Pima County sues over Tucson Water rate shifts

Pima County filed a suit against Tucson's city water utility on Friday, alleging that an increase in rates for some customers who live outside the city limits can't be implemented as Tucson officials plan.

The 32-page lawsuit maintains that the city has set rates that are not "just and reasonable," and that Tucson Water will be committing "common law discrimination" by not treating all customers equally.

While the city of Tucson owns the water utility, Tucson Water also serves many customers who live in unincorporated areas of the county, outside of the city limits. City officials contend that providing water to those customers is more costly, and thus they should pay higher rates.

The Pima County Board of Supervisors authorized the suit last month in a 3-2 vote.

In late June, the Tucson City Council voted unanimously in favor of raising Tucson Water rates for customers outside of the city limits. A war of words followed as Pima County supervisors called the move “greedy” as the feud brought relations between the city and the county to “all-time low.”

"We tried to talk to the city of Tucson; they didn't respond," said Supervisor Sharon Bronson, chair of the county board.

"We need to protect ratepayers" who live outside of the city limits. "They don't seem to understand that," she told TucsonSentinel.com on Friday.

"We spent a year asking and even pleading with the city not to do what should be clear to everyone is unfair, unreasonable, and unconstitutional," Bronson said in a news release Friday after the lawsuit was filed in the late afternoon. "We gave them ample proof that what they were doing was wrong and illegal. Yet the City Council did it anyway. We have no option left but to seek relief from the court and protect county taxpayers from this ill-considered and illegal action by the mayor and Council."

Tucson officials had "no comment on litigation matters," said City Attorney Mike Rankin. "We will respond (to the suit), file our answer and motions and go from there."

City officials have said it costs up to 26 percent more to provide water to some residents of unincorporated areas of the county.

Starting Dec. 1, City Ordinance 11846 raised potable water rates for residents in areas such as the Catalina Foothills, Casas Adobes, Tanque Verde Valley, Corona de Tucson and the Drexel/Alvernon area, among others, by 10 percent compared to prices for Tucson residents. It also establishes a tiered system that can raise rates by as much as 40 percent for customers who use more water.

The rate hike is expected to cost the county an additional $300,000, according to an estimate by County Administrator Chuck Huckelberry in a June memo to the Board of Supervisors. This is because county park facilities will be charged at the 40 percent tier.

“Dating back to spring when this issue first came up, there has always been one overarching reason to oppose these higher water rates being imposed only on certain customers,” Supervisor Rex Scott said during a meeting last month. “And that reason is it’s wrong. It’s wrong for people who have always been charged the same as other customers, some of them for decades.”

Supervisors Matt Heinz and Adelita Grijalva voted against filing the suit. Grijalva had said that she doesn’t support how the differential water rates were "imposed” by the city, but she believes legal precedents in the state give the city the right to do so. She also maintained that the county doesn’t need to seek outside legal counsel, which was part of the motion, because the county has attorneys in-house who can carry out the lawsuit, she said.

The argument from City Hall has been that differential water rates will lead to climate resiliency, fiscal responsibility and infrastructure investment in Tucson, as Mayor Regina Romero weighed prudence and conservation heavily before supporting the rate hike.

"For so many reasons (we have to do this)," Romero said before passing the water rate hike in June. "To be able to conserve and protect our water resources into the future but also for economic development reasons. We have to make sure that the decisions we're making right now are protecting residents not just five to 10 years from now but 50 years from now. Even though the motion has the cost-of-service analysis, this is much more based on the climate reality we live in and on the conservation that we have to take."

The county's vote last month "lacks any legal basis, is purely symbolic, and sets a dangerous precedent," Romero said in a press release the day of the county meeting. "The courts have affirmed the legality of differential water rates, and water utilities throughout the state already have them in place."

Romero said that city residents are "subsidizing" water used by county residents, and that "it is incumbent upon our elected leaders to be strong stewards of our precious water resources, especially as we face the likelihood of a Tier 2 shortage at Lake Mead."

County officials maintain that the city is attempting to push residents to be annexed into incorporated areas.

“When stripped of its post-hoc, pretextual, justifications, the city’s real reason for implementing differential rates becomes clear: It is using its control over the region’s water—a vital resource—to force Tucson Water customers living in unincorporated areas to vote in favor of annexation,” the county's court filing said.

East Side Councilman Paul Cunningham, who took the lead in pushing the change, said in June that what isn’t right is how the county treats Tucson, their largest municipality, and said it’s “borderline criminal” how much the county takes advantage of them.

“This is really about the county’s refusal to do the right thing for the city of Tucson,” Cunningham said. "At some point, it's about standing up and saying this isn't fair. This is a policy decision for city residents so they have a little something extra. We're not just doing this to cover the cost of service. We're doing this for the city of Tucson and its residents who aren't getting what's fair from the county."

In November, Cunningham said the county's move to retain outside attorneys and push forward with preparing a lawsuit is "a waste of time and public resources."

"I was aware of this possibility from the outset," Cunningham told the Sentinel. "If the county wants to spend our tax dollars on a lawsuit without merit, that is their business. I hope legal fees are recoverable in this case. The county is a good partner most of the time. We disagree about this."

Other issues have also plagued the city-county relationship. Supervisor Steve Christy, the lone Republican on the county board whose district covers Vail and the surrounding area, has called the rate hike “the first salvo from the bow” and part of a “three-pronged attack” alongside the city’s demands for greater representation on the Regional Transportation Authority and that the county repeal their PAYGO road repair program and the property taxes it created.

“They tout themselves, the city does, as the heart and soul of Pima County,” Christy said in late September. “All in all, with the Pima County administration, the departments, the deputy administrators, I’d say that the relationship is probably at an all-time low.”

Responding last month to the news of the county’s plan to sue over the water rates, Cunningham stood by his vote, saying, “We made a lawful and prudent vote, and I stand by it.”

“I hope the legal system plays out and decides what’s fair,” he told TucsonSentinel.com.

The City Attorney’s Office told the Mayor and Council that a cost-of-service study would be needed to legitimize the rate hike and to comply with state statute and city code. The city had not done a cost-of-service study before they passed the motion, however, which would have determined how much it costs Tucson Water to send potable water to its customers in unincorporated parts of Pima County.

After the city hired Raftelis Financial Consultants, Inc. and delivered a cost-of-service to the county in late August, Huckelberry called the findings “problematic.” That study, he said in a memo, was used by the city to analyze factors that assisted the city in making their case and ignore factors that didn’t.

City Councilman Steve Kozachik said last month that "we implemented differential rates based on solid legal advice from our attorneys."

"The courts will sort this out, and in the meantime it's important that the public see this issue will not drive a wedge between the city and the county on the many other important issues we need to collaborate on," Kozachik said in a press release at the time. "If county residents wish to avoid paying the increased rate, they can do so by simply saving 1-2 Ccf in water use each month — then we all win."