As the plaintiff and defendant await the ruling that could end
with a judge’s order to award a $4.6 million refund for groundwater
charges, at least one Morgan Hill property owner has chosen not to
pay his bill to the Santa Clara Valley Water District.
As the plaintiff and defendant await the ruling that could end with a judge’s order to award a $4.6 million refund for groundwater charges, at least one Morgan Hill property owner has chosen not to pay his bill to the Santa Clara Valley Water District.
Jon Persing said his refusal to pay last year’s groundwater extraction charges is based on a Santa Clara County Superior Court ruling in April that said the charges, as imposed on Great Oaks Water Co., are unconstitutional. Despite this ruling, Persing wonders why the district is still requiring well owners to pay the fees.
“How can this be legal(?) (A)nd I have to imagine many of the other local well owners out there are wondering the same thing,” Persing wrote in an e-mail to the Times last week. “I can only think that (the district’s) intention is to collect the money … and settle for refunds down the road without interest, but it doesn’t seem legal or ethical.”
The remedy phase of the trial in which Great Oaks sued the water district came to a close last week. The parties are waiting for Judge Kevin Murphy’s ruling. Great Oaks asked for an award of about $4.6 million – the total amount it paid in groundwater charges to the water district in 2005-2006 – because the charges violate the state Constitution.
The first phase of the trial ended in April, when Murphy found groundwater charges levied on Great Oaks that year violated Prop. 218 because the water district failed to secure voter approval for the property related fees.
That ruling also found that the district violated the District Act, a state law that created the public agency. The water district, in 2005-2006, used revenues from groundwater charges for expenses that are not authorized by the state law.
The water district argued last week that Great Oaks is not due a refund under Prop. 218, and is only entitled to a credit of about $738,000 for overcharges under the District Act.
Although the ruling only applies to Great Oaks, other well owners including the city of Morgan Hill have said they have been subject to the same rate-setting process, and have thus been similarly harmed.
“Great Oaks has set the stage” for refunds for other well owners, Persing said. He said the water district has sent him two letters in response to his defiance – one claiming the charges are still legal, and one threatening further action, including fines, if he doesn’t pay by Dec. 7.
Even though the bill he refuses to pay is less than $100, he said he will continue to fight it “on principle.”
The city of Morgan Hill first objected to the groundwater charges “four or five years ago,” according to City Manager Ed Tewes. He said the city is closely watching the Great Oaks case, but has continued to pay the charges.
About 12,000 households in Morgan Hill are served by city water, which is pumped from the groundwater aquifer via city-owned wells and purchased from the water district. Last year, the city paid about $2.2 million to the water district in groundwater charges.
Great Oaks has numerous other cases pending in local court. Those are nearly identical to the current one, requesting refunds for each year since 2005-2006 up to the current year, based on the same violations of state law.
In the current case, the company also asked the court to order the water district to comply with Prop. 218 by securing voter approval for groundwater charges.
Water district spokespeople have indicated that the agency will appeal the ruling after the phase two ruling, as they think the groundwater charges sufficiently complied with Prop. 218.
Murphy’s April ruling noted that well owners benefit from the district’s groundwater and recharge activities, which ensure an adequate supply of clean drinking water. Argued in the phase two trial were the details of how much of a difference there was between the value of those services and the charges imposed. In 2005-2006, that charge was $215 in South County and $420 in North County.
If the district appeals Murphy’s ruling on the monetary award due to Great Oaks, that process could drag on for up to two more years, according to people who are familiar with the case.
The water district’s insistence that the charges are lawful reflects “arrogance,” Persing said.
“And it irritates me beyond belief,” he added. Before the phase one ruling, Persing said he paid his bills to the water district “hesitantly,” but he has always felt the groundwater charges are a property rights violation.
Two more lawsuits filed by Great Oaks could bring more immediate relief to the county’s 4,000 well owners. These “reverse validation” claims – one filed for each of the last two years – argue that the resolution authorizing groundwater charges, approved by the district’s board of directors, should be declared invalid. If that happens, the ruling would apply to all well owners, who would be due refunds of groundwater charges paid in the last two years, or about $130 million.
Those cases are on hold until next year.
Murphy’s ruling is expected in the next few days.
