjected future water rate increases to <br />prior voter approval, was not supported by Article XIIIC and was therefore invalid.) <br /> <br />The court in Bighorn specifically noted that it was not holding that the initiative power is <br />free of all limitations; the court stated that it was not determining whether the electorate’s <br />initiative power is subject to the statutory provision requiring that water service charges be set <br />at a level that will pay for operating expenses, provide for repairs and depreciation of works, <br />provide a reasonable surplus for improvements, extensions, and enlargements, pay the interest <br />on any bonded debt, and provide a sinking or other fund for the payment of the principal of <br />such debt as it may become due. <br /> <br />Current Practice Regarding Rates and Charges. The City’s practice has been to provide <br />public notice of proposed water rate increases through means that include, among others, <br />holding informational presentations at community group meetings, mailings to residential and <br />commercial customers of public hearings on rate increases, and press releases and media <br />campaigns regarding rate increases, followed by public hearings conducted by the City Council. <br />The most recent rate increase was enacted by the City in strict compliance with the procedures <br />mandated by Proposition 218 and Bighorn. <br /> <br />Conclusion. It is not possible to predict how courts will further interpret Article XIIIC and <br />Article XIIID in future judicial decisions, and what, if any, further implementing legislation will <br />8.C. - Page 63