Moore v. City of Lemon Grove

Filed 6/2/15

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

JACK MOORE, D066670

Appellant,

v. (Super. Ct. No. 37-2013-00045077-
CU-WM-CTL)
CITY OF LEMON GROVE et al.,

Respondents.

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
(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

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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,

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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.

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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

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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 in-

lieu 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 "revenue-

centric 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

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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-of-

way)." (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.

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