A proposed water rate hike for owners of vacant lots will not go through after all.

In a rare unanimous vote, the five directors of the Lake Don Pedro Community Services District voted July 26 against proceeding with the plan to increase the rates by 400 percent.

An audience of several dozen local residents and out-of-area property owners applauded the vote.

Several board members reversed their earlier position of supporting the rate hike. They said they were backing away from this proposed increase because of the fear of costly lawsuits.

Even Financial Administrator Charise Reeves, who put together the original proposal for the rate hike, advised the board to vote it down.

“Our cash position cannot survive tying up the $420,000 if a court decides we have to determine the outcome of a challenge before allowing us to bill our non-metered lots,” she said in a report to the board. “Nor can we afford additional legal fees to see a challenge through.”

Board President Wes Barton agreed. “We’ve got too many lawsuits hanging over our heads,” he said. “We don’t have the money to risk shutting down 1,450 treated water (customers).”

On the advice of the district’s legal counsel and a report by a consulting firm, the district had proposed to replace the $60 annual standby fees for non-metered lots with a $20 monthly fee, or $240 per year.

They justified the move based on a recent legal case, which allowed such fees for lots in which water was immediately available.
That launched a lengthy debate over what the definition of “immediately available” should be.

Many residents argued that simply having a service lateral extended to their property did not make water immediately available to them.

Also at issue in the debate over the increase was whether the proposed change constituted a fee or an assessment.

For a fee hike, the district is only required to hold a public hearing. If fewer than half of the affected ratepayers lodge a formal protest, the increase would go through.

However, if the new charge is deemed an assessment, the community services district would be required to go through a more detailed, expensive process, including an engineer’s report and a ballot vote.

Reeves wrote in her report that she had recently contacted the Howard Jarvis Taxpayers Association, which created the Proposition 218 process that spells out the rules that must be followed for rate hikes.

A representative of the organization told her that he believes the district’s proposal sounded like an assessment.

The Howard Jarvis Taxpayers Association, at this point, does not intend to sue the District if they pursue the current rate increase, “but it is not out of the question,” Reeves was told.

During the meeting, members of the audience took district board members and staff to task for not doing more homework before launching this rate hike proposal.

Ruth Smith complained that they had spent thousands of dollars on the process before talking with county officials, who have expressed reluctance to add the fees to tax rolls.

“Whatever you do (in the future), please check it out first,” she told the board.

Others brought up the fact that last fall, the board granted raises for all its employees, just after a rate hike was approved for metered-water customers. Part of the district’s argument for that rate hike was that they were financially strapped.

“This is not a time to be giving raises,” said Jeanne Oden.

Millie Beranek asked the board to seriously consider a recent offer by the Tuolumne County Counsel’s office to provide legal services for a much lower fee than what the district’s private-practice attorney charges. The district has paid tens of thousands of dollars in legal fees in recent years.

Beranek also asked the district to hold off on making a rate hike decision until after the November election, when there could potentially be four new directors on the board.

Vicki Keefe agreed, saying, “Wait until there’s a new board. I have no confidence in this board. You have done nothing to reduce costs.”

The vote to drop the rate hike still leaves the district with an expected deficit of at least $180,000.

Immediately after the vote, financial administrator Charise Reeves recommended the board immediately initiate a new Proposition 218 process for a revised water rate hike, so that the process could be completed within 45 days and new fees in place by October 1, to balance the budget.

However, the board members expressed reluctance to go in that direction.

The board agreed by consensus to drop the matter for now.