Roseville

The City of Roseville (Roseville) operates three municipal utilities that provide, respectively, water, sewer, and refuse collection services. Roseville imposes an “in-lieu franchise fee” (in-lieu fee) of 4 percent on each of the utilities’ annual budgets; this fee is paid by the utility ratepayers and transferred to Roseville’s general fund.

This appeal presents us with two principal questions: whether Proposition 218—a descendant of Proposition 13 that covers local government fees and charges—applies to Roseville’s in-lieu fee; and, if so, whether the in-lieu fee violates Proposition 218. We answer yes to both questions and affirm the judgment.

Background

Private utilities pay public authorities “franchise fees” to use government land such as streets, or for rights-of-way to provide utility service. Roseville similarly imposes the in-lieu fee on its municipal utilities; “in-lieu” is the term of choice since the utilities are not private entities.

The accounting for Roseville’s municipal utilities is maintained in enterprise accounts that are separate from Roseville’s general fund. The in-lieu fee was conceived in 1968, and has existed in various forms since then.…