After Ventua County Taxpayers Association inquiry, Santa Paula Pledges Change on Water Fee Misuse

By Ventura County Taxpayers Association (VCTA)

Last year the Ventura County Taxpayers Association (VCTA) noticed the Santa Paula City Council approved a budget that included an unusual revenue source. The city of Santa Paula appeared to be diverting money set aside specifically for future water projects in order to pay bills and balance its books. This budget gimmick not only shortchanged future infrastructure investments, but it appeared to be a violation of both state statute and the city’s own ordinance.

The money in question originated from water in-lieu fees that Santa Paula and other municipalities collect when a project comes in without the water to support it. Those fees are retained in a separate account and are supposed to be used for capital projects that will generate additional water resources for the city. 

However, in June 2018 Santa Paula’s City Manager proposed and City Council approved, diverting $500,000 of these water in-lieu fee reserves to pay the city groundwater bill and balance its FY 2018-19 operating budget.

Unfortunately, that move appeared to put the city on the wrong side of state law. VCTA believes state law places limits on what fees a city may charge as a condition of development, and what the city may do with that revenue. 

Government Code section 66001 provides that, if a city is going to collect a fee as a condition of development, it must “identify the purpose of the fee,” and “identify the use to which the fee is to be put.”

Paying the city’s annual groundwater bill and balancing their books served none of the purposes listed in the city’s ordinance.

On September 16, 2018 VCTA sent an email (read more) to the City Manager and each Council Member expressing our concerns that using water in-lieu fees to pay annual groundwater bills is likely a violation of both state statute and the city’s own ordinance.

On January 22, 2019, four months after our original request, the City Manager, City Attorney and Mayor agreed to meet with representatives of VCTA.

At the meeting, both the City Manager and City Attorney agreed with VCTA that it was a violation of Santa Paula’s ordinance and the Government Code to use water in-lieu fees to pay city water bills, or for any general operating expense.

The City Manager said the FY 2018-19 budget approved by City Council included spending $500,000 of water in-lieu fee reserves to pay water bills, but that money had not been spent. However, he was unclear where or how the city will reduce department expenses to make up for this loss of revenue.

Finding $500,000 of unspecified department expense reductions within a $13.3 million FY 2018-19 General Fund budget is not an insignificant task. We are curious how or if that will be accomplished.

The City Manager recognizes this was a serious error in budgeting that needs correction. VCTA expects the City Council will make appropriate corrections and approve a revised FY 2018-19 budget. 

We applaud the city for being willing to sit down with taxpayer representatives like VCTA and begin to work to fix problems with the city’s use of government funds. 

As always, our mission is to inform taxpayers, promote the wise use of public funds, oppose waste and advise public officials regarding issues of concern to taxpayers and recommend positions that will best serve the taxpayers’ interests.