The ongoing trial to determine how much the Santa Clara Valley
Water District will owe in refunded groundwater charges to a San
Jose water retailer will wrap up early next week.
The ongoing trial to determine how much the Santa Clara Valley Water District will owe in refunded groundwater charges to a San Jose water retailer will wrap up early next week.
Witnesses who testified on behalf of the water district Tuesday included employees involved in setting water rates and negotiating contracts for the public agency. On Monday, the district is expected to call its final witness, an expert on public agency rate-setting.
In April, Santa Clara County Superior Court Judge Kevin Murphy ruled that the water district violated California Prop. 218 by failing to secure voter approval for the groundwater charges it levied on Great Oaks Water during the 2005-06 fiscal year. He also ruled that the water district, a public water wholesaler, broke the state law that created it – the District Act – by using groundwater charge revenue for unauthorized purposes.
The current phase of the lawsuit will determine whether Great Oaks is due a refund of about $4.6 million it paid the district to pump water out of the ground in 2005-06.
Great Oaks’ only witness, forensic accountant Thomas O’Rourke, claimed in testimony Monday that the water district “double charged” customers and property owners for imported water purchased through the State Water Project in 2005-06. The water district denies these allegations.
The groundwater charges, at $420 per acre foot, included the recovery of $15 million for imported water expenses, O’Rourke testified. But that water was already paid for with $15 million in property taxes levied on Santa Clara County property owners, he said. That equal portion of revenues collected through groundwater charges likely found their way into the district’s reserve funds, he said.
The Great Oaks attorneys identified the double charging allegations as a specific violation of Prop. 218, which requires public agencies to secure voter approval before levying taxes or property related fees.
“The Santa Clara Valley Water District did not ‘double charge’ Great Oaks Water Company or other groundwater pumpers for costs related to importing water to the County,” the water district said in a statement. “The evidence presented in the ongoing trial does not support this claim by Great Oaks.”
Testimony and closing arguments in the “phase two” trial are expected to finish early next week, and a ruling on how much money is owed to Great Oaks is expected shortly afterwards.
Great Oaks has a number of similar cases on file in Superior Court – including cases making the same allegations for each year since 2005-06. Those cases are on hold until a ruling on the current case is filed.
The company, which serves about 100,000 customers in south San Jose, has also filed two reverse validation lawsuits, claiming that the ordinance allowing the water district to collect groundwater charges from the county’s 4,000 well owners is invalid because it flouts state law. If those two claims are found in Great Oaks’ favor, everyone who paid groundwater charges to the water district the last two years would be eligible for a refund.
