Practice Areas > Water Agency Revenue Sources
Water Rate Setting (Prop 218)
Water agencies are empowered to set water rates to recover the cost of providing water service to their customers. Following the California Supreme Court’s Bighorn decision, the constitutional requirements of Proposition 218 apply to retail water rate setting. McCormick, Kidman & Behrens LLP advises retail water agency clients on compliance with both the procedural (notice and hearing) and substantive (cost of service) requirements of Proposition 218..
Property Tax Allocation (Prop 13, Prop 1A)
Prior to Proposition 13 in 1978, many water agencies levied and collected ad valorem property taxes; after passage of Prop 13, these agencies were allocated a share of the 1% general property tax revenue collected in each county in the state. The State Legislature, however, has authority under Prop 13 to reapportion property taxes, and twice since the mid-1990s it has diverted property tax revenues away from local agencies, particularly “enterprise” special districts. In 2004, the voters of California enacted Proposition 1A to protect against such property tax diversions. MKB advises retail water agency clients on the intricacies of the property tax revenue apportionment system and represents clients in fighting against property tax revenue diversion schemes by the State.
Meter Minimum Charges, Standby Charges, Capacity Fees, Connection Fees, Capital Facilities Fees
Capital infrastructure costs must be incurred, and provide benefits to property owners, very often irrespective of the actual quantity of water used on a given property. Water agencies commonly recover some costs of capital infrastructure through revenue devices that collect capital infrastructure costs from customers apart from quantity of water used. The law imposes various limitations and procedural requirements on the use of these charges. MKB assists clients through the legal challenges associated with charges imposed without regard to actual use.