Former Councilman Wins Lawsuit Against City Use of Wastewater Funds

The city of Petaluma broke the law when it used money intended for its wastewater systems to maintain its storm drain system, a Sonoma County judge ruled last week.

The judge will meet next month with officials from both sides to determine how much the city will be forced to repay into its wastewater fund.

"I am grateful for Judge Nadler’s ruling that the City of Petaluma has been violating the constitution of the State of California and his order that the City return the funds to the ratepayers," former Petaluma City Councilman Bryant Moynihan, who filed the lawsuit last year, said in a statement. "We have calculated that the City, in just this one case, has taken over $6.1 Million of ratepayer monies just to pay for the General Fund expenditure of storm drain maintenance in violation of the State Constitution."

In a 24-page ruling issued Thursday, Sonoma County Superior Court Judge Gary Nadler said prior to 2012, the city "lumped together" funding for its storm drains and wastewater systems, and used money collected for wastewater operations to maintain its storm drain systems. That violated the state constitution, he said.

The statute of limitations says the court can only force the city of transfer funds borrowed three years before the lawsuit was filed, so any ruling can only go back to January 2009. In his statement, Moynihan urges the council to return the full amount taken, which he puts at $6.1 million.

The two sites will meet at 3 p.m. on Oct. 10 for a Case Management Conference to determine how much Petaluma will be forced to repay to its wastewater fund.

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The judge's ruling is attached above as a PDF, and Moynihan's full statement follows:

I am grateful for Judge Nadler’s ruling that the City of Petaluma has been violating the constitution of the State of California and his order that the City return the funds to the ratepayers.  I appreciate the outstanding job done by Eric Benink of the law firm, KRAUSE, KALFAYAN, BENINK & SLAVENS, LLP for successfully representing the ratepayers of Petaluma against the illegal actions of our City Council and City Administration.

This is one of four ways that Petaluma is misappropriating ratepayer monies.  We have calculated that the City, in just this one case, has taken over $6.1 Million of ratepayer monies just to pay for the General Fund expenditure of storm drain maintenance in violation of the State Constitution. 

Judge Nadler is only able to order the City to return a portion of what has been taken (approximately $2.1 million).  If the Petaluma City Council and Administration has integrity and ethics, they would return the full $6.1 million they have taken from the Sewer Enterprise Fund. (The city has $127 million in cash and investments per the last Treasurer’s report).

The City Council will have wasted hundreds of thousands of dollars in legal costs in a foolish attempt to defend their illegal activities.  Only the lawyers (i.e. Meyers Nave) are getting rich.  The City’s ongoing activities in violation of the State Constitution must stop now before the ratepayers sue again.  The City Council and Administration should admit their mistakes, complete an independent audit and agree to work with the community in resolving these on-going problems. 

Long term, our community deserves better.  We need an independent Public Utility Commission to oversee the water and sewer operations and their related enterprise funds.  The temptation is too great for the current leadership to misappropriate more funds making it impossible to entrust our utilities to a city administration that has other priorities.

-Bryant Moynihan