SAN BERNARDINO — A class action lawsuit [CIVDS1725027] filed here against the Town of Apple Valley alleges Proposition 218 violations in the form of unlawful monetary transfers, a complaint obtained by the Daily Press shows.
Filed by town resident Christina Lopez-Burton, the suit claims Apple Valley has illegally transferred millions from its Solid Waste Fund to its General Fund, a result of billing residential customers more than what is paid to Burrtec Waste Industries for trash collection.
Per a 2014 exclusive franchise agreement (EFA), Burrtec receives $13.69 per month for each 40-gallon container serviced, but the town charges customers $23.71, according to the complaint, which contends the $10.02 difference brought the town more than $2 million in Fiscal Year 2016-17 alone.
“Of that amount, $729,366 was allocated to pay costs incurred in the Town’s budget for ‘General Gov’t Services,’” the complaint reads. “But a substantial part of the General Gov’t Service Account 1001-1200 funds services totally unrelated to waste collection services, like services related to the Town’s golf course and park and recreation department.”
In addition, an 18 percent franchise fee the town “pays itself” from all money collected on behalf of Burrtec netted an estimated $2 million that was also transferred to the General Fund for “general governmental purposes,” according to the complaint.
Town spokesperson Gina Whiteside declined to comment on the suit due to its ongoing status.
Per a previous EFA, the franchise fee was 6 percent in 2012. The suit alleges, however, that the town began exploring ways to bolster General Fund revenues in 2014, ultimately deciding to triple the franchise fee.
But when the town informed customers of a proposed rate increase in mid-2014, the Prop 218 notice “failed to mention the tripling of the franchise fee at all.” As such, attorney Eric Benink, who represents Lopez-Burton, described the fee as one of the suit’s key underlying issues.
“We don’t think it’s a justifiable cost,” Benink told the Daily Press. “The label attached is a franchise fee, but we don’t think it’s a true franchise fee. That money doesn’t come out of Burrtec’s pocket in any significant way. The town passed on that tripling directly to the ratepayers, and there’s no evidence that that 18 percent was negotiated in any meaningful way.”
While the suit acknowledges franchise fees are not unlawful, it described the town’s as “an artifice designed to generate surplus revenue for the Town.”
Passed by California voters in 1996, Prop 218 amended the California Constitution and awarded voters the right to vote on all local taxes, and required taxpayer approval of assessments and property-related fees, according to the Howard Jarvis Taxpayers Association.
The class action suit, filed in December, represents the second Prop 218-related legal action Lopez-Burton has taken against the town since 2016. The previous case centered on flawed sewer rate increases and the alleged illegal transfer of nearly $7 million from the town’s Wastewater Fund to its General Fund, according to previous Daily Press reports.
A settlement reached in early 2017 resulted in the town paying $75,000 to cover Lopez-Burton’s attorney fees, transferring $798,000 into a reserve account within the Wastewater Fund for capital improvement projects to the sewer system, and resetting the monthly wastewater rate for some 22,000 customers to $31.43 from $35.04.
The town is currently researching raising sewer rates; a public hearing is scheduled for May 8.
Lopez-Burton now seeks a writ of mandate ordering the town to comply with its constitutional duties under Prop 218, as well as a court order for the restoration of money to the town’s Solid Waste Fund and a class-wide refund to all trash customers, according to the complaint.
Benink said the suit is limited to one year before a claim was filed with the town in July, meaning that any charges imposed on customers beginning July 24, 2016, and “forward from there” would be a part of the refund.
A case-management conference is set for Feb. 28 in San Bernardino County Superior Court. A trial date could be scheduled at that time, according to Benink, who said cases like Lopez-Burton’s typically take more than a year to reach their end.
“Settlements happen faster than that sometimes,” he said, “but if it were to be adjudicated that would happen a year to a year and a half from now.”
Source: Matthew Cabe, Daily Press