Facts

In this certified class action lawsuit, Plaintiff Eve Komesar sued Defendant City of Pasadena, claiming that the City's charges for electric service violated article XIIIC of the California Constitution because they were set "at rates that include an amount expected to finance the City's transfer of funds from its electric utility enterprise fund to its General Fund."

Plaintiff alleged that the portion of the City's electric rates that financed the "general fund transfer" exceeded the City's reasonable costs of providing electric service and therefore was a "tax" that had not been approved by Pasadena voters, as article XIIIC requires. Plaintiff sought a refund of the allegedly excess amounts for herself and all other customers of the City, which she alleged would be at least $18 million for the two-year period running from July 1, 2017 through June 30, 2019.

The City moved for summary judgment, on the grounds that the general fund transfer was mandated by the City's charter; that Pasadena voters had approved the relevant charter provisions many times since the general fund transfer was first instituted in 1934; and that to make the general fund transfer, as the charter required, the City must finance the transfer, at least in part, through its charges for electric service. Plaintiff opposed the motion, arguing that article XIIIC required express voter approval of the City's electric rates and that voter approval of the general fund transfer was insufficient. The Court agreed with Plaintiff and denied the motion in March of 2020.

In November of 2020, Pasadena voters approved "Measure P," the "Pasadena City Services Protection Measure," by a margin of 83.57 percent. 55,909 of the 66,899 votes cast on the measure favored its adoption. Measure P amended the City's charter to clarify that the City had the authority to set its charges for electric service at rates that generate enough revenue to support the general fund transfer and reaffirmed that authority, both prospectively and retroactively as to all electric rates collected by the City on or after July 1, 2017.

PLAINTIFF'S CONTENTIONS: Plaintiff claimed the charter language authorizing the transfer to the general fund does not expressly approve of electric service charges.

DEFENDANT'S CONTENTIONS: Defendant claimed that the voter-approved charter provisions mandate the transfer to the general fund, and to make the transfer, the monies must necessarily be recovered through electric rates.

Result

At the City's request, the Court reconsidered its order denying the City's motion for summary judgment and, in light of Measure P and a new published appellate decision regarding fund transfers, issued a new order granting City's motion for summary judgment, in full. The Court agreed that because the City was required to make the general fund transfer and the transfer had been approved by Pasadena voters, no violation of article XIIIC had taken place. It also held that Measure P clarified that Pasadena voters had authorized the City to finance the general fund transfer through its charges for electric service and that Measure P could be applied retroactively.