UPDATE: The $34 million figure in this article was originally calculated through the information that was available when opening briefs were filed with the court. But the city continued collecting this fee until the judge's decision was issued, and the amount collected during that time also must be returned, so the final amount will instead be $36.5 million.
Victory in court today!
The City of Oxnard had been skimming as much as $7 million per year from the City’s three utility enterprises (water, wastewater and solid waste) ... and diverting the money to the general fund for what they call an Infrastructure Use Fee (IUF).
Our contention has been that the IUF is an unlawful transfer scheme – really, a backdoor tax! – that violates the California Constitution, particularly Proposition 218.
Back in 2016 we notified Oxnard City Hall of our concerns, but they were dismissed.
We did not want to go to engage lawyers to fight about this. We make it a practice to give the City of Oxnard an opportunity to do the right thing on their own first.
We then told City Hall in early 2017 that if they ceased their illegal practice of siphoning money from the utilities to the general fund, we would not insist that previous unlawful transfers be returned – which amounted to only $22 million at that time.
Unfortunately, Oxnard City Hall would not talk to us! Instead, they wrote a memo falsely asserting their IUF to be legal ... even when the Howard Jarvis Taxpayers Association – the authors of Proposition 218 – stated that it clearly was not.
City Hall did not care they were breaking the law ... and they continued siphoning more money, so our only option was to seek redress through the courts.
We filed a lawsuit in March of 2017. It required over three years for our lawyer to collect evidence and depose witnesses.
A hearing was held on October 1 of this year in front of Ventura County Superior Court Judge Matthew Guasco.
Today, Judge Guasco issued his tentative decision in our favor, ordering the City of Oxnard to IMMEDIATELY repay all of the money siphoned since March 2014 – now over $34 million! – back to the City’s three utility enterprises.
The amount would have been more, if not for the three-year statute of limitations.
In his written ruling, Guasco made reference to the study commissioned by the City that purported to justify the IUF ... and concluded that even if the study had been admissible as evidence:
- the consultant's methodology and calculations were "entirely lacking in foundation, speculative, and deeply flawed," and
- the calculations appeared to be “arbitrary, capricious, unsupported by any foundational facts, and entirely speculative.”
That pretty much says it all!
Today, we happily celebrate our victory on behalf of Oxnard’s utility ratepayers, but remain sad that this whole ordeal was even necessary.
The City was illegally confiscating these funds – and then raising our utility rates to make up for the so-called shortfall.
This means that the City’s utility rates are inherently excessive, since they include the IUF in their cost structure, and thus the Proposition 218 violations continue.
The City may want to talk to us about that.