Filed 6/2/15

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

JACK MOORE,

Appellant,

v.

CITY OF LEMON GROVE et al.,

Respondents.

 D066670

 (Super. Ct. No. 37-2013-00045077-

 CU-WM-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, 

Ronald S. Prager, Judge. Affirmed.

Krause Kalfayan Benink & Slavens and Eric J. Benink for Appellant.

Lounsbery Ferguson Altona & Peak, James P. Lough and Alena Shamos for 

Respondents.

Trevor A. Grimm, Jonathan M. Coupal, Timothy A. Bittle and J. Ryan Cogdill 

for Howard Jarvis Taxpayers Foundation as Amicus Curiae on behalf of Appellant.

In this case, a sanitation fee ratepayer, Jack Moore, appealed a judgment denying 

his petition for writ of mandate and equitable relief as against the City of Lemon Grove 
2

(the City) and the Lemon Grove Sanitation District (the District, together with the City, 

Respondents). Moore sought to stop Respondents from transferring funds collected as 

sewer service fees and charges to the City's general fund, claiming the transfers violated 

Proposition 218, the Right to Vote on Taxes Act. (Historical Notes, 2B West's Ann. 

Codes, Cal. Const. (2013 ed.) foll. art. 13C, § 1, p. 363.) The trial court concluded that 

the charges at issue were subject to Proposition 218, but that the transfers did not violate 

Proposition 218 as the District had used reasonable methods to determine the amounts 

to transfer. We agree and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

The District manages and maintains about 67 miles of collection pipes that 

transport sewage to the City of San Diego treatment plants. The District possesses very 

little capital equipment and the City has three employees who exclusively perform 

District-related work. All District maintenance, facilities, administrative equipment, 

personnel, service, billing, regulatory and other overhead are provided by the City. The 

other functions required for the District to operate (accountants/finance, receptionists, 

analysts, engineers, inspectors, plan checkers, etc.) are provided by City employees that 

divide their time among various activities.

Moore is a resident of the City and a sanitation fee ratepayer. He filed a petition 

for writ of mandate and complaint for injunctive relief, claiming Respondents provide 

sewer services and impose fees and charges on users of the sewer services through 

semi-annual property tax bills. He alleged that Respondents engaged in a practice 

whereby they transferred funds collected as sewer service fees and charges to the City's 
3

general fund. Further, he claimed Respondents failed to earmark these funds for a 

specific purpose, such as for reimbursement of shared costs or sewer maintenance and 

operations, but instead used the funds for general governmental purposes. Moore 

claimed the yearly amount transferred by Respondents to the general fund was not 

based on the actual costs incurred to support sewer maintenance and operations, but was 

calculated as about 22 percent of the annual sewer service fees collected.

Moore sought a petition for writ of mandate directing that Respondents stop all 

transfers to the general fund and restore all previously transferred funds received by the 

general fund. He also sought a declaration of rights declaring that Respondents violated 

article XIII D (article XIII D) of the California Constitution and an injunction enjoining 

Respondents from transferring funds to the general fund and requiring them to repay all 

previously transferred funds received by the general fund.

After considering the parties' evidence, the trial court issued a tentative ruling 

concluding that the sanitation fees and charges at issue were subject to Proposition 218, 

but finding Respondents did not violate Proposition 218. The trial court later confirmed 

its tentative ruling. Thereafter, the court issued a judgment denying Moore's petition for 

writ of mandate. Moore timely appealed. We granted the application of the Howard 

Jarvis Taxpayers Association to file an amicus curiae brief on behalf of Moore.

DISCUSSION

I. General Legal Principles

"In 1978, California voters enacted Proposition 13, which amended the 

California Constitution by adding article XIII A (article XIII A). The amendment 
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'plac[ed] significant limits on the taxing power of local and state governments.' 

[Citation.] As pertinent here, article XIII A, section 4 provides, 'Cities, Counties and 

special districts, by a two-thirds vote of the qualified electors of such district, may 

impose special taxes on such district . . . .'" (City of San Diego v. Shapiro (2014) 228 

Cal.App.4th 756, 760-761 (Shapiro), italics deleted.)

"In 1996, California voters enacted Proposition 218, which added article XIII C 

(article XIII C) and article XIII D (article XIII D) to the California Constitution in order 

to 'close government-devised loopholes in Proposition 13.'" (Shapiro, supra, 228 

Cal.App.4th at p. 761.) "[T]he primary purpose of Proposition 218 was to reform the 

law governing local government's imposition of revenue generating devices other than 

special taxes . . . ." (Id. at p. 779.) A "fee" or "charge" is defined as "any levy other

than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a 

parcel or upon a person as an incident of property ownership, including a user fee or 

charge for a property related service." (Art. XIII D, § 2, subd. (e).)

Section 6 of article XIII D sets forth the procedures and requirements governing 

property-related fees and charges. As relevant here, section 6 provides: a fee cannot be 

charged in excess of the service provided; a fee can only be used for the purpose it was 

charged; and the fee may not be imposed for general governmental services. (Art. XIII 

D, § 6, subd. (b)(1), (2) & (5), hereinafter section 6(b)(1), (2) or (5).) "The theme of 

these sections is that fee or charge revenues may not exceed what it costs to provide fee 

or charge services. Of course, what it costs to provide such services includes all the 

required costs of providing service, short-term and long-term, including operation, 
5

maintenance, financial, and capital expenditures. The key is that the revenues derived 

from the fee or charge are required to provide the service, and may be used only for the 

service. In short, the section 6(b) fee or charge must reasonably represent the cost of 

providing service." (Howard Jarvis Taxpayers Assn. v. City of Roseville (2002) 97 

Cal.App.4th 637, 647-648 (Roseville).)

As one court that examined a regulatory fee noted, some fees "are not easily 

correlated to a specific, ascertainable cost. This may be due to the complexity of the 

regulatory scheme and the multifaceted responsibilities of the department or agency 

charged with implementing or enforcing the applicable regulations; the multifaceted 

responsibilities of each of the employees who are charged with implementing or 

enforcing the regulations; the intermingled functions of various departments as well as 

intermingled funding sources; and expansive accounting systems which are not 

designed to track specific tasks." (California Assn. of Prof. Scientists v. Department of 

Fish & Game (2000) 79 Cal.App.4th 935, 950.) Thus, courts afford agencies a 

reasonable degree of flexibility "to apportion the costs of regulatory programs in a 

variety of reasonable financing schemes." (Ibid.)

The agency charging the fee or charge has the burden of demonstrating 

compliance with these requirements. (§ 6(b)(5).) The question whether a fee or charge 

violates article XIII D is subject to de novo review. (Silicon Valley Taxpayers' Assn., 

Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal.4th 431, 450.) We 

presume that the appealed judgment is correct. (Denham v. Superior Court (1970) 2 

Cal.3d 557, 564.) Even when we exercise our independent judgment in reviewing the 
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record, we do not decide disputed issues of fact (Morgan v. Imperial Irrigation Dist.

(2014) 223 Cal.App.4th 892, 912) and our review "is limited to issues which have been 

adequately raised and supported in [the appellant's] brief." (Reyes v. Kosha (1998) 65 

Cal.App.4th 451, 466, fn. 6.)

II. Analysis

The trial court concluded that the sanitation fees and charges at issue were fees as 

defined in article XIII D, section 2, subdivision (e) of the California Constitution and 

thus, were "property-related fees subject to [Proposition] 218." This finding is not at 

issue. Rather, Moore contends the money transferred by Respondents from the 

sanitation fund to the general fund is illegal because the transfers were not properly tied 

to actual costs incurred for the District's benefit and Respondents never properly 

identified and quantified the costs. Moore alleges a violation of three specific 

subdivisions of section 6. Accordingly, we address each subdivision in turn, examining 

whether the District met its burden of demonstrating compliance with the requirements

of section 6.

A. The Fees Were Not Spent for Unrelated Revenue Purposes

A fee may only be used for the purpose it was charged. (§ 6(b)(2).) Here, the 

fees at issue were collected from property owners and described as sewer service 

charges. Accordingly, Respondents may appropriately spend these fees on anything 

related to the maintenance and management of the sewer system. We consider "all the 

required costs of providing service, short-term and long-term, including operation, 
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maintenance, financial, and capital expenditures." (Roseville, supra, 97 Cal.App.4th at 

p. 648.)

The District presented evidence showing most functions required for it to operate

are provided by City employees that divide their time among various activities. In 

return, the District reimburses the City for these services and expenses related to these 

services. Cathleen Till, the City's finance director, explained that basic operational tools 

that the District requires to operate include: support staff, accounting software, accounts 

payable staff, computer and "GIS" systems, human resource services, executive 

management and support, inspection services, engineering staff, design programs and 

tools, and receptionist staff. Because the District does not possess any of these software 

programs, computer systems, personnel, expertise, buildings for office space, etc., it 

relies on the City to provide these services.

Graham Mitchell is the city manager and serves as executive director for the 

District. As the District's executive director, Mitchell oversees the overall operation of 

the District, manages the employees that provide direct and support services to the 

District, manages the overall budget, provides policy recommendations to the District's 

board of directors and ensures that the District is fiscally solvent.

Mitchell explained that the shared staffing approach utilized by the District and 

the City creates effective economies of scale and saves the taxpayers and ratepayers of 

the City and the District. Mitchell also stated it is common practice in California for a 

city manager to provide executive management for several city-related enterprises and 
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for city staff to provide support for the other city-related enterprises such as a sanitation 

district.

Mitchell attempts to ensure an equitable and reasonable exchange of personnel 

and services between the City and the District. To manage the exchange of personnel 

and services between the City and the District, he utilizes an accounting practice in 

which the District transferred reimbursements to the City under two categories—

"'Interfund Transfers for Operations'" and "'Interfund Transfers for Administrative 

Services.'" Interfund Transfers for Operations relates to the direct personnel costs that 

the City incurs to manage and operate the District (direct costs) and the Interfund 

Transfers for Administrative Services represents the overhead costs associated with 

operating the District (indirect costs).

Till explained how the City and the District apportion indirect costs. For 

example, the telephone in the one-room office used by the District is charged as a direct 

cost to the sanitation program. However, a percentage of the telephones used by the 

supervising public works director, city manager and other employees who spend part of 

their working hours performing sanitation duties is apportioned as an indirect cost to the 

District. The apportionment is done in accordance with the City's best estimate of the 

actual time spent on sanitation matters. Till stated that general department overhead is 

apportioned to the general fund if services are provided to the District by that 

department.

Mitchell stated that Moore's inquiries over the past few years have prompted the 

City to create a better system to document transfers between the District and the City. 
9

After consulting with the San Diego County Grand Jury auditor, the City developed a 

method to determine overhead costs. The City first determines its total overhead-related 

costs for building expenditures, accounting software, copiers, utilities, etc. It then 

determines each fund or activity's share of the overhead costs by examining the 

budgeted expenditures for each fund or activity. Mitchell explained that the challenge 

with using an expenditure model is that in any given year, expenditures can fluctuate 

greatly. For example, the District could have $2 million in capital improvements, which 

would increase its share wildly that year. Because this anomaly exists, Mitchell 

explained that it makes more sense to base each fund's or activity's share of overhead on 

revenue.

Till similarly stated that revenue estimates are a good indicator of general time 

spent by the support departments of each special fund when dividing overhead costs and 

provided the following as an example. Assuming she gets thirty phone calls a day about 

various business items. Each phone call may discuss a different budget fund. A call 

from the public works director may raise five or six special fund issues. Cost allocation 

by time sheet could not capture the allocation of each of these costs. However, a 

general allocation method based on how much money flowed through into the programs 

would be a more accurate measure of the actual time spent and the loaded costs of each 

employee's time in each program.

Till noted that counting tasks assigned to each manager would be a misleading 

way to determine overhead costs, using the handling of tort claims by the risk 

manager/public works director as an example. She stated that most street-related claims 
10

involve tire or wheel damage due to pot holes. These claims have a very standardized 

process and seldom are a significant cost item. In contrast, sewer damage claims 

happen once or twice a year and take up significant time and resources. Till explained 

that for sewer backups, the District must respond as if it is the District's fault unless 

proven otherwise. This entails significant environmental cleanup costs and costs for 

damage to the household and often hotel bills. It is a time-intensive process even if it is 

later determined that the District was not at fault. The risk manager, city manager, city 

attorney, public works crews and outside contractors are involved for sewer backup 

clams. Accordingly, one claim for tire damage and one sewer backup claim are not 

equal from a cost allocation perspective.

Significantly, Moore conceded at oral argument below that when a cost is 

incurred for the joint benefit of different divisions within a city or local government, 

those costs may be allocated. Moore explained that the principle used by Respondents 

was "okay," but that the methods used were "too ad hoc" and "not subject to any kind of

objective criteria." Moore agreed with the trial court's restatement of his argument that 

he believed the method used by Respondents to estimate and allocate their costs was 

unreasonable, while Respondents believed the method to be reasonable. Below and on 

appeal, Moore relied on the Roseville case to support his argument that Respondents did 

not use a reasonable methodology.

At issue in Roseville was an "in-lieu franchise fee" (in-lieu fee). (Roseville, 

supra, 97 Cal.App.4th at p. 638.) The Roseville court explained that "[p]rivate utilities 

pay public authorities 'franchise fees' to use government land such as streets, or for 
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rights-of-way to provide utility service. [The city] similarly imposes the in-lieu fee on 

its municipal utilities; 'in-lieu' is the term of choice since the utilities are not private 

entities." (Id. at p. 639, fn. omitted.) The city set the in-lieu franchise fee at a flat four 

percent of the utilities' annual budgets. (Id. at p. 648.) The Roseville court concluded 

that the flat fee on the annual budget violated section 6(b)(1) because the City made no 

showing that the flat fee represented actual costs, noting "[o]n its face, this fee does not 

represent costs. It is a flat fee." (Roseville, at p. 648.) Once collected, the City 

transferred the flat fee into its general fund without pledging it for any specific purpose. 

(Id. at p. 650.) The court concluded the transfer violated sections 6(b)(2) and (b)(5) 

because the flat fee was used to pay for general governmental services, not costs 

attributable to the services for which the fee was charged. (Roseville, at p. 650.)

Similarly, in Howard Jarvis Taxpayers Assn. v. City of Fresno (2005) 127 

Cal.App.4th 914 (Fresno), the city required each municipal utility to "'pay to the City, 

in lieu of property and other taxes normally placed upon private business,'" an in-lieu 

fee currently set at one percent of the assessed value of fixed assets of the utility 

department or division. (Id. at p. 917.) The Fresno court concluded that the trial court 

properly prohibited the city from collecting the in[-]lieu fee, noting "[the city] has not 

even claimed the in[-]lieu fee approximates the cost of city services to the utility 

departments and divisions, much less has it established such a relationship as a fact." 

(Id. at p. 928.) The Fresno court stated that if the city wishes to recover all of its costs 

from user fees, it must reasonably determine the unbudgeted costs of utilities enterprises 
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and that those costs be recovered through rates proportional to the cost of providing 

service to each parcel. (Id. at p. 923.)

The trial court rejected Moore's argument that the instant case was akin to the inlieu fees at issue in Roseville. The court found that, unlike the Roseville case, 

"Respondents provided ample evidence that the amount of money transferred to the 

[g]eneral [f]und [was] based on reliable estimates of time spent by City workers on 

sanitation issues." We agree.

In Roseville and Fresno, each city made no attempt to show that the flat fees 

represented the actual cost of providing the service as required by section 6(b)(2). 

(Roseville, supra, 97 Cal.App.4th at p. 648; Fresno, supra, 127 Cal.App.4th at p. 928.) 

Here, in contrast, Respondents presented evidence on this issue. Unlike Roseville and 

Fresno, Moore's challenge is to Respondents' method of showing they used the fees 

collected for only the purpose for which the fees were charged. Moore separately 

addressed personnel costs and overhead costs. We do the same.

As to personnel costs, Moore acknowledged that some city workers spent time 

on sanitation activities and, to the extent city workers do so, a portion of their salaries 

can be allocated to the District. Moore explained he is not seeking to cut off salary 

reimbursements; rather, he is concerned that the salary allocations were not subjected to 

any level of rigor or objective analysis. At oral argument below, Moore's counsel 

admitted "[i]n principle" transferring money to the general fund to pay for a portion of 

nonsanitation worker salaries that worked on sanitation matters was "okay," but 

complained about the allocation methods used by Respondents. Moore also testified he 
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believed some money should be transferred to the general fund to compensate for 

employee time.

Thus, at issue is the method used by Respondents to determine the amount of 

time city workers spend on District activities and thus, the amounts transferred to the 

general fund. On this issue, Till stated that after sanitation rates are established, she and 

her staff monitor expenditures to make sure that they stay within budget. Her

department tracks direct costs to the sewer program to ensure they stay within budgetary 

parameters, she interviews department directors and makes adjustments to personnel 

allocations between various funds, and directors are required to review and analyze for 

which funds the work of their respective staff applies.

Although Till was not employed by the City during the preparation of the

budgets for fiscal years 2009-2010 and 2010-2011, she created spreadsheets for these 

fiscal years by reviewing previous budgets and identifying the staff allocated to the 

District. She also reviewed handwritten notes identifying the various individuals with a 

percentage. Although these spreadsheets were created after the fact, Mitchell stated that 

Respondents employed the same analysis, albeit informally with written notes justifying 

the transfers.

Our review of the totality of the evidence shows Respondents' methods were 

informal. For example, although Mitchell asked Till to interview each of the 

department directors to identify the amount of time spent on District activities and then 

interview individual staff members to verify the amount of time, Till never interviewed 

employees to determine if the percentages were accurate. Similarly, Till did not provide 
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instructions on determining percentages. She assumed that based on their supervisory 

roles, directors knew what percentage of time employees were spending on certain 

directives. While the informality of Respondents' method for determining the 

percentage to time employees spend on District matters is not ideal, we concur with the 

trial court's implied conclusion that no unconstitutionality exists.

As to overhead costs, Till stated that "[g]eneral department overhead is 

apportioned to the General Fund if services are provided to the [District] by that 

[particular] department." (Italics added.) After the City determines its total overhead 

related costs, it then determines each fund or activity's share of the overhead costs by 

examining the budgeted expenditures for each fund or activity. Mitchell explained it 

makes more sense to base each fund's or activity's share of overhead on revenue and not 

expenditures as expenditures can vary greatly year to year.

The District's revenue is specifically tied to expenditures through the Lemon 

Grove Sanitation District Wastewater Enterprise Rate Study (the Five-Year Rate Study). 

An independent consultant develops the Five-Year Rate Study by reviewing past and 

projected expenditures, such as costs associated with capital improvement projects, 

sewer line maintenance, contracted services, and administration (including indirect 

operational costs). The Five-Year Rate Study averages out costs over a five-year period 

and then determines the revenue required to cover those charges from year to year to 

avoid ratepayers experiencing spikes in sewer bills the year of a large capital project. 

Mitchell explained that this process helps to ensure that ratepayers do not overpay for 

sewer services.
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Moore argues that Respondents transferred a flat fee to the general fund that bore 

no relation to costs. He cited evidence that for the 2010-2011 fiscal year, Respondents 

transferred a flat 11 percent of sanitation revenues to the general fund as 

administration/indirect costs and the following fiscal year, this percentage increased to 

13.5 percent. This argument is misleading as it ignores the methodology used by 

Respondents to calculate the percentages transferred. Namely, Respondents calculated 

the percentage to transfer to the general fund by dividing sanitation expenditures by 

sanitation revenue. As Mitchell explained, reviewing staff report time revealed that 

amounts budgeted for sanitation "pretty close[ly]" corresponded to time actually spent

on sanitation matters.

Moore asserts Respondents provided no authority to support their "revenuecentric methodology," noting Respondents argued in conclusory fashion that their

method of cost allocation was reasonable and legal. We disagree.

Here, Respondents presented evidence regarding the methods used and the trial 

court found the evidence showed "apportioning the funds based on revenue [was]

reasonable under the circumstances." This evidence consists mainly of declarations 

from the City's manager, finance director and clerk. While Moore is dissatisfied with 

the explanations provided by these individuals regarding Respondents' cost allocation 

methods, these explanations constitute evidence and the trial court impliedly found the 

evidence satisfied Respondents' burden of demonstrating compliance with the 

requirements of section 6.
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Moore presented no expert testimony or other authority showing Respondents'

allocation methods were illegal or otherwise improper. Rather, cost allocation methods 

used by governments present a subject beyond the trial court's and our common 

experience and knowledge. (Evid. Code, § 801, subd. (a) [an expert's opinion must 

relate to a subject matter that is sufficiently beyond common experience that it assists 

the trier of fact].) On this record, we cannot conclude that Respondents' cost allocation 

methods were improper or that Respondents improperly spent fees for unrelated revenue 

purposes in violation of section 6(b)(2).

B. The Fees Were in Amounts Necessary to Accomplish Their Purpose

We next examine whether the fees imposed by the District exceeded the cost of 

providing the service. (§ 6(b)(1).) As a preliminary matter, we note Moore did not 

specifically challenge in his appellate briefing the trial court's implied conclusion that 

Respondents did not violate section 6(b)(1). Nonetheless, because the parties generally 

jumbled all their arguments together, we exercise our discretion to address this issue. 

To show a fee is " '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 

which the costs are apportioned, so that charges allocated to a payor bear a fair or 

reasonable relationship to the payor's burdens on or benefits from the regulatory 

activity.'" (Collier v. City and County of San Francisco (2007) 151 Cal.App.4th 1326, 

1346.)

As explained above, we determined Respondents appropriately spend the fees 

collected from ratepayers on the maintenance and management of the sewer system. 
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The District explained its revenue is tied to expenditures through the Five-Year Rate 

Study and we concluded that Respondents reasonably apportioned the funds based on 

revenue. (Ante, Part A.)

As allowed by law, the Five-Year Rate Study identifies the maximum fee 

increases that the District can apply annually. This same approach was used in the 

previous rate study published in 2007. The District board annually determines whether 

the estimates identified in the Five-Year Rate Study are accurate based on new cost 

conditions. In 2007 and 2011, the District board increased the sanitation rates 

consistent with the amounts set forth in the current and prior Five-Year Rate Study. In 

later years, the District lowered the rate increases to an amount below that set forth in 

the current the Five-Year Rate Study. After sanitation rates are established, the City 

finance department monitors expenditures to make sure they stay within budget. 

Additionally, direct costs to the District are tracked to ensure they stay within budgetary 

parameters. Finally, Till interviews department directors and makes adjustments to 

personnel allocations between various funds. This evidence sufficiently tied the rates 

charged by the District to the amounts needed to run the District as required by section 

6(b)(1).

C. The Fees Were Not Imposed for General Governmental Services 

Section 6(b)(5) provides in part: "No fee or charge may be imposed for general 

governmental services including, but not limited to, police, fire, ambulance or library 

services, where the service is available to the public at large in substantially the same 

manner as it is to property owners." Viewed in conjunction with section 6(b)(1) and (2), 
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the purpose of section 6(b)(5) is to require that a fee or charge collected from ratepayers

be used to pay for the service for which the fee or charge was imposed and not general 

governmental services.

To show a violation of section 6(b)(5), Moore relies on the following discussion 

in Roseville: "[The city] concedes that '[r]evenue from the in[-]lieu franchise fee is 

[]placed in [the city's] general fund to pay for general governmental services. It has not 

been pledged, formally or informally[,] for any specific purpose.' This concession runs 

afoul of section 6(b)(2) that '[r]evenues derived from the fee or charge shall not be used 

for any purpose other than that for which the fee or charge was imposed.' It also 

contravenes section 6(b)(5) that '[n]o fee or charge may be imposed for general 

governmental services. . . .'" (Roseville, supra, 97 Cal.App.4th at p. 650, italics added.)

Namely, Moore cites to the above italicized language to assert Respondents 

violated section 6(b)(5) because they failed to earmark or pledge the transferred funds 

for any specific purpose. Rather, once Respondents determined the proper amount 

needed to cover the District's share of personnel and overhead expenses, the funds were 

placed in the City's general fund. Although not specifically argued by Moore, he 

appears to suggest that the funds placed in the general fund need to be specifically 

earmarked as payment for particular overhead or personnel costs of the District. We 

conclude Respondents' action did not violate section 6(b)(5).

First, as addressed above, Roseville is distinguishable because the city imposed a 

flat fee to cover the cost of water, sewer, and refuse collection services, but failed to 
19

connect the flat fee to the cost of providing these services. (Ante, Part A.) 

Significantly, after noting fees "must reasonably represent the cost of providing [the]

service," the Roseville court stated, "In line with this theme, [the city] may charge its 

water, sewer, and refuse utilities for the street, alley and right-of-way costs attributed to 

the utilities; and [the city] may transfer these revenues to its general fund to pay for such 

costs (the general fund supports or pays for [the city's] streets, alleys, and rights-ofway)." (Roseville, supra, 97 Cal.App.4th at p. 648.) The Roseville court reaffirmed this 

statement at the end of its opinion: "As noted, [the city] may place in its general fund 

the revenues derived from a cost-based in-lieu franchise fee to pay for the street, alley 

and right-of-way costs attributed to the water, sewer and refuse utilities." (Id. at p. 650.) 

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. The statement of the 

Roseville court that the funds transferred to the general fund were not earmarked or 

pledged for any specific purpose must be considered based on the facts presented.

Here, Respondents presented evidence linking the fees to its costs and showing 

its fees did not exceed the cost of providing the service. (Ante, Parts A & B.) The 

District then reimburses the City for services and expenditures related to the services 

provided by the City. As Till stated, the general fund, can subsidize any other fund, 

including sanitation. Respondents' action of reimbursing the general fund for its costs 

did not violate section 6(b)(5).
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DISPOSITION

The judgment is affirmed. Respondents are entitled to their costs on appeal.

MCINTYRE, J.

WE CONCUR:

NARES, Acting P. J.

O'ROURKE, J.