Failure To Pay Under Protest Prevents Ratepayer From Challenging Garbage Collection Charges

A California Court of Appeal has determined that San Jose ratepayers are prohibited from challenging the City’s garbage collection charges without first paying under protest. In Padilla v. San Jose, the appellate court held that the procedural protections of Health and Safety Code section 5472 applied to the City’s garbage collection charges as long as the City adopted the garbage collection charges by ordinance or resolution adopted by two-thirds of the legislative body. This is an important decision that sheds light on how cities can obtain procedural protections afforded by Health and Safety Code section 5742 for water, sewer, sanitation and stormwater fees.

Plaintiffs Challenge Garbage Collection Charges
San Jose provides garbage collection services to customers within the City. To enforce collection, the City records liens on property owned by delinquent property owners, and refers delinquencies to the County of Santa Clara as special assessments included on the property tax bill. Plaintiffs challenged the City’s practice as violating California law regarding recording and priority of real property liens, and sought a refund for all amounts collected through the lien process. 

City Demurs Based on Health and Safety Code
The City argued that Plaintiffs were statutorily prohibited from seeking a refund for the City’s garbage collection charges because they failed to pay such charges under protest. The City relied on the statutory scheme set forth in the Health and Safety Code provisions beginning with section 5470. 

• Health and Safety Code section 5471 authorizes local agencies that are authorized to acquire, construct, maintain and operate sanitary sewers and sewerage systems, to impose fees for services and facilities furnished by a local agency in connection with water, sanitation, storm drainage or sewerage systems, provided such fees are adopted by a two-thirds vote of the agency’s legislative body.
• Health and Safety Code section 5472 provides procedures for challenging the City’s fees and charges adopted pursuant to Section 5471, including a requirement that challengers first make payment under protest.
• Health and Safety Code section 5473 et seq. provides that local agencies may elect to have charges imposed pursuant to Section 5471 or delinquencies collected on the property tax roll in the same manner as property taxes.

Court Determines Health and Safety Code Provisions Are Applicable
In upholding the trial court’s decision, the appellate court determined that the City’s garbage collection charges were adopted in accordance with Section 5471, and challenges to such charges are prohibited unless the plaintiff first paid under protest in accordance with Section 5472.

In reaching this conclusion, the court determined that the only requirement for the City to claim that its charges were adopted under Section 5471 was to show that the charges were adopted by resolution or ordinance approved by at least two thirds of the legislative body. Section 5471 does not require that the resolution or ordinance specifically reference Section 5471 or include any special language to fall under these statutes. Further, Section 5471’s procedures for adopting fees and Section 5473’s procedures for collecting fees are independent of each other, and the court determined that the City need not utilize the collection procedures in Section 5473 in order to avail itself of the protections of Section 5472.

Further, plaintiffs tried to argue that Section 5472’s payment under protest provisions did not apply to garbage collection charges. However, the court ruled that Section 5471’s reference to “sanitation” included solid waste service, and therefore, garbage collection charges fall within the authority of Section 5471.

Conclusion
The court’s ruling in this important case clarifies that Section 5471 encompasses solid waste fees, and that local agencies need only adopt fees and charges for water, sewer, stormwater and sanitation by two-thirds vote of their legislative body to support a claim that such charges fall under Section 5471. For many cities, this provides an important procedural guard to challenge under Section 5472, requiring plaintiffs to pay under protest before filing suit, and further limiting the ability to bring such challenges on behalf of a class. As the court notes, payment under protest provides fiscal protection to the collecting entity by putting them on notice of potential challenges to their fees.

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