The Santa Clara Valley Water District is set to send out
residential groundwater bills this week, even though the local
Superior Court ruled the charges unconstitutional.
The Santa Clara Valley Water District is set to send out residential groundwater bills this week, even though the local Superior Court ruled the charges unconstitutional.
Morgan Hill resident and well owner Jon Persing said he will refuse to pay, even after the water district added about $45 in late fees and interest to his $88 bill for groundwater usage earlier this year.
Earlier this month, Great Oaks Water Co., a San Jose company, sued the water district for a full refund of about $4.6 million in groundwater charges the water retailer paid to the water district in 2005-06. In that ruling, Judge Kevin Murphy found that the charges levied by the water district violated Proposition 218 because the charges were not approved by the voters.
To Persing, that means he is due a refund as well, and he doesn’t have to pay the groundwater charges anymore because the public agency used the same process to determine his bill.
“It’s pure and simple,” Persing said. “I don’t know how they would fight that, knowing a judge has already ruled in favor of Great Oaks.”
Meanwhile, Persing has chosen a more aggressive path to hanging onto his money, and the water district responded. In addition to the basic charge for water use last year, the water district has added a penalty of $8.80, a $35 administrative fee, and $3.52 in interest to Persing’s bill, bringing his total balance to $135.32. He said he has also received a letter from the water district stating that if he didn’t pay by Dec. 9 the agency would pursue legal action, though he said Monday he hasn’t heard anything since that deadline. He declined to say whether or not he has discussed the situation with an attorney.
“I was thinking I would donate the money to charity, and tell (the water district) to do the same with my refund,” Persing said.
Ultimately, the water district could take out a lien on Persing’s and other delinquent well owners’ properties, according to SCVWD spokeswoman Susan Siravo. That would happen only after “several” unanswered delinquent notices, including a notice of a 10 percent penalty, plus 1 percent interest per month, and the $35 administrative fee. If the well owner still refuses to pay, the water district could pursue legal action, which would add court costs to the bill. If the court rules in the water district’s favor, the district could put a lien on the well owner’s property.
Water district board of directors chair Sig Sanchez said the agency’s position remains that the groundwater charges are lawful, and the water district has complied with Proposition 218. They are likely to appeal the Great Oaks ruling, and have argued that the charges satisfy the terms of Proposition 218.
“This court action is ongoing,” Sanchez said. “I can’t believe the staff is going to do anything different than what it’s been doing.”
If the water district’s appeal attempt fails, and if other lawsuits filed by Great Oaks end in the water company’s favor, then refunds to the county’s 4,000 well owners could be in order. But that is likely not to be determined for at least another year, as the lengthy appeal process continues.
Supervisor Don Gage said the court ruling could decimate one of the water district’s key revenue sources. This year, the water district budgeted about $60 million in revenue from groundwater charges. The agency’s total budget is $305 million.
“If other people sue, I think it could get out of control,” said Gage, who plans to run for a seat on the water district’s board of directors in 2010. “It could mean millions of dollars.”
Siravo said water district staff are not aware of any well owners who have refused to pay groundwater charges based on the Great Oaks ruling, and there is no litigation challenging the charges pending other than Great Oaks’ lawsuits.
Longtime water district critic and San Martin resident Bob Cerruti was pleased with the Great Oaks ruling, but he plans to play it safe and pay the groundwater charges until the water district exhausts all of its legal options. He is confident that the court of appeals, and even the state Supreme Court, will uphold Judge Murphy’s ruling and he will eventually receive a refund.
Cerruti said he can’t afford to file a lawsuit similar to that of Great Oaks, but he has tried to encourage the cities of Morgan Hill and Gilroy to jointly protest the groundwater charges on behalf of their constituents.
“I’m hoping we can see some restitution to what’s happened over the years. It sure would be nice if we could get a rebate,” Cerruti said.
The city of Morgan Hill serves about 12,000 water customers with local groundwater. Last year, the city paid the water district about $2.2 million in groundwater extraction charges. City Manager Ed Tewes said Monday that the city hasn’t decided how to respond.
The water district sends out “statements” of payment, rather than invoices, to groundwater users, twice a year, Siravo said. Well owners are required to calculate groundwater charges based on those statements. Some well owners only receive annual statements, in June, if they are small-scale water consumers or if they are non-agricultural customers, Siravo said.
