Court Holds Groundwater Augmentation Charge is Not Subject to Voter Approval Requirements of Proposition 218

by Best Best & Krieger LLP

Notice of a Public Hearing for a Property-related Fee or Charge Must Only be Mailed to the Record Owners of Each Affected Parcel

A California court of appeal recently held that a groundwater management agency’s groundwater augmentation charges are water service fees. Consequently, any new or increase to the agency’s existing groundwater augmentation charges are exempt from the voter approval requirements of Proposition 218 (California Constitution article XIII D, section 6). The court in Griffith v. Pajaro Valley Water Management Agency also held that under Proposition 218, a public agency is required to mail notice of the public hearing for the adoption of any new or increase to any existing property-related fee or charge to the record owner of each identified parcel upon which the fee or charge is proposed to be imposed. The public agency is not required to mail such notice to any tenant directly liable for the payment of the fee or charge.

In Griffith, the plaintiff challenged the agency’s groundwater augmentation charges on several grounds. The court, however, rejected all of the plaintiffs challenges. Among other holdings, the court found that:

  1. the groundwater augmentation charges are water service fees and therefore not subject to the voter approval requirements of Proposition 218;
  2. a public agency is only required to mail notice of the public hearing for the adoption of a property-related fee or charge to the record owner of a parcel (i.e., a property owner listed on the assessment roll) proposed to be subject to the fee or charge;
  3. the charges did not exceed the proportionate cost of providing the service because all groundwater users benefit from the Agency’s groundwater management activities, not just the coastal users receiving supplemental water; and
  4. Proposition 218 does not require that property-related fees and charges be calculated on a parcel-by-parcel basis, rather grouping similar users together (i.e., calculating fees on a class-by-class basis) is a reasonable method of allocating the costs of service.

The Pajaro Valley Groundwater Basin is subject to saltwater intrusion. To protect the groundwater basin, the Pajaro Valley Water Management Agency (Agency) implemented a program to deliver supplemental water to some coastal users and develop other supplemental water projects. The cost of the program was to be shared by all properties served by a well within the boundaries of the Agency.

The Agency decided to adopt a three-tiered groundwater augmentation charge to fund the program and conducted a Proposition 218 majority protest hearing for that purpose. Although the Agency was aware that certain tenants would be indirectly liable for the payment of the proposed charges through lease obligations, notice of the public hearing was mailed only to the record owners or properties served by a well. The Agency did not receive written protests from a majority of the affected property owners and enacted an ordinance imposing the charges. The Agency then conducted an all-mailed ballot property-related fee election on the ordinance, after the majority protest proceeding was completed, since it was thought that this additional election was required under Proposition 218 for this type of charge. The ballots were mailed only to affected property owners.

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