UPDATED: According to Jim Reardon, a member of the Capistrano Taxpayers Association who was in court today, the judge made the tentative ruling in favor of the citizens group his permanent ruling. The lawsuit continues.
"I'm very pleased that the questions we had about water rates will be given consideration and we will be given answers," Reardon said.
A trial is scheduled for mid-June.
Lawyers for San Juan Capistrano and the citizens group that sued the city over its water rates head to court Thursday afternoon for a hearing on whether stop the lawsuit in its tracks.
However, if a preliminary ruling by the judge stands, the battle will continue.
The Capistrano Taxpayers Association sued the city in late August, claiming the city’s tiered water rates violate the state constitution because they're really a tax which requires a two-thirds vote of approval.
The city is challenging the lawsuit in an objection called a demurrer, which some describe as the legal equivalent of saying, “So what?”
In papers filed with the court, the city’s primary argument is that the citizens group waited too long to sue. The rates were passed in 2010, and the 120-day period in which to file a legal challenge has long passed.
“Accordingly, plaintiff’s claim has been untimely since June 2010,” the city’s attorneys wrote.
The city enjoys this shorter-than-average time frame in which to file suit because water rates are “capacity charges,” i.e., they help fund large projects that help secure a long-term water supply, the city’s lawyers wrote.
State law provides for this briefer window because agencies need “stable, predictable revenue,” the city’s lawyers contend, adding that the money collected has long been spent.
But Judge Gregory Munoz issued a preliminary ruling late Wednesday in favor of the taxpayers group.
The city "failed to establish" its case that time had run out, he tentatively ruled.
The ruling doesn't become set in stone until after the judge has heard from both sides and is ultimately unpersuaded to change his mind.
In countering the city's arguments, the attorney for the Capistrano Taxpayers Association claims the city’s rates are actually a “commodity charge” for a service provided, and commodity charges can be challenged within a three-year timeframe.
San Clemente-based Benjamin Benumof called the issue a “red herring,” “disingenuous” and “hocus-pocus” because the city’s own water rate study itself calls the rates commodity charges.
“Incredibly – and at the heart of the matter here – it appears that neither the city, nor its army of high-priced attorneys, have even read the city’s own water rate study,” Benumof wrote.
Even if the 120-day rule was in effect, water rates went up July 1, 2012, so the lawsuit meets the deadline, he wrote.