A lawsuit was filed Friday in Los Angeles County Superior Court against the city of Long Beach over alleged illegal water and sewer permit fees.
The plaintiff, Long Beach resident Diana Lejins, claims that the city charges the Water Department fees that are illegally transferred to the city’s general fund and improperly passed on to water customers.
The lawsuit seeks an injunction to invalidate the fees, stop the transfers, and restore to the Water Department funds transferred in the previous three years.
The city’s approved budget for fiscal year 2017 (which started Saturday, Oct. 1), assesses the Water Department a $6.16 million water pipeline fee, representing 6% of the $102.3 million water budget; and a $4.73 million sewer fee, representing 23% of the $20.2 million sewer budget.
The lawsuit was filed after complaint letters sent to the Water Commission in July and August by a lawyer for Lejins, and by former Fifth District Councilwoman Gerrie Schipske. Lejins and Schipske were protesting a 4% increase in sewer and water rates for fiscal year 2017. The rates were increased in part to pay for the illegal permit fees, the letters said.
Schipske is listed in the lawsuit filed Sept. 30 as an attorney for plaintiff Lejins, along with attorneys from the San Diego law firm Krause, Kalfayan, Benink & Slavens.
The City Council unanimously approved a recommendation to adopt an ordinance that would amend the city’s code related to pipelines, including permit fees on water pipes in 2003. In 2006, when the ordinance was amended to add sewer lines, Schipske, a councilwoman at the time, voted in favor of the ordinance. On second reading, Schipske was absent from the meeting.
Schipske said she voted for the ordinance because “the city attorney at the time assured me it was perfectly legal.”
Lejins registered a protest at the Water Department’s Proposition 218 hearing on Sept. 1. When the proposed water budget was discussed in September at a City Council meeting, Lejins threatened legal action.
“I am protesting because this violates Proposition 218,” Lejins said.
Proposition 218 states that cities cannot charge for utility services that are greater than the cost to provide those services, or use utility fees for non-utility purposes.
The lawsuit alleges that the city transfers the pipeline fees to its general fund, which “does not incur actual expenses related to the installation, maintenance and access to the underground sewer and water pipelines.”
“The city needs to document and provide an accounting of these costs,” Schipske said. “They may have a legal right to make the assessment, but this has been a cash trap for them.”
Deputy City Attorney Richard F. Anthony, who advises the Water Department, did not respond to a request for comment by the Gazette’s deadline.
A spokeswoman for City Manager Patrick West said he would defer comment to Anthony.
John Gross, the city’s director of financial management, said he hadn’t seen or read the allegations.
“The city does have a fee it charges the Water Department, and that money is treated as general revenue in the general fund, so it’s not allocated to any particular thing,” Gross said. “But the general fund does pay for things that one could say support the pipelines, such as the maintenance of roads.”
Anatole Falagan, assistant general manager for the Long Beach Water Department, said someone from the city’s Public Works department would have information about how permit fees are specifically allocated.
Craig Beck, director of Public Works, said that “when cities charge a pipeline permit fee, it’s because they are responsible for streets and sidewalks. If any company, including a utility, is cutting into streets to put in pipelines, it is weakening that structure.”
A utility might pay to patch up the street, Beck said, “but because the structure is weakened, it’s not necessarily paying for all the costs.”
Beck said he and his staff will likely need to look into “providing detailed analytical data about how much the streets are weakened by pipelines.”
Editor’s Note: Harry Saltzgaver, executive editor of Gazette Newspapers, is a member of the Water Commission.
Karen Lindell can be reached at firstname.lastname@example.org.