Cities of Signal Hill, Cerritos and Downey suing WRD for $19 million

By Nick Diamantides
Staff Writer

As freshwater supplies dwindle and demand increases, lawsuits pertaining to that precious resource are increasing in frequency. Now the Cities of Signal Hill, Cerritos and Downey are suing the Water Replenishment District (WRD) for allegedly overcharging the municipalities for the water they pump from underground aquifers. The cities are seeking the return of approximately $19 million they claim WRD illegally collected from them and, in turn, their residents and local businesses.
WRD is an agency created by a vote of the people in 1959 to clean up and replenish the water contained in underground aquifers in the Central Basin and West Coast Basin of the southeastern portion of Los Angeles County. The two basins combined encompass 48 cities. Ten of those cities are in the Central Basin, but so far only three of them are suing WRD.
“There have been independent studies that have shown that WRD’s cost for services per acre-foot of water in the West Coast Basin are three times higher than its cost for services per acre-foot of water in the Central Basin,” said Patty Quilizapa, an attorney with McCormick, Kidman, and Behrens, the Costa Mesa-based law firm representing the three cities.
She explained that in order to fund its replenishment and cleanup efforts, WRD is authorized to collect a “replenishment assessment” (RA), also called a pumping fee, per every acre-foot of groundwater pumped within its service area. WRD assesses a uniform RA on all pumpers in both basins.
According to Quilizapa, the three cities are alleging that the uniform RA constitutes illegal taxation pursuant to Proposition 218 because it forces the users of Central Basin water to subsidize the benefits received by West Coast Basin water users.
Proposition 218– passed by California voters in 1996– prohibits the imposition of property-related fees that exceed the costs associated with providing the service for which they are imposed. Quilizapa explained that, in a 2006 case pertaining to the Pajaro Valley Water District, the California Court of Appeals ruled that water-pumping fees are subject to Proposition 218. Quilizapa added that the lawsuit filed by the three cities against WRD follows several other cases filed around the state successfully challenging groundwater-pumping fees on Proposition 218 grounds.
She explained that the court has ruled that agencies must undertake a cost-benefit analysis and comply with Proposition 218’s other procedural and substantive requirements before imposing fees or charges for the services they provide. Quilizapa noted that, according to the lawsuit filed by the cities, WRD has not complied with those requirements.
As of press time, WRD officials had not returned a phone message left by the Signal Tribune. In addition, Signal Hill City Manger Ken Farfsing was on vacation and could not be reached. Signal Hill Deputy City Manager Charlie Honeycutt said he had not studied the petition filed by the two cities and did not know much about the specifics of the case, but he noted that Desi Alvarez, deputy city manager for the City of Downey, could provide more information.
Alvarez didn’t have the dollar figures, but he said if the cities win the lawsuit, Downey would get the biggest share of the $19 million. With approximately 115,000 people, it is the largest of the three cities and therefore uses the most water. Cerritos has approximately 65,000 people and Signal Hill has about 12,000, so their shares would be proportionately smaller.
Alvarez explained that WRD has increased the RA per acre-foot from about $140 to $205 during the past few years. “Our costs as a result of WRD’s last two increases have gone up by about $900,000 per year,” he noted.
According to Alvarez, even if the court rules in favor of the cities, Downey would probably not provide refunds to water users for bills they have paid in the last several years. He noted that, in spite of the WRD increases, Downey has not raised its water bills. “Because of the last two WRD rate increases, we are facing the challenge of having to increase our water rates,” he said. However, he added that if the court orders WRD to reduce its rates for the Central Basin and to pay each of the three cities, their fair share of the $19 million judgment, Downey will probably not have to raise its water rates.
The lawsuit also alleges that WRD is mismanaging its revenues by spending tens of millions of dollars on things that have nothing to do with replenishing or cleaning up the aquifers, including excessive advocacy, lobbying and donations to various organizations. “Three different audits have shown that WRD continues to play footloose and fancy free with its revenues,” Alvarez said. “There are issues with how WRD spends the money that it raises through the pump tax (RA). A little over half their budget goes to purchase water– the rest of it goes to other activities.”
He noted that WRD has donated money to a Boy Scout troop, a middle school, the retirement banquet of a county supervisor, and other organizations and activities that have nothing to do with water. “WRD gave $250,000 to the Aquarium of the Pacific in Long Beach, and $500,000 to the Museum of Science and Exposition Center” he said. “I am not saying that these organizations do not deserve to have money donated to them, but why is WRD doing that with the public’s money that it has raised through rate increases?”
Alvarez stressed that he only mentioned a few of the many non-water-related organizations that have received money from WRD during the past few years. “The reality is that WRD and other special districts do not get a lot of scrutiny,” he said. “Most people are just not aware of them, and not aware of their meetings, and not aware of how they are spending huge amounts of the public’s money.”

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