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HomeMy WebLinkAboutItem 23 - Protests - Sewer & Water Rates FEi12'9 Barry Ross January 26, 2026 City Clerk City of Santa Ana PO Box 1988, M30 Santa Ana, CA 92701 To Whom it May Concern: I am submitting this protest to the proposed increase in Santa Ana water and sewer rates. In reviewing the Cost Study on the City website,there is a significant difference in the percentage rate increase each year between the study and the published rates. Please see below: Rate Study Year 1 Year 2 Year 3 Year 4 Year 5 Water Fixed 7% 7% 6.5% 2% 2% Commodity 7% 8.2% 6.4% 2% 2% Sewer 3% 5% 9% 9% 9% Proposed Year 1 Year 2 Year 3 Year 4 Year 5 Rates Water Fixed 9.9% 8.98% 9% 9% 9% Commodity 1 21.5% 8.8% 1 9% 9% 8% These increases are significantly higher than the annual increases proposed in the rate study. While the study was completed five years ago,the inflation rate does not justify this increase. My water bill based on average usage is projected to increase 77%from the current use in Year 1. In order to be transparent, each customer should be provided detail on what their projected increase will be based on average usage. also request that the City re-evaluate the required reserve requirements and capital improvements to reduce the cost of the increases. I Sincerely, �� l is Fit LAJ 22 rnD UD to 9D Legal Objection Proposed Water and Sewer Rate Changes January 31, 2026 VIA HAND DELIVERY 1 U.S. MAIL City of Santa Ana Attention: City Clerk P.O. Box 1988, M-30 Santa Ana, CA 92701 Re: Legal Objection to Proposed Water,Recycled Water, and Sewer Rate Changes Pursuant to California Constitution Article XIII D, Section 6 (Proposition 218) and Government Code Section 53759.1 (AB 2257) Honorable Mayor and Members of the City Council: I am a property owner and ratepayer within the City of Santa Ana. This letter constitutes a formal legal objection to the proposed water, recycled water, and sewer rate changes as described in the City's Proposition 218 Notice of Public Hearing dated for March 17, 2026, and as detailed in the 2026 Water and Sewer Rate Study ("Rate Study") prepared by Robert D. Niehaus, Inc. ("RDN"), dated January 7, 2026. This objection is submitted in accordance with the requirements of California Constitution Article X111 D, Section 6, and the administrative exhaustion procedures established by AB 2257 (Government Code Section 53759.1), as referenced in the City's public hearing notice. I am submitting this objection prior to the March 10, 2026 deadline to preserve all rights to challenge the proposed rates. While this objection addresses multiple aspects of the proposed rate changes, the central concern is the consolidation of all customer classes into a single rate class and the resulting failure to demonstrate proportional cost-of-service compliance as required by Proposition 218. I. LEGAL STANDARD California Constitution Article XIII D, Section 6(b) imposes substantive limitations on property- related fees and charges. Subdivision (b)(3)provides that"[t]he 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." (Cal. Const., art. XIII D, § 6, subd. (b)(3), emphasis added.) As the California Court of Appeal recently reaffirmed in Coziahr v. Otay Water District(2024) 103 Cal.App.5th 785, this proportionality requirement is strict and demands more than a showing of"reasonableness." The burden falls on the local agency to "demonstrate compliance" with Section 6(b)(3) by "substantial evidence that withstands independent review." (Id.) The Court held that it is "not enough for a water agency to show it uses a reasonable allocation method"; rather, "an agency must show that the method produces rates that are proportional to costs." (1d.) The Coziahr court further found that Otay Water District"discriminated against single-family residential customers by charging them more for water than other customer classes without a Page 1 Legal Objection—Proposed Water and Sewer Rate Changes cogent reason." This holding is directly relevant to the proposed consolidation of customer classes in Santa Ana's Rate Study. These principles were subsequently reinforced in Patz v. City of San Diego (4th Dist, 2025), where the Fourth District Court of Appeal again struck down tiered water rates that failed to meet the strict proportionality standard, and specifically held that reliance on industry-standard methodologies is insufficient absent agency-specific, verified cost data. II. CONSOLIDATION OF CUSTOMER CLASSES VIOLATES SECTION 6(b)(3) A. The Proposed Single-Class Structure Eliminates Proportionality Analysis The Rate Study proposes "combining all customers into a single customer class" for both water and sewer services. (Rate Study, Executive Summary.) The City's prior rate structure maintained distinctions between Single Family Residential, Non-Residential, and Multi-Family customer classes, each with differentiated tier widths reflecting distinct usage patterns and cost-of-service characteristics. The Proposition 218 Notice itself documents these prior distinctions. The current bi-monthly water rate structure sets different Tier 1 widths by customer class: for a 5/8" x 3/4"meter, Single Family customers receive 21 CCF, Non-Residential customers receive 62 CCF, and Multi- Family customers receive 17 CCF per dwelling unit. These differentiated widths reflect the recognized reality that these customer types have materially different water use patterns, infrastructure demands, and cost-of-service profiles. The proposed structure eliminates all of these distinctions, replacing them with a uniform 21 CCF Tier 1 allocation for a 5/8" x 3/4"meter applied to "all customers, regardless of customer class." (Prop 218 Notice, p. 4.) This consolidation is not merely an administrative simplification. It is a fundamental change in cost allocation methodology that the Rate Study fails to justify under Section 6(b)(3)'s strict proportionality standard. D. Different Customer Types Impose Materially Different Costs on the System It is well-established in water utility economics that different customer classes impose different costs on a water and sewer system. 'These differences include,but are not limited to: a. Peaking factors. Single-family residential customers with irrigated lots generate significant seasonal demand peaks, particularly during summer months. These peaks drive capacity requirements for transmission, distribution, pumping, and storage infrastructure. Commercial and multi-family customers typically exhibit flatter demand profiles. The cost of infrastructure sized to meet peak demand is a real, allocable cost that differs by customer type. b. Return-flow ratios for sewer. The proportion of water consumed that returns to the sewer system varies significantly by customer type. Residential outdoor irrigation generates no sewer return flow. Restaurants, laundries, and food-processing facilities generate high-volume, bigh-strength wastewater with grease and organic loading that Page 2 Legal Objection—Proposed Water and Sewer Rate Changes imposes disproportionate treatment costs. The proposed single-class sewer rate structure cannot reflect these differences. c. Infrastructure utilization patterns. Commercial customers concentrated in particular corridors place different demands on distribution mains, service connections, and fire-flow capacity than residential customers distributed across neighborhoods. Multi-family customers share service connections and generate higher per-connection throughput. These differences in infrastructure utilization translate directly to differences in cost of service. d. Customer service and meter-reading costs.Per-account administrative costs vary by customer type, as do meter sizes, service connection characteristics, and the complexity of billing arrangements.Aggregating these into a single class obscures real cast differences that Section 5(b)(3) requires be reflected in rates. C. The Rate Study Fails to Demonstrate That Consolidation Preserves Proportionality The Rate Study does not include a comparative analysis demonstrating that a single customer class produces rates proportional to the cost of service attributable to each parcel. Specifically, the Rate Study does not: a. Present the cost-of-service breakdown by prior customer class (Single Family, Non- Residential, Multi-Family)that existed under the current rate structure; b. Quantify the magnitude of cross-subsidization inherent in the proposed single-class structure. That is, the degree to which one former customer class subsidizes or is subsidized by another under the uniform rates; c. Provide verified, Santa Ana-specific data on peaking factors,return-flow ratios, or infrastructure demand by customer type to justify treating all customers identically; d. Explain why the prior differentiated class structure was inadequate or inconsistent with Proposition 218, or why collapsing it into a single class better achieves proportional cost recovery. Under Coziahr, the burden is on the City to demonstrate compliance by substantial evidence. The absence of this analysis is not a technicality; it is the very gap in evidentiary support that the Court of Appeal found fatal in both Coziahr and Patz. III. THE PROPOSITION 218 NOTICE UNDERSTATES THE RATE IMPACT The Proposition 218 Notice states that the monthly impact to a"typical customer"is "$4.18" for water and "$2.94" for sewer, These figures represent only the Year 1. adjustment. The Notice fails to communicate the cumulative five-year impact in terms that would enable a property owner to understand the full scope of the proposed rate changes. The proposed adjustments compound as follows: Page 3 Legal Objection--Proposed Water and Sewer Rate Changes a. Water: 9.0% (May 2026), 9.0% (July 2027), 9.0% (July 2028), 9.0% (July 2029), and 8.0% (July 2030). The compound cumulative increase over the five-year period is approximately 53%, not a simple sum of 44%. b. Sewer: 13.5%(May 2026), 13.5%(July 2027), 10.0% (July 2028), 10.0% (July 2029), and 10.0% (July 2030). The compound cumulative increase over the five-year period is approximately 71%. The purpose of Proposition 218's notice requirement is to provide affected property owners with sufficient information to evaluate the proposed rate changes and determine whether to file a protest. Presenting only the first-year dollar impact of a five-year compounding rate schedule, without stating the total cumulative increase in either dollar or percentage terms, undermines the informed participation that Article XIII D is designed to protect. Additionally, the pass-through adjustment policy described in the Rate Study permits additional annual increases of up to 15% on top of the scheduled adjustments, further compounding the actual rate impact beyond what the notice communicates. IV. THE TRANSITION TO MONTHLY BILLING OBSCURES YEAR- OVER.-YEAR COMPARISON The simultaneous transition from bi-monthly to monthly billing introduces a structural break in ratepayers' ability to compare their bills over time.A ratepayer who has historically tracked bi- monthly charges will find it difficult to evaluate whether their post-adjustment monthly bill reflects only the stated rate increase or also reflects changes in tier allocation,fixed-charge restructuring, or other rate-design modifications embedded in the new structure. While monthly billing may offer operational benefits, implementing it simultaneously with a major rate restructuring and class consolidation has the practical effect of making it substantially more difficult for ratepayers to detect disproportionate cost allocation which is the very outcome. Proposition 218 exists to prevent. V. SPECIFIC RELIEF REQUESTED In light of the foregoing, I respectfully request that the City Council: a. Decline to adopt the proposed rates as currently structured until the City can demonstrate, by substantial evidence, that the single-customer-class structure produces rates proportional to the cost of service attributable to each parcel, as required by Article XI1I D, Section 6(b)(3); b. Direct RDN or another qualified consultant to prepare and make publicly available a supplemental analysis that quantifies the cost-of-service by customer class under both the prior differentiated structure and the proposed consolidated structure, including verified data on peaking factors, return-flow ratios, and infrastructure demand by customer type specific to Santa Ana's system; Page 4 Legal Objection—Proposed Water and Sewer Mate Changes c. Amend the Proposition 218 Notice to clearly state the cumulative five-year rate increase in both dollar and percentage terms for a typical customer, including the potential impact of pass-through adjustments; d. Provide a written response to this objection, as required by Government Code Section 53759.1 (AB 2257), explaining the City's substantive basis for concluding that the proposed single-class rate structure complies with the proportionality requirements of Section 6(b)(3). VI. RESERVATION OF RIGHTS This objection is submitted to exhaust administrative remedies pursuant to Government Code Section 53759.1 and to preserve all rights to challenge the proposed rate adjustments through judicial proceedings under California Constitution Article X111 D and Government Code Section 53759, The submission of this objection does not constitute a waiver of any rights or claims, including but not limited to any claims arising under Proposition 218, Proposition 26, or any other applicable provision of law. 1 reserve the right to supplement this objection with additional evidence and argument prior to the close of the public hearing on arch 17, 2026, and to present oral testimony at the hearing. Swithin Lindb k (service address) cc:Armando Fernandez,Acting Deputy Public Works Director City of Santa Ana Public Works Agency Page 5 -N'A qRNA CITY CLERK IFlrB 9'2 6 °m3:14 FORMAL LEGAL OBJECTION AND NOTICE OF NONCOMPLIANCE Proposition 218—California Constitution,Article XIII D February 6, 2026 To: City Clerk City of Santa Ana P.O. Box 1988, M-30 Santa Ana, CA 92701 LEGAL OBJECTION TO PROPOSED WATER, SEWER,AND RECYCLED WATER RATE ADJUSTMENTS I, Barbara Orozco, am the owner of record and customer of record of the property identified below. I hereby submit this formal written legal objection and notice of noncompliance to the City of Santa Ana's proposed adjustments to water, sewer, and recycled water rates and charges, as noticed for consideration at the Public Hearing scheduled for March 17, 2026. This objection is submitted pursuant to Article XIII D of the California Constitution(Proposition 218) and is intended to fully exhaust all administrative remedies. PROPERTY 1 CUSTOMER INFORMATION Name: Barbara Orozco Service Address: Parcel Number(APN): RATES AND POLICIES OBJECTED TO This objection applies to all proposed rate adjustments, including but not limited to water fixed charges; water commodity rates (Tier 1 and Tier 2); sewer fixed charges; recycled water rates; the Pass-Through Adjustment Policy; and fire line fixed charges. LEGAL GROUNDS FOR OBJECTION 1. Failure to Demonstrate Proportional Cost of Service. The City has failed to demonstrate that the proposed rates and charges are proportional to the cost of service attributable to Parcel No. 001-284-01, as required by Article XIII D, Section 6(b)(3). The materials rely on generalized system-wide assumptions rather than parcel-specific cost allocation. 2. Unlawful Expansion of Fixed Charges. The proposed increases substantially expand fixed monthly charges that apply regardless of actual water usage, improperly shifting variable system costs onto ratepayers. 3. Unsupported Multi-Year Rate Escalation. The proposed five-year schedule of escalating rate increases are speculative and unsupported by a demonstrated necessity for each future increase. 4. Improper Pass-Through Adjustment Mechanism. The proposed policy authorizes additional future increases beyond the stated rate schedule, creating risk of charges exceeding lawful cost-of-service limits. 5. Failure to Consider Less Burdensome Alternatives. The City has not adequately evaluated or disclosed less burdensome alternatives, including reductions in fixed charges and greater reliance on usage-based pricing. 6. Procedural Deficiencies. The notice and supporting materials do not provide sufficient transparency for meaningful evaluation under Proposition 218. FORMAL DEMAND I demand that the City reject the proposed rate adjustments in their current form; revise the rate structure to ensure strict proportionality to parcel-specific cost of service, eliminate or substantially reduce fixed charges not directly tied to service provided; remove or materially limit the Pass-Through Adjustment Policy; and provide full parcel-level cost-of-service documentation prior to any adoption. RESERVATION OF RIGHTS Nothing in this objection shall be deemed a waiver of any rights. I expressly reserve the right to pursue judicial relief, including declaratory and injunctive relief, should the City adopt rates or charges that violate Proposition 218 or other applicable law. DECLARATION and correct. I dec der penalty of erjury un the laws of the State of California that the foregoing is tru . Printed Name:. Barbara Orozco Date: o w l W i t r r r CO f%5 124 4dF � S� cp pq pr r,- � r: February 3, 2026 Carole Reeves City of Santa Ana Attention: City Clerk P.O. Box 1988, M30 Santa Ana, CA 92701 Reference: Rate increase protest Dear Sirs: I strongly protest any rate increases and changes to my water service and sewer service. I live on Social Security alone and have no other income. I cannot afford any increases to my bills. I live at Thank you Carole Reeves en ID fQ r; .N,... Nelida Mendoza March 6, 2026 City of Santa Ana ATTNP: City Clerk. PO Box 1988, M-80 Santa Ana, CA 92701 SUBJECT Notice of Legal Objection to Proposed Increase Consumption Chargers (Water I Sewer I Recycled) Service Address Dear City of Santa Ana: I am filing this legal objection to your proposed increase due to the fact that the City of Santa Ana fails to provide residents with evidence that increasing the rates now would"help to prevent higher costs in the future. Residents are not provided with verifiable evidence that supports such increases. How does the City of Santa Ana calculate what the rate of inflation would be for the next five years? Maintaining infrastructure is important. However, our extremely high property tax and outrageous retail tax are monies are already paying for such. Thank you in advance for your understanding and consideration. Please feel free to contact me if additional information is requested. Nelida Mendoza New Horizons Neighborhood