WATER WAR: City Found in Violation of Constitution, Charter
January 6, 2010
Judge R. Terrence Ney ruled today that Falls Church’s water system policies violate the Commonwealth’s constitution and the City’s own charter.
The decision is a victory for the Fairfax County Water Authority (FCWA), which filed suit against Falls Church in December 2008. The case was tried before Judge Ney last September in Fairfax Circuit Court.
In finding the City’s transfer of water fund surpluses to its general fund constitutes an illegal tax on Fairfax County residents, the judge wrote in part:
. . . the City here has held itself out for decades as the public water provider in eastern Fairfax County. In fact, the City’s own expert admitted that the City’s Fairfax County customers are “captive” and have nowhere else to go. They are captives to a tax that they cannot challenge by election. That is plainly unconstitutional.
Concerning the Charter violation, Judge Ney wrote:
The Charter has always made clear that the water rates were to be set so that anticipated receipts equaled anticipated expenses without resulting in a surplus created by the rates themselves. The City points out that 13.07 provides that the City Council, by a two-thirds vote, may transfer any surplus to either the general fund or the renewal fund. Notwithstanding, this transfer provision confounds the broader mandate of the charter, namely, that the City should be operating the water company in a manner whereby receipts are to equal — not exceed — expenses. There should not be a “surplus” profit to transfer to any fund, by a two-thirds vote or otherwise.
In short, the City’s rate-making for its water services is plainly at odds with the mandate of its charter. Receipts with a profit do not equal expenses.
Judge Ney concluded:
Because the City is in violation of its charter and because the transferring of the profit derived from the sale of water and related service into its general fund amounts to an unconstitutionally void tax on non-residents of the City, Fairfax Water is entitled to injunctive relief. Such relief is warranted because the remedy at law is inadequate. Fairfax Water is not seeking disgorgement of fees improperly paid in the past. It only wants for what is plainly an illegal and unconstitutional practice to come to an end.
The full text of the opinion is available here.
Philip Allin, Chairman of Fairfax Water, was pleased with the decision. “Judge Ney’s ruling brings justice to the citizens of Fairfax County that have long suffered from the City’s illegal practice.”
Falls Church City Manager Wyatt Shields expressed his disappointment. “While the City has the utmost respect for Judge Ney, we are very disappointed in the ruling. We are reviewing the ruling with legal counsel and examining all options including the filing of an appeal.”
Mr. Shields noted that the General Assembly has authorized cities throughout the Commonwealth to transfer utility fund proceeds to the general fund, as a reasonable return on investment and compensation for the financial risk born by their taxpayers.
Trial on three other counts in the case is scheduled to begin on February 1.
By George Bromley
January 6, 2010