Failure to heed results in water utility rate errors

In 2011 Glendale’s government decided it needed more revenue for the water utility. It
retained a consultant, Willdan, to prepare a Cost of Services Analysis (COSA) and
based on that COSA to design the ordinance which would provide those revenues. The
COSA is crucial because Art. XIIID, added to California’s Constitution by Proposition
218, requires the following of fees for water service (fees the California Supreme Court
has held are property related): (1) “revenues derived from the fee or charge shall not
exceed the funds required to provide the property related service” and (2) “The amount
of the fee or charge imposed upon a parcel or person as an incident of property
ownership shall not exceed the proportional cost of the service attributable to the
parcel”.

Obviously if the COSA does not accurately describe the cost of providing water services
to the various ratepayers, an ordinance based on such a fatally flawed COSA would
violate Prop. 218’s constitutional requirements that I’ve just described; and, it would
render any fees collected pursuant to that ordinance of dubious validity.
Willdan completed its COSA, designed a water rate ordinance based on it and the
Council adopted it on April 27, 2011.

Then in a December 17, 2013 report city staff indicated the ordinance was generating
less than the anticipated needed revenues–to date $8 million less. The staff isolated the
error in Willdan’s work product that caused this shortfall; but, Willdan failed to take
responsibility for it. Faced with the urgency of a diminished revenue stream the city
retained new consultants, Bartle Wells, to correct the error and revise the ordinance
accordingly. But, a detailed analysis culminated in the following conclusion concerning
Willdan’s work product: ”… a number of errors have been identified in calculations and
methodology, resulting in the need to perform an entirely new COSA to ensure proper
administration of water rates in compliance with Prop 218”. Revision was not an option;
the only option was to begin afresh.

The result of this detailed analysis, forced by revenue shortfalls, could not have come
as a surprise to the city. Prior to the ordinance’s adoption I provided the city with a
written analysis detailing errors in Willdan’s work product that violated Prop. 218. The
Board of Realtors consulted the Pasadena law firm of Lagerlof, Senecal, Gosney &
Kruse, that practices in the area Proposition 218 and water rates, concerning Willdan’s
work. It had access to my analysis as well as other materials. I met with two of its
lawyers for approximately an hour and a half. We all agreed that Willdan’s work
contained Proposition 218 errors. It’s my understanding the law firm prepared a letter to
that effect and that that letter was shared with the city prior to the ordinance’s passage.

Consistent with an arrogant pattern that at best ignores citizen critics or at worse
distorts what they say, treats them with disrespect and disdain and personally attacks
them, the city ignored these warnings.

Now the city is faced with revenue shortfalls and $100,000 wasted on an ordinance it
must scrap.. Even more serious, given a fatally flawed COSA, the ordinance may violate
the Prop 218’s constitutional requirements that I’ve outlined above. That in turn could
call into question the validity of all water fees collected pursuant to that ordinance.

Glendale’s citizens and public policy would be better served if the city abandoned it’s
defensive “circle the wagons” attitude when faced with citizen critiques.