Beaumont Illegal Sewer Fee Increase
Beaumont must follow California Constitution Article XIII C Section 2, which requires Voter Approval, Not Article XIII D
The City of Beaumont is attempting to circumvent State Law that requires Voter Approval for Tax Increases in order to secure a revenue source to pay the Premium & Interest Payments on $90 Million worth of Bond Debt.
Beaumont is claiming Voter Approval is not necessary by citing Article XIIID of the California Constitution, but this Section of the Law is not applicable because it is not an increase for basic services, it’s an increase to fund another Wastewater Treatment Plant Expansion/Renovation and Brine Pipeline Installation Project.
CALIFORNIA CONSTITUTION ARTICLE XIII D Section 6 (c) Voter Approval for New or Increased Fees and Charges. Except for fees or charges for sewer, water, and refuse collection SERVICES, no property related fee or charge shall be imposed or increased unless and until that fee or charge is submitted and approved by a majority vote of the property owners of the property subject to the fee or charge or, at the option of the agency, by a two-thirds vote of the electorate residing in the affected area. The election shall be conducted not less than 45 days after the public hearing. An agency may adopt procedures similar to those for increases in assessments in the conduct of elections under this subdivision.
The Notice clearly states: “The Proposed rate changes are needed to help fund the Wastewater Treatment Plant (WWTP) Expansion/Renovation and Brine Pipeline Installation Project.”
The Notice also states: “The expansion will increase the permitted capacity from 4.0 MGD to 6.0 MGD.”
All Sewer Ratepayers are already paying an addition Fee Increase that was imposed in July, 2013, to expand the Sewer Plant from 4 mgd to 8 mgd, but all the money is being stolen or misused right now. There was $5.7 Million collected in the last five years that is gone. The $3.5 Million collected since Lloyd White took office was deposited into the General Fund and now it’s gone.
Sewer Ratepayers living in the Development Areas are also already paying massive Mello Roos Taxes for $100 Million in Sewer Upgrades that were never constructed and a Recycled Water Facility that doesn’t exist.
California Constitution Article XIII D is not applicable to Beaumont’s Sewer Fee Increase because the increase is to secure funding for Bond Debt, not for basic services.
The City of Beaumont must follow California Constitution Article XIII C Section 2, which requires Voter Approval for a Sewer Fee Increase to pay for Bond Debt and construction of Facilities.
When Mayor White was notified that the Electorate must be allowed to vote on the Sewer Fee Increase he replied in an email: “I have asked all the questions about the 218 process and I will continue to ask questions. If I have any doubt to the legality of our process, I will vote against it and, if it is required to go to the voters, I will argue for that.”
“Have any of those who are claiming to you that it must go to the voters experienced in challenging prop 218 procedures? Can they point to actual real life examples I can review? I haven’t found any where the increase was for capital improvements to meet the minimum level of service required.”
An increase in Fees without Voter Approval is only allowed if the money is being used to provide Basic Services. Construction of Capital Improvements requires a Vote of the Electorate because the additional Fees are being used to secure Bond Interest and Premium Payments.
At the November 7, 2017 Beaumont City Council Meeting Staff made it clear that the money from Rate Increase would be used to secure Bond Debt on the Finance Report that must be submitted to the Santa Ana Water Quality Control Board by December 30, 2017.
A 5-Year Fee Increase will not secure a 30-Year Bond and all Bond Debt Increases must be approved by 1/2 of the Property Owners or 2/3’s of the Electorate in the State of California.
Beaumont City Council Approved Defrauding the Citizens and Violating Prop 2018 at their November 7, 2017 Meeting. Contrary to what Mayor White said; Acting City Attorney Robert Patterson never said a word.
Beaumont City Council Transcript November 7, 2017: https://www.youtube.com/watch?v=pcF1FmZLQkI&t=17377s
4:40:00 Agenda Item 28: Sewer Rate Study: https://beaumont.civicweb.net/document/9808/Item%2028.pdf?handle=8E7180B2289B454991C3325BDCFDA061
Jakher: We did a Presentation at the last Meeting on the Sewer Rate Study. We do have updated numbers and we also have the study that’s completed. Tonight we are proceeding with the Prop 218 process.
4:41:00 Kim Boehler, Associate Director NBS: We updated the current rates to reflect the adjustment the City did July, 2017. We updated the state date for new rates to be February 1, 2018 instead of January due to the timing of the Prop 218 process. And we updated the Financial Plan and the Reserve Fund Projections to reflect the change that we noted. The Rates haven’t changed from what you’ve seen before; it’s just the percentage change in the first year that’s lower than it was to reflect the fact that the City already implemented a Rate Increase in July.
4:42:00 Boehler, For a Single-Family Resident unit; the current rate is $33.51. That will change in February to $34.91 in this Plan then increase 7% per year. At the end of the five-year period that rate will be $45.77 for a single-family home.
White: Do you know if we’re doing this; if that $33.51 would have gone up again on its own without what we’re doing?
Boehler: The Plan that the City currently has, I think it would expire this year.
Jakher: There is one more year and it would have gone up to $34.51.
White: Okay, so the $34.91 only a little bit of that is more than what would have gone up if we weren’t doing anything.
4:43:00 Jakher: The only difference is that it would have gone up in July. This is going up in February.
White: Okay, okay.
4:44:00 White: You said this increase would cover all the costs? Not all the costs for the Wastewater Treatment Plant, is it?
Boehler: It would cover your operating and maintenance costs, the Debt Services Payments [FUTURE BONDS] that projected because you’re going to Debt Finance the Sewer Treatment Plant Project.
Boehler: Then the City has about $1.5 Million in annual Capital Expenditures for Rehab and Replacement, which are regular costs. `It’s debt service paid over time, so that debt service is factored in.
4:45:00 White: You’d still have to apply for financing, but this is a way to pay it off.
Boehler: This would pay it off over a 30-year period. The next steps after tonight; City Staff is planning on sending a Prop 218 Notice to all your customers notifying them of the potential rate increase. The 2018 Notice will state the time and place of the Public Hearing, which is planned for January 16, 2018. There needs to be a 45-day period after sending the notices, before the public hearing takes place, so that’s factored into that timeline. I sent City Staff the Report today for the Rate Study, so that should be available online for the residents to look at during the 45-day period.
White: There’s a clause that if there’s a majority of the written – have you ever seen that happen?
4:46:00 Boehler: No. No. It’s a pretty high threshold; you have o get 51[%], the majority. 50% + 1 of customers to protest.
White: And they have to do it in writing.
Martinez: The options that were presented back in the drawing room; is that a part of these figures? If we decide to go with those options presented; then we’d have to change this Financing Plan?
Jakher: The estimated cost are included in our Capital Project. Those are all included. What you saw last time presented by Brian [Forebath, Webb & Assocates] are all included in this Project.
4:47:00 Jakher: We have to submit a Financial Plan to the Board by the end of this year, December 31, 2017, so that’s the reason you’re seeing this now. We need to have this in place and let the Board know that we’ll be adopting the new Rates very shortly. This will complete our Financial Plan that we need to submit to them in about a month.
White: And expanding this Plant isn’t an option. We’re required to do it and if we had taken Option B [Sell to BCVWD] our rates would be going up much higher, correct?
Jakher: That is correct. And as you recall we did the connection fees for the Sewer and our fees are lower than if we had to connect to Yucaipa. Their fees are a little over $8,000, or a little over $5,000.
White: And do we know; I think their Fees are now what this is going to end up at? Is that about right?
Jakher: Their Fees are $42 and some cents. That’s current fees. Everybody has increases coming up.
4:48:00 Parton: To put that in context: In Year 1 the extra on the Rate is $18.00. That’s up 4.19%. Then it goes to $19.26 in Year 2, $20.61 in Year 3, $22.05 in Year 4, and $23.59 in Year 5. That’s the Annualized Costs.
White: There was some concerns with the last Increase that the money was not set aside and put aside. This all goes into the Sewer Fund and then the Sewer Fund manages the Debt Service from there.
Parton: That’s right.
White: And that’s a Separate Fund from the City and that’s a Fund that’s Audited each year?
4:49:00 Parton: Yes. And with that we’ve got to book the Debt Service Obligation that’s there. I’ve got a report on that as we know. We’ll be getting some guidelines on the appropriate management and accounting and recording of that as well.
White: So what are we approving tonight, to begin the 218 Process?
Male Councilman: I make a Motion to Approve.
White: I’ll Second that. So when will that go out?
4:50:00 Parton: Notices will go out on November 22nd and then your 1st Public Hearing is January 16, 2018. February 1, 2018 increases the Rates.