CITIZENS FOR FAIR REU RATES v. CITY OF REDDINGRespondent’s Reply Brief on the MeritsCal.July 21, 2015 Exemptfrom Filing Fees No. $224779 Government Code § 6103 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA Citizens for Fair REU Rates,et al. Plaintiffs and Appellants SUPREME COURT vs. PILED City of Redding,et al. JUL 21 2015 Defendants and Respondents Frank A. MeGuire Clerk Deputy REPLY BRIEF Review of a Published Decision of the Third Appellate District, Case No. C07 1906 Reversing a Judgment of the Superior Court of the State of California for the County of Shasta, Case No. 171377 (Consolidated with Case No. 172960) Honorable William D. Gallagher, Judge Presiding *MICHAEL G. COLANTUONO(143551) MColantuono@chwlaw.us MICHAEL R. COBDEN (262087) MCobden@chwlaw.us MEGANS. KNIZE (257970) MKnize@chwlaw.us HIGHSMITHPCO | 1364 Pleasant Valley Road Penn Valley, California 95946-9000 Telephone: (530) 432-7357 Facsimile: (530) 432-7356 Attorneys for Respondent City of Redding 152354.8 Exemptfrom Filing Fees No. 8224779 Government Code § 6103 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA Citizens for Fair REU Rates,et al. Plaintiffs and Appellants VS. City of Redding,et al. Defendants and Respondents REPLY BRIEF Review of a Published Decision of the Third Appellate District, Case No. C071 906 Reversing a Judgment of the Superior Court of the State of California for the County of Shasta, Case No. 171377 (Consolidated with Case No. 172960) Honorable William D. Gallagher, Judge Presiding *MICHAEL G. COLANTUONO(143551) MColantuono@chwlaw.us MICHAEL R. COBDEN(262087) MCobden@chwlaw.us MEGANS. KNIZE (257970) MKnize@chwlaw.us HIGHSMITH——i—itst—‘“‘“‘it™*és | 1364 Pleasant Valley Road PennValley, California 95946-9000 Telephone: (530) 432-7357 Facsimile: (530) 432-7356 Attorneys for Respondent City of Redding 152354.8 TABLE OF CONTENTS INTRODUCTION...eessssssssecsesecocsnesesveseesecsssscseenscsssssusussescescuenessneaeeseessanesteceees | LEGAL DISCUSSION....oececessssssecsecessssessecersnecnsseescsnsassnsssaeacsecsennsarenesassesssseeereees 2 I. STANDARDS OF REVIEWAND BURDENSOF PROOP...............++ 2 ll. CITIZENS MISREAD THE RECORD...eessessseseesneecsessecatsncetseeeeeees 5 A. Citizens Assume Without Evidence that the December 2010 Electric Rates Fund the PILOT... 5 B. Citizens Repeat a Claim Debunked in the Court of Appeal that the City Increased the PILOT in 2010... 7 C. Citizens Make, for the First Time in this Litigation, a New Claim of Error by the City...sesssesseresesneeneees 10 il. §£THE PILOT DOES NOT EXCEED THE REASONABLE COST OF SERVICE.0.0....eeeessssessecssseenesecescorenssecasersececucsssecsessscnececessesenees 13 A. Proposition 218 and Proposition 26 Impose Different Cost of Service Standards.........ssssssssecsceeesteeeeesens 13 B. Fresno and Roseville Do Not Aid Citizens...eeeseeeseeeeee 19 IV. THATTHE PILOT IS TRANSFERRED TO THE GENERAL FUND DOES NOT MAKEITATAX...eceeecsecessenees 20 V. THE PILOT ISA REASONABLE COST OF SERVICE AS A MATTER OF LAW...ececssessscesssssessseeecsesecesesscssescesnesasereneeeesees 22 VI. THE PILOT IS PREEXISTING LEGISLATION UNAFFECTED BY PROP. 26.0.0... eescsecececessesssececscsesecseensenssesscseseeess 24 ' Citi ’ Attacl he F £ Lesislati - Enacting the PILOT Are UnpersuaSive.............sesssecssscecteeeeeees 24 B. The PILOTis a Lawful Cost of Service Predating Proposition 26.0.0...esssessssseceeccssssssecsseesceesseeeseeeess 25 CONCLUSION...ccseesecssesssseeessecseeseacaccnsenecuscsceseenscussecscesssceeeeeseeseeseeneeaccnseeeneass 29 i 152354.8 TABLE OF AUTHORITIES Cases Arcadia Development Co.v. City ofMorgan Hill Page(s) (2008) 169 Cal.App. 4th 253 ..eccsssssssuusssssseseusssssssssssssssseeseeee 26, 27, 28 Barratt American, Inc. v. City ofRancho Cucamonga (2005) 37 Cal. 4th 685.0... cccecccsssssseeescsssseesesesesseneeeeeseseeeees26, 27, 28 Brainard v. Cotner (1976) 59 Cal.App.3d 790 .esssssssssssessusssssesssussssssnnensnsesseseeee Brooktrails Township Community Services Dist. v. Bd. of Supervisors ofMendocino County (2013) 218 Cal.App.4th 195 .ssssssssssssssseessssusssssssssssseneeeeeee California Building Industry Association v. State Water Resources Control Board (2015) 235 Cal.App-4th 1430 ..ccsssssssssussssssseessnsssssennsnssssee California Farm Bureau Federation v. State Water Resources Control Bd. (2011) 51 Cal. 4th 421 occcccesecsssssssssssssssessssssssssssssnssssscesecceseee Citizens for Fair REU Rates v. City ofRedding seeeaeesseeees 27 veteseeesseeee 19 sesseeeseeeseee 3 seseeeeeee 3, 14 (2015) 182 Cal.Rptr.3d 722 ....ccccceessssesseesesetsesessesseesensseteeees 8, 18, 22 Gately v. Cloverdale Unified School Dist. (2007) 156 Cal.App. 4th 487.0...cceceseseeseseseneeeeseseneseneees Griffith v. Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586 .csscssssssssssssssesssssessssanssnteesnsnnse Hansenv. City of San Buenaventura (1986) 42 Cal. 3d 1172...cececcecetseeneeeeeteeneeeseeseeseeneeneeees il 152354.8 sesseeeeeneose TY veseseeeeseees 14 sesseeseeeeens 23 Howard Jarvis Taxpayers Association v. City of Fresno (2005) 127 Cal.App.4th 914.0... ccesssecssssesesesssessscseneeesesneees passim Howard Jarvis Taxpayers Association v. City ofRoseville (2002) 97 Cal.App. 4th 637.0... cccscssssecsssseeceeessessesenesesesseeeees passim McDonald's Corp. v. Bd. of Supervisors (1998) 63 CalApp.4th 612.00.eesesesecceecseeseseessssecceeseesseesesteeeeees8 Moorev. City of Lemon Grove (2015) 237 Cal.App.4th 363.0... .ccccsssesesesssssssesesseeeseesseeteseseeeeees passim Morgan v. Imperial Irrigation Dist. (2014) 223 CalApp.4th 892.0...cececsescecseesscsssseeeeeaeeeeenees 3, 4, 16 San Diego Gas & Electric Co. v. San Diego County Air Pollution Control Dist. (1988) 203 CaLApp.3d 1132...seessscsseeessccsssesseeessesterstseeseeeseeseees 17 Schmeer v. County ofLos Angeles (2013) 213 CalApp.4th 1310.0... ecseecssscesecsseeeeesestseseeesteeeeeeseees 18 Scott v. Common Council (1996) 44 Cal.App.4th 684.0...ccccsssescnenssscseesasseenseeeseseesseeceees24 Sinclair Paint Co. v. State Board of Equalization (1997) 15 Cal.4th 866.0... ccccssesccesceesssscseseecssneseseeeseneaseeenees 17, 18, 23 Southern California Edison Companyv. Public Utilities Commission (2014) 227 Cal.App.4th 172.0... cecessesssseesscsssetesesenecssseeeeseeseeasesenes 25. White v. Davis (2003) 30 Cal4th 528.0... cccceccscceseseenssessssssecssseseneneseesaeseeeeseereeseeeees24 ili 152354.8 California Constitution Article XID C vceeeessssecessssssecesesessssssesesseseccsescsesssaesesenseecesesssessusssesavaes 9 Article XTID C, § 1 voce eeesesesessessssseseeesessssssssesesecsesesesessesseeesssesesessnss 15 Article XIII C, § 1, Subd. (€) ....eeesesssssssssssecesssesesseseseneseesesesssseseres 17, 22 Article XIII C, § 1, subd. (€)(1) ..ceeececsecssssesssesesesesesescseseseecsesssesssces 15 Article XIII C, § 1, subd. (€)(2) ...ccccccecsesesessssessesesessessesssseesssaes 13, 15 Article XIII C, § 1, subd. (€)(4) .ccccccscscsssesssseseeecsecsenssecssessscscassscenes20 Article XTID Doceeeseesesssceessesessseeesesssssesssesesesssseseeeeeesestscesecssssenes4,9 Article XIII D, § 1, Subd. (€) oo. ceeesssesssssesesescsessesescsceseseresssseusssseseess 16 Article XII D, § 3, SUD. (D) .o.eeeesesessesesesseseeesscececesseees9,19, 22, 26 Article XII D, § 6, SUD. (D)(1)....eecesessesesessesssccescssesseeesessseesenses 13, 16 Article XIII D, § 6, SUD. (1D)(2) eeeeeccsssseceessseseecessesessesesesssscerscsacaees 13 Article XIII D, § 6, Subd. (D)(3)..... ce eeeseeesseseessesessceeseeseeeeeescerens 13, 17 Article XIII D, § 6, SUD. (Cd)... eccccesesesessessseesesesseaesecssseesessssssssesscas 19 Statutes Government Code § 53750, Sub. (h)(2)(B) .....cescescssessssescssessessesscsecssccsccsessecsecsecsceaceeseneeaees 9 Rules California Rules of Court TUJe 8.204()ocececesecsseeeseseteneecectesceescsceescesssssesseseseesesesesesesscscecseeesaes 5 TUle 8.520(D) .....eeecscesssscssccssesccessescsscscsscsesesssessssesssscssessecsscssseesessasenececenes 5 Other Authorities Newhall County Water Dist. v. Castaic Lake Water Agency Second District Court of Appeal Case No. B257964......cccseceees 14 iv 152354.8 PUBLICATIONS Coleman, The California Municipal Revenue Sources Handbook (2104 €d..) ....eeesessssesesesessesesessesecsesesssssscsessesssssscasacaceeseeeees 20 Scalia and Garner, Reading Law:TheInterpretation of Legal Texts (2012) ....ccccceccsssssssesseseseeseceserensesssesessesesseseseeseessneseasseses27 Vv 152354.8 INTRODUCTION The City of Redding’s Opening Brief demonstrated that the paymentin lieu of taxes (PILOT) appropriated by its annual budgets and transferred from the Redding Electric Utility (REU)to the City’s general fundis legislation that predates 2010’s Proposition 26 and therefore survivesit. In opposition, Appellants Citizens for Fair REU Rates (Citizens) fail to establish the prima facie case required to challenge governmentrevenuesfor three reasons: e Citizens assume, but do not establish, the essential fact on which they build their case — that the PILOT is funded by electric rates — even thoughthetrial court found the contrary with record support. e They misapprehend the record. e They assume without argument that Proposition 218 authorities control construction of Proposition 26 despite the different language andintent of the two measures on points material here. Accordingly, this Court ought to affirm the trial court's ruling for the City on the grandfathering theory. Alternatively, this Court should affirm the trial court’s ruling on its further conclusion, reflected in Justice Duarte’s dissent below, that evenif 152354.8 Proposition 26 applied here, the City’s PILOT is reasonablein fact and as a matter of law. LEGAL DISCUSSION I. STANDARDS OF REVIEW AND BURDENS OF PROOF The parties are largely in agreementthat this Court reviews legal issues and the administrative record de novo. (Defendants and Respondents’ Opening Brief (OB) at p. 12; Plaintiffs and Appellants’ AnswerBrief (Ans.) at p. 15.) However, Citizens overlook that Proposition 26 did notalter the distribution of responsibility betweentrial and appellate courts. Citizens continue to bear the duty to demonstrate errorin the trial court and to identify record support for their claims on appeal. Asthe Fourth District Court of Appeal recently confirmedin . Moorev. City ofLemon Grove (2015) 237 Cal.App.4th 363, 368 (Lemon Grove), affirming transfer of sewer service fees to a city’s general fund, an appellate court “presume[s] that the appealed judgmentis correct.” “Even when weexercise our independent judgmentin reviewing the record, we do not decide disputed issues of fact and ourreview ‘is limited to issues which have been adequately raised and supported in [the appellant's] brief.” (Ibid. [internal citations omitted].) 1523548 Morgan v. Imperial Irrigation Dist. (2014) 223 Cal.App.4th 892, 913 (Morgan) explains an “appellant must frame the issues for us, show us wherethe superior court erred, and provide us with the propercitations to the record andcase law....” Further, Citizens may not merely observe the City’s duty to produce a record in supportof its rate-making and budgets. It must makea primafacie case the City’s electric rates exceed the reasonablecost of service on account of the PILOT. Only then does the burdenshift to the City to demonstrate otherwise on a competent record. Citizens conceded as muchin their opening brief to the trial court. (2 CT 541 [“Certainly, a plaintiff fee-payer challenging a local government charge as an unlawful disguised ‘tax’ mustallege a primafacie caseto initiate the action”].) Citizensinitially “bear[] the burden of proof to establish a primafacie case showingthatthe fee is invalid.” (California Farm Bureau Federation v. State Water Resources Control Bd. (2011) 51 Cal. 4th 421, 436 [construing Prop. 13]; see also California Building Industry Association v. State Water Resources Control Board (2015) 235 Cal.App.4th 1430, 1451 [same].) Morgan confirmsthe rule in the context of Proposition 218: Therefore, although we use a de novo standard of review here, we do not transform into a trial court. ... [W]e do notfind it sufficient for an appellant to merely claim the respondent should not have been successful at 3 152354.8 trial and then the burden shifts to the respondent to proveits case in its entirety again. (Morgan, supra, 223 Cal.App.4th at p. 913.) So, too, in Lemon Grove — another Proposition 218 case: The agency charging the fee or charge has the burden of demonstrating compliance with these requirements. The question whether a fee or charge violates article XIII D is subject to de novo review. We presume that the appealed judgment is correct. Even when we exercise our independent judgment in reviewing the record, we do not decide disputed issues of fact and our review “is limited to issues which have been adequately raised and supported in [the appellant’s] brief.” (Lemon Grove, supra, 237 Cal.App.4th at pp. 368-369 citations omitted.) Because Citizensfail to make a primafacie case that the City’s electric rates exceed the reasonable cost of service, this Court should affirm the trial court’s decision. However, evenif the Court finds Citizens made a prima facie case,the City can bear its burden on this record, as demonstrated below. 152354.8 ll. CITIZENS MISREAD THE RECORD A. Citizens Assume Without Evidence that the December2010 Electric Rates Fund the PILOT Citizens’ AnswerBrief is premised on an unsupportable assumption — thatthe electric rates set on December7, 2010 fund . the PILOT.Becausethis is untrue, their entire argumentfails. Thetrial court concluded “there is no evidence that the PILOT is paid out of customers[’] rates.” (3 CT 741.) As the Opening Brief explainedin detail (at pp. 35-39) the record amply supports this conclusion.(See, e.g., IV AR, Tab 145, p. 831 [Fiscal Year 2010-2011 budget] and Attachment1 [legible copy];! id. at p. 873 [2010 audit showing PILOT of $6,055,950]; XIII AR, Tab 205, p. 2975 [Fiscal Year 2012-2013 budget showing wholesale revenuesofat least $12.6 million per year and miscellaneous incomeofat least $6.9 million per year].) Citizens do not dispute the PILOT can be funded three times over from unrestricted revenues without drawing uponretail rate proceeds. Citizens offer three kinds of “support” for their claim the ~ assertions of the claim withoutcitation to the record or any other 1 Duplication of the AR obscured muchof page 831. A legible copyis attached to this Brief as Attachment 1 pursuant to California Rules of Court rules 8.520(b) and 8.204(d).) 5 152354.8 authority. (See Ans. at pp. 3, 12, 20, 24, 25, and 26.) Second, Citizens offer a singlecitation to the trial court’s statementof decision — toa page that does not speak to how the PILOTis funded. (Ans.at p.6, citing 3 CT 736.) Rather, as the trial court states elsewhere in that statementof decision: “there is no evidencethat the PILOTis paid out of [a] customer'srates.” (3 CT 741.) Finally, Citizens cite boilerplate language in the City’s rate- makingresolutionsstating electric rates “obtain funds necessary to maintain suchintra-City transfers as authorized by law.” (Ans. at p. 12, citing IV AR, Tab 163, p. 1041, § 3.) Citizens assume the resolutions’ references to “transfers” must mean the PILOT, but providenobasis for that assumption.(See, e.g., Ans. at pp. 26-27.) However, they also observethatthe electric utility reimburses the City’s general fund via a “cost allocation plan” for shared overhead and general services — such asfacility rent, insurance, the services of the City Attorney,etc. (Ans. at pp. 27-28, 30.) Thus, the boilerplate Citizenscite could aseasily refer to cost allocation as to the PILOT — the referenceis not proof retail rates fund the PILOT. Furthermore, as demonstrated by the City’s OpeningBrief, the recordshere establish that the December 2010 powerrate increases were unneeded to fund the PILOT, which wasfully funded by earlier rates (OB at pp. 16, 41; see IV AR, Tab 159, pp. 1030-1034 [Nov. 19, 2010 staff report]; IV AR, Tab 166, pp. 1065-1098) and that the PILOT can be funded from revenuesother than the proceeds of 6 152354.8 retail rates. (OB at pp. 35-36; see IV AR, Tab 145, p. 831; IV AR, Tab 149, p. 873; XIII AR, Tab 205, p. 2975.) In sum,the essential factual premise of Citizens’ AnswerBrief is simply unsupported on this record. The AnswerBrief is therefore entirely unpersuasive. B. Citizens Repeat a Claim Debunked in the Court ofAppeal that the City Increased the PILOTin 2010 Asthey did in the Court of Appeal, Citizensraise a factual argumentthey did not makein thetrial court. Citizens claim the City changed the PILOT formula in 2010to includetheelectric utility’s share of assets held by joint powers agencies, citing an attachmentto the City Council resolution adopting the 2011-2013 budget. (Ans.at p. 10; Appellants’ OpeningBrief in the Courtof Appeal (AOB)at p. 26.) However, as the City explained then, Citizens did not make this factual argumentin thetrial court. (Respondents’Brief to the Court of Appeal (RB) at pp. 23-24,citing RT 71-73, 198-199.) Instead, Citizens acknowledgedattrial that the event, has not changed “in the recent years.” (RT at pp. 198-199.) While Citizens discussed changes in PILOTcalculation several timesattrial, including accounting for the electric utility’s interest in assets held jointly with otherutilities, it never disputed that the 152354.8 PILOThas been unchangedsince before the 2010 adoption of Proposition 26. (RT at pp. 198-199.) Citizens cannot nowpresent a factual argument neverraised in thetrial court. (McDonald’s Corp. v. Bd. of Supervisors (1998) 63 Cal.App.4th 612, 618 [“The existence of this factual question prevents the County from raising this theory for the first time on appeal”].) For this reason, this Court should disregard this argument. Moreover, the Court of Appeal properly rejected this contention on its merits. The Court of Appeal’s recitation of facts acknowledgesthat the most recent amendmentof the PILOT followed “adoption of a two-year budgetin June 2005, [when] the City Council adopted the PILOT into its current form by including the value of joint-venture assets in which the Utility has a share in the asset base to which the 1% [PILOT]is applied.” (Citizens for Fair REURates v. City ofRedding (2015) 182 Cal.Rptr.3d 722, 726.) Thus, were this Court to consider the point, Attachment A to the 2011-2013 budgetresolution (XI AR, Tab 203, p. 2469), and the in-lieu computations from the City’s budgets for fiscal years ending 2006 through 2009,? show only what counsel acknowledgedattrial: The in-lieu computations are attached as Exhibits D and E to the Motionfor Judicial Notice in Support of Respondents’ Brieffiled in the Court of Appeal. (MJN in Supportof Resp.Brief.) 8 1523548 the PILOT increasesasutility assets increase.? The PILOT has worked that way for 25 years. (RB at p. 25.) Furthermore, Attachment A to the 2011-2013 budget resolution does not support Citizens’ belated contention that “the City changedits concepts of ‘assets’ and changedits formula for the PILOT.” (Ans.at p. 11; see also AOBatp. 26). Attachment A does not show how the PILOT wascalculated for any year other than fiscal year 2010-2011. Careful review of Attachment A showsthe City’s consistent methodology for calculating the PILOT. (See RBat pp. 25-27 [explaining calculation of the value of appreciating assets and demonstrating that budget attachmentsreflect this consistent methodology].) Attachment A to the 2011-2013 budget resolution distinguishes appreciating assets (e.g., land) from depreciating assets (e.g., vehicles). The far left column of line 14 of Attachment A totals the values of appreciating assets still in service in fiscal year 2010-2011. The fact they appear there does not meanthese values 3 As discussed below,this does not amount to an “increase” for 7 hich not appl lectricr in _ any event. (Gov. Code § 53750, subd.(h)(2)(B) [defining “increase” for purposes of Articles XIII C and XIII D]; Art. XIII D, § 3, subd. (b) [“For purposesofthis article, fees for the provision of electrical or gas service shall not be deemed chargesor fees imposed as an incident of property ownership”J.) 9 152354.8 werefirst calculated in that year, as Citizens assume.Joint powers agencyassets are treated as non-appreciating because acquisition data are on the joint powersentities’ books, not the City’s. Budget attachmentsfor prior yearsreflect this consistent methodology, with joint powers authority assets accounted for every yearjust as reflected in Attachment A to the 2011-2013 budget. (See RB at pp. 26-27; MJN in Support of Resp. Brief, Exhs. D and E.) Therefore, Citizens’ belated claim that the PILOT was amendedin 2010 to include the value of joint powers agencyassets is simply wrong. Thus, the claim is unsupported by the record and should be disregarded, even should this Court be inclined to entertain this arcanefactual inquiry for the first time on appeal. C. Citizens Make, for the First Time in this Litigation, a New Claim of Error by the City Some two and a half yearsinto thislitigation, Citizens “take us a bit into the weeds”to argueforthe first time that the City’s briefs mistakenly transposed the respective methodologies employed by the City and the Board of Equalization in a recitation of amendments to the PILOT calculation before the 2010 adoption of _ Proposition 26. (Ans. at p. 9.) The City indeed stated in its Opening Brief that a 1999 R.W. Beck study “noted the State Board of Equalization assessed multi-county utility property for property taxation using original, rather than the depreciated, asset values; but 10 152354.8 the City’s PILOT then did not. (III AR, Tab 119, p. 664 (1st {).)” (OB at p. 8.) Citizens correctly note that the R.W. Beck studystates that the Board of Equalization used depreciated asset values rather than original. (Ans. at p. 9.) This was indeed a transposition error in the City’s brief, albeit an inconsequential one. Citizens are not correct, however, in denying that the City amended the PILOTin the 2001-2003 budget“to bring[it] in line with property tax methodologies” used by the Board of Equalization. (See HI AR, Tab 126, pp. 693-694; OBatp. 9.) Thus the City’s briefs have correctly stated throughoutthis litigation the more important point — that the City had amendedits PILOT in 2001 to match the Board of Equalization’s methodologies.* Furthermore, the only fact needed for present purposesis that the City has not 4 The City explainedinits trial brief that the PILOTis calculated the same wayas the property tax, including an annual 2% escalation cap, based on the book value of REU’sassets. (3 CT 630, fn. 12.) The City explained in its brief to the Court of Appeal that “[u]pon adoption of its 2001-2003 budget, the City Council adjusted the methodology....” (RB at p. 7, citing II] AR ,Tab 126, pp. 693-694; ITI AR, Tab 134, p. 738.) The City made the same argumentin its Opening Brief here. (OB atp. 9, citing 2 CT 530 (last {); MJN in Support of Resp. Brief, Exh. D [PILOT calculation forfiscal years ending in 2006 and 2007].) 11 152354.8 amended the PILOT formula since 2005. (2 CT 530 (last {); see also MJN in Supportof Resp. Brief, Exh. D.) The precise details of the PILOT methodology are not relevantto the inquiry whetherthe PILOTis grandfathered; whatever they maybe, they are grandfathered. Citizens evade this question to argue the PILOTis transferred to the City’s general fund while the property tax it mimics is shared among the City, County, school and otherspecialdistricts. (Ans. at pp. 39-40.) Again, the pointis true, but immaterial. The City was free in the pre-Proposition 26 legal environmentto legislate the PILOT to ensure that the economicactivity represented bytheelectric utility supports public services approximately as an investor-owned utility would. That the distribution of those funds differs from the distribution of a property tax may be of policy concern, butit is of no legal momenthere. In any event, regardless of whether the PILOTperfectly matches the property tax or makes good public policy, the PILOT as it is implemented today existed before voters adopted Proposition 26 andis therefore grandfatheredbyit. 12 152354.8 Il. THE PILOT DOES NOT EXCEED THE REASONABLE COSTOF SERVICE A. Proposition 218 and Proposition 26 Impose Different Cost of Service Standards Citizens argue “[t]he constitutional requirementsfor compliance with Proposition 26are noless ‘substantive’ than those for Proposition 218.” (Ans. at p. 17.) Indeed. However, the two requirementsstate different cost limitations for the revenue measuresthey regulate. That there are somesimilarities between the two does not permit unthinking resort to authorities under Proposition 218 to construe Proposition 26. Authorities applied by analogy must be applied with care and only to the extent the analogy holdstrueto the constitutionaltext. Proposition 218 demands moreof rate-makers than Proposition 26. Both measureslimit service fee proceedsto the total costof service to all whoreceive it. (Cal. Const., art. XIII D, § 6, subd.(b)(1) (“Revenues derived from thefee or charge shall not exceed the funds required to provide the property related service”]; Cal. Const., art. XIII C, § 1, subd. (e)(2)[”Tax” excludes “A charge imposedfor a specific governmentservice or product ... which does not exceed the reasonablecosts to the local governmentof providing the service or product”].) Proposition 218 reinforcesits cost-of- service limitation by forbidding use of fee proceedsfor other 13 152354.8 purposes. (Cal. Const., art. XIII D, § 6, subd. (b)(2) [“Revenues derived from the fee or chargeshall not be used for any purpose other than that for which the fee or charge is imposed”].) Finally, and at the heart of Proposition 218, is a proportionalcost requirement with only a roughparallel in Proposition 26.(Id., § 6, subd.(b)(3) [“The amountofa fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.”].) Proposition 218’s cost-of-service limitations require someone, presumablythelegislative rate-maker, to reasonably attribute service to each parcel. For administrative necessity, this is often done customer-class-by-customer-class, rather than customer-by- customer.° (California Farm Bureau Federation, supra, 51 Cal. 4th at p. 437, 446 [class-by-class cost allocation under Prop. 13]; see also Griffith v. Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586, 600 [same underProp. 218]; Lemon Grove, supra, 237 Cal.App.4th at pp. 374-375 [same underProp. 218].) A rate-maker * Some rate-makers have so few customers that there is no néed to makerates by class. For example, Newhall County Water Dist. v. Castaic Lake Water Agency, SecondDistrict Court of Appeal Case No. B257964(filed Aug. 4, 2014; Reply Brief due Aug. 17, 2015), involves a State Water Project contractor that wholesales water to just four retailers. 14 152354.8 must then determinethe proportional cost of providing that attributed service to each customerclass — allocating the cost of providingthatserviceto all. Finally, the rate-maker must demonstrate its rates do not exceed that proportionalcost as to any customerclass. Proposition 26 is less demanding. It requires a rate-maker to demonstrate a service chargeis: imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product. (Cal. Const., art. XIII C, § 1, subd.(e)(2).)® Further, the rate-maker must prove: that the amount is not more than necessary to cover the reasonable costs of the governmental activity, and that 6 This brief applies Proposition 26’s exception for government- r . (Cal. Const, art.XTC _ subd. (e)(2).) However, it might as easily apply that for government- providedprivileges and benefits. (Cal. Const., art. XIII C, § 1, subd.(e)(1).) The distinction between a privilege or benefit and a service or productis not alwaysclear, but the two exceptions impose identical requirements, so the distinction is unimportant. 15 152354.8 the mannerin which thosecosts are allocated to a payor bear a fair or reasonable relationship to the payor’s burdenson,or benefits received from, the governmental activity. (Cal. Const., art. XIII C, § 1, final unnumbered {, emphasis added.) This text creates four requirements: 1. The “direct-service requirement” — The fee mustbe for a specific service provided directly to payors. 2. The “no free riders principle” — The service may not be provided to those not charged.’ 7 It is unlikely the voters who approved Proposition 26 intended to forbid free or discounted services. More likely, they intended to forbid such servicesif funded by other rate-payors. If subsidies or discounts are funded by taxes or other non-rate-revenues, the goals of Proposition 26 to reduce the burden of governmenton tax-, rate- and fee-payors are met. (IV AR, p. 988 [uncodified § 1 of Proposition 26, “Findings and Declarations of Purpose”]; cf. Morgan, 22 LA 2 prohibits an agency from chargingless than the proportional cost of service. The fees simply cannot exceed the proportional cost”].) Thus, Citizens’ bare assertion, without argument, that rate-payors would be harmed by the funding of the PILOT from non-rate revenuesfails to persuade. (Ans.at pp. 31-33.) 16 152354.8 3. The “total cost limit” — The charge may “not exceed the reasonablecosts to the local governmentof providing the service or product.” 4. The “cost allocation requirement” — Rate-makers must show “the mannerin which thosecosts are allocated to a payor beara fair or reasonable relationship to the payor’s burdenson,or benefits received from, the government activity.” (Cal. Const., art. XIII C, § 1, subd.(e) [final, unnumberedpara.].) The cost allocation requirement requires something more than the total-cost limit; yet it is not a proportionate-cost-of-service rule comparable to Proposition 218’s article XIII D, section 6, subdivision (b)(3). Rather it codifies this Court’s pre-Proposition 26 case law testing regulatory and other fees under Proposition 13, on § This is analogous to Proposition 218’s article XIII D, section 6, subdivision (b)(1). It is reinforced by the final unnumbered paragraph of section 1, subdivision (e), which requires a rate-maker to prove a charge “is no mor nn costs of the governmentactivity.” (Cal. Const., art. XIII C, § 1, subd.(e)[final, unnumbered {].) This language from thefinal unnumberedparagraph seems to merely assign the burden to prove — rather than to change — the total cost requirement of subdivision (1)(e)(2). 17 152354.8 which both Propositions 26 and 218 build. (OB at p. 33; see Sinclair Paint Co. v. State Board of Equalization (1997) 15 Cal.4th 866, 879 quoting San Diego Gas & Electric Co. v. San Diego County Air Pollution Control Dist. (1988) 203 Cal.App.3d 1132, 1146 [“to show fee is a regulatory fee and not a special tax, the government should prove (1) the estimated costs of the service or regulatory activity, and (2) the basis for determining the manner in whichthecosts are apportioned, so that chargesallocated to a payorbeara fair or reasonable relationship to the payors’ burdensonorbenefits from the regulatory activity”]; see also, Schmeer v. County ofLos Angeles (2013) 213 Cal.App.4th 1310, 1321-1322, 1326 [citing Sinclair Paint to construe Proposition 26].) Thus, while Proposition 218 requires a rate-maker to show a fee is proportionate to the cost of service attributable to a parcel or customerclass; Proposition 26 requires only that total service cost be allocated among payors in a mannerthatis “fair or reasonable” when compared to payors’ respective burdens on or benefits from the governmentservice. This wasthe basis for Justice Duarte’s dissent below, concluding the PILOT meets Proposition 26’s standard becauseit is a fair and reasonable allocation of service cost amongrate payors. (182 Cal.Rptr.3d at p. 741.) This Court should conclude likewise. 18 152354.8 B. Fresno and Roseville Do Not Aid Citizens Citizens cite Howard Jarvis Taxpayers Association v. City of Roseville (2002) 97 Cal.App. 4th 637 (Roseville) and Howard Jarvis Taxpayers Association v. City of Fresno (2005) 127 Cal.App.4th 914 (Fresno) to supporttheir claim the 2010 electric rates challenged here exceed the cost of service. (Ans. at pp. 25, 27, 32.) However, those cases are unhelpful here for three reasons. First, as Citizens concede, those cases apply Proposition 218, not Proposition 26. (Ans. at p. 25.) As discussed above, the proportional-cost-of-service requirement of Propositions 218is substantially more demandingthan the cost-allocation requirement Proposition 26. Proposition 218 authorities construingits proportional-cost requirementareof limited utility in construing the “fair or reasonable”cost allocation requirement of Proposition 26. Second, Proposition 218 is retroactively applicable to property related fees legislated before its adoption and maintainedafter July 1, 1997. (Cal. Const., art. XIII D, § 6, subd. (d) (“Beginning July 1, 1997, all fees or charges shall comply with this section”].) No comparable language appears in Proposition 26, which is plainly not retroactive as to local government. (Brooktrails Township Community Services Dist. v. Bd. of Supervisors ofMendocino County (2013) 218 Cal.App.4th 195, 205). The contrast is especially telling because Proposition 26 amends Proposition 218 andis thereforein pari materia with it. (Gately v. Cloverdale Unified School Dist. (2007) 156 19 152354.8 Cal.App. 4th 487, 494 [“Statutory provisionsthatare in pari materia, i.e., related to the samesubject, should be construed together as one statute and harmonizedif possible”].) Because Proposition 26 does not displace pre-existing legislation as Proposition 218 did, and because Proposition 218 excludes powerrates from its reach (Cal. Const., art. XII D, § 3, subd.(b)), Fresno and Roseville apply law that does notcontrol here. Third and finally, even if Fresno and Roseville applied as a matter of law, they are also distinguishable on a critical fact: in both cases it was undisputed that the local government funded a general fund transfer from the challenged retail rates. (Roseville, supra, 97 Cal.App.4th at p. 638; Fresno, supra, 127 Cal.App.4that p. 918.) As demonstrated above, that is not true here. Therefore these cases do not help Citizens. iV. THAT THE PILOT IS TRANSFERRED TO THE GENERAL FUND DOES NOT MAKEIT A TAX Citizens argue the “PILOT componentof the increasedelectric rate is collected for ‘general revenue purposes’ — a fact which makes ita “tax.” (Ans. at p. 21.) The argument proves too much. Accounting treatment of revenuesis not determinative. For example, Proposition 26 also exempts from its definition of “taxes” fees for the use of governmentproperty (Cal. Const., art. XIII C, § 1, subd.(e)(4)), and fines and penalties (id., subd. (e)(5)). Such charges 20 152354.8 routinely fund local governments’ general funds: “Most revenue from fines and forfeitures may be expendedfor any legal municipal service.” (Coleman, The California Municipal Revenue Sources Handbook (2014 ed.) p. 107.)? Similarly, “[r]evenues from rental or use of city property and/or resources”are “[u]nrestricted unless indicated otherwise by agreement.”(Id. at p. 109.) Moreover, case law is plain that — even under the more demandingproportional-cost-of-service requirementof Proposition 218 — funds whichflow to a general fund in reimbursementfor services provided by that fund” are not madetaxes by that fact. For instance, Fresno and Roseville allowedutility fund transfers to general funds to reimburse proven costs of services to theutilities. (Fresno, supra, 127 Cal.App.4th at p. 926; Roseville, supra, 97 Cal.App.4th at pp. 650-651.) Thus, even the cases Citizenscite refute their overly broad claim. Lemon Grove madethis point plain: [the city] may place in its general fund the revenues derived from a cost-based in-lieu franchise fee to pay ° The cited pages of this resource are provided for the Court’s convenience as Exhibit A to the accompanying Motion for Judicial Notice. 10 This may include equipment, access to rights of way, police and fire protection of utility assets, etc. 21 152354.8 for the street, alley and right-of-way costs attributed to the water, sewerandrefuseutilities. (Lemon Grove, supra, 237 Cal.App.4th at pp. 376-77, quoting Roseville, supra, 97 Cal.App.4th at p. 650, abridgement by Roseville court.) In other words, if fees are properly linked to costs, section 6(b) does not prevent those properly imposed fees from then being placed in a general fund. (Lemon Grove, supra, 237 Cal.App.4th at p. 377.) Therefore transfer of the PILOT to the general fund does not alone prove Citizens’ case. V. THE PILOT IS A REASONABLE COST OF SERVICE AS A MATTER OF LAW Asdetailed above, Proposition 26 — like Proposition 13 before it — requires only that costs recovered by service and regulatory fees be reasonable in toto and be “fair or reasonably” apportioned to a payor’s burdensonor benefits from the service or regulation. (Cal. Const., art. XIII C, § 1, subd.(e) [final unnumbered {{].) The PILOT approximates the 1% tax on investor-ownedutilities permitted by Mh ] wn . This wasthe thrust of Justice Duarte’s dissent below; although she also noted that the City’s rates are lower than those of PG&E,the rates of which are regulated by the Public Utilities Commission (PUC) to ensure reasonableness. (182 Cal. Rptr. 3d at 737-741.) 22 152354.8 Citizens make a straw man of Justice Duarte’s point. (Ans.at pp. 30-31.) The City agrees that Proposition 26's “fair or reasonable” cost allocation principle is not measured by the marketplace alone. That rates below investor-ownedutility rates approved by the PUC are necessarily reasonable does not meanthat rates higher than the investor-owned utility rates are necessarily unreasonable — especially those whicharesufficiently cost-justified. Justice Duarte’s point wasthat reasonableness underthe Constitution can be _ demonstrated at least in part by comparison to PUC regulated rates, nothing more. That point remains correct and unremarkable. Common market conditions very likely reflect social attitudes as to whatis “fair or reasonable.” Furthermore, reasonableness as understood under Proposition 13 does notforbid a utility to earn a return onits capital investment. Hansen v. City of San Buenaventura (1986) 42 Cal. 3d 1172, 1183 interpreted Proposition 13 to allow a municipalutility to include such a returnin rates for its water service. That rule does not survive Proposition 218 for the utility services that measure governs, such as water and sewerservices. (Fresno, supra, 127 Cal.App.4th at pp- 922-923 [cities maystill recovercosts for utility services through user fees, but the amount charged shall not exceed the proportional cost of service]; Roseville, supra, 97 Cal.App.4th at 647-648 [same].) However, as demonstrated above, unlike the more demanding Proposition 218, Proposition 26 maintains Proposition 13’s more 23 152354.8 permissive standardsfor the cost-justification and allocation of regulatory and service charges — essentially tracking the two-part analysis this court announcedin Sinclair Paint. Citizens’ contrary claim (Ans.at p. 32) merely assumes — but does not persuade — that Proposition 26 and Proposition 218 are consonant onthis point despite their different language and apparentintent. VI. THE PILOT IS PREEXISTING LEGISLATION UNAFFECTED BY.PROP.26 A. Citizens’ Attacks on the Form ofLegislation Enacting the PILOT Are Unpersuasive The City has legislated the PILOTin its budget appropriations consistently for decades. Budgets and the appropriations they authorize are plainly legislative acts. (E.g., Scott v. Common Council (1996) 44 Cal.App.4th 684, 698 [mandating council fund city attorney positions required by city charter].) Citizens’ AnswerBrief does not discuss, muchless distinguish, the arguments and authorities the OpeningBrief cites for this point (at pp. 16-18). Furthermore, Citizens identify no duty before enactmentof Proposition 26 to appropriate fundingin any particular form. (See Ans.at p. 4.) Nor do Citizens identify any duty of the Redding City Council to vote on each budget appropriation individually. (See Ans. at p. 7.) There is, of course, no such rule — as demonstrated by Scott v. Common Council and other cases involving appropriations. (E.g. 24 152354.8 White v. Davis (2003) 30 Cal.4th 528, 538; see also, OB at pp. 16-27.) In none of those cases wasthere evidencethat the questioned appropriations were separately legislated. Thus Citizens ask this Court to create new law — that a city mustlegislate in a particular way — and applyit retroactively, without notice, to strike down a PILOT to which they object on policy grounds. The Court of Appeal erred to accept that invitation, an error this Court need not repeat. B. The PILOTis a Lawful Cost of Service Predating Proposition 26 ‘In arguing the PILOT does not predate Proposition 26, Citizens state: “the PILOT can at best (for the City) be characterized as a ‘cost’ item for the electric utility that it may recover through the rates as with all other costs of the enterprise.” (Ans. at p. 37.) Precisely so. Indeed, the trial court so concluded. (3 CT 737.) The sameis true of myriad otherlegislative acts that increase the cost of powerto customersof the Redding Electric Utility, such as the City’s pre-Proposition 26 policy to provide reduced rates to the poor and elderly; occupational safety and health standards; and other public goods charges.Ail survive Propositions 26 and 218, just as their 11 The term “public goods charge”is defined at length in Southern California Edison Companyv. Public Utilities Commission (2014) 227 25 152354.8 proponents argued.(1 CT 280 [Proposition 26 protects consumer regulations andfees]; 2 CT 349 [Proposition 218 proponents’ rebuttal argument: “’Lifeline’ rates for elderly and disabled for telephone, gas, andelectric services are NOT affected”].) Proposition 218 expressly excludeselectric rates from its sweep to protect these vulnerable populations. (Cal. Const., art. XIII D, § 3, subd.(b); 1 CT 216 [discussing City’s Lifeline and CARES Programs].) Thus, except for water, sewer, and trash rates governed by Proposition 218, PILOTs were a lawfulcost of service for electric utilities when Proposition 26 was adopted. As demonstrated above, Redding’s PILOT wasestablishedlegislatively in 1988 andlast amendedin 2005.It is a legislative act under controlling case law. Citizens admit that Proposition 26 did not take effect until November2010. (Ans.at p. 2.) Nor did Redding readopt the PILOT after 2010. Citizens argue that “re-enactmentof the fee resolution” requires a fresh examination of fees under Barratt American, Inc. v. City ofRancho Cucamonga (2005) 37 Cal. 4th 685, 704 (Barratt American). What Citizenscall the “re-enactment rule” from Barratt can has | Fed ion 5 ted —inti - contextof statutes of limitations for land use disputes. (See Arcadia Cal.App.4th 172 [PUC-imposed public goods charge did not exceed its statutory authority or constitute a tax under Prop.26].) 26 152354.8 DevelopmentCo. v. City ofMorgan Hill (2008) 169 Cal.App.4th 253, 261-262.) The trial court here refused to stretch Barratt American so far beyondits intended reach, stating that the case appliedto its specific statutory context. (3 CT 739.) This Court should affirm that conclusion. In Barratt American, a city council adopted a comprehensive schedule of fees on development, which this Court held triggered a fresh limitations period to challenge any fee on that schedule, including those unchanged from prior schedules. (Barratt American, supra, 37 Cal.4th at p. 703.) This Court basedits holding on two groundsnotpresenthere.First, it relied upon a Government Code section requiring the city to engage in periodic accounting of revenueto reconcile estimates of development impact mitigation fees with actual mitigation costs. Second, this Court relied upon the city’s clear intention to adopt a “new comprehensivefee schedule.” (Ibid; see also Arcadia, 169 Cal.App.4th at pp. 263-265 [extension of “temporary” land use ordinance triggered fresh statute of limitations].) Arcadia applied Barratt American because the defendant city there clearly indicated that a land use ordinance — as to which any challenge was time-barred — was temporary, and its extension therefore constituted a “re-enactment.” (Arcadia, supra, 169 Cal.App.4that p. 263.) | Thus, both Barratt American and Arcadia are exceptions to the usualrule that maintaining earlier legislative language in new 27 152354.8 enactments continuesrather than newly enacts that language. Both are justified by legislative intent contrary to the generalrule. That canons of construction must bend to evidenceofcontrary legislative intent does not make them useless. “[E]very rule has its exceptions.” (Brainard v. Cotner (1976) 59 Cal.App.3d 790, 795; see also Scalia and Garner, Reading Law:TheInterpretation of Legal Texts (2012) p. 59 [“No canon of construction is absolute. Each may be overcome by the strength of differing principles that pointin other directions”].) In stark contrast to Barratt American and Arcadia, the Redding City Council gave no indication in 2011of intent that the PILOT be temporary or established anew.To the contrary, the Council made expressits intent to continue the PILOTasit has existed for over 20 years: [I]n light of the adoption of Proposition 26 on November2, 2010, which precludescertain new fees, levies or charges butis notretroactive as to local governments, the City Council desires to maintain the existing PILOT utilizing the current accounting formula and methodologyas last modified in 2005. (2 CT 531.) Accordingly, Resolution No. 2011-111 stated the Redding City Council did notlegislate the PILOT anewandits intent to maintain the pre-Proposition 26 status quo is express and unmistakable. To 28 152354.8 apply Barratt American to these facts is to rewrite the Redding City Council’s language rather than to implementit. Thus,it is plain that the PILOT predates Proposition 26 and Citizens’ terse argumentto the contrary simplyfails. CONCLUSION Citizens’ brief fails because it assumes whatit must prove and applies Proposition 218 authorities without consideration of the different language and purpose of Proposition 26, which makes those authorities inapt here. Citizens therefore fail to establish a primafacie case sufficient to put the City to its proof that the PILOT is not a tax. Even so, the City can and does demonstrate the PILOTis grandfathered by Proposition 26, is not funded byrates, and the challenged rates would comply with Proposition 26’s requirement that charges for governmentservicesreflect a reasonable cost of service even if they funded the PILOT. Accordingly, the City respectfully requests that this Court affirm thetrial court judgment. DATED:July 20, 2015 LANTUONO, HIGHSMITH & ITJATIEY PC VETAATOOT, Fe z MICHAEL G. COLANTUONO Attorneys for RespondentCity of Redding = O 29 152354.8 CERTIFICATION OF COMPLIANCE WITH CAL.R. CT. 8.520(B) & 8.204(C)(1) Pursuantto California Rules of Court, rules 8.520(b) and 8.204(c)(1), the foregoing Reply Brief by Defendants/ Respondents City of Redding and City Council of Redding contains 6,067 words(including footnotes, but excluding the tables andthis Certificate) and is within the 8,400 wordlimit set by California Rules of Court, rule 8.520(c). In preparing this certificate, I relied on the word count generated by Wordversion 14, included in Microsoft Office Professional Plus 2010. DATED:July 20, 2015 COLANTUONO, HIGHSMITH & WHATLEY, PC MICHAEL G. COLANTUONO Attorneys for Respondent City of Redding 30 152354.8 ATTACHMENTNO.| CILY OF REDDING BIENNIAL BUDGET. FISCAL YEARS ENDING JUNE 39, 2000 AND 2011 Public Benetils Program Eaimated Adopiel ‘Milgpred Description Fy 2008-09 [RY 209-10 [Fv2007 ergy Piicieney, ~ [Beofect Expenses (including bos) S__1s70000 [5 1.500.000] 5 1,500,000 Low facome Assistance Projet Expenses (including labor) Sawn [s—_600,000 ¥_ota.u00 Research, Development & Denioustration Prpjest Expenses including labor) Tago [$10,000 [$150,000 [Renewable Resources [Brajeck Expenses (inclnding leon) 3 #6000 |S $0,000 ¥ 30,006 ROTAPBP Charges 3 zaneou] $ _2300,000 § 2,300,000 Five-Year Financial Plan The Electric Utility’s financial plan for the current yeur and subsequent five years is summarized in the table below. = an TigaVes Eoving ne 1 BaeR FINANCIAL, PLAN 2009 210 2071 2012 203 2014 Peeiieiy Fund DeaRaiance wz [ses ast ise [iso ta Rate Austen Tim [sae 910m a0 dae Bt0% [Revenues ($ Mil) RotaFleer ites 63 tor] uma sae a6 Whesle Elecales 266 wa w2 tous ws | Mioslaneusicone or ose sz 59 60 #2 Toa rad ers] ess Pee an ass Operating ExpensesOH | Paver Suppiy ao sia a2 wa ws ara ouM wo 25 os os 303 a2 ota a ay [os 098 os aes Nat Operating Rover ao [a6 a [ma [a otal Net Debt Serie sa ino By a [a [Revenue Remaining ater Dein Senice ae [86 45_[ iss [350 her Revennes & Expeties “Ost Rosensss a1 ae a2 09 or or Beiobursenens fomBond Protets so 20 20 a0 oo op Genoral Fund Paybwk rioniPureiase 02 02 02 a2 uz 2 Revenue Funded Copital Projects ss ss 32 so 2 3 ToLieu Payment io Cy i so or ss 6s Rolin Stock, Major Pn Muioenance so os as 40 os Tota Bi 86] a4 [sear increase (Deerea Pande NH ag es as sas etre Utes Yond Ending Batance sin 322 as7 aso 1s0 ist 225 serves (as a % of OMI Requtzemend) Si0% Tv [Taare 34% Beave BebtService Coverage Ralo Tp ae zs | bas PROOFOFSERVICE Citizens for Fair REU Ratesv. City OfRedding Third District Court of Appeal Case No. C071906 California Supreme Court Case No. 5224779 I, Ashley A. Lloyd, declare: Iam employed in the County of Nevada, State of California.I am over the age of 18 and not a party to the within action. My business address is 11364 Pleasant Valley Road, Penn Valley, California 95946. On Jury 20, 2015 1 served the document(s) described as REPLY BRIEFontheinterested parties in this action by placing a true copy thereof enclosed in a sealed envelope addressed as follows: SEE ATTACHEDLIST BY MAIL: The envelope was mailed with postage thereon fully prepaid. I am readily familiar with the firm’s practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid at Penn Valley, California in the ordinary course of business. I am aware that on motion of the party served, service is presumedinvalid if the postal cancellation date or postage meter date is more than one day after service of deposit for mailing in affidavit. I declare under penalty of perjury under the lawsof the State Executed on Juey 20, 2015 at Penn Valley, California. Ashley A. Ifqyd | / 31 152354.8 SERVICE LIST Citizensfor Fair REU Ratesv. City ofRedding Third District Court of Appeal Case No. C071906 California Supreme Court Case No. $224779 William P. McNeill McNeill Law Offices 280 Hemsted Drive, Suite E Redding, CA 96002 Telephone: (530) 222-8992 Facsimile: (530) 222-8892 Email: waltmcn@aol.com Attorneys for Plaintiff and Appellant Citizens for Fair REU Rates Rick W.Jarvis Jarvis Fay Doporto & Gibson 492 9th Street, Suite 310 Oakland, CA 94607 Attorneys for League of California Cities, Pub/Depublication Requestor JamesR. Cogdill HowardJarvis Taxpayers Assn. 921 11Street, Suite 1201 Sacramento, CA 95814 Barry DeWalt, City Attorney City Of Redding 777 Cypress Avenue P.O. Box 49601 Redding, CA 96099 Telephone: (530) 225-4050 Facsimile: (530) 225-4362 Email: lwingate@ci.redding.ca.us Attorneys for Defendant and Respondent City ofRedding Daniel E. Griffiths Braun Blaising McLaughlin & Smith 915 L Street, Suite 1270 Sacramento, CA 95814 Attorneys for California Municipal Utilities Association, Pub/Depublication Requestor Clerk of the Court Shasta County Superior Court 1500 Court Street Redding, CA 96001-1686 Attorneys for Howard farvis Taxpayers Association, Pub/Depublication Requestor 152354.8 Court of Appeal Third Appellate District 914 Capitol Mall Sacramento, CA 95814 32