Final Grand Jury Report on Glendale recommends

The final Los Angeles Grand Jury report addresses the complaint filed by a Glendale Citizen and publishes the following findings:

1) The Glendale City’s arguement that Propositions 218 and 26 do not apply istoo simplistic

In a memorandum dated July 30, 2012, the City has taken the position that a transfer of revenues
from GWP is mandated by the City Charter. The City also asserts that GWP rates have been
implemented in accordance with a formula that allows up to a 25 per cent transfer to the City
General Fund. Finally, the City argues that its transfer of GWP revenue is “grandfathered” and
pre-dates the adoption of Propositions 218 and 26.
The Grand Jury is concerned that this analysis is too simplistic and overlooks the City Charter
provision that limits the transfer from the “surplus fund” account. The Grand Jury is also
concerned that reliance on a 70 year old Charter provision that permits a transfer from operating
revenues with no methodology for calculating rates does not satisfy the requirements of
Proposition 218 or Proposition 26. Further, the proposed “clarifications” of the City Charter to
be submitted to a vote of the citizens of Glendale will not, in the view of the Grand Jury, comply
with the requirements of Propositions 218 and 26.

2) The City of Los Angeles lost in court making a similar argument as the City of Glendale

An argument similar to that asserted by the City was made by the City of Los Angeles in City of
Los Angeles v. All Persons Interested In The Matter of the Validity Of The Transfer Of
$29,931,300 From The Water Revenue Fund To The Reserve Fund (Fiscal Year 2006-2007) LA
Sup. Ct. Case No. BC369238. In its Final Statement of Decision filed July 2, 2009, the court
held that Proposition 218 prohibited the City of Los Angeles and its Department of Water and
Power from transferring surplus revenue derived from water service fees to Los Angeles for nonwater
related purposes and that Proposition 218 prohibited Los Angeles and its Department of
Water and Power from charging fees for water or water-related services in amounts that generate
revenues greater than necessary to provide water-related services to its customers. In so ruling,
the Court specifically rejected Los Angeles’ argument that its city charter provisions authorizing
such transfers from the Department of Water and Power exempted it from compliance with
Proposition 218. The Grand Jury understands that a trial court decision may not be cited as
authority in a court filing, but the Grand Jury does find this holding as indicative of the judicial
trend in interpreting Propositions 218 and 26.

3) Fiscal challenges do not justify ignoring constitutional requirements

While the Grand Jury understands the fiscal challenges facing cities such as Glendale, it is not
permissible for the City to use Glendale Water & Power as its “piggy bank” to satisfy budgetary
shortfalls. Rather, the City should consider alternate revenue sources and or submit its rate
structure for GWP to the citizens of Glendale for their approval by a two thirds majority vote in
compliance with Propositions 218 and 26.

Full report bellow