On May 9, 2023, the Benink & Slavens, LLP., filed suit against the City of Rialto on behalf of their clients alleging the City fails to comply with Proposition 218 and other statutes. California’s Proposition 218, among other things, prohibits local agencies, such as the City of Rialto, from imposing upon ratepayers excessive property related service fees (including fees for water, sewer, and solid waste service) in order to generate surplus revenue for their general fund. The purpose of Proposition 218 is to halt local government attempts to evade the 1% property tax limitation established by Proposition 13 in 1978. Nevertheless, the suit alleges that the City of Rialto regularly violates Proposition 218 by charging water, sewer, and solid waste service fees that are designed to, and do, generate substantial general fund revenue.
The City of Rialto provides fee-based water and sewer services to its residents. But the suit alleges that, in addition to its costs to provide service, the City of Rialto includes a multi-million dollar surcharge in its service fees representing annual “lease” revenue the Rialto Utility Authority allegedly “agreed” to pay to the City for the “use” of its utilities. The suit further alleges that the City of Rialto spends the lease revenue on general government services unrelated to operating its utilities. The City of Rialto allegedly created and fully controls the Rialto Utility Authority. Despite having just leased its utilities to the Rialto Utility Authority, the City of Rialto and the Rialto Utility Authority allegedly concurrently agreed to maintain the status quo, i.e. the City of Rialto allegedly continued to own, control, operate and maintain the utilities, including setting rates, and billing and collecting rate revenue. Under Proposition 218, the City of Rialto may only charge ratepayers for its service costs; it is not permitted to earn excessive revenue off the backs of ratepayers under the guise of “lease payments.”
The City of Rialto also allegedly provides fee-based solid waste (i.e. trash) service. It allegedly contracts with a third party to provide waste collection and recycling services, including curb-side pickup. The City of Rialto is alleged to violate Proposition 218 because it allegedly embeds a 14% franchise fee surcharge in its solid waste service fees, even though the flat rate franchise fee is not based on any actual service costs. Rather, the franchise fee is allegedly just another revenue mechanism employed by the City of Rialto to avoid the limitations on property taxes, fees and charges established by the People of this State in enacting Propositions 13 and 218. Finally, the City of Rialto allegedly violates California’s Vehicle Code section 9400.8, because it allegedly embeds a “pavement maintenance fee” in its solid waste service fees for the common privilege of using its streets.
Petitioners seek a writ of mandate and declaratory relief that the City’s practices violates Proposition 218 and Vehicle Code section 9400.8 and prohibiting the City from profiting from its property related services or otherwise including illegal rate components and to limit the City to charging only the cost of providing those services.
Questions about this matter may be directed to Vincent D. Slavens, Esq., at [email protected]