Citizens file lawsuit against city of Dunsmuir

It is official – Citizens for a Better Dunsmuir and city council candidate Nick Mitchell have filed a lawsuit against the city of Dunsmuir. The city was served with the summons on Aug. 19.

The plaintiffs, represented by Redding attorney Susan Hinz, allege that the city conducted an illegal Proposition 218 protest process and illegally imposed the multi-year water and sewer rate increases that were implemented last month.

“I am satisfied that the city acted appropriately,” said Dunsmuir’s attorney John Kenny regarding the Proposition 218 protest procedures.  

“We will undergo a complete analysis of the issue,” said city manager Jim Lindley.

On behalf of Dunsmuir water and sewer customers, the plaintiffs are seeking a city-wide reimbursement of all water and sewer fees that they allege were illegally collected up to the day that the judge issues a final ruling.

The plaintiffs will also seek attorney fees from the city, and other payments that the court may consider appropriate.

In addition to the plaintiffs’ claim that the city failed to carry out legal Proposition 218 protest procedures, the complaint points to the city’s alleged failure to provide calculations for the method that the rate adjustments were determined. It also claims that the city failed to present citizens with consistent information about infrastructure improvement plans.

According to the complaint, the plaintiffs also allege, “The increases to the city’s water and sewer charges were enacted not to pay for the costs of providing water and sewer services that are consumed by existing ratepayers, but as a revenue enhancement device to raise money for the future construction of water delivery systems, treatment systems, and sewer infrastructure improvements.”

Under Proposition 218, a property-related fee cannot be increased unless the service for which the increase was implemented is immediately used by, or immediately available to, the owners of properties. Fees and charges based on potential or future use of a service is not permitted.

“The fee increase was for services that are immediately available,” said Kenny. “The increases are to fund system improvements. The improvements can’t be made until there are funds to do them.”

During a separate interview with Lindley, he agreed with Kenny. “These rate increases are for improvements to the system for existing services. There is no plan for future development. We are bound by our land-use limitations.”

City attorney Kenny is on a $20,000 per year retainer, said Lindley. If his representation hours exceed $20,000 in a year, the city pays his firm any additional fees from the General Fund.

Lindley said that he anticipates the lawsuit – which will likely include a trial – will cost the city a minimum of $50,000 in legal fees.

“This would put us in a deficit with meager reserves. We would have to look at cutting services somewhere. Right now, we have a balanced budget, which is quite an accomplishment if you look at the other cities in California,” said Lindley.

Lindley noted that Mitchell and the CFBD could have used the initiative process for the rate roll-back measure to appear on the ballot.

Asked if he believes the judge will consider that when issuing a final ruling, Lindley answered, “Yes” – the judge will likely see that the plaintiffs did not exhaust other administrative processes. “Usually litigation is the last resort.”

However, Lindley said that if Dunsmuir water and sewer rate revenue does not meet the city’s reserve fund requirements and is insufficient to cover infrastructure needs, the state will come in and set the rates. If that comes to pass, the rate adjustments determined by the state will not be subject to Proposition 218 procedures.

In addition to Mitchell’s role in pursing the lawsuit, he is a city council candidate and a recall proponent of Mayor Peter Arth and Vice Mayor Mario Rubino.

Mitchell attended the Aug. 19 city council meeting when Rubino stood at the podium during the public comment period to make a statement about the water usage at Thriftway Foods, which is owned by Mitchell.

Rubino, who does plumbing and electrical work, said that in his research, he has discovered that Thriftway Foods operates a water-cooling refrigeration system. This system, which Rubino described as “an incredible waste of water,” results in a higher monthly water bill for Mitchell in comparison to other stores that use alternative refrigeration cooling systems.

“In the summer months, the system uses the entire Dunsmuir swimming pool in water,” said Rubino.

Rubino noted that economic development loans are available for business owners who wish to save energy and look to other alternatives.

“This isn’t about utility bills; it’s about lawyer bills on both sides. Personally, I’d like to see us move forward,” Rubino stated.

Asked if his decision to file a lawsuit was motivated by his store’s monthly water usage, Mitchell answered, “No. The motive for the lawsuit was in how the city went about the rate increase. The cost of water is a concern for all. The citizens have chosen me to speak on their behalf. I am not the sole person behind this lawsuit.”