Krause, Kalfayan, Benink & Slavens, LLP Achieves Settlement Of Prop. 218 Case Against Anaheim

A water rate payer, represented by Krause, Kalfayan, Benink & Slavens, LLP, and the City of Anaheim have settled a lawsuit brought against the City in 2012. The lawsuit alleged that Anaheim illegally transferred more than $2M each year from its separate water utility fund to its general fund in violation of California’s Constitution, specifically Proposition 218. Proposition 218 prohibits cities and other local governments from taking money collected for water utility service and using it to pay for other general government services which are not related to water service.  Water utility fees and other so-called “property related fees” may only be used to cover the cost of providing the service to ratepayers.

After the lawsuit was filed, Anaheim began preserving the transferred funds in a separate account. The settlement requires Anaheim to restore $3M from the general fund to the water utility fund. Anaheim is also expected to put a measure on the ballot asking voters to approve the transfers going forward. If the ballot measure does not pass, Anaheim will stop all transfers in the future, or at least until it obtains voter approval. It will also reimburse to the water fund all funds transferred and held in the separate account during the pendency of the lawsuit, which may result in millions more dollars being repaid.

Krause, Kalfayan, Benink & Slavens, LLP is a boutique San Diego law firm that represents citizens, ratepayers and taxpayers in fee-related litigation against municipalities. For more information, visit www.kkbs-law.com/people/vincent-d-slavens/.