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service, which is one of several other property-related services that aids in the provision of fire service provided to properties.” (Gov. Code, § 53750.5, subds. (a)(1), (d).) Hydrants—the Legislature explained—are among the “system of public improvements intended to provide for the production, storage, supply, treatment, or distribution of water from any source,” that the Legislature recognized as “water” services. (Id., § 53750, subd. (n); id., § 53750.5, subd. (a)(2).) Thus, “[h]ydrants and the water distributed through them are part of the property-related water service provided to all property owners served by a water service provider.” (Id., § 53750.5, subd. (a)(6).) And “fees or charges for the aspects of water service related to hydrants and the water distributed through them may be . . . included in the other water rates and charges fixed and collected by a public agency.” (Id., § 53750.5, subd. (b).) “[W]ater service costs may include, but are not limited to, any costs associated with constructing, maintaining, repairing, upgrading, and replacing hydrants, and costs associated with obtaining, treating, and distributing adequate volumes of water to meet the water demands of properties served by the water service provider, including water supplied for firefighting purposes.” (Id., § 53750.5, subd. (a)(7).)
The Legislature also made a set of findings regarding the design, installation, and use of hydrants particularly relevant to the requirements of Section 6, subdivisions (b)(3) through (b)(5):
• Hydrants are generally designed, installed, and used to provide an immediately available water service to aid in extinguishing fires that threaten property served by a water service provider, and are generally not designed or installed to provide water service to aid in extinguishing fires that threaten property not served by a water service provider or wildfires. Hydrants are also used by a water service provider for water system operations and maintenance.
(Id., § 53750.5, subd. (a)(3).)
• Through hydrants, water is immediately available to those properties to aid in extinguishing a fire that directly threatens them. The cost as sociated with this aspect of water service is proportionately allocable among properties that may receive a reasonably similar level of service from the immediate availability of water to aid in extinguishing fires that directly or indirectly threaten thos e properties.
(Id., § 53750.5, subd. (a)(6).)
• Hydrants are generally located in proximity to properties served by a water service provider to facilitate water service to those properties. Hydrants and the water distributed through them have a direct relationship to property ownership because hydrants are generally sized based upon property use and then are installed when parcels are developed or connected to a water system. (Id., § 53750.5, subd. (a)(4).)
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• Hydrants and the water distributed through them are not available to the public at large in substantially the same manner as they are to property owners served by a water service provider because hydrants are designed, installed, and used to serve properties receiving water service, and the public at large does not generally have access to water through those hydrants. Incidental or other de minimis use of hydrants and the water distributed through them for other purposes does not change their essential character as a property-related service. (Id., § 53750.5, subd. (5).)
III. Factual and Procedural Background
The SFPUC builds, maintains, and operates an extensive infrastructure of hydrants, pipes, pumps, valves, water mains, and reservoirs to provide water primarily used in firefighting. There are two primary types of hydrants in San Francisco—lower pressure hydrants connected to the same potable water mains that provide running water to homes and businesses and higher-pressure hydrants connected to the non-potable Auxiliary Water Supply System (“AWSS”), also sometimes referred to as the Emergency Firefighting Water System. (Declaration of Bill Teahan (“Teahan Decl.”), Exs. A– C.) The low-pressure hydrants are located throughout the City, and the AWSS provides broad coverage to properties across the City. (Id., Exs. B–C.) Indeed, all three representative Plaintiffs live and receive service from the SFPUC within a block and a half of an AWSS hydrant. (Id., Exs. E–G; Aquilina Decl. ¶ 6; Roh Decl. ¶ 6; Lowenberg Decl. ¶ 6; Batshoun Decl. ¶ 3.) 2 And the high-pressure
hydrant system is in the process of continued expansion. (See, e.g., Teahan Decl., Ex. H [subdivision regulations requiring installation of AWSS hydrants with new development].) The high-pressure and low-pressure hydrant systems serve the same purposes. “Having both systems increases the Fire Department’s capacity to address more simultaneous, large property fires and to account for the potential loss of one or the other system in a natural disaster such as an earthquake.” (Declaration of Deputy Chief Darius Luttropp (“Luttropp Decl.”) ¶ 7.)
These hydrants “are located and designed to protect developed properties, such as buildings, facilities, and other structures within the City, which receive water service from the SFPUC.” (Id. ¶ 2.) The California Fire Code requires that hydrants be located where facilities or buildings are
2 Plaintiffs also incorrectly asserted in earlier iterations of their complaints, though not the current ones, that the AWSS does not serve the Chinatown neighborhood in San Francisco. In fact, the AWSS fully serves Chinatown, with AWSS hydrants throughout the neighborhood. (Teahan Decl., Ex. D.)
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constructed, and the Fire Department oversees ensuring there is sufficient hydrant infrastructure for new development. (Ibid.; Code Regs., tit. 24, pt. 9, § 507.1.) “The Fire Code does not require the installation of hydrants near vacant land.” (Luttropp Decl. ¶ 5.) “When the Fire Department responds to fires on vacant land, the response is typically designed to prevent the fire from spreading to nearby buildings or other structures.” (Ibid.) “The Fire Department also responds to car and other street fires,” but it “generally uses manual extinguishers or tank water to put out non-structural fires such as these. These fires require a smaller volume of water to extinguish, so it is unnecessary (and would be inefficient) to connect to the hydrant system.” (Id. ¶ 6.) “The essential purpose of hydrants is to provide water service to suppress fires that threaten developed properties. Any other use of hydrants within the City is incidental to the primary purpose of providing water to suppress fires on developed properties.” (Id. ¶ 3.)
To set sewer rates under Proposition 218, the City conducts detailed studies of the projected costs of the water system and allocation of those costs to ratepayers, assisted by outside expert consultants. (See Declaration of Erin Corvinova (“Corvinova Decl.”), Exs. A, D.) The City most recently conducted those rate studies in 2018 and 2023. (Ibid.) Rate setting is conducted based on cost of service principles under Proposition 218, meaning rates are set to exactly cover costs to provide services, with no excess. (See, e.g., id., Ex. D [2023 Water and Wastewater Rate Study] at p. 1.) The 2018 and 2023 rate studies comply with Proposition 218 and industry best practices. (See id., Ex. A [2018 Water and Wastewater Cost of Service Study] at p. 11 [“This study and recommendations follow industry best practices and adhere to the substantive requirements of Proposition 218.”]; id., Ex. E at pp. 1, 23.) The 2018 and 2023 rate studies address the costs of hydrants and the associated infrastructure and water flows as part of the costs of water services. (Id., Ex. A at p. 34; id., Ex. E at pp. 38–39.) “The water rate design analysis determines rates required to achieve cost recovery, proportionately for each customer.” (Id., Ex. A at p. 11; see also id. at p. 3 [“Proposition 218 requires that property-related fees and charges, including water and wastewater rates, do not exceed the proportional cost of providing the service.”]; id. at p. 33 [summarizing the water cost of service analysis]; id., Ex. E at p. 6 [“The cost of service analysis evaluates each customer class’s cost burden on the water system, and then proportionally allocates the overall retail rate revenue requirement to
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each customer class.”].) The costs associated with hydrants and their infrastructure and flows are distributed across ratepayers as part of the fixed monthly charges based on the equivalent meter size, which is a measure accounting for the difference in demand on the system from different customers. (Id., Ex. A at pp. 8, 11, 35.)
In 2022, Ms. Toy and Ms. Aquilina, along with now-dismissed Plaintiff Michelle Dickstein, filed Toy against the City and County of San Francisco and the San Francisco Public Utilities Commission. The operative Third Amended Complaint dismissed Ms. Dickstein and added Mr. Roh and Mr. Loewenberg as Plaintiffs. (Declaration of Alexander J. Holtzman (“Holtzman Decl.”), Ex. A (“Toy TAC”).) In Toy, Plaintiffs challenge the City’s water rates from October 2019 through June 2023 adopted consistent with the 2018 Water and Wastewater Cost of Service Study. (Id. ¶¶ 4–5,
26.)
3 In 2023, Ms. Aquilina, Mr. Roe, and Mr. Loewenberg filed Aquilina against the City and County of San Francisco. In Aquilina, Plaintiffs (except for Ms. Toy) challenge the City’s water rates from July 2023 through the present, adopted consistent with the 2023 Water and Wastewater Rate Study. (Id., Ex. B (“Aquilina Compl.”) ¶¶ 4–5, 18.) Except for the time period at issue, named plaintiffs, and named defendants, the operative complaints in Toy and Aquilina are substantively identical.
Plaintiffs allege the City violates Proposition 218 by imposing water rates and charges for water service that exceed the cost of service. (Toy TAC ¶ 1; Aquilina Compl. ¶ 1.) Specifically, “Plaintiffs allege that City has improperly included costs associated with public fire service in calculating its cost of service to plaintiffs and class members, resulting in rates that violate Proposition 218 because they are more than the actual cost of service.” (Toy TAC ¶ 15; Aquilina Compl. ¶ 15.) Plaintiffs allege that Proposition 218 prohibits local governments from: (A) imposing charges for property related services that exceed the cost of the service absent voter approval (corresponding to Section 6, subdivisions (b)(1) and (b)(2)); (B) imposing charges exceeding the proportional cost of service attributable to a parcel (corresponding to Section 6, subdivision (b)(3)); (C) imposing charges
3 Although not addressed in this Motion based on limitations on motions for summary judgment or summary adjudication under Code of Civil Procedure section 437c, the City contends this alleged period of potential damages extends longer than authorized by the Government Claims Act and Plaintiffs assertions of equitable tolling lack merit.
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for potential or future service (corresponding to Section 6, subdivision (b)(4)); and (D) imposing charges for general governmental services that are available to the public at large in substantially the same manner they are available to property owners (corresponding to Section 6, subdivision (b)(5)). (Toy TAC ¶ 2; Aquilina Compl. ¶ 2.) Plaintiffs challenge the rates established by Resolution 18-0053 in Toy and Resolution 23-0103 in Aquilina. (Toy TAC ¶¶ 4–5; Aquilina Compl. ¶¶ 4–5.) The 2018 to June 2023 rates were based on the 2018 Water and Wastewater Cost of Service Study. (Toy TAC ¶ 13.) The July 2023 to present rates are based on the 2023 Water and Wastewater Rate Study. (Aquilina Compl. ¶¶ 12–13.)
Plaintiffs assert a single purported “cause of action” titled “Rate Methodology Resulting in Charges in Excess of the Costs of Service.” Plaintiffs assert that the “City has a clear, present, mandatory duty to adopt rates using a methodology that results in charges permitted by the California Constitution.” (Toy TAC ¶ 37; Aquilina Compl. ¶ 29.) Although this omnibus cause of action and other portions of the complaints do not identify the specific violations Plaintiffs assert, their most recent briefing on class certification suggests they intend to bring claims under each subpart of Section 6, subdivision (b). (Holtzman Decl., Ex. I [Aquilina Reply in Support of Class Certification] at p. 4 [“With this allegation, plaintiffs have sufficiently stated a claim against City for violation of all five subsections of section 6(b).”].) On that basis, Plaintiffs “seek a refund, an accounting, declaratory relief, injunctive relief, and a writ of mandate.” (Toy TAC ¶ 38; Aquilina Compl. ¶ 30.) In June 2024, the Court certified classes in Toy and Aquilina, with Ms. Aquilina, Mr. Roh, and Mr. Loewenberg as the representative plaintiffs. (See Orders Granting Plaintiffs’ Motions for Class Certification, filed June 6, 2024.)
IV. Legal Standard
The purpose of a motion for summary judgment is to “cut through the parties’ pleadings” to determine whether a trial is necessary. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) A motion for summary judgment “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c(c).) The statute “imposes an affirmative duty on the trial court to grant a motion for summary judgment in an appropriate case.” (Preach v. Monter Rainbow (1993) 12
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Cal.App.4th 1441, 1450.)
A “cause of action” consists of “a ‘primary right’ of the plaintiff, a corresponding ‘primary duty’ of the defendant, and a wrongful act . . . constituting a breach of that duty.” (Hindin v. Rust (2004) 118 Cal.App.4th 1247, 1257 (Hindin).) Where a complaint combines two or more separate and distinct alleged wrongful acts as one cause of action, a defendant may move for summary adjudication, as an alternative to summary judgment, against each separate and distinct act. (Id. at pp. 1257–1258.) “[T]he issues which are material are limited to the allegations of the complaint” and a “party cannot raise new issues of materiality merely by submitting a declaration in opposition to the summary judgment motion.” (Lewinter v. Genmar Industries, Inc. (1994) 26 Cal.App.4th 1214, 1223 (Lewinter); see VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC (2024) 100 Cal.App.5th 287, 308 (VFLA) [finding “irrelevant” theories not alleged in the complaint and related factual disputes].) “[S]ummary judgment cannot be denied on a ground not raised by the pleadings.” (Bostrom v. County of San Bernardino (1995) 35 Cal.App.4th 1654, 1663 [citing cases]; original italics.)
V. Argument
A. Plaintiffs’ Claims Challenging the Inclusion of Hydrant Costs in Water Rates Fail Based on the Government Code, the City’s Practices, Other State Statutes, and Industry Standards.
Plaintiffs’ claims under Section 6, subdivisions (b)(1), (b)(2), (b)(4), and (b)(5) depend on showing that water flows from hydrants are not part of “water services” under Proposition 218 and that the City therefore must raise taxes to pay for water from hydrants rather than including those costs in water rates subject to the procedures for setting rates under Proposition 218. (Cal. Const., art. XIII D, § 6.) But Plaintiffs’ contention runs straight into Government Code section 53750.5, which forecloses their claims as a matter of law. Even without the Government Code provisions, though, including water from hydrants as part of water services in San Francisco is consistent with Proposition 218. (Cf. Crawley v. Alameda County Waste Management Authority (2015) 243 Cal.App.4th 396, 409 (Crawley) [reflecting the broad interpretation of categories of services under Proposition 218 in holding annual hazardous waste charge was for “refuse collection services” under Proposition 218 rather than narrower proposed “recyclable material” collection service potentially requiring vote].)
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Under the Government Code, Water Services Include Hydrants, Cisterns, and
Associated Infrastructure and Water Flows.
In Government Code section 53750.5, the Le gislature explained that water flows from hydrants are a part of “water services” under Proposition 218 and found that this interpretation reflected existing law. This forecloses Plaintiffs’ claims as a matter of law. To prevail here, Plaintiffs would have to show that section 53750.5 is unconstitutional. They have not alleged this, and even if they had, they could not satisfy that heavy burden.
As the Legislature explained, hydrants and associated infrastructure are part of water service— among the “system of public improvements intended to provide for the production, storage, supply, treatment, or distribution of water from any source.” (Id., § 53750, subd. (n); id., § 53750.5, subd. (a)(2).) “Hydrants and the water distributed through them are part of the property-related water service provided to all property owners served by a water service provider.” (Id., § 53750.5, subd. (a)(6); see also id., § 53750.5, subd. (a)(4).) And “fees or charges for the aspects of water service related to hydrants and the water distributed through them may be . . . included in the other water rates and charges fixed and collected by a public agency.” (Id., § 53750.5, subd. (b).) The Legislature cautioned against taking too narrow a view of water service as to hydrants, recognizing that “water service costs may include, but are not limited to, any costs associated with constructing, maintaining, repairing, upgrading, and replacing hydrants, and costs associated with obtaining, treating, and distributing adequate volumes of water to meet the water demands of properties served by the water service provider, including water supplied for firefighting purposes.” (Id., § 53750.5, subd. (a)(7); see also id., § 53750.5, subd. (b) [similarly reflecting broad scope of water services as to hydrants].) Plaintiffs waived any challenge to the constitutionality of these statutory provisions by not including the provisions or any allegation of their unconstitutionality in any version of their complaints. “‘It is the general rule applicable in civil cases that a constitutional question must be raised at the earliest opportunity or it will be considered as waived.’ [Citation.]” (Bidart Brothers v.
Elmo Farming Co. (1973) 35 Cal.App.3d 248, 263; see Hershey v. Reclamation Dist. No. 108 (1927) 200 Cal. 550, 564 [holding constitutional question not raised in initial protest document was waived].) If the Court is inclined to consider the constitutionality of this statutory provision, the 15 MPA ISO MSJ; Case No. CPF-22-517764 n:\govlit\li2024\221061\01800138.docx 1 2
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“Legislature’s interpretation of uncertain constitutional terms, as reflected in subsequently enacted legislation, is entitled to great deference by the courts.” (Davis v. City of Berkeley (1990) 51 Cal.3d 227, 242 (Davis); see People v. Birkett (1999) 21 Cal.4th 226, 244 (Birkett); Methodist Hospital of Sacramento v. Saylor (1971) 5 Cal.3d 685, 692 (Saylor); City of Azusa v. Cohen (2015) 238 Cal.App.4th 619, 629 [upholding constitutionality of statute in Proposition 218 challenge in light of Saylor]; Barratt American, Inc. v. City of San Diego (2004) 117 Cal.App.4th 809, 817 [upholding provision of Code of Civil Procedure constitutional over Proposition 218 challenge, citing high standard for unconstitutionality]; County of Sonoma v. Com. on State Mandates (2000) 84 Cal.App.4th 1264, 1284, as mod. on den. of rehg. (Dec. 19, 2000) [applying the “fundamental rule of constitutional construction that, if the Legislature has by statute adopted one, its action in this respect is well nigh, if not completely, controlling [citation],” internal quotation marks omitted]; cf. Silicon Valley Taxpayers’ Assn., Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 448 [holding courts exercise independent judgment in “reviewing local agency decisions,” but notably not questioning doctrines of deference to the Legislature’s enactments].) “[T]he presumption is always in favor of the constitutionality of a statute, and the invalidity of an act of the Legislature must be clear and unquestionable before the statute will be declared unconstitutional.” (Jones-Hamilton Co. v.
Franchise Tax Bd. (1968) 268 Cal.App.2d 343, 349.)
Judicial deference to the Legislature’s interpretation extends to situations in which the Legislature has acted with judgment as to a constitutional provision passed by a voter initiative, including Proposition 218. (See Greene v. Marin County Flood Control & Water Conservation Dist. (2010) 49 Cal.4th 277, 291 (Greene) [Proposition 218 challenge].) In cases of ambiguity of constitutional provisions passed by ballot initiative, including Proposition 218, “the presumption of constitutionality accorded to legislative acts is particularly appropriate when the Legislature has enacted a statute with the relevant constitutional prescriptions clearly in mind.” (Ibid.) Applying this standard, Government Code section 53750.5 is constitutional and demonstrates that inclusion of water from hydrants and the associated costs in water rates complies with Proposition 218. (See Capistrano Taxpayers Assn., Inc. v. City of San Juan Capistrano (2015) 235 Cal.App.4th 1493, 1502 (Capistrano), as mod. (May 19, 2015) [“In the present case, there is a Government Code 16 MPA ISO MSJ; Case No. CPF-22-517764 n:\govlit\li2024\221061\01800138.docx 1 2
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definition of water, which shows water to be part of a holistic distribution system that does not distinguish between potable and nonpotable water[.]”].) The Legislature carefully considered the appropriate definition of “water services” with respect to hydrants for purposes of Proposition 218, resulting in the detailed findings in section 53750.5. It enacted these provisions “with the relevant constitutional prescriptions clearly in mind.” (Greene, supra, 49 Cal.4th at p. 291; see Holtzman Decl., Ex. C [Legislative Intent Service declaration compiling the legislative history of Government Code section 53750.5].) This is reflected in the text of section 53750.5, which mirrors the subdivisions of Section 6. It is evident from the Legislative Counsel’s Digest for the enacting bill, SB 1386. (Id. at LIS - 1e [describing requirements for fees and charges under Proposition 218 and effect of the legislation].) And it is clear in the legislative history. (See id. at LIS – 3 [Senate Committee on Governance and Finance Analysis, describing Proposition 218, the relevant history, related litigation, and the purpose of the legislation].) Prominent in the legislative analysis in both the Senate and Assembly analysis of SB 1386 is that it was closely patterned after and intended to codify a prior, unpublished Court of Appeal decision. (See id. at LIS - 3, LIS - 4, LIS - 5.) Especially given that section 53750.5 codified a prior Court of Appeal decision on this issue, the Legislature’s interpretation is at least “plausible,” and there is no “plain and unmistakable conflict between the statute[s] and the Constitution.” (Saylor, supra, 5 Cal.3d at p. 693.) Government Code section 53750.5 therefore demonstrates that the City provides water services with hydrants and the associated infrastructure and flows. The Court’s analysis can and should end there.
Even without the deference afforded to the Legislature’s interpretation, Government Code section 53750.5 correctly categorizes costs associated with water from hydrants as costs for water services under Proposition 218. On top of Government Code section 53750.5, other state statutes recognize that providing water for potential use in firefighting is a core function of water service providers. (See, e.g., Water Code, § 353 [identifying “domestic use, sanitation, and fire protection” as the areas of the “greatest public benefit” to be protected by water providers during shortage]; id., § 354 [prioritizing other water uses less than “domestic use, sanitation, and fire protection” for water providers during shortage]; Building Industry Assn. v. Marin Mun. Water Dist. (1991) 235 Cal.App.3d 1641, 1647 [“The clear import of section 354 is that when a district does decide to impose rationing, it 17 MPA ISO MSJ; Case No. CPF-22-517764 n:\govlit\li2024\221061\01800138.docx 1 2
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must first allocate or set aside the amount of water needed for domestic use, sanitation, and fire protection . . . .”].) The California Fire Code likewise requires water systems serving developed properties to be designed and maintained to provide sufficient water volume and pressure to support fire suppression. (Code Regs., tit. 24, pt. 9, § 507.1 [“An approved water supply capable of supplying the required fire flow for fire protection shall be provided to premises on which facilities, buildings or portions of buildings are hereafter constructed or moved into or within the jurisdiction.”]; id., § C101.1 [stating “fire hydrants shall be provided in accordance with this appendix for the protection of buildings, or portions of buildings”].) Absent water from hydrants, no development is allowed.
Meanwhile, the same properties protected by the use of water for firefighting are responsible for payment for that water service. All buildings with a water connection must have water meters. (Water Code, § 525, subd. (a).) And a water connection is required for almost all types of buildings. (See Code Regs., tit. 24, pt. 2, § 2902 [setting forth minimum plumbing facilities for different types of buildings].)
The national-industry-standard American Water Works Association’s M1 Manual, addressing the setting of water rates, similarly explains, “Since the mid-1900s, and continuing to the present,” rate-making has recognized water systems have two “equally important” core functions—“ to provide basic water service and to provide a readiness-to-serve capacity for fire protection.” (American Water Works Association, Manual of Water Supply Practices—M1: Principles of Water Rates, Fees, and Charges (7th ed. 2017) p. 16 [produced by Plaintiffs in this litigation; relevant excerpt attached as Holtzman Decl., Ex. E]; see id. at p. 3 [“Cost-based rates provide sufficient funding to allow communities to build, operate, maintain, and reinvest in the water system that provides the community with safe and reliable drinking water and fire protection.”].) Hydrants in San Francisco are, consistent with state law, “located and designed to protect developed properties, such as buildings, facilities, and other structures within the City, which receive water service from the SFPUC.” (Luttropp Decl. ¶ 2; see id. ¶ 3.) “The public at large does not have access to water through hydrants. Tampering with any fire hydrant for the unauthorized use of water is unlawful.” (Id. ¶ 4; see Penal Code § 148.4(a) [misdemeanor to “[w]illfully and maliciously tamper[] with, molest[], injure[], or break[] any fire protection equipment”]; id., § 498, subd. (b) 18 MPA ISO MSJ; Case No. CPF-22-517764 n:\govlit\li2024\221061\01800138.docx 1 2
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[misdemeanor to “divert[] or cause[] to be diverted utility services by any means,” “tamper[] with any property owned by or used by the utility to provide utility services,” or “make[] or cause[] to be made any connection with or reconnection with property owned by or used by the utility to provide utility services without authorization or consent of the utility”]; Health & Saf. Code, § 116750 [felony to tamper with public water system].) “As a whole, the City’s low-pressure hydrant system and Auxiliary Water Supply System provide immediate availability of water to aid in extinguishing fires on or threatening properties across the City. Having both systems increases the Fire Department’s capacity to address more simultaneous, large property fires and to account for the potential loss of one or the other system in a natural disaster such as an earthquake.” (Luttropp Decl. ¶ 7.) To the extent Plaintiffs may contend that water from hydrants is not an aspect of water service because customers usually cannot lawfully use water from hydrants themselves, many components of water services are inaccessible to customers and nonetheless indisputably used by customers as part of water services under Proposition 218, including reservoirs, treatment plants, and pipes distributing water. Common sense, Government Code section 53750.5, subdivision (a)(6), and decisions regarding the scope of services under Proposition 218 refute the argument that an aspect of water service must be directly accessible by customers to be a part of the water rates. (See Capistrano, supra, 235 Cal.App.4th at p. 1502; Wyatt v. City of Sacramento (2021) 60 Cal.App.5th 373, 383 [“Of course, what it costs to provide such services includes all the required costs of providing service, short-term and long-term, including operation, maintenance, financial, and capital expenditures.”].) Just because homeowners typically cannot lawfully access water from the hydrants themselves does not mean that the water that comes from the hydrants is unavailable to assist in extinguishing a fire on their property or that the costs associated with that water fall outside of water service.
Plaintiffs’ C
laims Depending on Hydrant Costs Not Being Part of Water Services Therefore Fail.
Because the costs for water services including costs associated with water from hydrants, Pla
intiffs cannot prevail on their claims under Section 6, subdivisions (b)(1), (b)(2), (b)(4), and (b)(5).
Plaintiffs do not allege and the evidence does not show that the City charges more for water services than they cost or uses revenues from water services to fund other purposes, apart from including hydrants and associated infrastructure and flows in costs of water services and therefore in the water
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rates. Plaintiffs’ claims under Section 6, subdivisions (b)(1) and (b)(2) therefore cannot succeed.
As to Section 6, subdivision (b)(4), Plaintiffs similarly do not contend that water services, assuming such services include hydrants and the associated infrastructure and flows, are unavailable to them. (See Capistrano, supra, 235 Cal.App.4th at p. 1502 [“since water service is already immediately available to all customers of City Water, there is no contravention of subdivision (b)(4) in including charges to construct and provide recycled water to some customers”].) To the contrary, “[t]hrough hydrants, water is immediately available to those properties to aid in extinguishing a fire that directly threatens them.” (Gov. Code, § 53750.5, subd. (a)(6).) As to Section 6, subdivision (b)(5), Plaintiffs do not allege that water services, if they include hydrant costs, are general government services accessible in the same way to the general public. As the Legislature has recognized, “[h]ydrants and the water distributed through them are not available to the public at large in substantially the same manner as they are to property owners served by a water service provider because hydrants are designed, installed, and used to serve properties receiving water service, and the public at large does not generally have access to water through those hydrants.” (Gov.
Code, § 53750.5, subd. (a)(5).) “Viewed in conjunction with section 6(b)(1) and (2), the purpose of section 6(b)(5) is to require that a fee or charge collected from ratepayers be used to pay for the service for which the fee or charge was imposed and not general governmental services.” (Moore v. City of Lemon Grove (2015) 237 Cal.App.4th 363, 376.) Water rates including costs associated with hydrants are indisputably used to pay for water services including the provision of water from those hydrants.
B. Plaintiffs’ Claim Regarding the Proportionate Allocation of Hydrant Costs Fails as a Matter of Law.
Apart from their claims that the City was not allowed to include the costs associated with water from hydrants in water rates at all, Plaintiffs assert under Section 6, subdivision (b)(3), that even if the total amount of the costs for water services properly includes the costs associated with water from hydrants and the infrastructure to provide it, the City has distributed those total costs disproportionately. (See Holtzman Decl., Ex. I [Plaintiffs’ Reply in Support of Class Certification] at p. 5.) Plaintiffs’ operative complaints provide no detail about the nature of Plaintiffs’ purported disproportionality claim. (See Holtzman Decl., Exs. A–B [referring to proportionality only once, in a general description of Proposition 218’s requirements].) This lack of any alleged manner of
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disproportionality is dispositive because Plaintiffs cannot now assert a basis for disproportionality in the rates having omitted any proposed grounds in their complaints, especially given that the 2018 and 2023 rate studies setting forth the City’s proportionality analysis are public reports. (VFLA, supra, 100 Cal.App.5th at p. 308; Lewinter, supra, 26 Cal.App.4th at p. 1223.) Regardless, there is no genuine factual dispute regarding the compliance of the City’s water rates with Section 6, subdivision (b)(3). The 2018 and 2023 rate studies address the allocation of water services costs, including hydrant costs, consistent with independent, expert analysis. The 2018 and 2023 rate studies both carefully addressed proportionality consistent with Proposition 218. (See Corvinova Decl., Ex. A at p. 11; id. at p. 3 [“Proposition 218 requires that property-related fees and charges, including water and wastewater rates, do not exceed the proportional cost of providing the service.”]; id. at p. 33 [summarizing the water cost of service analysis]; id., Ex. D at p. 6 [“The cost of service analysis evaluates each customer class’s cost burden on the water system, and then proportionally allocates the overall retail rate revenue requirement to each customer class.”].) The method of allocating costs in the 2018 and 2023 rate studies is consistent with Proposition 218.
Griffith v. Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586, 600 (Griffith) [approving methodology from American Water Works Association Manual of Water Supply Practices:
Principles of Water Rates, Fees, and Charges for proportionality], disapproved on unrelated grounds by City of San Buenaventura v. United Water Conservation Dist. (2017) 3 Cal.5th 1191.) As the Legislature explained in Government Code section 53750.5, “[t]hrough hydrants, water is immediately available to those properties to aid in extinguishing a fire that directly threatens them. The cost associated with this aspect of water service is proportionately allocable among properties that may receive a reasonably similar level of service from the immediate availability of water to aid in extinguishing fires that directly or indirectly threaten those properties.” (Id. § 53750.5, subd. (a)(6).) Plaintiffs have repeatedly disclaimed any rate setting based on distinctions among ratepayers.
In responses to discovery requests from the City, for example, each Plaintiff stated that he or she “does not assert that the California Constitution requires DEFENDANTS to implement tiered rates or other differentiation in water charges.” (Holtzman Decl., Ex. J at p. 6 [Ms. Toy’s discovery responses]; id., Ex. K at p. 6 [Ms. Aquilina’s discovery responses]; id., Ex. M at p. 6 [Mr. Roh’s discovery responses];
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id., Ex. N at p. 6 [Mr. Loewenberg’s discovery responses].) Even beyond their complaints, Plaintiffs do not propose any alternative approach to allocation.
And even if they did, the existence of an alternative possible approach to proportionality as a matter of law would not render the one used by the SFPUC improper. “That there may be other methods favored by [P]laintiffs does not render [the City’s] method unconstitutional.” (Griffith, supra, 220 Cal.App.4th at p. 601; see San Diego County Water Authority v. Metropolitan Water Dist. of Southern Cal. (2017) 12 Cal.App.5th 1124, 1149 [courts determine lawfulness of agency’s rates rather than seeking the “best” rates].) In assessing the reasonableness of allocation of costs of service across ratepayers, courts have recognized the need for local governments to have flexibility in their methodology. (See KCSFV I, LLC v. Florin County Water Dist. (2021) 64 Cal.App.5th 1015; Capistrano, supra, 235 Cal.App.4th at p. 1493.) Morgan v. Imperial Irrigation District (2014) 223 Cal.App.4th 892, for example, upheld water rates despite a dispute about the quality of the data used to allocate costs. (Id. at p. 923.) “While it [was] clear the [defendant’s] water measurement system [was] not perfect, [article XIII D,] section 6 does not require perfection.” (Ibid.) To the extent Plaintiffs may argue, as alleged in previous iterations of their complaints though omitted in the operative complaints, that residential ratepayers are distant from AWSS hydrants and therefore should not be responsible for a portion of the costs of the AWSS, that allegation is false, as shown by the undisputed facts. All three representative Plaintiffs live near AWSS hydrants. (See Teahan Decl., Exs. E–G.) In any event, it is permissible under Proposition 218 to include in rates the costs for types of water only received by some customers as long as all customers receive water service “that meets their needs.” (Capistrano, supra, 235 Cal.App.4th at p. 1502 [“Both are getting water that meets their needs. Nonpotable water for some customers frees up potable water for others.”].) Because Plaintiffs have no evidence supporting a claim that the City’s rates lack proportionality under Proposition 218, Plaintiffs’ final potential claim fails, and the Court should grant summary judgment.
C. The Court Should Grant Summary Adjudication in the Alternative.
Although the complaints in both Toy and Aquilina are pled as containing only one omnibus cause of action titled “Rate Methodology Resulting in Charges in Excess of the Cost of Service,”
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“[t]he manner in which a plaintiff elects to organize his or her claims within the body of the complaint is irrelevant to determining the number of causes of action alleged under the primary right theory.” (Hindin, supra, 118 Cal.App.4th at p. 1257.) “‘[I]f a plaintiff alleges that the defendant’s single wrongful act invaded two different primary rights, he has stated two causes of action, and this is so even though the two invasions are pleaded in a single count of the complaint.’ [Citation.]” (Ibid.) A cause of action, under the primary rights theory, “‘is comprised of a ‘primary right’ of the plaintiff, a corresponding ‘primary duty’ of the defendant, and a wrongful act by the defendant constituting a breach of that duty.’” (Ibid.) “‘The most salient characteristic of a primary right is that it is indivisible: the violation of a single primary right gives rise to but a single cause of action.’ [Citations.]” (Ibid.)
The subsections of Section 6 set forth distinct alleged duties by the SFPUC in setting rates and distinct potential injuries of property owners. For example, subsection (b)(2) sets forth a duty not to apply revenues associated with one type of service to pay costs associated other uses. Meanwhile, subsection (b)(3) addresses the apportionment of costs across ratepayers, irrespective of the total amount of the costs. Each of these is a distinct primary right potentially asserted by Plaintiffs. (See, e.g., Capistrano, supra, 235 Cal.App.4th at p. 1501 [addressing claim specifically under Section 6, subdivision (b)(4)].) Claims under each of these subdivisions are divisible. Even if the Court concludes that there are material disputed issues of fact as to one or more subparts of Section 6(b), it should therefore grant summary adjudication to the City on the remaining subparts. (Code Civ. Proc., § 437c, subd. (f).)
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VI. Conclusion
For the foregoing reasons, the City respectfully requests that the Court grant summary judgment in its favor.
Dated: November 14, 2024 Respectfully submitted,
DAVID CHIU
City Attorney
SARA J. EISENBERG
ALEXANDER J. HOLTZMAN
Deputy City Attorneys
By: /s/ ALEXANDER J. HOLTZMAN
ALEXANDER J. HOLTZMAN
Attorneys for Defendants and Respondents
CITY AND COUNTY OF SAN FRANCISCO,
SAN FRANCISCO PUBLIC UTILITIES
COMMISSION
OUR MISSION: To provide our customers with high-quality, efficient, and reliable water, power and sewer services in a manner that values environmental and community interests and sustains the resources entrusted to our care.
525 Golden Gate Ave.
San Francisco, CA 94102
(415) 554-3155
sfpuc.gov
7 April 2026
San Francisco Public Utilities Commission
525 Golden Gate Avenue
San Francisco CA 94102
Commissioners:
In accordance with Article 8B of the Charter of the City and County of San Francisco, the Rate Fairness Board (RFB) offers the following comments and recommendations regarding the Staff’s proposed water and wastewater rates for FY 2026/27 and FY 2027/28, and proposed retail electricity rates for Hetch Hetchy Power and for CleanPowerSF for FY 2026/27.
Water and Wastewater
1. We note that the proposed rates for water and wastewater service are the continuation of the rate trends identified in the most recent major rate study completed in 2023.
2. While not insignificant, the proposed rate increases are necessary in order to maintain the financial health of the enterprises, given the substantial long-term capital programs underway, especially for the wastewater enterprise.
3. The proposed wastewater rates also continue the phase-in of the stormwater charge, which this board has previously endorsed.
Retail Electricity
4. We note that the proposed rates for Hetch Hetchy Power are the continuation of the rate trends identified in its first-ever major rate study completed in 2022.
5. The 6% overall rate increase for Hetch Hetchy Power retail customers, and the 3-cent per kilowatt-hour increase for the GUSE rates, are in line with the Staff’s goals, established 4 years ago, for a multi-year move toward rates based on cost of service and for rate simplification. Although the proposed rates increases are not insignificant, we continue to believe that the ultimate rate goals are reasonable, fair, and necessary. The current rate proposals are another important step in this journey.
6. The staff’s proposal for no increase in CleanPowerSF rates for FY 2026/27 is welcome news, especially after a rate reduction in March 2026. This outcome is due, in part, to staff use of the enterprise’s fund balance. We find this to be an appropriate (and intended) use of fund balance, and find this proposal to be fair and reasonable.
7. We note that the Staff’s proposed generation rates for both Hetch Hetchy Power and for CleanPowerSF are based solely on
SFPUC costs, and these proposed rates reflect Staff’s efforts to remain competitive with the corresponding rates for comparable service from Pacific Gas & Electric (PG&E).
Overall, we find that the Staff’s current rate proposals for all four enterprises are a reasoned and measured approach to well-established goals: (1) adjusting rates to account for current and expected costs; (2) establishing all rates based solely on cost of service; (3) maintaining the fiscal health of each enterprise; and (4) providing electricity generations service at rates competitive with PG&E. Thus, the RFB recommends that the Commission approve the Staff’s rate proposals.
We look forward to continued interaction with the Commission on future rate proceedings for water, wastewater and power.
Sincerely,
Howard Ash
Howard Ash
Chair, Rate Fairness Board of the San Francisco Public Utilities Commission
On behalf of:
Ben Becker, Refuse Rates Analyst, Controller’s Office
Eric Dew, Residential City Retail Customer
Celeste Middleton, Principal Budget & Planning Analyst, City Administrator’s Office
Masood Samereie, Vice-Chair and City Retail Large Business Customer Vishal Trivedi, Financial Analyst, Controller’s Office of Public Finance