Facts

Great Oaks Water Co. paid a groundwater production charge to the Santa Clara Valley Water District (District) during the 2005-2006 fiscal year.

PLAINTIFF'S CONTENTIONS:
Great Oaks filed suit against the District, alleging that they were improperly charged under Proposition 218 and the District Act. Great Oaks contended that Proposition 218 requires the District to receive voter approval for property-related charges. Great Oaks alleged that the charges imposed were excessive and illegal.

Great Oaks also alleged that the District was mismanaging the groundwater basin, that Great Oaks received no benefit from the District's conjunctive use program and that the "zones of benefit" were improperly designated.

DEFENDANT'S CONTENTIONS:
The District contended that Proposition 218 did not apply to Great Oaks, because it was not making a property-related use of the water as defined under Proposition 218.

The District also contended that the conjunctive use program provided Great Oaks with a more reliable water supply and the designation of zones related to the conjunctive use area were appropriate.

The District further alleged that it was subject to an exemption from the voter approval requirement because a groundwater production charge was considered a charge for water service.

Result

The court determined that Great Oaks benefited from the District's conjunctive use program and that the zones of benefit were properly designated. The court found that Great Oaks was making a property related use of the water and therefore its rates were subject to Proposition 218. The Court further found that the groundwater production charge was not a charge for water service and therefore the District was required to obtain voter approval to adjust the groundwater production charge. The court rendered a verdict for Great Oaks, finding the charges were illegal, ordering the District to pay a refund of $4,623,095.

Other Information

FILING DATE: Nov. 22, 2005.