LIVINGSTON -- The city's multiyear water rate hike is unconstitutional, a Merced County Superior Court judge declared, as he ordered the city to halt the increase.
It's unclear what the city's response to Thursday's ruling will be, or whether residents will see lower amounts on their next bill.
City Manager Richard Warne, Finance Director Victoria Lewis and city attorney Jonathan Hobbs didn't return calls requesting information.
"I am disappointed," Mayor Daniel Varela Sr. said in response to the ruling. "It's frustrating when you are trying to do the right thing for the community."
Varela said he didn't know if the city would appeal the ruling or cut its rates. He said city employees are working on what to do next.
Livingston's council passed the phased increase July 7. It's designed to raise water rates more than 100 percent over several years.
Officials argued the city hadn't raised rates since 1995. They have been taking money out of the city's general fund, which pays for essential services such as police and fire, to make up for a deficit in the city's water fund.
The deficit exists, they say, because the revenue collected can't fully fund the cost of providing the service.
Number of errors found
Superior Court Judge Brian McCabe found the city committed a number of errors in approving the rate increase.
Under Proposition 218, the city was required to give affected property owners written notice of a potential increase. It also needed a supermajority on the council to pass an ordinance raising rates, the judge concluded.
The council failed to do either.
McCabe found that while Livingston mailed notices to property owners, the notices included three scenarios of potential increases, but a fourth, unlisted increase, was selected. The council also continued several meetings and didn't renotify the property owners appropriately, McCabe found.
The council deadlocked 3-2 several times on raising rates. A supermajority required four votes.
Livingston's city attorney at the time, Malathy Subramanian, advised the council that it must reach that supermajority or leave the rates alone.
The council fired Subramanian and hired Sacramento-based Hobbs, who said the council could raise the rates by making the increase a resolution instead of an ordinance. The council did so, and it passed 3-2.
McCabe ruled that decision was an error.
He found no malice involved, however. "It appears to the court that the respondent council majority ... were attempting to salvage the considerable time, energy and money expended on the subject. No sinister motive is apparent nor deemed," he wrote.
Varela said the council thought it could take that action because other communities around California had done so without problems.
The lawsuit was filed by Foster Farms in July. The company has since followed up with a second lawsuit claiming mismanagement of city finances by Warne, Livingston's city manager.
Carmine Zarlenga, an attorney with the Washington, D.C.- based Howrey law firm representing Foster Farms, argued there wouldn't be a water fund deficit if it weren't for this mismanagement.
"It's a fantastic outcome that benefits not only Foster Farms but all of the residents of Livingston that were outraged by the water rate increase," Zarlenga said Friday. "That's the positive. The negative is this is just a continuing pattern by the city of Livingston and their city manager to undertake unlawful actions and then spend hundreds of thousands of taxpayer dollars defending them."
Zarlenga said one of the victims in the case was the for- mer attorney, Subramanian.
"She has been vindicated here," he said. "It just happened to be advice that the city manager didn't want to hear, so she got fired.
"Another firm was brought in, money was spent and it appears to be spent foolishly, and the bottom line is, who's responsible?"