Howard Jarvis Taxpayers Ass'n v. City of Roseville

Opinion

DAVIS, J.

The City of Roseville (Roseville) operates three municipal utilities that provide, respectively, water, sewer, and refuse collection services. Roseville imposes an “in-lieu franchise fee” (in-lieu fee) of 4 percent on each of the utilities’ annual budgets; this fee is paid by the utility ratepayers and transferred to Roseville’s general fund.

This appeal presents us with two principal questions: whether Proposition 218—a descendant of Proposition 13 that covers local government fees and charges—applies to Roseville’s in-lieu fee; and, if so, whether the in-lieu fee violates Proposition 218. We answer yes to both questions and affirm the judgment.

[639]

Background

Private utilities pay public authorities “franchise fees” to use government land such as streets, or for rights-of-way to provide utility service.

1

Roseville similarly imposes the in-lieu fee on its municipal utilities; “in-lieu” is the term of choice since the utilities are not private entities.

The accounting for Roseville’s municipal utilities is maintained in enterprise accounts that are separate from Roseville’s general fund. The in-lieu fee was conceived in 1968, and has existed in various forms since then. The in-lieu fee at issue here began in 1992, when Roseville began transferring from the utilities’ enterprise accounts to its general fund a fee of 4 percent of the utilities’ annual budgets.

The Howard Jarvis Taxpayers Association, together with two other groups and two individual ratepayers (collectively referred to as plaintiffs), sued Roseville over the in-lieu fee. Plaintiffs sought declaratory relief, injunctive relief, and a writ of mandate; they claimed the in-lieu fee violated Proposition 218 by imposing a fee for a property-related service that was not tied properly to the cost of providing that service. Plaintiffs initially had also sought a refund, but they abandoned that claim.

Preliminarily, Roseville argues that plaintiffs failed to exhaust their administrative remedies, and that the trial court lacked jurisdiction to entertain a suit in equity because plaintiffs had the adequate legal remedy of a refund. Similar to the situation presented in the recent high court decision in