Regents of University of California v. East Bay Municipal Utility District

In San Marcos Water Dist. v. San Marcos Unified School Dist. (1986) 42 Cal.3d 154 [ 228 Cal.Rptr. 47 , 720 P.2d 935 ] (San Marcos), the Supreme Court held that the constitutional public entity exemption from special assessments prohibited a local water district from imposing a capacity fee used to fund capital improvements to the water system, absent legislative authorization. The Legislature responded to the San Marcos decision by enacting Government Code section 54999 et seq., often referred to as the San Marcos Legislation, authorizing public utilities to impose “capital facilities fees” on public entities, subject to certain limitations. This case involves the application of the San Marcos Legislation to the capital component of a public utility’s periodic water service charges imposed on a public university.

The Regents of the University of California and the East Bay Municipal Utility District each appeal from a judgment on the Regents’ refund action, challenging the fiscal year 2002 water rates. The Regents contend that the district’s rates contain capital facilities fees exceeding the limitations imposed by the San Marcos Legislation. The district contends that…