Santa Clara Valley Water District could be forced to refund
millions
Santa Clara Valley Water District could be forced to refund millions
The Santa Clara Valley Water District is fighting a court battle to keep millions of dollars they may have illegally collected. Should they lose, they may have to return at least $5 million to the Great Oaks Water Company of San Jose, and could be liable for millions more to other well owners, including the city of Morgan Hill.
At the heart of the case, which began Monday in San Jose, is Great Oaks’ contention that the water district charged customers $15 million for the recovery of costs associated with the management and recharge of underwater aquifers in the county. Simultaneously, the district collected the same amount of property tax revenues to pay for the same water. “The (water district board of directors) approved groundwater charges, at the same time the board approved the recovery of $15 million from the Santa Clara County tax assessor’s office,” forensic accountant Thomas O’Rourke testified. “They were collecting it at the same time from two different groups of people, (but) they were not paying $30 million (for the expenses they designated).”
Practice of ‘double-dipping’ violated Proposition 218
This practice of “double charging” is a specific violation of California Prop 218, a constitutional amendment which says taxes and property-related fees such as groundwater charges levied by the water district must be approved by voters before any public agency can collect them and must equal what it cost the district to provide that service. How did that fact get past the seven water district board members? Were questions ever raised about the legality of the process? Was the wool pulled over their eyes, or did they know they were double dipping to set themselves up with a comfortable cushion at taxpayer expense? Either way, they were not ethical or transparent.
Some major accounting and oversight changes needed
Great Oaks attorney Tim Guster said O’Rourke’s testimony described the “systematic overbudgeting” and “massive overcharging” by the district that constitute specific violations of Prop. 218, including the double charging for imported water contracts, and the District Act, including the placement of revenues in reserve funds.
It appears the water district has violated Prop. 218 and the District Act, which created the SCVWD. Even if the water district wins this battle, they have some major accounting and oversight changes to make.
It’s a shame a public agency, that has a budget of $305 million and employs more than 700 people, can make this kind of mistake. Even if the practices are found to be legal, charging customers twice for the same service is unethical.
