City of Long Beach reaches settlement with resident concerning transfer of pipeline permit fees

City will repay $12 million to Water and Sewer Funds over the next four years

File photo
Diane Lejins, a 5th-district resident, filed a lawsuit against the City of Long Beach challenging its transfers of pipeline permit fees from the Water and Sewer Funds to the City’s General Fund since 2003, alleging the money transferred is the proceeds of fees the Water Department charges for water and sewer service and should therefore not have been used for general governmental purposes. The City reached a settlement with Lejins last week.

The City of Long Beach has reached a settlement with a resident who filed a lawsuit in September 2016 challenging the City’s transfers of pipeline permit fees from the Water Fund and Sewer Fund to the City’s General Fund since 2003.

Diana Lejins, a 5th-district resident and freelance photographer, filed the suit alleging that the money transferred is the proceeds of fees the Water Department charges for water and sewer service and should therefore not be used for general governmental purposes. The suit contended that those sewer fees are subject to Proposition 218, the “Right to Vote on Taxes Act,” which California voters passed in 1996 to protect taxpayers by limiting the procedures by which local governments may implement or increase taxes, fees and charges without taxpayers’ consent. It mandates that voter approval is needed prior to any imposition or hike of general taxes, assessments and certain user fees.

The pipeline permit fee is a charge for the use of the City’s right-of-way for the water and sewer pipelines that run through city streets. At issue in the lawsuit was the specific amount charged by the City to the Water Department, according to a statement from the city attorney’s office.

As part of the settlement, the City will no longer charge such fees to the water department for that department’s water and sewer pipelines.

“The settlement will resolve this litigation and provide for a predictable amount of annual support for the City from the Water and Sewer Funds,” said Long Beach City Manager Patrick West. “We support the settlement as the most reasonable solution to this litigation, which has also been faced by other California cities up and down the coast.”

The settlement establishes the amount that the City can charge at approximately $4.5 million per year, according to city officials. As a result, the annual General Fund support and associated revenue will be reduced by approximately $7 million annually. City officials expect to address the loss of General Fund support through the Fiscal Year 2019 budget process.

Additionally, the City will repay the Water and Sewer Funds an aggregate amount of $12 million over the course of the next four years, officials said. According to the terms of the settlement and release agreement, which Lejins provided to the Signal Tribune, the City will transfer the $12 million from its General Fund to the water department in four equal payments of $3 million each year. The first transfer is to be conducted within 120 days of the effective date of the settlement.

From each payment, 57 percent will be allocated to the water fund and 43 percent will be applied to the sewer fund. Additionally, the City shall provide Lejins, upon her request, with accounting documents that confirm the transfers, per the Public Records Act.

Long Beach officials added that, currently, the City has the lowest combined water and sewer fees of any of the 10 largest cities in the state, but, as part of the settlement, the water department will further lower water and sewer rates, resulting in approximately a $3 reduction per month for the average water and sewer bill.

However, Lejins will not receive direct compensation as the plaintiff, and, in a phone interview Tuesday morning, she emphasized that she did not request it.

“In this particular issue, I have done it for the good of the people, and there was no remuneration,” Lejins said. “I did not receive any compensation for it, and neither did I ask for it.”

When asked how she became aware of the pipeline permit fee, Lejins only said that someone had brought it to her attention around August of 2016. She looked into the matter, then took it to an attorney who had handled similar cases for other cities.

“Looking at the entirety of the picture, and knowing that our City Hall does tend to jump at every opportunity they can– unscrupulously or not– to take money from its taxpayers, I decided that we need to show them that we’re not just total ‘sheeple’ and that people are paying attention,” Lejins said.

“The biggest thing for me here is to send City Hall a message that the people have power– and a message to the people that they have power, so they don’t feel they can’t fight City Hall. So, there’s that feeling of empowerment, and if I can give that as a gift to anyone who’s willing to stand up to City Hall, that’s pure joy.”

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