No Water Refunds—Not Now—Council Affirms

San Juan Capistrano residents won't be getting refunds on their water bills——the City Council affirmed Tuesday night.

An attorney specializing in public-utility law who was retained by the City Council Aug. 2 , said the council has leeway to determine how to best use water rate revenues, even if the reasoning for adjusting rates in 2010 was never realized.

"I have no doubt that you have the power to determine how to use water rate revenues to the best advantage of your customers," said attorney Michael G. Colantuono.

About 20 San Juan Capistrano ratepayers have contended that they are due refunds on 10 percent of the 40 percent hike in water rates the council authorized last year to issue $18 million in bonds needed to make improvements to the city's recycled-water and sewer infrastructure.

The bonds were not issued upon revelation that the water agency has .

Colantuono said the council could justify re-examing its rate structure, but that would likely mean raising rates to overcome its shortfall.

Those demanding the refunds, among them Jim Reardon, Clint Worthington and John Perry, said it is not fair that that they are paying to issue bonds when those bonds were never issued. 

"This is really a very simple matter of trust," said Reardon. "Do you think what’s going on here is right? To tell the public you’re going to do one thing, and then do another?”

Although there is a concern that rate hike is going to go unchanged, raking in $40 million in revenue over what would have been the life of the bond, Colantuono explained that under Proposition 218, the city cannot take on that amount of excess revenue.

If that scenario plays out, he said, "you’ll have to eventually reduce water rates … in which case you will be thrilled."

also assured those residents, who have threatened to sue, that an in-depth audit of the utilities department will include a review of the city's water rates.

"If we’re bringing in too much revenue … I will be the first person to not only rebate you, but myself; I’m a ratepayer, too," he said.

Colantuono was paid $5,000 for his opinion, which can be read in its entirety in a PDF to the right of this article.