Lejins v. City of Long Beach, B305134

Background

Long Beach voters approved Measure M (June 2018), amending the city charter to authorize transfers from the Water and Sewer Revenue Funds to the General Fund (up to 12% of utility gross revenues) for "unrestricted general revenue purposes." The transfers were embedded in water/sewer rates and not separately billed.
Measure M was promoted to maintain general services (police, fire, street repair, parks, libraries); city fixed water rates (7.2% increase) after the vote to fund the transfers.
Plaintiffs (Lejins and Kimball), water/sewer customers, sued claiming the embedded surcharge violates article XIII D of the California Constitution because the revenue is not for water/sewer service and is imposed as an incident of property ownership.
The City conceded the surcharge did not comply with article XIII D’s substantive requirements but argued Measure M was a voter-approved general tax under article XIII C and thus not subject to XIII D.
The trial court invalidated the surcharge under article XIII D (and, to the extent applied to out-of-city customers, under article XI §7), issued a writ and injunction, and awarded attorneys’ fees; the Court of Appeal affirmed on the XIII D ground and left the XI §7 issue unaddressed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Is the Measure M surcharge a fee/charge imposed "as an incident of property ownership" under art. XIII D?	Yes — ongoing water/sewer charges for existing connections are property-related and the surcharge burdens customers as property owners.	No — the surcharge is a tax on utility use, not a levy on property ownership; one can own property without using utility service.	Held: Yes — surcharge is imposed as an incident of property ownership (existing service = property-related fee).
2) Does voter approval under art. XIII C exempt a voter‑approved utility tax from article XIII D’s restrictions?	No — XIII D imposes independent substantive requirements; voter approval does not convert an invalid property-related fee into a valid one.	Yes — Measure M was voter-approved under XIII C, so XIII D constraints do not apply.	Held: No — voter approval under XIII C does not relieve the City of XIII D requirements.
3) Did the City satisfy article XIII D §6(b) (revenues ≦ cost of service; use limited to the service; not for general governmental services)?	No — Measure M proceeds fund general governmental services and therefore violate §6(b).	City largely conceded in trial it did not satisfy §6(b); it pointed to voter approval instead.	Held: City failed to demonstrate compliance with §6(b); surcharge invalid under XIII D.
4) Does collecting the surcharge from customers served outside city boundaries violate article XI §7?	Yes — trial court found it unconstitutional as applied to out-of-city customers.	City contested that finding.	Held: Appellate court did not reach this issue because it affirmed on XIII D; the XI §7 question remains unnecessary to the decision.

Key Cases Cited

Apartment Assn. of Los Angeles County, Inc. v. City of Los Angeles, 24 Cal.4th 830 (2001) (article XIII D restricts fees imposed directly on property owners; fees must be tied to property ownership to be subject to XIII D)
Richmond v. Shasta Community Services Dist., 32 Cal.4th 409 (2004) (fees for ongoing water service through existing connections are imposed as an incident of property ownership; new-connection charges are different)
Bighorn-Desert View Water Agency v. Verjil, 39 Cal.4th 205 (2006) (charges for ongoing water delivery are fees/charges within the meaning of article XIII D)
Citizens for Fair REU Rates v. City of Redding, 6 Cal.5th 1 (2018) (analyzed limits on using utility revenues and relationship between rates and costs)
Silicon Valley Taxpayers’ Assn. v. Santa Clara County Open Space Authority, 44 Cal.4th 431 (2008) (voter consent cannot convert an otherwise unconstitutional assessment into a constitutional one)
Howard Jarvis Taxpayers Assn. v. City of Fresno, 127 Cal.App.4th 914 (2005) (in-lieu utility fees passed to ratepayers are subject to article XIII D when tied to property ownership)
Capistrano Taxpayers Assn. v. City of San Juan Capistrano, 235 Cal.App.4th 1493 (2015) (discussed voter approval for rates that exceed cost of service; distinguished here)
Wyatt v. City of Sacramento, 60 Cal.App.5th 373 (2021) (upheld a voter-approved utility tax tied to demonstrated cost-of-service showing; court distinguished on facts)