Bainbridge should be careful what it asks for | GUEST OPINION
April 3, 2012 · Updated 4:00 PM
By Sally Adams
Our Bainbridge Ratepayers Alliance’s continues to defend the rights of COBI utility users with a nearly three-year-old lawsuit against the City of Bainbridge Island.
Most recently, on Feb. 29, Judge Hartman reaffirmed his Sept. 1, 2011 multi-million dollar ruling in favor of the Ratepayers Alliance and the Surface and Storm Water Management Fund.
He reiterated that the city’s 2010 ordinance (2010-34) retroactively forgiving itself underpayments of 70 percent of its Surface and Storm Water Management fees back through 2008 was “arbitrary and capricious.” It violated state law, which forbids cities from granting themselves unilateral discounts not available to other ratepayers.
State law allows discounts for “in-kind” contributions, if supported by appropriate documentation.
However, in 2011, the city admitted to the court that it could not then provide records supporting the 70 percent discount it took on its road Surface and Storm Water Management fees from 2008 to 2011. State law also allows discounts to be enacted retroactively, but only if they apply across-the-board to all Surface and Storm Water Management ratepayers.
Our city is liable for Surface and Storm Water Management fees on as much as 31 percent of all island properties. Since these properties are subject to the greatest toxic runoff, the fiscal impact of their decision to short the Surface and Storm Water Management fund 70 percent is significant.
Despite Judge Hartman's September ruling, the city has not yet taken steps to make the fund whole. Rather, as a result of underpayments, the city’s outstanding Surface and Storm Water Management Fund liability will approach $4.4 million, including late fees, by year's end.
On Feb. 29, in response to the city’s December plea for relief, Judge Hartman explained that nothing bars our city from crafting a valid “rate-setting” ordinance that’s not “arbitrary and capricious” and that applies retroactively to all Surface and Storm Water Management ratepayers. He then granted the city’s request for a nine-month delay to figure it out.
Figuring it out includes both enacting a valid ordinance and documenting retroactive credits to which the city believes itself entitled.
Clearly, our city’s goal is to reduce its liability for underpayments by demonstrating the extent of its “in-kind” contributions.
There’s the rub, as compiling such records would be no small challenge for the city. Just four months ago our state auditor stated that city “records did not adequately demonstrate the appropriateness of overhead charges to the utility funds in 2009.” Moreover the last time the city had to provide a court with accounting documentation in a fee dispute it elected to settle the lawsuit for $495,000.
Our city should be careful what it asks for. It may prove challenging for the city to substantiate claims without revealing additional examples of its misallocation of monies among the city utility and general funds. The Ratepayers Alliance could then use these examples to further substantiate their outstanding 10th Cause of Action concerning a misallocation of monies between the city of Bainbridge Island’s utility and general funds.
Another problem: State law requires that any city discount mechanism must apply to all Surface and Storm Water Management ratepayers. Any number of island ratepayers might claim the discount should council craft a legal retroactive ordinance within the time allotted by the court. This could become another accounting nightmare for the city.
The city won a legal delay, while the city’s general fund liability grows daily. Meanwhile, the Ratepayers Alliance’s goal remains, as it has since early 2009: to assure that the utility fees charged to all island ratepayers accurately reflect the value of services actually received. Perhaps it’s time for our city to stop kicking the can down the road hoping the problem will go away.
Sally Adams is the secretary for the Bainbridge Ratepayers Alliance.