The letter, dated Aug. 28 and sent by attorney Eric Benink (of the San Diego firm of Krause, Kalfayan, Benink and Slavens), implicitly raises the possibility of a legal challenge to Measure M, approved by 53.9% of LB voters in June. Measure M has now enabled City Hall to use a portion of LB Water Dept. revenue (including a FY19 Water Commission-approved 7% water rate increase) to "balance" City Hall's FY19 budget (and future budgets.)

LBREPORT.com has separately learned that retired 5th district LB Councilwoman Gerrie Schipske, who is an attorney and was part of the legal team that ended the water/sewer "pipeline fees," is also part of the legal team now raising the Measure M issue.

The letter indicates the law firm represents ELB taxpayer Diana Lejins, who was the plaintiff in the "pipeline fee" litigation, and is now joined by Angella Kimball, a resident of the small unincorporated "L.A. County island" (Carson Park area east of Woodruff Ave. at Harco Street, south of Heartwell Park.) Ms. Kimball raises a separate issue; like Signal Hill residents and businesses, she will be paying the LB Water Dept. rate increase without having had an opportunity (with LB voters) to vote on Measure M.

Ms. Lejins read aloud portions of the law firm letter at last night's Aug. 30 Water Commission hearing (which was a Prop 218 "protest" procedure at which the water rate increase could be stopped if over half of LB water users submitted written or verbal protests.) Since only 57 people citywide protested (including a number of prominent LB activists who testified personally), the Water Dept. budget (including a 7% water rate increase but no sewer fee increase) now heads to the City Council on Sept. 4 for inclusion in the City's FY19 budget.

On Tuesday, the Council can approve or disapprove the Water Dept. budget. If the Council disapproves it, it will create a multi-million dollar revenue hole in the City's FY19 budget (instant deficit requiring spending cuts and/or revenue elsewhere.) If the City Council approves the Water Dept. budget, it may invite a legal challenge to Measure M.

Below is attorney Eric Benink's Aug. 28 letter to the City of Long Beach:

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[Benink Aug. 28 letter]

Please be advised that this firm represents Long Beach Water Department customers Diana Lejins...and Angela Kimball...In conjunction with the Water Department's August 30, 2018 public hearing, Ms. Lejins and Ms. Kimball objected to and protested the Water Department's establishment of water and sewer rates as reflected in Resolution WD-1392 passed by the Board of Water Commissioners (Board) on June 21, 2018 (effective October 1, 2018)...

On September 4, 2018, the City Council will consider whether to declare an ordinance approving Resolution WD-1392. It is our understanding that the Board passed Resolution WD-1392 based on the passage of Measure M on June 5, 2018. According to the City, Measure M authorizes the Water Department to embed a surcharge in its water and sewer rates in order fund transfers from the Water Revenue Fund to the City’s General Fund. The City initiated Measure M after it resolved a lawsuit brought by Ms. Lejins to challenge the City’s practice of transferring so-called "pipeline permit fees." The goal of Measure M was to replace the loss of revenue that resulted from the settlement the City entered into with Ms. Lejins.

Ms. Lejins and Ms. Kimball believe that the proposed water and sewer rates are illegal to the extent they embed amounts to transfer from the Water Revenue Fund to the City’s General Fund based on any purported authority provided by Measure M. It is our understanding that such embedded surcharges comprise approximately 12% of the rates.

The basis for their contention is threefold. First, the City apparently agrees that the water and sewer fees and charges are property-related and accordingly, are subject to Proposition 218. (See California Constitution, article XIII D, § 2, subdivisions (e)(g) and (h).) Yet, California Constitution, article XIII D, section 3, plainly prohibits the imposition of any tax, assessment, fee or charge, upon any parcel or property or upon any person as an incident of property ownership, subject to four exceptions, none of which are applicable here. Second, article XIII D, section 6, subdivisions (b)(1)(2) and (5) prohibit the imposition of a property-related fee if such fee exceeds the funds required to provide the property-related service, is used for purposes other than that for which the fee or charge is imposed, or is used for general governmental services. Embedding surcharges to fund transfers to the General Fund violates all three subdivisions. Finally, to the extent that the City contends that the fees and charges constitute a voter-approved tax (a term not used in Measure M or in the amended Charter provision), the City lacks legal authority to impose taxes on persons and properties outside it territorial limits. Ms. Kimball resides in an unincorporated area of Los Angeles County. She was unable to vote on Measure M, yet she is subject to the "tax" to the extent the City contends it is such.

Based on the foregoing, we respectfully request that City Council decline to declare an ordinance approving Resolution No. WD-1392. Please include this letter in the record of the September 4, 2018 public hearing with respect to the above-referenced agenda item. Thank you for your attention to these matters.

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