Well owners can protest charges


If more than half the well owners in South Santa Clara County
protest next year’s groundwater charges, then the fees will not be
levied as they have in the past.
If more than half the well owners in South Santa Clara County protest next year’s groundwater charges, then the fees will not be levied as they have in the past.

When the Santa Clara Valley Water District begins the annual process of setting groundwater extraction charges next week, one topic of discussion will be the “majority protest procedure” allowed under Proposition 218, a constitutional amendment that requires voter approval for taxes and property related fees.

For the first time since the amendment was passed in 1996, at Tuesday’s board of directors meeting the water district will announce that the county’s 4,000 well owners can object to the groundwater charges. And if a majority of well owners protest in writing to the charges, then the district cannot collect them, based on Proposition 218.

In fact, it’s the first time the board of directors will publicly discuss the constitutional amendment and how it relates to groundwater charges. Former Director Sig Sanchez, who retired last month after serving on the board for 29 years, said the board has talked about the amendment in closed session meetings before, but not in public earshot.

But allowing a majority protest is not enough to satisfy Proposition 218, according to Tim Guster, general counsel for San Jose-based Great Oaks Water Co. If a majority of well owners end up protesting next year’s groundwater charges, that only means the water district cannot take a vote and there will be no imposition of the fees.

“If there is not a majority protest, a vote must still be taken,” Guster said. Such a vote can be cast among either the well owners or the general electorate. The water district has never taken such a vote. Currently its staff does not intend to take that step, according to District Senior Project Manager Darin Taylor.

The topic will be broached this year because of recent legal challenges to the groundwater charges, Taylor said. Most notably in Nov. 2009, Great Oaks won a local court ruling that ordered the district to pay back about $4.6 million in groundwater charges because they violated the state law. A previous ruling in the same case said the water district has not secured voter approval for the groundwater charges as required by the constitution, and has illegally used revenues from the tiered charges to subsidize lower-paying customers.

The water district sets groundwater charges in a process that begins around this time each year, and ends with a vote by the board before the first day of the fiscal year, July 1. That process includes public hearings, staff presentations, and public notices sent to well owners.

The district has always gone through many steps to ensure that different types of water users can provide input on groundwater charges, Director Rosemary Kamei said. This year, by letting well owners know about the protest opportunity, the board hopes to facilitate even more public participation in the process.

“One of the things I see is a need to be much more clear, much more visible in terms of what the charges go for,” said Kamei, who has not voted for a groundwater charge increase since 2004 though her colleagues outnumbered her. “This is a way to encourage participation.”

Tuesday’s meeting is the first part of the charge setting process for the 2010-2011 year. Although Taylor said next week’s presentation does not include a recommendation and will likely change before the board approves next year’s charges, it includes two scenarios to keep groundwater charges in both south and north County the same as they are now, with different proportions of increases in future years.

Currently, South County municipal and industrial well owners, including the City of Gilroy, pay $275 per acre foot of water pumped out of the ground. Agricultural users pay $16.50 per acre foot, based on a water district policy to support farming and open space by capping their fees at 10 percent of the municipal and industrial rates.

The water district has previously subsidized the lower rates with higher rates paid by other users, and the Great Oaks ruling said that practice violates Proposition 218. Now, the directors will have to find other funds in addition to property taxes to provide that subsidy.

Water district staff will also continue to study the potential impact of lost revenues if a successful majority protest occurs. This year, the agency budgeted about $60 million in revenue from groundwater charges. The water district relies on voter-approved property taxes and fees for treated, surface and recycled water for the remainder of its revenues. The district’s total budget this year is $305 million.

Still, the water district is likely to appeal the Great Oaks ruling as the directors think the groundwater charges comply with all state laws. The staff report to be presented Tuesday says that the relationship between Proposition 218 and the charges “has not been finally determined by the courts.”

San Martin residential well owner and frequent water district critic Bob Cerruti said he has never been aware of the Proposition 218 protest procedure, and has never heard anyone from the district talk about the option before.

“I’d be willing to protest it, because what they’re doing is illegal. I’m sure there’s a lot of other people in South County that would be willing to do the same,” Cerruti said.


– Tuesday, 9:30 a.m.: Santa Clara Valley Water District board of directors workshop on groundwater charges for 2010-2011, at water district headquarters, 5700 Almaden Expressway, San Jose.

– Throughout January: Continued analysis of 2010-2011 groundwater charges by district staff, advisory committees, and directors.

– Feb. 9: Water district directors will set a public hearing to gather input and inform well owners of recommended rates.

– Feb. 26: Notices of groundwater charges and public hearing to be mailed to well owners.

– April 27: Deadline for well owners to protest the groundwater charges formally and in writing.

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