Filed 8/7/13

                           CERTIFIED FOR PUBLICATION

           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                           FOURTH APPELLATE DISTRICT

                                       DIVISION TWO


MISSION SPRINGS WATER DISTRICT,

        Plaintiff and Respondent,                   E055176

v.                                                  (Super.Ct.No. INC1105569)

KARI VERJIL, as Registrar of Voters, etc.,          OPINION

         Defendant;

TIM RADIGAN BROPHY et al.,

        Real Parties in Interest and
        Appellants.


        APPEAL from the Superior Court of Riverside County. Harold W. Hopp, Judge.

Affirmed.

        Trevor A. Grimm, Jonathan M. Coupal, and Timothy A. Bittle for Defendants and

Appellants.

        Benbrook Law Group and Bradley A. Benbrook for Citizens in Charge as Amicus

Curiae on behalf of Defendants and Appellants.

        Slovak Baron & Empey, John O. Pinkney, and Charles L. Gallagher for Plaintiff

and Respondent.



                                             1
       Colantuono & Levin and Michael G. Colantuono for Association of California

Water Agencies, California Association of Sanitation Agencies, California State

Association of Counties, and League of California Cities as Amici Curiae on behalf of

Plaintiff and Respondent.

       Mission Springs Water District (the District) increased its water and sewer rates.

Initiatives to roll back the increases gathered enough signatures to qualify for the ballot.

Rather than hold an election on the initiatives, however, the District filed this action

against the proponents of the initiatives1 (the Proponents) for a declaration that the

initiatives are invalid.

       The Proponents filed a ―SLAPP motion‖ — i.e., a special motion to strike pursuant

to Code of Civil Procedure section 425.16 (SLAPP Act). For this motion to be granted,

the Proponents had to show that the action arose out of activity protected under the

constitutional right of petition or free speech, and the District had to fail to show a

probability of prevailing on its claims. The trial court denied the motion. It ruled that,

under our decision in City of Riverside v. Stansbury (2007) 155 Cal.App.4th 1582

(Stansbury), a declaratory relief action concerning the validity of an initiative does not

arise out of protected activity by the initiative‘s proponents.




       1       The proponents of the initiatives, and hence the named real parties in
interest, are Tim Radigan Brophy, Douglas Ward Sherman, Mary K. Stephens, and Steve
Sobotta.


                                               2
          The Proponents ask us to reconsider Stansbury, asserting that it was poorly

reasoned. We conclude that Stansbury was sound when decided; however, in light of the

California Supreme Court‘s subsequent holding in Perry v. Brown (2011) 52 Cal.4th 1116

(Perry) that a preelection challenge to an initiative does implicate the personal

constitutional rights of the initiative‘s proponents, Stansbury is no longer good law.

          Nevertheless, we also conclude that the trial court properly denied the SLAPP

motion, albeit for the wrong reason. The District showed a probability of prevailing on at

least one of its theories — that the initiatives would set the District‘s rates too low to

cover its costs, in violation of Water Code section 31007, and that the voters of a local

district cannot override this statewide requirement. Hence, we will affirm.

                                                I.

                                 FACTUAL BACKGROUND

          In 2010, the District adopted water and sewer rate increases effective January 1,

2011. According to the District, the rate increases are necessary if it is to remain solvent

and to continue to carry out its vital public functions. According to the Proponents,

however, the rate increases are unjustifiably high, due in part to employee salaries, health

benefits, and pension benefits that are out of line with those prevailing in the private

sector.

          The Proponents circulated petitions for two initiatives (one for water rates and one

for sewer rates) that would undo the rate increases and restore the preexisting rates. The

initiatives also provided that, every fiscal year, ―the District may adjust these . . . rates by



                                                3
the percentage increase, if any, in the Consumer Price Index published by the federal

Bureau of Labor Statistics for the region applicable to the . . . District.‖

       In May 2011, defendant Kari Verjil, the registrar of voters, notified the District

that the initiatives had received enough signatures. (See Elec. Code, §§ 9308, subd. (e),

9309, subd. (f).) At that point, the District was statutorily required to order that the

initiatives be placed on the ballot at the next general election. (Elec. Code, §§ 1405,

subd. (b), 9310, subd. (a)(2).)2 The District, however, did not do so. Instead, it filed this

action for declaratory relief.

                                              II.

                             PROCEDURAL BACKGROUND

       The District alleged that the initiatives were invalid because:

       1.     While Proposition 218 permits reducing local district rates by initiative, the

initiatives went beyond this authorization by also limiting future rate increases.

       2.     The initiatives were void for vagueness because they did not specify which

Consumer Price Index (CPI) was to be used for future rate increases.

       3.     The initiatives would cause the District to become insolvent.




       2       The petitions requested that the initiatives be submitted to the voters ―at a
special election . . . or the . . . next regular election . . . .‖ This wording was probably
insufficient to require a special election. (See Elec. Code, § 9310, subd. (a).) According
to the Proponents themselves, the initiatives should have gone on the ballot in the next
general election, on November 8, 2011.


                                               4
       4.     The initiatives, rather than enacting legislation directly, required the District

to enact legislation.

       5.     The initiatives unconstitutionally impaired the obligation of contract.

       The Proponents filed a demurrer. In it, they argued that the initiatives were not

invalid on any of the five theories that the District was asserting.

       Meanwhile, the Proponents also filed a SLAPP motion. They argued that the

action arose from the protected activity of exercising their right of petition. They also

argued that the District was not likely to prevail on the merits.

       The trial court held a combined hearing on both the demurrer and the SLAPP

motion. After hearing argument, it denied the SLAPP motion. It reasoned that, under

Stansbury, the action did not arise out of any protected activity. It therefore did not reach

the question of whether the District had shown a probability of prevailing on the merits.

(See Code Civ. Proc., § 425.16, subd. (b)(1).)

       At the same time, however, it overruled the demurrer. It ruled that at least one of

the District‘s theories — that the initiatives unconstitutionally limited future rate

increases — appeared to be meritorious.




                                               5
                                             III.

     THE DISTRICT‘S CLAIM DOES ARISE OUT OF PROTECTED ACTIVITY,

         BUT THE DISTRICT SHOWED A PROBABILITY OF PREVAILING

       A.     General SLAPP Act Principles.

       The SLAPP Act states: ―A cause of action against a person arising from any act of

that person in furtherance of the person‘s right of petition or free speech under the United

States Constitution or the California Constitution in connection with a public issue shall

be subject to a special motion to strike, unless the court determines that the plaintiff has

established that there is a probability that the plaintiff will prevail on the claim.‖ (Code

Civ. Proc., § 425.16, subd. (b)(1).)

       ―The analysis of [a SLAPP] motion thus involves two steps. ‗First, the court

decides whether the defendant has made a threshold showing that the challenged cause of

action is one ―arising from‖ protected activity. [Citation.] If the court finds such a

showing has been made, it then must consider whether the plaintiff has demonstrated a

probability of prevailing on the claim.‘ [Citation.]‖ (Oasis West Realty, LLC v. Goldman

(2011) 51 Cal.4th 811, 819-820.)

       ―We review an order granting or denying a motion to strike under section 425.16

de novo. [Citation.]‖ (Oasis West Realty, LLC v. Goldman, supra, 51 Cal.4th at p. 820.)




                                              6
       B.         The “Arising From” Requirement.

       The Proponents contend that this action does arise out of protected activity. They

appear to concede that, under Stansbury, it does not, but they urge us either to ―revisit‖

Stansbury (capitalization omitted) or to carve out an exception to it.

       ―[T]o meet its burden ‗the defendant . . . must present a prima facie showing that

the plaintiff‘s causes of action arise from acts of the defendant taken to further the

defendant‘s rights of free speech or petition in connection with a public issue. . . .‘

[Citation.]‖ (Flatley v. Mauro (2006) 39 Cal.4th 299, 314 [discussing & quoting Paul for

Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1365]; see also Flatley, at pp. 316-318

[approving Paul for Council].)

       ―[T]he mere fact that an action was filed after protected activity took place does

not mean the action arose from that activity for the purposes of the anti-SLAPP statute.

[Citation.] Moreover, that a cause of action arguably may have been ‗triggered‘ by

protected activity does not entail that it is one arising from such. [Citation.] In the anti-

SLAPP context, the critical consideration is whether the cause of action is based on the

defendant‘s protected free speech or petitioning activity.‖ (Navellier v. Sletten (2002) 29

Cal.4th 82, 89.) ―The anti-SLAPP statute‘s definitional focus is not on the form of the

plaintiff‘s cause of action but, rather, the defendant‘s activity that gives rise to his or her

asserted liability — and whether that activity constitutes protected speech or petitioning.‖

(Id. at p. 92.)




                                               7
       To the best of our knowledge, this standard has been applied to actions challenging

initiatives only twice.

       First, in City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43 (Stewart),

voters in Pasadena passed an initiative that prohibited city officials from accepting gifts

and campaign contributions from recipients of certain public benefits. (Id. at pp. 50-51,

54.) The city, however, claimed that the initiative was unconstitutional; it refused to

authenticate, certify and file copies of the initiative, which prevented the initiative from

going into effect. (Id. at p. 54.)

       The Foundation for Taxpayer and Consumer Rights (FTCR), which had sponsored

the initiative, intervened in an action to compel the city to authenticate, certify, and file

copies of the initiative. (Stewart, supra, 126 Cal.App.4th at p. 54.) The city responded

by cross-complaining against FTCR for declaratory relief, asserting that the initiative was

unconstitutional. FTCR then filed a SLAPP motion. (Id. at p. 55.) The trial court denied

the SLAPP motion because it accepted the city‘s argument that the ―cross-action was not

motivated by a desire to punish FTCR or chill the exercise of its First Amendment rights.

Rather, the goal was only to obtain a judicial determination that the city was not required

to perform any of the ministerial duties necessary to certify the election results . . .

because the Initiative was unconstitutional.‖ (Id. at pp. 71-72; see also id. at pp. 55-56.)

       The appellate court held that this was error, and the cross-complaint did arise out

of protected activity. Preliminarily, it rejected the city‘s argument that the cross-

complaint did not arise out of protected activity because it arose out of the passage of the



                                               8
initiative. (Stewart, supra, 126 Cal.App.4th at pp. 72-73.) It explained, ―[E]ven if we

agreed that the act which led to the filing of the cross-complaint against FTCR was the

voters‘ approval of the FTCR-sponsored Initiative, that approval would represent, among

other things, a paradigmatic exercise of FTCR‘s and the voters‘ engagement in ‗conduct

in furtherance of the exercise of the constitutional right of petition or the constitutional

right of free speech in connection with a public issue or an issue of public interest.‘

[Citations.] Advocacy for an [i]nitiative and adoption of the measure are, without

question, a fundamental exercise of the First Amendment right to petition.‖ (Id. at p. 73,

italics added.)

       The court went on to hold, however, that the cross-complaint actually arose out of

FTCR‘s acts of intervening in the action and demanding that the city perform its

ministerial duties of certifying and filing the initiative. (Stewart, supra, 126 Cal.App.4th

at pp. 73-75.) The court found that the ―gravamen‖ of the cross-complaint was not the

constitutionality of the initiative, but rather the dispute over the city‘s obligation to

perform its ministerial duties. (Id. at p. 74.)

       The court concluded: ―FTCR was sued because it had the temerity to file a

complaint-in-intervention to force Pasadena to put the [i]nitiative into effect, and because

it sponsored the [i]nitiative and supported its constitutionality, all of which are clearly

protected activities.‖ (Stewart, supra, 126 Cal.App.4th at p. 75, italics added.)

       Thereafter, in Stansbury, the defendants were the proponents of an initiative that

would have amended the eminent domain provisions of the Riverside city charter.



                                                  9
(Stansbury, supra, 155 Cal.App.4th at p. 1585.) The city filed a declaratory relief action

against them, seeking a declaration that the proposed initiative was invalid and did not

have to be placed on the ballot. (Id. at pp. 1586-1586.) The proponents filed a SLAPP

motion, which the trial court granted. (Id. at p. 1587.)

       We held that this was error, because the complaint did not arise out of any

protected activity. We relied on City of Cotati v. Cashman (2002) 29 Cal.4th 69, which

had held that a city‘s declaratory relief action regarding the validity of a rent control

ordinance did not arise out of protected speech. We concluded that, in the case before us,

―[b]y its declaratory relief action, the City was simply asking for guidance as to the

constitutionality of the proposed initiative. Indeed, the City did nothing to limit

respondents‘ activities in connection with the initiative, nor did the City, by its action,

otherwise impact respondents‘ First Amendment rights. Moreover, it was proper for the

City to initiate its declaratory relief action as a means of disputing, in a preelection

challenge, the validity of the initiative. [Citations.]‖ (Stansbury, supra, 155 Cal.App.4th

at pp. 1590-1591.)

       As we noted, ―[u]nderlying [the] position [of one of the proponents] is the faulty

premise that his right to petition is not complete and thus cannot be challenged — until

after the proposed initiative is placed on the ballot and the electorate determines whether

it should pass.‖ (Stansbury, supra, 155 Cal.App.4th at p. 1591; see also id. at p. 1592.)

We responded that this ―overlooks the fact there is no constitutional right to place an

invalid initiative on the ballot. [Citation.] Moreover, [it] ignores entirely the body of law



                                              10
which recognizes preelection challenges to initiative measures.‖ (Id. at p. 1592.) We

concluded that ―if the trial court‘s ruling is allowed to stand, no one could ever challenge

an initiative‘s constitutionality prior to the election, which is contrary to law.‖ (Id. at

p. 1585.)

       We distinguished Stewart, stating that ―[t]he cross-action [in Stewart] involved not

the constitutionality of the initiative, as in our case, but rather, the dispute over the

city‘s . . . duty to perform certain ministerial acts . . . . [Citation.] Thus, because the

cross-action ‗arose from‘ FTCR‘s protected act of filing litigation, it was properly subject

to a motion to strike under section 425.16.‖ (Stansbury, supra, 155 Cal.App.4th at

p. 1593.)

       The Proponents argue that Stewart and Stansbury are ―irreconcilable‖ and that

Stansbury was ―wrongly decided . . . .‖ The District, on the other hand, argues that

Stansbury is controlling and that Stewart is distinguishable on the grounds we stated in

Stansbury.

       The correctness of Stansbury turns on whether a declaratory relief action

challenging the validity of an initiative arises out of the proponents‘ exercise of their right

of petition. We indicated that the proponents‘ exercise of their right to petition was

―complete‖ once they had done everything necessary to qualify the initiative for the

ballot; hence, a challenge to actually placing the initiative on the ballot did not implicate

the proponents‘ right of petition. (See Stansbury, supra, 15 Cal.App.4th at p. 1591.) In

2007, when Stansbury was decided, there was little authority on this point. There was



                                               11
Stewart, but it was not entirely clear; it could be read broadly, as the Proponents do, or

narrowly, as the District does and as we ultimately did in Stansbury.

       In 2011, however, the California Supreme Court confronted the issue directly in

Perry. There, the Ninth Circuit had asked our Supreme Court to decide ―‗[w]hether . . .

the official proponents of an initiative measure possess either a particularized interest in

the initiative‘s validity or the authority to assert the State‘s interest in the initiative‘s

validity, which would enable them to defend the constitutionality of the initiative upon its

adoption or appeal a judgment invalidating the initiative, when the public officials

charged with that duty refuse to do so.‘‖ (Perry, supra, 52 Cal.4th at p. 1124.)

       The Supreme Court began by observing, ―[I]n the past official proponents of

initiative measures in California have uniformly been permitted to participate as parties

— either as interveners or as real parties in interest — in numerous lawsuits in California

courts challenging the validity of the initiative measure the proponents sponsored. . . .

This court, however, has not previously had occasion fully to explain the basis upon

which an official initiative proponent‘s ability to participate as a party in such litigation

rests.‖ (Perry, supra, 52 Cal.4th at p. 1125.)

       The court stated: ―In the preelection setting, when a proposed initiative measure

has not yet been adopted as state law, the official proponents of an initiative measure who

intervene or appear as real parties in interest are properly viewed as asserting their own

personal rights and interests — under article II, section 8 of the California Constitution

and the California statutes relating to initiative proponents — to propose an initiative



                                                12
measure and have the measure submitted to the voters for approval or rejection. In

preelection cases, the official initiative proponents possess a distinct interest in defending

the proposed initiative because they are acting to vindicate their own rights under the

relevant California constitutional and statutory provisions to have their proposed

measure — a measure they have submitted to the Attorney General, have circulated for

signature, and have the exclusive right to submit to the Secretary of State after signatures

have been collected — put to a vote of the people.‖ (Perry, supra, 52 Cal.4th at p. 1146,

italics added.)

       By contrast, the court noted, in postelection litigation, the existence of a personal

interest on the part of the official proponents is ―arguably less clear . . . .‖ (Perry, supra,

52 Cal.4th at p. 1147.) It then held that, ―at least in those circumstances in which the

government officials who ordinarily defend a challenged statute or constitutional

amendment have declined to provide such a defense or to appeal a lower court decision

striking down the measure, the authority of the official proponents of the initiative to

assert the state‘s interest in the validity of the initiative is properly understood as arising

out of article II, section 8 of the California Constitution and the provisions of the

Elections Code relating to the role of initiative proponents.‖ (Id. at p. 1151.)

       When this court decided Stansbury, Perry had not yet been decided. Indeed, as the

Supreme Court itself noted, it had not yet articulated precisely why the proponent of an

initiative has standing to defend its validity. (Perry, supra, 52 Cal.4th at p. 1125.)

Accordingly, we suggested that a proponent‘s exercise of the right to petition is



                                               13
―complete‖ once the proposed initiative has qualified procedurally to be placed on the

ballot; we indicated that, in a preelection challenge to the validity of the initiative, this

right simply is not involved. (Stansbury, supra, 155 Cal.App.4th at p. 1591.) Under

Perry, however — and in particular under the italicized language quoted above — this

view is no longer tenable. Rather, Perry now stands for the proposition that, when the

proponent of an initiative is a party to preelection litigation challenging the initiative, the

litigation arises out of the proponent‘s exercise of the constitutional right of petition.

This is true even when the plaintiff is a governmental entity requesting guidance

regarding the constitutionality of the proposed initiative. In Stansbury, we reasoned

essentially that a preelection declaratory relief action does not ―limit [the proponents‘]

activities in connection with the initiative, nor . . . otherwise impact [the proponents‘]

First Amendment rights.‖ (Stansbury, supra, 155 Cal.App.4th at p. 1591.) However, we

now know from Perry that this is incorrect. We also believed that Cotati was controlling,

even though it dealt with an ordinance rather than an initiative. (Stansbury, at p. 1591.)

Once again, however, Perry teaches us that initiative proponents have a constitutional

stake in preelection litigation over their initiative that is distinct from the general public‘s

stake in postenactment litigation over a statute.

       Moreover, as the court in Perry noted, there is an inherent conflict of interest

between the proponent of an initiative and the affected governmental entity. ―[T]he

initiative process is specifically intended to enable the people . . . to enact statutes when

current government officials have declined to adopt (and often have publicly opposed) the



                                               14
measure in question . . . .‖ (Perry, supra, 52 Cal.4th at p. 1125.) Whenever the affected

governmental entity files a declaratory relief action in which it seeks to keep an initiative

off the ballot, the action arises out of the proponent‘s right of petition.3

       We adhere to the concern that we expressed in Stansbury about unduly inhibiting

preelection challenges to initiatives. However, our statement that ―if the trial court‘s

ruling is allowed to stand, no one could ever challenge an initiative‘s constitutionality

prior to the election‖ (Stansbury, supra, 155 Cal.App.4th at p. 1585) must be viewed in

context. In Stansbury, one of the proponents was arguing that the right to petition

prohibits any preelection challenge to an initiative. (Id. at p. 1591.) The trial court had

agreed, stating that ―‗to have a declaratory relief action before the initiative is ever

enacted is not something the Court should consider, because the initiative may not pass.‘‖



       3       One of the Proponents‘ objections to Stansbury is that supposedly it allows
a local governmental entity to evade its mandatory duty to place an initiative on the ballot
by filing a declaratory relief action instead. They claim that one of the issues in this
appeal is whether a local governmental entity has a mandatory duty to place a
procedurally qualified initiative on the ballot, even when it claims that the initiative is
unconstitutional or invalid.
        The filing of this declaratory relief action, however, is not what kept the initiatives
off the ballot. The District did not request or obtain any provisional relief from the trial
court; it simply decided, on its own, not to order an election. Filing the action does
enhance the District‘s appearance of good faith — it can claim it is merely awaiting
guidance from the court. However, the District could have refused to place the initiative
on the ballot without filing any action at all.
        We are somewhat surprised that the Proponents have not cross-complained for any
coercive relief, such as a writ or a preliminary injunction, to compel a prompt election on
the initiatives. Absent a request for such relief, however, the issue of the existence or
scope of the District‘s mandatory duty simply is not before us.


                                              15
(Id. at p. 1594, fn. 10.) It was this ruling that would have meant that no one could ever

bring a preelection challenge.

       By contrast, holding that a preelection declaratory relief action regarding the

validity of an initiative arises out of the proponent‘s protected activity does not mean that

no one could ever bring a preelection challenge. Such a holding merely addresses the

first prong of the analysis of a SLAPP motion. It would still be open to the challenger to

show that, under the second prong, it has a probability of prevailing. As we will discuss

in more detail in part III.C., post, this is not a particularly high hurdle. Thus, such a

holding would simply mean that no one could bring a meritless preelection challenge.

       Indeed, it is difficult to underestimate the likely impact of allowing SLAPP

motions in declaratory relief actions challenging the validity of initiatives. Admittedly, a

SLAPP motion requires the plaintiff to show that it has a probability of prevailing even

before it has obtained any discovery. A preelection challenge to the validity of an

initiative, however, is likely to present primarily issues of law. (See Senate of State of

Cal. v. Jones (1999) 21 Cal.4th 1142, 1153-1154 and cases cited [appropriate preelection

claims include claim that initiative is not legislative in character, amounts to a

constitutional revision rather than amendment, fails to contain accurate short title, or

violates single-subject rule].)

       Also, to the extent that the preelection challenge is brought by the affected

governmental entity, it is likely that the entity already has much of the relevant factual

information. Here, for example, the District claims that the initiatives would cause it to



                                              16
become insolvent. The information relevant to this claim, including information about

the District‘s revenues, expenses, and rate-setting practices, is in the District‘s own hands.

It does not need discovery on this issue.

       The only other significant effect of allowing SLAPP motions is that, if the motion

is granted, the plaintiff will have to pay the defendant‘s attorney fees. (Code Civ. Proc.,

§ 425.16, subd. (c)(1).) Whenever the plaintiff is the affected governmental entity, these

fees must come, directly or indirectly, out of the pocket of the public. Once again,

however, for fees to be awarded, the action must be meritless. We would hope that local

governmental entities — which have ready access to the advice of counsel — will not

bring so many meritless challenges to initiatives as drain the public fisc.

       ―The purpose of the anti-SLAPP statute is to encourage participation in matters of

public significance and prevent meritless litigation designed to chill the exercise of First

Amendment rights. [Citation.]‖ (Fremont Reorganizing Corp. v. Faigin (2011) 198

Cal.App.4th 1153, 1165.) When a governmental entity brings a meritless preelection

challenge to the validity of an initiative, these legislative policies apply full force.

       Finally, the District argues that the Proponents ―effectively ask this Court to

dispense with the first prong of the anti-SLAPP analysis in any and all challenges to the

constitutionality of proposed initiatives.‖ Not at all. We merely conclude that the first

prong is satisfied (at least when a proponent of the initiative is a party).




                                               17
       C.      Probability of Prevailing.

       We therefore turn to the second prong of the analysis — whether the District has

demonstrated a probability of prevailing on its claim.

       ―[A] SLAPP motion, like a summary judgment motion, pierces the pleadings and

requires an evidentiary showing.‖ (Simmons v. Allstate Ins. Co. (2001) 92 Cal.App.4th

1068, 1073.) ―‗[A]lthough by its terms [Code of Civil Procedure] section 425.16,

subdivision (b)(1) calls upon a court to determine whether ―the plaintiff has established

that there is a probability that the plaintiff will prevail on the claim‖ . . . , past cases

interpreting this provision establish that the Legislature did not intend that a court, in

ruling on a motion to strike under this statute, would weigh conflicting evidence to

determine whether it is more probable than not that plaintiff will prevail on the claim, but

rather intended to establish a summary-judgment-like procedure available at an early

stage of litigation that poses a potential chilling effect on speech-related activities.‘

[Citation.] ‗[T]he court‘s responsibility is to accept as true the evidence favorable to the

plaintiff . . . .‘ [Citation.] ‗[T]he defendant‘s evidence is considered with a view toward

whether it defeats the plaintiff‘s showing as a matter of law, such as by establishing a

defense or the absence of a necessary element.‘ [Citation.]‖ (Daniels v. Robbins (2010)

182 Cal.App.4th 204, 215.)

       ―[A]n anti-SLAPP motion may lie against a complaint for declaratory relief

[citation] . . . .‖ (South Sutter, LLC v. LJ Sutter Partners, L.P. (2011) 193 Cal.App.4th

634, 665-666.) Moreover, ―the mere existence of a controversy is insufficient to



                                                18
overcome an anti-SLAPP motion against a claim for declaratory relief. [¶] To defeat an

anti-SLAPP motion, the plaintiff must also make a prima facie evidentiary showing to

sustain a judgment in the plaintiff‘s favor. [Citation.] In other words, for a declaratory

relief action to survive an anti-SLAPP motion, the plaintiff must introduce substantial

evidence that would support a judgment of relief made in plaintiff‘s favor.‖ (Id. at p. 670;

see also CKE Restaurants, Inc. v. Moore (2008) 159 Cal.App.4th 262, 272 [plaintiff‘s

evidence failed to show probability of prevailing on its declaratory relief claim].)

               1.     The propriety of a declaratory relief action.

       Preliminarily, the Proponents argue that the District cannot bring a declaratory

relief action at all because Elections Code section 9380 provides the exclusive procedure

for challenging the validity of a local district initiative. That section provides that, once

the text of a proposed ordinance and the arguments for and against it have been submitted

(see Elec. Code, §§ 9312, 9315, 9317), there is a 10-day window during which ―any voter

of the jurisdiction in which the election is being held, or the elections official, himself or

herself, seek a writ of mandate or an injunction requiring any material to be amended or

deleted.‖ (Elec. Code, § 9380, subd. (b)(1).) ―A peremptory writ of mandate or an

injunction shall be issued only upon clear and convincing proof that the material in

question is false, misleading, or inconsistent with this chapter . . . .‖ (Id., subd. (b)(2).)

       As the District notes, Elections Code section 9380 is not an appropriate vehicle for

its particular challenge. An action under Elections Code section 9380 can be brought

only by a voter or by the elections official; the District is neither. Moreover, the District



                                               19
is not arguing that the ballot material regarding the initiatives is false, misleading, or

inconsistent with the Elections Code; it is arguing that the initiatives themselves are

unconstitutional and invalid. It has been held that Elections Code section 9380 and

similar provisions (see also Elec. Code, §§ 9092, 9190, subd. (b), 9295, subd. (b), 9509,

subd. (b), 13282, 13313) are ―not the sole avenue of relief for a party who seeks to

demonstrate that a proposed ballot measure is beyond the powers of the voters to adopt.

Rather, such a question of law may be raised by a nonvoter seeking declaratory relief

under [Code of Civil Procedure] section 1060 as to the respective rights and duties of the

parties and the construction of a written instrument, where the validity of a ballot measure

is concerned. [Citation.]‖ (City of San Diego v. Dunkl (2001) 86 Cal.App.4th 384, 398.)

              2.      Proposition 218 and Bighorn.

       The District contends that the portion of the initiatives allowing future rate

increases indexed to the CPI is invalid under Proposition 218, as construed in Bighorn-

Desert View Water Agency v. Verjil (2006) 39 Cal.4th 205 (Bighorn).

       ―In 1996, California voters adopted Proposition 218, known as the Right to Vote

on Taxes Act, which added articles XIII C and XIII D to the California Constitution.

[Citation.]‖ (Beutz v. County of Riverside (2010) 184 Cal.App.4th 1516, 1520 [Fourth

Dist., Div. Two].) The principal purpose of Proposition 218 was to close a loophole in

Proposition 13, which limited the ability of local governments to impose taxes, by

similarly limiting their ability to impose assessments, fees, and charges. (Beutz, at

p. 1520.)



                                              20
       The particular provision of Proposition 218 that is relevant here is section 3 of

article XIII C of the California Constitution (article XIII C), which states:

―Notwithstanding any other provision of this Constitution, including, but not limited to,

Sections 8 and 9 of Article II, the initiative power shall not be prohibited or otherwise

limited in matters of reducing or repealing any local tax, assessment, fee or charge. The

power of initiative to affect local taxes, assessments, fees and charges shall be applicable

to all local governments . . . .‖

       The California Supreme Court construed article XIII C, section 3 in Bighorn.

There, one E.W. Kelley qualified an initiative for the ballot that (1) reduced existing

water rates and (2) required the water district to obtain voter approval before increasing

water rates or imposing any new water rates. (Bighorn, supra, 39 Cal.4th at pp. 209-210.)

       The Supreme Court held that, to the extent that the initiative reduced existing

water rates, it was ―expressly authorize[d]‖ by article XIII C, section 3. (Bighorn, supra,

39 Cal.4th at p. 216.) The water district had challenged the initiative under what the

Supreme Court called ―the exclusive delegation rule‖ (id. at p. 219); it argued that the

Legislature had granted the exclusive authority to set water rates to the water district‘s

board of directors, and thus had implicitly precluded the use of the initiative power to set

water rates. (Id. at pp. 217, 219.) The court held, however, that article XIII C, section 3

prevailed over the exclusive delegation rule: ―The Legislature is bound by the state

Constitution . . . , and the evident purpose of article XIII C is to extend the local initiative

power to fees and charges imposed by local public agencies. . . . [T]he Legislature‘s



                                               21
authority in enacting the statutes under which the Agency operates must in this instance

yield to constitutional command.‖ (Bighorn, at p. 217.)

       However, the Supreme Court also held that to the extent the initiative sought to

―impose voter-approval requirements for future increases in fees or charges,‖ it was not

authorized by article XIII C, section 3. (Bighorn, supra, 39 Cal.4th at p. 218.) It added:

―Kelley apparently concedes that in the absence of the authority granted by section 3 of

article XIII C, the exclusive delegation rule [citations] bars initiative measures that

infringe on the power of the Agency’s governing board to set its water delivery rate and

charges. Accordingly, . . . Kelley‘s initiative is invalid insofar as it seeks to impose a

voter-approval requirement on future actions by the [water district]‘s board of directors to

increase the existing water rate and other charges or to impose new charges.‖ (Id. at

p. 219, italics added.)

       Finally, the court summarized its holding as follows: ―We have concluded that

under section 3 of . . . article XIII C, local voters by initiative may reduce a public

agency‘s water rate and other delivery charges, but also that section 3 of article XIII C

does not authorize an initiative to impose a requirement of voter preapproval for future

rate increases or new charges for water delivery. In other words, by exercising the

initiative power voters may decrease a public water agency‘s fees and charges for water

service, but the agency‘s governing board may then raise other fees or impose new fees

without prior voter approval. Although this power-sharing arrangement has the potential

for conflict, we must presume that both sides will act reasonably and in good faith, and



                                              22
that the political process will eventually lead to compromises that are mutually acceptable

and both financially and legally sound. [Citation.] We presume local voters will give

appropriate consideration and deference to a governing board‘s judgments about the rate

structure needed to ensure a public water agency‘s fiscal solvency, and we assume the

board, whose members are elected [citation], will give appropriate consideration and

deference to the voters‘ expressed wishes for affordable water service.‖ (Bighorn, supra,

39 Cal.4th at p. 220.)

       The District argues that the portion of the initiatives here that allows future rate

increases indexed to the CPI is analogous to the portion of the initiative in Bighorn that

required voter approval for future rate increases. The District concludes that, under

Bighorn, this portion of the initiatives is unauthorized under Proposition 218 and hence

invalid. The trial court agreed (at least in connection with the demurrer; it did not reach

this argument in connection with the SLAPP motion).

       The problem with this contention is that Bighorn held this portion of the initiative

to be invalid only because there the proponent conceded that it violated the ―exclusive

delegation rule.‖ (Bighorn, supra, 39 Cal.4th at p. 219.) Here, the Proponents have made

no such concession. Thus, we must determine whether the exclusive delegation rule

applies.

       Under the exclusive delegation rule, if the Legislature statutorily delegates the

exercise of certain authority exclusively to the governing body of a local governmental

entity, that implicitly precludes the exercise of the same authority by initiative. (DeVita v.



                                              23
County of Napa (1995) 9 Cal.4th 763, 776; see also Bighorn, supra, 39 Cal.4th at p. 219

[citing DeVita].)

       The Supreme Court has recognized ―certain guidelines‖ for determining whether

the exclusive delegation rule applies. (DeVita v. County of Napa, supra, 9 Cal.4th at

p. 776.) ―The paramount factors . . . are: (1) statutory language, with reference to

‗legislative body‘ or ‗governing body‘ deserving of a weak inference that the Legislature

intended to restrict the initiative and referendum power, and reference to ‗city council‘

and/or ‗board of supervisors‘ deserving of a stronger one [citation]; [and] (2) the question

whether the subject at issue was a matter of ‗statewide concern‘ or a ‗municipal affair,‘

with the former indicating a greater probability of intent to bar initiative and referendum

[citation].‖ (Ibid.)

       For purposes of the exclusive delegation rule, the water district in Bighorn was

significantly different from the water district here. There, the water district was a special

district; it operated under the Bighorn Mountains Water Agency Law, an uncodified act.

(Bighorn, supra, 39 Cal.4th at p. 209.) The statute that assertedly delegated exclusive

authority provided: ―‗The board of directors, so far as practicable, shall fix such rate or

rates for water in the agency . . . as will result in revenues which will pay the operating

expenses of the agency, . . . provide for repairs and depreciation of works, provide a

reasonable surplus for improvements, extensions, and enlargements, pay the interest on

any bonded debt, and provide a sinking or other fund for the payment of the principal of




                                              24
such debt as it may become due.‘‖ (Id. at p. 210, italics added, quoting Stats. 1969,

ch. 1175, § 25, pp. 2285–2286.)

        Here, by contrast, the District is a county water district. The only statute the

District cites as delegating exclusive authority is Water Code section 31007, which

provides, as pertinent here:

        ―The rates and charges to be collected by [a county water] district shall be so fixed

as to yield an amount sufficient to do each of the following:

        ―(a) Pay the operating expenses of the district.

        ―(b) Provide for repairs and depreciation of works owned or operated by the

district.

        ―(c) Pay the interest on any bonded debt.

        ―(d) So far as possible, provide a fund for the payment of the principal of the

bonded debt as it becomes due.‖ (See also Wat. Code, §§ 30010, 30013 [defining

―district,‖ as used in Wat. Code, §§ 30000-33901, as county water district].)

        Thus, unlike the statute at issue in Bighorn, Water Code section 31007 does not

refer to the governing body of the water district at all. Instead, using the passive voice, it

merely directs that rates and charges ―shall be . . . fixed,‖ without specifying how or by

whom. Thus, there is no basis for even a ―weak inference‖ (DeVita v. County of Napa,

supra, 9 Cal.4th at p. 776) that the Legislature intended to preclude the voters from using

the initiative power to fix rates and charges.




                                              25
         The District argues that Water Code section 31007 relates to ―public health and

water quality,‖ which are ―matters of statewide concern.‖ Actually, it relates more

narrowly to a county water district‘s budgeting practices and ability to repay its bonds;

arguably, these are predominantly local concerns. In any event, ―[a] state statutory

scheme does not restrict or preempt the power of an initiative simply because the

initiative includes some elements of statewide concern. [Citation.]‖ (Shea Homes

Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1257; accord,

DeVita v. County of Napa, supra, 9 Cal.4th at pp. 780-781.) Rather, there must be ―‗a

clear showing of the Legislature‘s intent‘‖ to exclude the operation of the initiative

power. (DeVita, at p. 775.) There is no such showing in the text of Water Code section

31007.

         We therefore conclude that the District has failed to show a probability of

prevailing on its claim that the initiatives are invalid under Bighorn. We need not decide

whether article XIII C, section 3 authorizes the portion of the initiatives that allows future

rate increases indexed to the CPI. Even assuming it does not, the general initiative power

does;4 and the Legislature has not manifested any intent, in accordance with the exclusive

delegation rule, to withdraw this power.




         4     The Proponents contend that the voters‘ power to enact a local water district
initiative has both constitutional and statutory sources. They cite the California
Constitution, article II, section 8, article II, section 11, and article IV, section 1. They
also cite Elections Code sections 9300 et seq. and Water Code section 30830.
                                                                  [footnote continued on next page]


                                              26
                 3.      Vagueness of the CPI indexing provision.

        The District contends that the initiatives are void for vagueness because they do

not specify which CPI is to be used as the index for future rate increases.

        ―The underlying concern of a vagueness challenge ‗is the core due process

requirement of adequate notice.‘ [Citation.]‖ (Amaral v. Cintas Corp. No. 2 (2008) 163

Cal.App.4th 1157, 1180.) ―Statutes or ordinances that are not clear as to the regulated

conduct are void for three reasons: (1) to avoid punishing people for behavior that they

could not have known was illegal; (2) to avoid subjective enforcement of the laws based

on arbitrary and discriminatory enforcement by government officers; and (3) to avoid any

chilling effect on the exercise of First Amendment freedoms. [Citation.]‖ (Concerned

Dog Owners of California v. City of Los Angeles (2011) 194 Cal.App.4th 1219, 1231.)

Here, because the initiatives are not penal and do not restrict speech, vagueness review is



[footnote continued from previous page]

        We do not agree that there is a general state constitutional right (i.e., other than
under article XIII C, section 3) to enact a local district initiative. Article II, section 8 and
article IV, section 1 concern the power to adopt statewide statutes by initiative. Similarly,
article II, section 11 concerns the power to adopt county and city initiatives. None of
these provisions grant the power to enact local district initiatives. (Board of Education v.
Superior Court (1979) 93 Cal.App.3d 578, 583 [school district].)
        We do agree, however, that the Legislature has statutorily granted the power of
initiative to the voters of a local water district. Elections Code section 9300 provides that,
subject to exceptions not applicable here, ―ordinances may be enacted by any district
pursuant to this article . . . .‖ Elections Code sections 9301-9323 then go on to prescribe
the procedure for adopting a district ordinance by initiative. Moreover, specifically with
regard to water districts, Water Code section 30830 provides that ―[o]rdinances may be
passed by voters in accordance with Article 1 (commencing with Section 9100) of
Chapter 2 of Division 9 of the Elections Code.‖


                                               27
at its lowest ebb, assuming it applies at all. (See Duffy v. State Bd. of Equalization (1984)

152 Cal.App.3d 1156, 1171-1172 [questioning whether vagueness review even applies to

nonpenal, nonspeech-related statutes].)

       ―When assessing a facial challenge to a statute on vagueness grounds, courts

should where possible construe the statute in favor of its validity and give it a reasonable

and practical construction in accordance with the probable intent of the Legislature; a

statute will not be declared void for vagueness or uncertainty if any reasonable and

practical construction can be given its language. [Citation.] . . . [A] statute not

sufficiently clear may be made more precise by judicial construction and application of

the statute in conformity with the legislative objective. [Citation.]‖ (Schweitzer v.

Westminster Investments, Inc. (2007) 157 Cal.App.4th 1195, 1206.)

       We note that the California Constitution itself, as well as a host of California

statutes, all refer to ―the consumer price index‖ without specifying any particular one.

(E.g., Cal. Const., art. XIII A, § 2(b), Code Civ. Proc., § 726, subd. (g), Ed. Code,

§ 17457.5, subd. (d), Gov. Code, § 66427.5, subd. (f)(2), Health & Saf. Code, § 44060,

subd. (c)(3).) We would not lightly cast doubt on the validity of all of these statutes.

       The initiatives‘ reference to ―the Consumer Price Index‖ is indeed ambiguous.

The CPI is not a single number, but rather ―a large family of indexes with thousands of

indexes published each month.‖




                                             28
(<http://www.bls.gov/opub/focus/volume1_number15/cpi_1_15.htm>, as of July 16,

2013.)5

       ―Where more than one statutory construction is arguably possible, our ‗policy has

long been to favor the construction that leads to the more reasonable result.‘ [Citation.]

. . . Thus, our task is to select the construction that comports most closely with the

[drafters‘] apparent intent, with a view to promoting rather than defeating the statutes‘

general purpose, and to avoid a construction that would lead to unreasonable, impractical,

or arbitrary results. [Citations.]‖ (Imperial Merchant Services, Inc. v. Hunt (2009) 47

Cal.4th 381, 388.)

       The leading subgroups of the CPI are the CPI-U (for urban consumers), C-CPI-U

(chained, for urban consumers), and CPI-W (for urban wage earners and clerical

workers). (<www.bls.gov/cpi/cpisuptn.htm>, as of July 16, 2013.)

       The CPI-W excludes professional, managerial, and technical workers; the self-

employed; short-term workers; the unemployed; and retirees and others not in the labor

force. (<http://www.bls.gov/news.release/cpi.nr0.htm>, as of July 16, 2013.) As these

individuals make up a significant portion of the population that must pay for water, it

would not make sense to use the CPI-W for water rate calculations.



       5      We take judicial notice of the online materials cited in this section. (See
Evid. Code, §§ 452, subd. (h), 459.) By means of our tentative opinion (see AA. App.,
Fourth Dist., Div. Two, Internal Operating Practices & Proc., VIII, Tentative opinions
and oral argument), we gave the parties notice of our intent to do so. (Evid. Code, § 455,
subd. (a).)


                                             29
       The C-CPI-U, unlike the CPI-U, assumes that, as prices increase, consumers will

substitute cheaper goods — for example, ―[i]f the price of pork increases while the price

of beef does not, consumers might shift away from pork to beef.‖

(<http://www.bls.gov/cpi/cpisupqa.htm>, as of July 16, 2013.) However, the C-CPI-U

has not been generally adopted as an indexing mechanism. For example, according to the

Bureau of Labor Statistics, ―The C-CPI-U to our knowledge currently is not used in any

federal legislation as an adjustment mechanism.‖ (Ibid.) By this process of elimination,

it seems that the drafters of the initiatives must have had in mind the CPI-U.

       The only other question is what mix of products the drafters intended the CPI to be

based on. There is a CPI for all items. This is also broken down into a CPI for food, for

energy, for all items other than food and energy, and for services. Each of these is broken

down still further; for example, the food CPI is broken down by food at home and food

away from home. (<http://www.bls.gov/news.release/cpi.nr0.htm>, as of July 16, 2013.)

The all-items CPI is the one most widely reported. Moreover, from the very fact that the

drafters did not specify a product mix, we conclude they had in mind the CPI for all

items. We therefore conclude that the initiatives refer to the CPI-U for all items for the

Los Angeles-Orange County-Riverside geographical area. (See

<http://www.bls.gov/cpi/cpid1303.pdf>, Table 16, p. 49, as of July 16, 2013.)

       We emphasize that we are resolving this issue for purposes of the SLAPP motion,

not necessarily for the litigation as a whole. The key point is that, on this record, a court

can readily determine which CPI was intended, and therefore the initiatives are not



                                              30
unconstitutionally vague. (See Table Servs., Ltd. v. Hickenlooper (Colo. App. 2011) 257

P.3d 1210, 1215-1217 [constitutional amendment indexing minimum wage to ―the

Consumer Price Index used for Colorado‖ was not impermissibly vague].) If the parties

have evidence that some other CPI was intended, even though they did not present it in

support of or in opposition to the SLAPP motion, we do not mean to preclude them from

presenting it in subsequent litigation.

       In a twist on its vagueness argument, the District also argues that the initiatives are

invalid because they require it to take future legislative action — i.e., to determine which

CPI to use. We recognize that an initiative must enact a statute; it cannot ―merely state

policies and direct the [governmental entity] to enact unspecified laws pursuant to those

policies.‖ (Widders v. Furchtenicht (2008) 167 Cal.App.4th 769, 785.) Here, however,

because it is possible to discern which CPI the initiatives were referring to, there is no

need for any further action by the District.

              4.     The fiscal consequences of the initiatives.

       The District contends that the initiatives are invalid because they would (1) violate

Water Code section 31007; (2) interfere with the provision of an essential governmental

service; and (3) unconstitutionally impair the obligation of contract.

       In opposition to the SLAPP motion, the District presented extensive and detailed

evidence that its 2011 water and sewer rate increases were absolutely necessary due to

revenue declines and cost increases, both of which were beyond its control. ―Between

2007 and 2010, [the District] experienced operating losses of $2.9 million to $3.5 million



                                               31
annually.‖ If the initiatives pass and rates are rolled back, the District would be unable to

meet its costs, pay its debts, and stay in business; the potential consequences for the local

water supply would be disastrous.

       The Proponents did not contradict this evidence. In this appeal, they belatedly

question some of the District‘s assumptions about future income and expense trends.

There is no evidence, however, that those assumptions are incorrect. In any event, as

already discussed (see part III.B., ante), we must accept the District‘s evidence as true.

                      i.      Preelection review.

       Preliminarily, the Proponents argue that, because the District‘s challenges based on

this evidence raise factual issues, they are not ripe for preelection review.

       ―‗[I]t is usually more appropriate to review . . . challenges to ballot propositions or

initiative measures after an election rather than to disrupt the electoral process by

preventing the exercise of the people‘s franchise, in the absence of some clear showing of

invalidity.‘ . . . [H]owever, ‗ . . . ― . . . this general rule applies primarily when a

challenge rests upon the alleged unconstitutionality of the substance of the proposed

initiative, and . . . the rule does not preclude preelection review when the challenge is

based upon a claim, for example, that the proposed measure may not properly be

submitted to the voters because the measure is not legislative in character or because it

amounts to a constitutional revision rather than an amendment. [Citations.]‖ [Citation.]‘

. . . [P]reelection review of an initiative measure may be appropriate when the challenge

is not based on a claim that the substantive provisions of the measure are unconstitutional,



                                                32
but rests instead on a contention that the measure is not one that properly may be enacted

by initiative. [Citations.]‖ (Independent Energy Producers Assn. v. McPherson (2006)

38 Cal.4th 1020, 1029.)

       ―‗It is clear that a measure may be kept off the ballot if it represents an effort to

exercise a power which the electorate does not possess. [Citations.]‘ [Citation.]‖ (City

of San Diego v. Dunkl, supra, 86 Cal.App.4th at p. 400.) Here, the District claims that the

voters lack the power to enact the initiatives because the initiatives would set its water

rates below its costs and thus would force it to default on its debts and put it out of

business. At least for purposes of the SLAPP motion, this does not present a factual

issue, because the Proponents have not presented any contrary evidence. (See Reycraft v.

Lee (2009) 177 Cal.App.4th 1211, 1217 [Fourth Dist., Div. Two] [―[w]hen the facts are

undisputed, the legal significance of those facts is a question of law‖].)

       Even if it did present a factual issue, however, the Proponents cite no authority for

the proposition that the mere existence of a factual issue precludes preelection review. To

the contrary, the Supreme Court has observed that ―an initiative petition‘s alleged failure

to have obtained the requisite number of qualified signatures‖ — an issue that would

appear to be quintessentially factual — can be litigated preelection. (Costa v. Superior

Court (2006) 37 Cal.4th 986, 1006.)

       Finally, the Proponents do not dispute that at least some of the District‘s claims are

subject to preelection review. For example, they do not argue that we cannot reach the

District‘s claim that the initiatives are invalid under Bighorn. (See part III.C.2., ante.) In



                                              33
Citizens for Responsible Behavior v. Superior Court (1991) 1 Cal.App.4th 1013 [Fourth

Dist., Div. Two], this court indicated that when an initiative is challenged on multiple

grounds, some of which may be heard preelection and others which, at least ordinarily,

may not, a court may proceed to resolve all the challenges on a preelection basis:

―[T]here is an analogy to the federal concept of ‗pendent jurisdiction.‘ That is, if we are

‗permitted‘ (as petitioner would have it) to conduct a preelection review of a particular

measure on the issue of the electorate‘s power, there is no logical reason why we should

be prohibited from reaching all the challenges raised to the measure. [¶] [A contrary]

rule would encourage multiple litigation of the most mischievous sort. Having found no

‗ultra vires‘ impropriety, a court would be compelled to permit a measure to be submitted

to the voters without addressing even the most patent issues of substantive invalidity. The

voters, having been apparently assured that the measure would be effective if approved,

would not unreasonably feel betrayed when the court later entertained a new challenge

which proved successful. We reject this position.‖ (Id. at p. 1023, fn. 5.)

                     ii.     Water Code section 31007.

       We turn, then, to whether the initiatives are invalid under Water Code section

31007. As already mentioned, Water Code section 31007 requires that a county water

district‘s rates be fixed high enough to cover certain specified costs.

       Also as already mentioned, the water district in Bighorn was subject to a similar

statute. That statute could have been the basis for two distinct challenges to the proposed

initiative: (1) under the exclusive delegation rule, the water district‘s board of directors



                                              34
had the exclusive power to set its water rates and charges; or (2) the particular water rates

and charges set by the initiative were insufficient to cover the water district‘s costs.

(Bighorn, supra, 39 Cal.4th at p. 210.)

       The water district insisted that it was raising only the first issue. (Bighorn, supra,

39 Cal.4th at p. 210.) Thus, with regard to that issue, the Supreme Court held that article

XIII C, section 3 trumped the exclusive delegation rule. It explained: ―The Legislature is

bound by the state Constitution . . . , and the evident purpose of article XIII C is to extend

the local initiative power to fees and charges imposed by local public agencies. . . . [T]he

Legislature‘s authority in enacting the statutes under which the Agency operates must in

this instance yield to constitutional command.‖ (Bighorn, at p. 217.)

       The Supreme Court declined to decide the second issue. It stated: ―[W]e are not

holding that the authorized initiative power is free of all limitations. In particular, we are

not determining whether the electorate‘s initiative power is subject to the statutory

provision requiring that water service charges be set at a level that ‗will pay the operating

expenses of the agency, . . . provide for repairs and depreciation of works, provide a

reasonable surplus for improvements, extensions, and enlargements, pay the interest on

any bonded debt, and provide a sinking or other fund for the payment of the principal of

such debt as it may become due.‘ [Citation.] That issue is not currently before us.‖

(Bighorn, supra, 39 Cal.4th at p. 221.)

       We perceive a significant distinction between the two issues. The controlling

constitutional provision is article XIII C, section 3, which provides that local



                                              35
governmental charges can be reduced or repealed by initiative. This is totally

irreconcilable with any statutory rule that a water district cannot set its charges by

initiative. However, it is not similarly irreconcilable with a statutory rule that a water

district must set its charges high enough to cover its costs.

       ―[T]he local electorate‘s right to initiative . . . is generally co-extensive with the

legislative power of the local governing body. [Citation.]‖ (DeVita v. County of Napa,

supra, 9 Cal.4th at p. 775.) There is a ―constitutionally based presumption that the local

electorate could legislate by initiative on any subject on which the local governing body

could also legislate.‖ (Id. at p. 777.)

       Thus, if the state Legislature has restricted the legislative power of a local

governing body, that restriction applies equally to the local electorate‘s power of

initiative. For example, in deBottari v. City Council (1985) 171 Cal.App.3d 1204 [Fourth

Dist., Div. Two], we noted that Government Code section 65860 ―prohibits enactment of

a zoning ordinance that is not consistent with the general plan.‖ (deBottari, at p. 1210.)

We concluded that a local referendum, which, if passed, would have caused a city‘s

zoning ordinances to be inconsistent with the city‘s general plan, was invalid. (Id. at

pp. 1210-1212.) If the rule were otherwise, the voters of a city, county, or special district

could essentially exempt themselves from statewide statutes.

       Article XIII C, section 3 does not alter this traditional limitation on the initiative

power. As already mentioned, it provides that ―[n]otwithstanding any other provision of

this Constitution, including, but not limited to, Sections 8 and 9 of Article II, the initiative



                                              36
power shall not be prohibited or otherwise limited in matters of reducing or repealing any

local tax, assessment, fee or charge.‖ (Italics added.) Thus, it presupposes an otherwise

valid use of ―the initiative power.‖6 The voters of a local water district simply lack the

initiative power to exempt themselves from Water Code section 31007.

       The Proponents may argue that a water district has the ability to pad its own

―operating expenses,‖ through inflated salaries, sweetheart pension deals, lavish offices,

etc.; the voters should be able to rein in such profligate expenditures by initiative. In this

case, however, despite the Proponents‘ suspicions, there is no evidence that the District‘s

budget is padded or abusive. It is arguable that ―operating expenses,‖ as used in Water

Code section 31007, should be construed to mean only expenses that are reasonable

and/or in good faith. On this record, however, we need not decide this issue.

       Instead, we merely note that Proposition 218 also provides that, before increasing

any fee or charge, a local governmental entity must give affected property owners notice

and an opportunity to protest. If a majority of them do protest, ―the agency shall not



       6         We are aware of a ―Statement of Drafters‘ Intent‖ regarding Proposition
218. (Howard Jarvis Taxpayers Assn., Right to Vote on Taxes Act: Statement of
Drafters‘ Intent (May 1996), available at <http://www.hjta.org/propositions/proposition-
218/text-proposition-218-analysis>, as of Apr. 19, 2013.) However, because this
statement was not included in the ballot pamphlet or otherwise presented directly to the
voters, it is irrelevant to the construction of Proposition 218. (Robert L. v. Superior Court
(2003) 30 Cal.4th 894, 904-905.)
        In any event, according to the statement of intent, article XIII C, section 3 was
―merely‖ intended to ―‗constitutionalize[]‘‖ existing law to the effect that an initiative can
be used ―to reduce or eliminate government imposed levies . . . .‖ This supports our view
that article XIII C, section 3 was not intended to expand the initiative power.


                                              37
impose the fee or charge.‖ (Cal. Const., art. XIII D, § 6, subd. (a)(2).) This gives the

voters substantial protection against rate increases that, in their opinion, are due to

extravagant costs. In this case, the District followed this procedure scrupulously;

however, only about one out of every 500 property owners filed a protest. Finally, the

voters always have the remedy of booting the members of the water district board out of

office.

          In sum, then, under Water Code section 31007, the District could not set water

rates so low that they are inadequate to pay the costs listed in that section. We conclude

that the local electorate does not have the power to do so by initiative, and article XIII C,

section 3 was not intended to give it such power. The District has introduced

uncontradicted evidence that the initiatives, if enacted, would set water rates so low that

they would be inadequate to pay its costs. We therefore conclude that the District has

shown the probable validity of its claim that the initiatives are invalid under Water Code

section 31007.

          In light of this conclusion, we need not decide whether the initiatives are invalid

because they would interfere with the provision of an essential governmental service or

because they would unconstitutionally impair the obligation of contract.




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                                            IV.

                                      DISPOSITION

       The order appealed from is affirmed. In the interest of justice, each side shall bear

its own costs.

       CERTIFIED FOR PUBLICATION


                                                                RICHLI
                                                                                           J.

We concur:


RAMIREZ
                        P. J.


MILLER
                           J.




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