Mission Springs Water District (the District) increased its water and sewer rates. Initiatives to roll back the increases gathered enough signatures to qualify for the ballot. Rather than hold an election on the initiatives, however, the District filed this action against the proponents of the initiatives
The Proponents filed a "SLAPP motion" — i.e., a special motion to strike pursuant to Code of Civil Procedure section 425.16 (SLAPP Act). For this motion to be granted, the Proponents had to show that the action arose out of activity protected under the constitutional right of petition or free speech, and the District had to fail to show a probability of prevailing on its claims. The trial court denied the motion. It ruled that, under our decision in City of Riverside v. Stansbury (2007) 155 Cal.App.4th 1582 [66 Cal.Rptr.3d 862] (Stansbury), a declaratory relief action concerning the validity of an initiative does not arise out of protected activity by the initiative's proponents.
The Proponents ask us to reconsider Stansbury, asserting that it was poorly reasoned. We conclude that Stansbury was sound when decided; however, in light of the California Supreme Court's subsequent holding in Perry v. Brown (2011) 52 Cal.4th 1116 [134 Cal.Rptr.3d 499, 265 P.3d 1002] (Perry) that a preelection challenge to an initiative does implicate the personal constitutional rights of the initiative's proponents, Stansbury is no longer good law.
In 2010, the District adopted water and sewer rate increases effective January 1, 2011. According to the District, the rate increases are necessary if it is to remain solvent and to continue to carry out its vital public functions. According to the Proponents, however, the rate increases are unjustifiably high, due in part to employee salaries, health benefits, and pension benefits that are out of line with those prevailing in the private sector.
The Proponents circulated petitions for two initiatives (one for water rates and one for sewer rates) that would undo the rate increases and restore the preexisting rates. The initiatives also provided that, every fiscal year, "the District may adjust these ... rates by the percentage increase, if any, in the Consumer Price Index published by the federal Bureau of Labor Statistics for the region applicable to the ... District."
In May 2011, defendant Kari Verjil, the registrar of voters, notified the District that the initiatives had received enough signatures. (See Elec. Code, §§ 9308, subd. (e), 9309, subd. (f).) At that point, the District was statutorily required to order that the initiatives be placed on the ballot at the next general election. (Elec. Code, §§ 1405, subd. (b), 9310, subd. (a)(2).)
The District alleged that the initiatives were invalid because:
2. The initiatives were void for vagueness because they did not specify which Consumer Price Index (CPI) was to be used for future rate increases.
3. The initiatives would cause the District to become insolvent.
4. The initiatives, rather than enacting legislation directly, required the District to enact legislation.
5. The initiatives unconstitutionally impaired the obligation of contract.
The Proponents filed a demurrer. In it, they argued that the initiatives were not invalid on any of the five theories that the District was asserting.
Meanwhile, the Proponents also filed a SLAPP motion. They argued that the action arose from the protected activity of exercising their right of petition. They also argued that the District was not likely to prevail on the merits.
The trial court held a combined hearing on both the demurrer and the SLAPP motion. After hearing argument, it denied the SLAPP motion. It reasoned that, under Stansbury, the action did not arise out of any protected activity. It therefore did not reach the question of whether the District had shown a probability of prevailing on the merits. (See Code Civ. Proc., § 425.16, subd. (b)(1).)
At the same time, however, it overruled the demurrer. It ruled that at least one of the District's theories — that the initiatives unconstitutionally limited future rate increases — appeared to be meritorious.
The SLAPP Act states: "A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in
"We review an order granting or denying a motion to strike under section 425.16 de novo. [Citation.]" (Oasis West Realty, LLC v. Goldman, supra, 51 Cal.4th at p. 820.)
The Proponents contend that this action does arise out of protected activity. They appear to concede that, under Stansbury, it does not, but they urge us either to "revisit" (capitalization omitted) Stansbury or to carve out an exception to it.
"[T]he mere fact that an action was filed after protected activity took place does not mean the action arose from that activity for the purposes of the anti-SLAPP statute. [Citation.] Moreover, that a cause of action arguably may have been `triggered' by protected activity does not entail that it is one arising from such. [Citation.] In the anti-SLAPP context, the critical consideration is whether the cause of action is based on the defendant's protected free speech or petitioning activity." (Navellier v. Sletten (2002) 29 Cal.4th 82, 89 [124 Cal.Rptr.2d 530, 52 P.3d 703].) "The anti-SLAPP statute's definitional focus is not [on] the form of the plaintiff's cause of action but, rather, the defendant's activity that gives rise to his or her asserted liability — and whether that activity constitutes protected speech or petitioning." (Id. at p. 92.)
First, in City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43 [24 Cal.Rptr.3d 72] (Stewart), voters in Pasadena passed an initiative that prohibited city officials from accepting gifts and campaign contributions from recipients of certain public benefits. (Id. at pp. 50-51, 54.) The city, however, claimed that the initiative was unconstitutional; it refused to authenticate, certify and file copies of the initiative, which prevented the initiative from going into effect. (Id. at p. 54.)
The Foundation for Taxpayer and Consumer Rights (FTCR), which had sponsored the initiative, intervened in an action to compel the city to authenticate, certify, and file copies of the initiative. (Stewart, supra, 126 Cal.App.4th at p. 54.) The city responded by cross-complaining against FTCR for declaratory relief, asserting that the initiative was unconstitutional. FTCR then filed a SLAPP motion. (Id. at p. 55.) The trial court denied the SLAPP motion because it accepted the city's argument that the "cross-action was not motivated by a desire to punish FTCR or chill the exercise of its First Amendment rights. Rather, the goal was only to obtain a judicial determination that the city was not required to perform any of the ministerial duties necessary to certify the election results ... because the Initiative was unconstitutional." (Id. at pp. 71-72; see id. at pp. 55-56.)
The appellate court held that this was error, and the cross-complaint did arise out of protected activity. Preliminarily, it rejected the city's argument that the cross-complaint did not arise out of protected activity because it arose out of the passage of the initiative. (Stewart, supra, 126 Cal.App.4th at pp. 72-73.) It explained, "[E]ven if we agreed that the act which led to the filing of the cross-complaint against FTCR was the voters' approval of the FTCR-sponsored Initiative, that approval would represent, among other things, a paradigmatic exercise of FTCR's and the voters' engagement in `conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.' [Citations.] Advocacy for an [i]nitiative and adoption of the measure are, without question, a fundamental exercise of the First Amendment right to petition." (Id. at p. 73, italics added.)
The court went on to hold, however, that the cross-complaint actually arose out of FTCR's acts of intervening in the action and demanding that the city perform its ministerial duties of certifying and filing the initiative. (Stewart, supra, 126 Cal.App.4th at pp. 73-75.) The court found that the "gravamen" of the cross-complaint was not the constitutionality of the initiative but rather the dispute over the city's obligation to perform its ministerial duties. (Id. at p. 74.)
Thereafter, in Stansbury, the defendants were the proponents of an initiative that would have amended the eminent domain provisions of the Riverside city charter. (Stansbury, supra, 155 Cal.App.4th at p. 1585.) The city filed a declaratory relief action against them, seeking a declaration that the proposed initiative was invalid and did not have to be placed on the ballot. (Id. at pp. 1586-1586.) The proponents filed a SLAPP motion, which the trial court granted. (Id. at p. 1587.)
We held that this was error, because the complaint did not arise out of any protected activity. We relied on City of Cotati v. Cashman (2002) 29 Cal.4th 69 [124 Cal.Rptr.2d 519, 52 P.3d 695], which had held that a city's declaratory relief action regarding the validity of a rent control ordinance did not arise out of protected speech. We concluded that, in the case before us, "[b]y its declaratory relief action, the City was simply asking for guidance as to the constitutionality of the proposed initiative. Indeed, the City did nothing to limit respondents' activities in connection with the initiative, nor did the City, by its action, otherwise impact respondents' First Amendment rights. Moreover, it was proper for the City to initiate its declaratory relief action as a means of disputing, in a preelection challenge, the validity of the initiative. [Citations.]" (Stansbury, supra, 155 Cal.App.4th at pp. 1590-1591.)
As we noted, "[u]nderlying [the] position [of one of the proponents] is the faulty premise that his right to petition is not complete and thus cannot be challenged — until after the proposed initiative is placed on the ballot and the electorate determines whether it should pass." (Stansbury, supra, 155 Cal.App.4th at p. 1591; see id. at p. 1592.) We responded that this "overlooks the fact there is no constitutional right to place an invalid initiative on the ballot. [Citation.] Moreover, [it] ignores entirely the body of law which recognizes preelection challenges to initiative measures." (Id. at p. 1592.) We concluded that "if the trial court's ruling is allowed to stand, no one could ever challenge an initiative's constitutionality prior to the election, which is contrary to law." (Id. at p. 1585.)
We distinguished Stewart, stating that "[t]he cross-action [in Stewart] involved not the constitutionality of the initiative, as in our case, but rather, the dispute over the city's ... duty to perform certain ministerial acts.... [Citation.] Thus, because the cross-action `arose from' FTCR's protected act of filing litigation, it was properly subject to a motion to strike under section 425.16." (Stansbury, supra, 155 Cal.App.4th at p. 1593.)
The correctness of Stansbury turns on whether a declaratory relief action challenging the validity of an initiative arises out of the proponents' exercise of their right of petition. We indicated that the proponents' exercise of their right to petition was "complete" once they had done everything necessary to qualify the initiative for the ballot; hence, a challenge to actually placing the initiative on the ballot did not implicate the proponents' right of petition. (Stansbury, supra, 155 Cal.App.4th at p. 1591.) In 2007, when Stansbury was decided, there was little authority on this point. There was Stewart, but it was not entirely clear; it could be read broadly, as the Proponents do, or narrowly, as the District does and as we ultimately did in Stansbury.
In 2011, however, the California Supreme Court confronted the issue directly in Perry. There, the Ninth Circuit had asked our Supreme Court to decide "`[w]hether ... the official proponents of an initiative measure possess either a particularized interest in the initiative's validity or the authority to assert the State's interest in the initiative's validity, which would enable them to defend the constitutionality of the initiative upon its adoption or appeal a judgment invalidating the initiative, when the public officials charged with that duty refuse to do so.'" (Perry, supra, 52 Cal.4th at p. 1124.)
The Supreme Court began by observing, "[I]n the past official proponents of initiative measures in California have uniformly been permitted to participate as parties — either as interveners or as real parties in interest — in numerous lawsuits in California courts challenging the validity of the initiative measure the proponents sponsored.... This court, however, has not previously had occasion fully to explain the basis upon which an official initiative proponent's ability to participate as a party in such litigation rests." (Perry, supra, 52 Cal.4th at p. 1125.)
By contrast, the court noted, in postelection litigation, the existence of a personal interest on the part of the official proponents is "arguably less clear...." (Perry, supra, 52 Cal.4th at p. 1147.) It then held that, "at least in those circumstances in which the government officials who ordinarily defend a challenged statute or constitutional amendment have declined to provide such a defense or to appeal a lower court decision striking down the measure, the authority of the official proponents of the initiative to assert the state's interest in the validity of the initiative is properly understood as arising out of article II, section 8 of the California Constitution and the provisions of the Elections Code relating to the role of initiative proponents." (Id. at p. 1151.)
Moreover, as the court in Perry noted, there is an inherent conflict of interest between the proponent of an initiative and the affected governmental
We adhere to the concern that we expressed in Stansbury about unduly inhibiting preelection challenges to initiatives. However, our statement that "if the trial court's ruling is allowed to stand, no one could ever challenge an initiative's constitutionality prior to the election ..." (Stansbury, supra, 155 Cal.App.4th at p. 1585) must be viewed in context. In Stansbury, one of the proponents was arguing that the right to petition prohibits any preelection challenge to an initiative. (Id. at p. 1591.) The trial court had agreed, stating that "`to have a declaratory relief action before the initiative is ever enacted is not something the Court should consider, because the initiative may not pass.'" (Id. at p. 1594, fn. 10.) It was this ruling that would have meant that no one could ever bring a preelection challenge.
By contrast, holding that a preelection declaratory relief action regarding the validity of an initiative arises out of the proponent's protected activity does not mean that no one could ever bring a preelection challenge. Such a holding merely addresses the first prong of the analysis of a SLAPP motion. It would still be open to the challenger to show that, under the second prong, it has a probability of prevailing. As we will discuss in more detail in part III.C., post, this is not a particularly high hurdle. Thus, such a holding would simply mean that no one could bring a meritless preelection challenge.
Indeed, it is difficult to underestimate the likely impact of allowing SLAPP motions in declaratory relief actions challenging the validity of initiatives. Admittedly, a SLAPP motion requires the plaintiff to show that it has a
Also, to the extent that the preelection challenge is brought by the affected governmental entity, it is likely that the entity already has much of the relevant factual information. Here, for example, the District claims that the initiatives would cause it to become insolvent. The information relevant to this claim, including information about the District's revenues, expenses, and ratesetting practices, is in the District's own hands. It does not need discovery on this issue.
The only other significant effect of allowing SLAPP motions is that, if the motion is granted, the plaintiff will have to pay the defendant's attorney fees. (Code Civ. Proc., § 425.16, subd. (c)(1).) Whenever the plaintiff is the affected governmental entity, these fees must come, directly or indirectly, out of the pocket of the public. Once again, however, for fees to be awarded, the action must be meritless. We would hope that local governmental entities — which have ready access to the advice of counsel — will not bring so many meritless challenges to initiatives as drain the public fisc.
"The purpose of the anti-SLAPP statute is to encourage participation in matters of public significance and prevent meritless litigation designed to chill the exercise of First Amendment rights. [Citation.]" (Fremont Reorganizing Corp. v. Faigin (2011) 198 Cal.App.4th 1153, 1165 [131 Cal.Rptr.3d 478].) When a governmental entity brings a meritless preelection challenge to the validity of an initiative, these legislative policies apply full force.
Finally, the District argues that the Proponents "effectively ask this Court to dispense with the first prong of the anti-SLAPP analysis in any and all challenges to the constitutionality of proposed initiatives." Not at all. We merely conclude that the first prong is satisfied (at least when a proponent of the initiative is a party).
We therefore turn to the second prong of the analysis — whether the District has demonstrated a probability of prevailing on its claim.
Preliminarily, the Proponents argue that the District cannot bring a declaratory relief action at all because Elections Code section 9380 provides the exclusive procedure for challenging the validity of a local district initiative. That section provides that, once the text of a proposed ordinance and the arguments for and against it have been submitted (see Elec. Code, §§ 9312, 9315, 9317), there is a 10-day window during which "any voter of the jurisdiction in which the election is being held, or the elections official, himself or herself, may seek a writ of mandate or an injunction requiring any material to be amended or deleted." (Elec. Code, § 9380, subd. (b)(1).) "A peremptory writ of mandate or an injunction shall be issued only upon clear and convincing proof that the material in question is false, misleading, or inconsistent with this chapter...." (Id., subd. (b)(2).)
The District contends that the portion of the initiatives allowing future rate increases indexed to the CPI is invalid under Proposition 218, as construed in Bighorn-Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205 [46 Cal.Rptr.3d 73, 138 P.3d 220] (Bighorn).
"In 1996, California voters adopted Proposition 218, known as the Right to Vote on Taxes Act, which added articles XIII C and XIII D to the California Constitution. [Citation.]" (Beutz v. County of Riverside (2010) 184 Cal.App.4th 1516, 1520 [109 Cal.Rptr.3d 851] [Fourth Dist., Div. Two].) The principal purpose of Proposition 218 was to close a loophole in Proposition 13, which limited the ability of local governments to impose taxes, by similarly limiting their ability to impose assessments, fees, and charges. (Beutz, at p. 1520.)
The particular provision of Proposition 218 that is relevant here is section 3 of article XIII C of the California Constitution (article XIII C), which states: "Notwithstanding any other provision of this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessments, fees and charges shall be applicable to all local governments...."
The California Supreme Court construed article XIII C, section 3 in Bighorn. There, one E.W. Kelley qualified an initiative for the ballot that (1) reduced existing water rates and (2) required the water district to obtain voter
The Supreme Court held that, to the extent that the initiative reduced existing water rates, it was "expressly authorize[d]" by article XIII C, section 3. (Bighorn, supra, 39 Cal.4th at p. 216.) The water district had challenged the initiative under what the Supreme Court called "the exclusive delegation rule" (id. at p. 219); it argued that the Legislature had granted the exclusive authority to set water rates to the water district's board of directors and thus had implicitly precluded the use of the initiative power to set water rates. (Id. at pp. 217, 219.) The court held, however, that article XIII C, section 3 prevailed over the exclusive delegation rule: "The Legislature is bound by the state Constitution ..., and the evident purpose of article XIII C is to extend the local initiative power to fees and charges imposed by local public agencies.... [T]he Legislature's authority in enacting the statutes under which the Agency operates must in this instance yield to constitutional command." (Bighorn, at p. 217.)
However, the Supreme Court also held that to the extent the initiative sought to "impose voter-approval requirements for future increases in fees or charges," it was not authorized by article XIII C, section 3. (Bighorn, supra, 39 Cal.4th at p. 218.) It added: "Kelley apparently concedes that in the absence of the authority granted by section 3 of article XIII C, the exclusive delegation rule [citations] bars initiative measures that infringe on the power of the Agency's governing board to set its water delivery rate and charges. Accordingly, ... Kelley's initiative is invalid insofar as it seeks to impose a voter-approval requirement on future actions by the [water district]'s board of directors to increase the existing water rate and other charges or to impose new charges." (Id. at p. 219, italics added.)
The District argues that the portion of the initiatives here that allows future rate increases indexed to the CPI is analogous to the portion of the initiative in Bighorn that required voter approval for future rate increases. The District concludes that, under Bighorn, this portion of the initiatives is unauthorized under Proposition 218 and hence invalid. The trial court agreed (at least in connection with the demurrer; it did not reach this argument in connection with the SLAPP motion).
The problem with this contention is that Bighorn held this portion of the initiative to be invalid only because there the proponent conceded that it violated the "exclusive delegation rule." (Bighorn, supra, 39 Cal.4th at p. 219.) Here, the Proponents have made no such concession. Thus, we must determine whether the exclusive delegation rule applies.
The Supreme Court has recognized "certain guidelines" for determining whether the exclusive delegation rule applies. (DeVita v. County of Napa, supra, 9 Cal.4th at p. 776.) "The paramount factors ... are: (1) statutory language, with reference to `legislative body' or `governing body' deserving of a weak inference that the Legislature intended to restrict the initiative and referendum power, and reference to `city council' and/or `board of supervisors' deserving of a stronger one [citation]; [and] (2) the question whether the subject at issue was a matter of `statewide concern' or a `municipal affair,' with the former indicating a greater probability of intent to bar initiative and referendum [citation]." (Ibid.)
For purposes of the exclusive delegation rule, the water district in Bighorn was significantly different from the water district here. There, the water district was a special district; it operated under the Bighorn Mountains Water Agency Law, an uncodified act. (Bighorn, supra, 39 Cal.4th at p. 209.) The statute that assertedly delegated exclusive authority provided: "`The board of directors, so far as practicable, shall fix such rate or rates for water in the agency ... as will result in revenues which will pay the operating expenses
Here, by contrast, the District is a county water district. The only statute the District cites as delegating exclusive authority is Water Code section 31007, which provides, as pertinent here:
"The rates and charges to be collected by [a county water] district shall be so fixed as to yield an amount sufficient to do each of the following:
"(a) Pay the operating expenses of the district.
"(b) Provide for repairs and depreciation of works owned or operated by the district.
"(c) Pay the interest on any bonded debt.
"(d) So far as possible, provide a fund for the payment of the principal of the bonded debt as it becomes due." (See Wat. Code, §§ 30010, 30013 [defining "district," as used in Wat. Code, §§ 30000-33901, as county water district].)
Thus, unlike the statute at issue in Bighorn, Water Code section 31007 does not refer to the governing body of the water district at all. Instead, using the passive voice, it merely directs that rates and charges "shall be ... fixed," without specifying how or by whom. Thus, there is no basis for even a "weak inference" (DeVita v. County of Napa, supra, 9 Cal.4th at p. 776) that the Legislature intended to preclude the voters from using the initiative power to fix rates and charges.
We therefore conclude that the District has failed to show a probability of prevailing on its claim that the initiatives are invalid under Bighorn. We need not decide whether article XIII C, section 3 authorizes the portion of the initiatives that allows future rate increases indexed to the CPI. Even assuming it does not, the general initiative power does;
The District contends that the initiatives are void for vagueness because they do not specify which CPI is to be used as the index for future rate increases.
"When assessing a facial challenge to a statute on vagueness grounds, courts should where possible construe the statute in favor of its validity and give it a reasonable and practical construction in accordance with the probable intent of the Legislature; a statute will not be declared void for vagueness or uncertainty if any reasonable and practical construction can be given its language. [Citation.] ... [A] statute not sufficiently clear may be made more precise by judicial construction and application of the statute in conformity with the legislative objective. [Citation.]" (Schweitzer v. Westminster Investments, Inc. (2007) 157 Cal.App.4th 1195, 1206 [69 Cal.Rptr.3d 472].)
We note that the California Constitution itself, as well as a host of California statutes, all refer to "the consumer price index" without specifying any particular one. (E.g., Cal. Const., art. XIII A, § 2, subd. (b); see Code Civ. Proc., § 726, subd. (g), Ed. Code, § 17457.5, subd. (d), Gov. Code, § 66427.5, subd. (f)(2); Health & Saf. Code, § 44060, subd. (c)(3).) We would not lightly cast doubt on the validity of all of these statutes.
The initiatives' reference to "the Consumer Price Index" is indeed ambiguous. The CPI is not a single number, but rather "a large family of indexes with thousands of indexes published each month." (<http://www.bls.gov/opub/focus/volume1_number15/cpi_1_15.htm> [as of Aug. 7, 2013].)
The leading subgroups of the CPI are the CPI-U (for urban consumers), C-CPI-U (chained, for urban consumers), and CPI-W (for urban wage earners and clerical workers). (<www.bls.gov/cpi/cpisuptn.htm> [as of Aug. 7, 2013].)
The CPI-W excludes professional, managerial, and technical workers; the self-employed; short-term workers; the unemployed; and retirees and others not in the labor force. (<http://www.bls.gov/news.release/cpi.nr0.htm> [as of Aug. 7, 2013].) As these individuals make up a significant portion of the population that must pay for water, it would not make sense to use the CPI-W for water rate calculations.
The C-CPI-U, unlike the CPI-U, assumes that, as prices increase, consumers will substitute cheaper goods — for example, "[i]f the price of pork increases while the price of beef does not, consumers might shift away from pork to beef." (<http://www.bls.gov/cpi/cpisupqa.htm> [as of Aug. 7, 2013].) However, the C-CPI-U has not been generally adopted as an indexing mechanism. For example, according to the Bureau of Labor Statistics, "The C-CPI-U to our knowledge currently is not used in any federal legislation as an adjustment mechanism." (Ibid.) By this process of elimination, it seems that the drafters of the initiatives must have had in mind the CPI-U.
The only other question is what mix of products the drafters intended the CPI to be based on. There is a CPI for all items. This is also broken down into a CPI for food, for energy, for all items other than food and energy, and for services. Each of these is broken down still further; for example, the food CPI is broken down by food at home and food away from home. (<http://www.bls.gov/news.release/cpi.nr0.htm> [as of Aug. 7, 2013].) The all-items CPI is the one most widely reported. Moreover, from the very fact that the drafters did not specify a product mix, we conclude they had in mind the CPI for all items. We therefore conclude that the initiatives refer to the CPI-U for all items for the Los Angeles-Orange County-Riverside geographical area. (See <http://www.bls.gov/cpi/cpid1303.pdf>, Table 16, p. 53 [as of July 16, 2013].)
We emphasize that we are resolving this issue for purposes of the SLAPP motion, not necessarily for the litigation as a whole. The key point is that, on this record, a court can readily determine which CPI was intended, and
The District contends that the initiatives are invalid because they would (1) violate Water Code section 31007; (2) interfere with the provision of an essential governmental service; and (3) unconstitutionally impair the obligation of contract.
In opposition to the SLAPP motion, the District presented extensive and detailed evidence that its 2011 water and sewer rate increases were absolutely necessary due to revenue declines and cost increases, both of which were beyond its control. "Between 2007 and 2010, [the District] experienced operating losses of $2.9 million to $3.5 million annually." If the initiatives pass and rates are rolled back, the District would be unable to meet its costs, pay its debts, and stay in business; the potential consequences for the local water supply would be disastrous.
The Proponents did not contradict this evidence. In this appeal, they belatedly question some of the District's assumptions about future income and expense trends. There is no evidence, however, that those assumptions are incorrect. In any event, as already discussed (see part III.B., ante), we must accept the District's evidence as true.
Preliminarily, the Proponents argue that, because the District's challenges based on this evidence raise factual issues, they are not ripe for preelection review.
"`It is clear that a measure may be kept off the ballot if it represents an effort to exercise a power which the electorate does not possess. [Citations.]' [Citation.]" (City of San Diego v. Dunkl, supra, 86 Cal.App.4th at p. 400.) Here, the District claims that the voters lack the power to enact the initiatives because the initiatives would set its water rates below its costs and thus would force it to default on its debts and put it out of business. At least for purposes of the SLAPP motion, this does not present a factual issue, because the Proponents have not presented any contrary evidence. (See Reycraft v. Lee (2009) 177 Cal.App.4th 1211, 1217 [99 Cal.Rptr.3d 746] [Fourth Dist., Div. Two] ["[w]hen the facts are undisputed, the legal significance of those facts is a question of law ..."].)
Even if it did present a factual issue, however, the Proponents cite no authority for the proposition that the mere existence of a factual issue precludes preelection review. To the contrary, the Supreme Court has observed that "an initiative petition's alleged failure to have obtained the requisite number of qualified signatures" — an issue that would appear to be quintessentially factual — can be litigated preelection. (Costa v. Superior Court (2006) 37 Cal.4th 986, 1006 [39 Cal.Rptr.3d 470, 128 P.3d 675].)
We turn, then, to whether the initiatives are invalid under Water Code section 31007. As already mentioned, Water Code section 31007 requires that a county water district's rates be fixed high enough to cover certain specified costs.
Also as already mentioned, the water district in Bighorn was subject to a similar statute. That statute could have been the basis for two distinct challenges to the proposed initiative: (1) under the exclusive delegation rule, the water district's board of directors had the exclusive power to set its water rates and charges, or (2) the particular water rates and charges set by the initiative were insufficient to cover the water district's costs. (Bighorn, supra, 39 Cal.4th at p. 210.)
The water district insisted that it was raising only the first issue. (Bighorn, supra, 39 Cal.4th at p. 210.) Thus, with regard to that issue, the Supreme Court held that article XIII C, section 3 trumped the exclusive delegation rule. It explained: "The Legislature is bound by the state Constitution ..., and the evident purpose of article XIII C is to extend the local initiative power to fees and charges imposed by local public agencies.... [T]he Legislature's authority in enacting the statutes under which the Agency operates must in this instance yield to constitutional command." (Bighorn, at p. 217.)
The Supreme Court declined to decide the second issue. It stated: "[W]e are not holding that the authorized initiative power is free of all limitations.
"[T]he local electorate's right to initiative ... is generally co-extensive with the legislative power of the local governing body. [Citation.]" (DeVita v. County of Napa, supra, 9 Cal.4th at p. 775.) There is a "constitutionally based presumption that the local electorate could legislate by initiative on any subject on which the local governing body could also legislate." (Id. at p. 777.)
Thus, if the state Legislature has restricted the legislative power of a local governing body, that restriction applies equally to the local electorate's power of initiative. For example, in deBottari v. City Council (1985) 171 Cal.App.3d 1204 [217 Cal.Rptr. 790] [Fourth Dist., Div. Two], we noted that Government Code section 65860 "prohibits enactment of a zoning ordinance that is not consistent with the general plan." (deBottari, at p. 1210.) We concluded that a local referendum, which, if passed, would have caused a city's zoning ordinances to be inconsistent with the city's general plan, was invalid. (Id. at pp. 1210-1212.) If the rule were otherwise, the voters of a city, county, or special district could essentially exempt themselves from statewide statutes.
Article XIII C, section 3 does not alter this traditional limitation on the initiative power. As already mentioned, it provides that "[n]otwithstanding any other provision of this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge...." (Italics added.) Thus, it presupposes an otherwise valid use of
The Proponents may argue that a water district has the ability to pad its own "operating expenses," through inflated salaries, sweetheart pension deals, lavish offices, etc.; the voters should be able to rein in such profligate expenditures by initiative. In this case, however, despite the Proponents' suspicions, there is no evidence that the District's budget is padded or abusive. It is arguable that "operating expenses," as used in Water Code section 31007, should be construed to mean only expenses that are reasonable and/or in good faith. On this record, however, we need not decide this issue.
Instead, we merely note that Proposition 218 also provides that, before increasing any fee or charge, a local governmental entity must give affected property owners notice and an opportunity to protest. If a majority of them do protest, "the agency shall not impose the fee or charge." (Cal. Const., art. XIII D, § 6, subd. (a)(2).) This gives the voters substantial protection against rate increases that, in their opinion, are due to extravagant costs. In this case, the District followed this procedure scrupulously; however, only about one out of every 500 property owners filed a protest. Finally, the voters always have the remedy of booting the members of the water district board out of office.
In light of this conclusion, we need not decide whether the initiatives are invalid because they would interfere with the provision of an essential governmental service or because they would unconstitutionally impair the obligation of contract.
The order appealed from is affirmed. In the interest of justice, each side shall bear its own costs.
Ramirez, P. J., and Miller, J., concurred.
The filing of this declaratory relief action, however, is not what kept the initiatives off the ballot. The District did not request or obtain any provisional relief from the trial court; it simply decided, on its own, not to order an election. Filing the action does enhance the District's appearance of good faith — it can claim it is merely awaiting guidance from the court. However, the District could have refused to place the initiative on the ballot without filing any action at all.
We are somewhat surprised that the Proponents have not cross-complained for any coercive relief, such as a writ or a preliminary injunction, to compel a prompt election on the initiatives. Absent a request for such relief, however, the issue of the existence or scope of the District's mandatory duty simply is not before us.
We do not agree that there is a general state constitutional right (i.e., other than under art. XIII C, § 3) to enact a local district initiative. Article II, section 8 and article IV, section 1 concern the power to adopt statewide statutes by initiative. Similarly, article II, section 11 concerns the power to adopt county and city initiatives. None of these provisions grant the power to enact local district initiatives. (Board of Education v. Superior Court (1979) 93 Cal.App.3d 578, 583 [155 Cal.Rptr. 839] [school district].)
We do agree, however, that the Legislature has statutorily granted the power of initiative to the voters of a local water district. Elections Code section 9300 provides that, subject to exceptions not applicable here, "ordinances may be enacted by any district pursuant to this article...." Elections Code sections 9301 to 9323 then go on to prescribe the procedure for adopting a district ordinance by initiative. Moreover, specifically with regard to water districts, Water Code section 30830 provides that "[o]rdinances may be passed by voters in accordance with Article 1 (commencing with Section 9100) of Chapter 2 of Division 9 of the Elections Code."
In any event, according to the statement of intent, article XIII C, section 3 was "merely" intended to "`constitutionalize[]'" existing law to the effect that an initiative can be used "to reduce or eliminate government imposed levies...." This supports our view that article XIII C, section 3 was not intended to expand the initiative power.
