CAPISTRANO TAXPAYERS ASSOCIATION, INC., Plaintiff and Respondent, v. CITY OF SAN JUAN CAPISTRANO, Defendant and Appellant.
No. G048969
Fourth Dist., Div. Three.
Apr. 20, 2015.
On May 19, 2015, the opinion was modified to read as printed above.
235 Cal. App. 4th 1493
Colantuono & Levin, Colantuono, Highsmith & Whatley, Michael G. Colantuono, Tiana J. Murillo, Jon di Cristina; Rutan & Tucker, Hans Van Ligten and Joel Kuperberg for Defendant and Appellant.
Best, Best & Krieger and Kelly J. Salt for the Association of California Water Agencies, League of California Cities and California State Association of Counties as Amici Curiae on behalf of Defendant and Appellant.
Mills Legal Clinic at Stanford Law School, Environmental Law Clinic and Deborah A. Sivas for Natural Resources Defense Council and Planning and Conservation League as Amici Curiae on behalf of Defendant and Appellant.
AlvaradoSmith, Benjamin T. Benumof and William M. Hensley for Plaintiff and Respondent.
Trevor A. Grimm, Jonathan M. Coupal, Timothy A. Bittle and Ryan Cogdill for Howard Jarvis Taxpayers Foundation as Amicus Curiae on behalf of Plaintiff and Respondent.
Foley & Mansfield and Louis C. Klein for Mesa Water District as Amicus Curiae on behalf of Plaintiff and Respondent.
OPINION
BEDSWORTH, Acting P. J.—
I. INTRODUCTION
Southern California is a “semi-desert with a desert heart.”1 Visionary engineers and scientists have done a remarkable job of making our home habitable, and too many of us south of the Tehachapis never give a thought to
In this case we deal with parties who have an acute appreciation of how tenuous the beachhead is, and how desperately we all must fight to protect it. But they disagree about what steps are allowable—or required—to accomplish that task. We are called upon to determine not what is the right—or even the more reasonable—approach to the beachhead‘s preservation, but what is the one chosen by the state‘s voters.
We hope there are future scientists, engineers, and legislators with the wisdom to envision and enact water plans to keep our beloved Cadillac Desert habitable. But that is not the court‘s mandate. Our job—and it is daunting enough—is solely to determine what water plans the voters and legislators of the past have put in place, and to determine whether the trial court‘s rulings complied with those plans.
We conclude the trial court erred in holding that Proposition 218 does not allow public water agencies to pass on to their customers the capital costs of improvements to provide additional increments of water—such as building a recycling plant. Its findings were that future water provided by the improvement is not immediately available to customers. (See
However, the trial court did not err in ruling that Proposition 218 requires public water agencies to calculate the actual costs of providing water at various levels of usage.
II. FACTS
Sometimes cities are themselves customers of a water district, the best example in the case law being the City of Palmdale, which successfully invoked Proposition 218 to challenge the rates it was paying to a water district. (See City of Palmdale v. Palmdale Water Dist. (2011) 198 Cal.App.4th 926 [131 Cal.Rptr.3d 373] (Palmdale).) And sometimes cities are, as in the present case, their own water district. As amicus curiae Association of California Water Agencies (ACWA) points out, government water suppliers in California are a diverse lot that includes municipal water districts, irrigation districts, county water districts, and, in some cases, cities themselves. To focus on its specific role in this case as a municipal water supplier—as distinct from its role as the provider of municipal services which consume water such as parks, city landscaping or public golf courses—we will refer to appellant City of San Juan Capistrano as “City Water.”
In February 2010, City Water adopted a new water rate structure recommended by a consulting firm. The way City Water calculated the new rate structure is well described in City Water‘s supplemental brief of November 25, 2014.5 City Water followed a pattern generally recommended by a manual used by public water agencies throughout the western United States known as the “M-1” manual. It first ascertained its total costs, including things like debt service on previous infrastructural improvements. It then
The four budgets were then used as the basis for four distinct “tiers” of pricing.6 For residential customers, tier 1, the low budget, was assumed to be exclusively indoor usage, based on World Health Organization guidelines concerning the “minimum quantity of water required for survival,” with adjustments for things like “low-flush toilets and other high-efficiency appliances.” Tier 2, the reasonable budget, included an outdoor allocation based on “typical landscapes,” and assumed “use of native plants and drought-tolerant plants.” The final two tiers were based on budgets of what City Water considers excessive usages of water or overuse volumes. Using these four budgets of consumption levels, City Water allocated its total costs in such a way that the anticipated revenues from all four tiers would equal its total costs, and thus the four-tier system would be, taken as a whole, revenue neutral, and City Water would not make a profit on its pricing structure. City Water did not try to calculate the incremental cost of providing water at the level of use represented by each tier, and in fact, at oral argument in this court, admitted it effectively used revenues from the top tiers to subsidize below-cost rates for the bottom tier.
Here is the rate structure adopted, as applied to residential customers:
| Tier | Usage | Price |
|---|---|---|
| 1 | Up to 6 ccf7 | $2.47 per ccf |
| 2 | 7 to 17 ccf8 | $3.29 per ccf |
| Tier | Usage | Price |
|---|---|---|
| 3 | 18 to 34 ccf9 | $4.94 per ccf |
| 4 | Over 34 ccf10 | $9.05 per ccf |
City Water obtains water from five separate sources: a municipal groundwater recovery plant, the Metropolitan Water District, five local groundwater wells, recycled water wells, and the nearby Moulton Niguel Water District. With the exception of water obtained from the Metropolitan Water District, City Water admits in its briefing that the record does not contain any breakdown as to the relative cost of each source of supply.
The breakdown of cost from each of its various sources of water is, in percentage terms:
| Source | Percent of Supply | Cost to Supply |
|---|---|---|
| Groundwater Recovery Plant | 51.95% | Not ascertained |
| Metropolitan Water District | 28.54% | $1,007 per-acre foot11 |
| Local Wells | 7.79% | Not ascertained |
| Recycled Wells | 6.11% | Not ascertained |
| Moulton Niguel Water District | 5.61% | Not ascertained |
Various percentages of City Water‘s overhead—or fixed costs in the record—were allocated in percentages to some of the sources of water, so the price per tier reflected a percentage of fixed costs and costs of some sources.
This chart reflects those allocations:
| Tier | Price | Percentage Allocation |
|---|---|---|
| 1 | $2.47 | $1.78 to fixed costs, $0.62 to wells |
| 2 | $3.29 | $1.78 to fixed, $1.46 to wells |
| 3 | $4.94 | $1.53 to fixed, $0.69 to wells, $0.17 to the Metropolitan Water District, and $2.50 to the groundwater recovery plant |
| 4 | $9.05 | 0 to fixed, 0 to wells, $0.53 to groundwater recovery plant, $2.53 to recycled, $3.32 to the Metropolitan Water District, and $2.64 to penalty set-aside |
In August 2012, the Capistrano Taxpayers Association, Inc. (CTA), filed this action, challenging City Water‘s new rates as violative of Proposition 218, specifically
The statement of decision also concluded that the imposition of charges for recycling within the rate structure violated the “immediately available” provision in
III. DISCUSSION
A. Capital Costs and Proposition 218
We first review the constitutional text.
The trial court ruled City Water had violated this provision by “charging certain ratepayers for recycled water that they do not actually use and that is
But the trial court assumed that providing recycled water is a fundamentally different kind of service from providing traditional potable water. We think not. When each kind of water is provided by a single local agency that provides water to different kinds of users, some of whom can make use of recycled water (for example, cities irrigating park land) while others, such as private residences, can only make use of traditional potable water, providing each kind of water is providing the same service. Both are getting water that meets their needs. Nonpotable water for some customers frees up potable water for others. And since water service is already immediately available to all customers of City Water, there is no contravention of subdivision (b)(4) in including charges to construct and provide recycled water to some customers.
On this point, Griffith v. Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586 [163 Cal.Rptr.3d 243] (Griffith) is instructive. Griffith involved an augmentation fee on parcels that had their own wells. An objection to the augmentation fee by the well owners was that the fee included a charge for delivered water, even though some of the properties were outside the area and not actually receiving delivered water. The Griffith court said that even if some parcel owners were not receiving delivered water, revenues from the augmentation fee still benefited those parcels, since they funded “activities required to prepare or implement the groundwater management program for the common benefit of all water users.” (Id. at p. 602.) In Griffith the augmentation fee was thus intended to fund aggressive capital investments to increase the general supply of water, including some customers receiving delivered water when other customers did not. It was undeniable that by funding delivered water to some customers, water was freed up for all customers. (See Griffith, supra, 220 Cal.App.4th at p. 602; accord, Paland v. Brooktrails Township Community Services Dist. Bd. of Directors (2009) 179 Cal.App.4th 1358 [102 Cal.Rptr.2d 270] [customer in rural area who periodically went inactive still had water immediately available to him].)
In the present case, there is a Government Code definition of water, which shows water to be part of a holistic distribution system that does not distinguish between potable and nonpotable water: “‘Water’ means any system of public improvements intended to provide for the production, storage, supply, treatment, or distribution of water from any source.” (
The upshot is that within a five-year period, a water agency might develop a capital-intensive means of production of what is effectively new water, such as recycling or desalinization, and pass on the costs of developing that new water to those customers whose marginal or incremental extra usage requires such new water to be produced. As amicus curiae Mesa Water District points out,
However, the record is insufficient to allow us to determine at this level whether residential ratepayers who only use six ccf or less—what City Water considers the superconservers—are being required to pay for recycling facilities that would not be necessary but for above-average consumption. Proposition 218 protects lower-than-average users from having to pay rates that are higher than the cost of service for them because those rates cover capital investments their levels of consumption do not make necessary. We note, in this regard, that in Palmdale, one of the reasons the court there found the tiered pricing structure to violate subdivision (b)(3) was the perverse effect of affirmatively penalizing conservation by some users. (See Palmdale, supra, 198 Cal.App.4th at pp. 937-938; accord, Brydon, supra, 24 Cal.App.4th at p. 202 [“To the extent that certain customers overutilize the resource, they contribute disproportionately to the necessity for conservation, and the requirement that the District acquire new sources for the supply of domestic water.“].)
That seems to us the appropriate way to complete the record in our case. Following the example of Farm Bureau, we remand the matter for further findings on whether charges to develop City Water‘s nascent recycling operation have been improperly allocated to users whose levels of consumption are so low that they cannot be said to be responsible for the need for that recycling.
B. Tiered Pricing and Cost of Service
1. Basic Analysis
We begin, as we did with the capital cost issue, with the text of the Constitution. In addition to subdivision (b)(3), the main provision at issue in this case, we also quote subdivision (b)(1), because it throws light on subdivision (b)(3). Subdivision (b) describes “Requirements for Existing, New or Increased Fees and Charges,” and provides that “A fee or charge shall not be extended, imposed, or increased by any agency unless it meets all of the following requirements: [] (1) Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service. [[] . . . [[] (3) The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.” (Italics added.)
In addition to these two substantive limits on fees,
As respondent CTA quickly ascertained, the difference between tier 1 and tier 2 is a tidy one-third extra, the difference between tier 2 and 3 is a similarly exact one-half extra, and the difference between tier 3 and tier 4 is precisely five-sixths extra. This fractional precision suggested to us that City Water did
In voluminous briefing by City Water and its amici curiae allies, two somewhat overlapping core thoughts emerge: First, they contend that when it comes to water, local agencies do not have to—or should not have to—calculate the cost of water service at various incremental levels of usage because the task is simply too complex and thus not required by our Constitution. The second core thought is that even if agencies are required to calculate the actual costs of water service at various tiered levels of usage, such a calculation is necessarily, as City Water‘s briefing contends, a legislative or quasi-legislative, discretionary matter, largely insulated from judicial review. We cannot agree with either assertion.
The appropriate way of examining the text of Proposition 218 has already been spelled out by the Supreme Court in Silicon Valley Taxpayers’ Assn., Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 448 [79 Cal.Rptr.3d 312, 187 P.3d 37] (Silicon Valley): “We ’ “must enforce the provisions of our Constitution and ‘may not lightly disregard or blink at . . . a clear constitutional mandate.’ ” ’ [Citation.] In so doing, we are obligated to construe constitutional amendments in a manner that effectuates the voters’ purpose in adopting the law. [Citation.] [[] . . . [[] Proposition 218 specifically states that ‘[t]he provisions of this act shall be liberally construed to effectuate its purposes of limiting local government revenue and enhancing taxpayer consent.’ (Ballot Pamp., [Gen. Elec. (Nov. 5, 1996)] text of Prop. 218, § 5, p. 109; see Historical Notes, [2A West‘s Ann. Const. (2008 supp.) foll. Cal. Const., art. XIII C.] at p. 85.) Also, as discussed above, the ballot materials explained to the voters that Proposition 218 was designed to: constrain local governments’ ability to impose assessments; place extensive requirements on local governments charging assessments; shift the burden of demonstrating assessments’ legality to local government; make it easier for taxpayers to win lawsuits; and limit the methods by which local governments exact revenue from taxpayers without their consent.” (Silicon Valley, supra, 44 Cal.4th at p. 448, italics added.)
If the phrase “proportional cost of the service attributable to the parcel” (italics added) is to mean anything, it has to be that
It seems to us that to comply with the Constitution, City Water had to do more than merely balance its total costs of service with its total revenues—that is already covered in subdivision (b)(1). To comply with subdivision (b)(3), City Water also had to correlate its tiered prices with the actual cost of providing water at those tiered levels. Since City Water didn‘t try to calculate the actual costs of service for the various tiers, the trial court‘s ruling on tiered pricing must be upheld simply on the basis of the constitutional text.
We find precedent for our conclusion in the Palmdale case. There, a water district obtained its water from two basic sources: 60 percent from a reservoir and the state water project, and the 40 percent balance from the district‘s own area groundwater wells. Most (about 72 percent) of the water went to single-family residences, with irrigation users accounting for 5 percent of the distribution. (Palmdale, supra, 198 Cal.App.4th at p. 928.) For the previous five years, the district had spent considerable money to upgrade its water treatment plant ($56 million) but revenues suffered from a ” decline in water sales, ” so its reserves were depleted. The district wanted to issue more debt for “future capital projects.” (Id. at pp. 928-929.) Relying on consultants, the water district adopted a new, five-tiered rate structure, which progressively increased rates (for the top four tiers) for three basic categories of customers: residences, businesses, and irrigation projects. The tiered budgets for irrigation users were more stringent than for residential and commercial customers. (Id. at p. 930.) The way the tiers operated, all three classes of customers got a tier 1 budget, but irrigation customers had less leeway to increase usage without progressing to another tier. Thus, for example, the tier 2 rates for residential customers did not kick in until 125 percent of the budget, but tier 2 rates for irrigation customers kicked in at 110 percent of the budget. The tiered rate structure was itself based on a monthly allocated water budget. (Ibid.)
Two irrigation users—the city itself and its redevelopment agency—sought to invalidate the new rates. The trial court had the advantage of the newly decided Supreme Court opinion in Silicon Valley, which had clarified the
With this in mind, the Palmdale court held the district had failed to carry its burden of showing compliance with Proposition 218. (Palmdale, supra, 198 Cal.App.4th at pp. 937-938.) The core of the Palmdale court‘s reasoning was twofold. First, there was discrimination against irrigation-only customers, giving an unfair price advantage to those customers in other classes who were inclined to inefficiently use—or, for that matter, waste—outdoor water. (The opinion noted the perfect exemplar of water waste: hosing off a parking lot.) Thus an irrigation user, such as a city providing playing fields, playgrounds and parks, was disproportionately impacted by the inequality in classes of users. (Id. at p. 937.) Second, the discrimination was gratuitous. The district‘s own consultants had proposed a “cost of service” option that they considered Proposition 218 compliant, but the district did not choose it because it preferred a “fixed” option providing better “‘rate stability.’ ” (Id. at pp. 937, 929.) In fact the choice had the perverse effect of entailing a “‘weaker signal for water conservation’ ” for ” ‘small customers who conserve water.’ ” (Id. at pp. 929, 937, some italics added.)14
We recognize that Palmdale was primarily focused on inequality between classes of users, as distinct from classes of water rate tiers. But, just as in Palmdale where the district never attempted to justify the inequality “in the cost of providing water” to its various classes of customers at each tiered level (Id. at p. 937), so City Water has never attempted to justify its price points as based on costs of service for those tiers. Rather, City Water merely used what it thought was its legislative, discretionary power to attribute percentages of total costs to the various tiers. While an interesting conversation might be had about whether this was
2. City Water‘s Arguments
a. Article X, Section 2
In supplemental briefing prior to oral argument, this court pitched a batting practice fastball question to City Water, intended to give the agency its best chance of showing that the prices for its various usage tiers, particularly the higher tiers (e.g., $4.94 for all usage over 17 ccf to 34 ccf, and $9.05 for usage over 34 ccf) corresponded with its actual costs of delivering water in those increments. We were hoping that, maybe, we had missed something in the record that would demonstrate the actual cost of delivering water for usage over 34 ccf per month really is $9.05 per ccf, and City Water would hit our question into the upper deck.
What we got back was a rejection of the very idea behind the question. As would later be confirmed at oral argument, City Water‘s answer was that there does not have to be a correlation between tiered water prices and the cost of service. Its position is that the “cost-of-service principle of Proposition 218” must be “balance[d]” against “the conservation mandate of article X, section 2.” In short, City Water justifies the lack of a correlation between the marginal amounts of water usage represented by its various tiers and the actual cost of supplying that water by saying the lack of correlation is excused by the subsidy for low usage represented by tier 1, on the theory that subsidized tier 1 rates are somehow required by article X, section 2. While we agree that low-cost water rates do not, in and of themselves, offend subdivision (b)(3) (see Morgan v. Imperial Irrigation Dist., supra, 223 Cal.App.4th at p. 899), we cannot adopt City Water‘s constitutional extrapolation of that point.
We quote the complete text of
The voters overturned Herminghaus in the 1928 election by adopting article X, section 2, then denoted article XIV, section 3. (See Gin S. Chow v. City of Santa Barbara (1933) 217 Cal. 673, 699 [22 P.2d 5] (Gin Chow).) In the 1976 constitutional revision, old article XIV, section 3, was recodified verbatim as
The purpose of
The emphasis in the actual language of
But nothing in
In fact, if push came to shove and article X, section 2 really were in irreconcilable conflict with
Fortunately, that problem has not arisen. We perceive article X, section 2 and
b. Brydon and Griffith
We believe the precedent most on point is Palmdale, and we read Palmdale to support the trial court‘s conclusion City Water did not comply
Brydon was a pre-Proposition 218 case upholding a tiered water rate structure as against challenges based on 1978‘s Proposition 13 rational basis and equal protection challenges. Similar to the case at hand, the water district promulgated an “inclining block rate structure.” (Brydon, supra, 24 Cal.App.4th at p. 182; see p. 184 [details of four-tier structure].) Proposition 218 had not yet been enacted, so the opponents of the block rate structure did not have the “proportional cost of the service attributable to the parcel” language in subdivision (b)(3) to use to challenge the rate structure. They relied, rather, on the theory that Proposition 13 made the rate structure a ” ‘special tax,’ ” requiring a vote. (Brydon, at p. 182.) As backup they made traditional rational basis and equal protection arguments. They claimed the rate structure was “arbitrary, capricious and not rationally related to any legitimate legislative or administrative objective” and, further, that the structure unreasonably discriminated against customers in the hotter areas of the district. (Brydon, supra, at p. 182.) The Brydon court rejected both the Proposition 13 and rational basis/equal protection arguments.
But Brydon—though it might still be read as evidence that tiered pricing not otherwise connected to cost of service would survive a rational basis or equal protection challenge—simply has no application to post-Proposition 218 cases. In fact, the construction of Proposition 13 applied by Brydon was based on cases Proposition 218 was designed to overturn.19 The best example of such reliance was Brydon‘s declining to follow Beaumont Investors v. Beaumont-Cherry Valley Water Dist. (1985) 165 Cal.App.3d 227 [211 Cal.Rptr. 567] (Beaumont) on the issue of the burden of proof. Beaumont had held it was the agency that had the burden of proof to show compliance with Proposition 13. Brydon, however, said the burden was on the taxpayers to show lack of compliance. In coming to its conclusion, Brydon invoked Knox v. City of Orland (1992) 4 Cal.4th 132 [14 Cal.Rptr.2d 159, 841 P.2d 144]. Knox, said Brydon, had “cast substantial doubt” on the “propriety of shifting the burden of proof to the agency.” (Brydon, supra, 24 Cal.App.4th at
As the Silicon Valley court observed, Proposition 218 effected a paradigm shift. Proposition 218 was passed by the voters in order to curtail discretionary models of local agency fee determination. (See Silicon Valley, supra, 44 Cal.4th at p. 446 [“As further evidence that the voters sought to curtail local agency discretion in raising funds . . . .“].)21 Allocation of water rates might indeed have been a purely discretionary, legislative task when Brydon was decided, but not after passage of Proposition 218.
The other key case in City Water‘s analysis of this point is Griffith. There, the fee itself varied according to the location of the property, e.g., whether the parcels with wells were coastal and metered, noncoastal and metered, or residential and nonmetered. Objectors to the fee asserted certain tiers in the fee, based on the geographic differences in the parcels covered by the fee, were not proportional to the cost they were paying. One objector in particular complained the fee was improperly established by working backwards from the overall amount of the project, subtracting other revenues, the balance being the augmentation charge, which was then apportioned among the users. (Griffith, supra, 220 Cal.App.4th at p. 600.) This objector argued that the proportional cost of service had to be calculated prior to setting the rate for the charge.
The objectors had also relied on Palmdale for the proposition that ” . . . Proposition 218 proportionality compels a parcel-by-parcel proportionality analysis.” (Griffith, supra, 220 Cal.App.4th at p. 601.) The Griffith court rejected that point by stating, “Apportionment is not a determination that lends itself to precise calculation,” for which it cited a pre-Proposition 13, pre-Proposition 218 case, White v. County of San Diego (1980) 26 Cal.3d 897, 903 [163 Cal.Rptr. 640, 608 P.2d 728], without any explanation. (Griffith, supra, 220 Cal.App.4th at p. 601.)
When read in context, Griffith does not excuse water agencies from ascertaining the true costs of supplying water to various tiers of usage. Its comments on proportionality necessarily relate only to variations in property location, such as what side of a water basin a parcel might fall into. That explains its citation to White, which itself was not only pre-Proposition 218, but pre-Proposition 13. Moreover, while the Griffith court may have noted that the M-1 manual generally recommends a work-backwards approach, we certainly do not read Griffith for the proposition that a mere manual used by utilities throughout the western United States can trump the plain language of the California state Constitution. The M-1 manual might show working backwards is reasonable, but it cannot excuse utilities from ascertaining cost of service now that the voters and the Constitution have chosen cost of service.
To the extent Griffith does apply to this case, which is on the (b)(4) issue, we find it helpful and have followed it. But trying to apply it to the (b)(1) and (b)(3) issues is fatally flawed.
c. Penalty Rates
A final justification City Water gives for not tying tier prices to cost of service is to say it doesn‘t make any difference because the higher tiers can be justified as penalties not within the purview of Proposition 218 at all. (In
City Water‘s theory of penalty rates relies on
But City Water‘s penalty rate theory is inconsistent with the Constitution. It would open up a loophole in
IV. CONCLUSION
All of which leads us to the conclusion City Water‘s pricing violates the constitutional requirement that fees “not exceed the proportional cost of the service attributable to the parcel.” (
The way Proposition 218 operates, water rates that exceed the cost of service operate as a tax, similar to the way a “carbon tax” might be imposed on use of energy. But, we should emphasize: Just because such above-cost rates are a tax does not mean they cannot be imposed they just have to be submitted to the relevant electorate and approved by the people in a vote. There is no reason, for example, why a water district or local government cannot, consistent with Proposition 218, seek the approval of the voters to
Having chosen to bypass the electorate, City Water‘s article X, section 2 position kept it from explaining to us why it cannot anchor rates to cost of service. Nothing in our record tells us why, for example, they could not figure out the costs of given usage levels that require City Water to tap more expensive supplies, and then bill users in those tiers accordingly. Such computations would seem to satisfy Proposition 218, and City Water has not shown in this record it would be impossible to comply with the constitutional mandate in this way or some other. As the court pointed out in Howard Jarvis Taxpayers Assn. v. City of Fresno (2005) 127 Cal.App.4th 914, 923 [26 Cal.Rptr.3d 153], the calculations required by Proposition 218 may be “complex,” but “such a process is now required by the California Constitution.”
Water service rates to fund the costs of capital-intensive operations to produce more or new water, such as the recycling plant at issue in this case, do not contravene article XIII D, section 6, subdivision (b)(4). While that provision precludes fees for a service not immediately available, both recycled water and traditional potable water are part of the same service—water service. And water service most assuredly is immediately available to City Water‘s customers now.
But, because the record is unclear whether low usage customers might be paying for a recycling operation made necessary only because of high usage customers, we must reverse the trial court‘s judgment that the rates here are necessarily inconsistent with subdivision (b)(4), and remand the matter for further proceedings with a view to ascertaining the portion of the cost of funding the recycling operation attributable to those customers whose additional, incremental usage requires its development.
By the same token, we see nothing in
Given the procedural posture the case now finds itself in, the issue of who is the prevailing party is premature. That question should be first dealt with by the trial court only after all proceedings as to City Water‘s rate structure are final. Accordingly, we do not make an appellate cost order now, but reserve that matter for future adjudication in the trial court. (See Neufeld v. Balboa Ins. Co. (2000) 84 Cal.App.4th 759, 766 [101 Cal.Rptr.2d 151] [deferring question of appellate costs in case being remanded until litigation was final].)
Moore, J., and Thompson, J., concurred.
On May 19, 2015, the opinion was modified to read as printed above.