The Santa Clara Valley Water District’s stranglehold on water
delivery took a substantial blow recently, and perhaps the bloated
agency will, at long last, be held accountable not by the voters,
but by the courts.
1. Courts had made clear rulings with regards to Prop 218 requirements
The Santa Clara Valley Water District’s stranglehold on water delivery took a substantial blow recently, and perhaps the bloated agency will, at long last, be held accountable not by the voters, but by the courts.
When Santa Clara Superior Court Judge Kevin J. Murphy said the district violated Proposition 218, thus illegally charging Great Oaks Water Company in San Jose groundwater extraction fees, he merely affirmed what retailers – like the city of Morgan Hill – had been claiming for years.
California courts had made expressly clear rulings on the issue of water rights being property rights and thus subject to Prop 218 requirements. Yet the SCVWD, as is so often the case, arrogantly continued its practice of charging retailers what’s known as a “pump tax.”
2. Great Oaks Water Company paid $5 million in extraction fees
The judges ruling, however, almost assuredly means the water district will have to seek voter approval for rate increases for retail suppliers like the city of Gilroy. That will mean millions in lost revenue for the district – Great Oaks, for example, paid SCVWD about $5 million in pump tax fees in 2005-06.
The judge’s ruling went further. Murphy also concluded that the district violated the state law which created it, by spending pump tax money for purposes not allowed under the founding Santa Clara Valley Water District Act. The judge also pointed out that the water district’s rates differed – unfairly perhaps – for North and South County.
3. Gilroy and Morgan Hill could have an alternative water supplier
The trial has a second phase coming at which monetary damages for Great Oaks will be set. At that time, hopefully, there will be an opportunity to explain the fact that SCVWD agreed to keep South County rates, municipal and agriculture, well below North County rates. That was the carrot for the unfortunate vote by residents in the late 1980s to dissolve the Gavilan Water Conservation District and merge with the SCVWD.
Sorting out the legal ins and outs triggered by this ruling will take quite some time. Almost assuredly, the deep-pocketed district will appeal.
But perhaps the courts will give water customers an opportunity. Maybe Great Oaks, for example, can deliver water more efficiently at a substantial savings to more customers.
At this point, South County’s main retailers – its two cities – should engage in discussions with Great Oaks. If a viable alternative emerges to cut costs and increase efficiency, the city’s leaders have a fiduciary duty to look at it very closely.
