A dispute between the city of Fresno and a small north Fresno utilities district could cost ratepayers.

A 15-year-old lawsuit, initiated and won by the city, has the Pinedale County Water District on the hook for nearly $300,000 in attorney’s fees. The district says it does not have the money and will have to raise sewer fees by 5% to satisfy the judgment against them.

“The District regrets being required to increase fees for sewer service, but it has been forced do so by the actions of the City of Fresno,” the notice sent by the district to its customers said. It encourages customers to direct any complaints “about the unnecessary surcharge” to Mayor Jerry Dyer, and councilmen Garry Bredefeld and Mike Karbassi.

PCWD attorney Neal Costanzo says the city, through its outside counsel James Betts, is now trying to enforce payment.

Constanzo said the city should forgive the debt.

“Absolutely. It’s the right thing for them to do,” Costanzo said.

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The small utility district provides water and sewer services to nearly 3,500 residents and businesses in north Fresno in a 2-square-mile area generally around Herndon and Maroa avenues. The district is separate from the city of Fresno. The five-member PCWD board of directors is elected by the public.

Sewer rates would increase by $1.43 — from $25.75 to $27.18. District customers have until Oct. 17 to submit opposition to the increase, known as a Proposition 218 protest. Rates have not increased since 2010. Water rates are also in the process of increasing, PCWD general manager Jason Franklin said.

District Sends Letter to Dyer

PCWD board president David Rodriguez sent Mayor Jerry Dyer a letter on Nov. 3, 2022, asking the city to forgive the debt.

“If ‘One Fresno’ is to be more than a campaign slogan, you as Mayor, or the City Council, need to direct the filing of a full and complete satisfaction of this judgment immediately. Otherwise, your residents will be paying inflated fees for sewer charges for the next ten years,” Rodriguez wrote.”

The initial 2008 lawsuit was never filed at the direction of the city council, Rodriguez wrote.

Rodriguez wrote that the district would pass on the costs to satisfy the judgment to its ratepayers “rather than bankrupt itself.”

Constanzo said Dyer never replied to the letter.

“I don’t even know Jerry Dyer opens his own mail. I’m sure he does not. Which is fine. But, you know, we’re just kind of disappointed that we made these overtures and were ignored,” Costanzo said.

Dyer deferred comments to his city manager, Georgeanne White. She said she could not comment because of pending litigation.

Why Can’t Pinedale Pay?

Why can’t Pinedale pay the city? Costanzo said the district has other priorities, namely building a well. The well is needed to satisfy city water pressure requirements.

“It’s a matter of using the money they have and what they need to do at this point in time,” Costanzo said. “We are under a lot of pressure to drill that well, which is about a $1.5 million project.”

Insurance, Costanzo said, would not cover the debt owed to the city.

2008 Lawsuit and Attorney Fees

The controversy started in 2008 when the city sued PCWD over a contract regarding the use of the city’s sewage treatment plant. Specifically, the city wanted to conduct an audit, as allowed in the contract. Court records show the audit decision came from then-interim city controller/finance director Karen Bradley, with approval from the city manager, Andy Souza.

The district balked.

“Because the person they serve to conduct the audits insisted on connecting to our computers and downloading everything,” Costanzo said.

The case was moved from Fresno County Superior Court to Madera County — a procedural move to allow for neutrality when two government agencies in the same county engage in litigation.

The judge ruled in the city’s favor, and after a failed appeal, finalized an award to the city in 2015 of more than $127,000 in attorney’s fees.

Meetings With City Officials

With a court victory in hand, the city never bothered to conduct the audit, the district said.

“They’ve filed the suit for an audit to compel an audit that they never wanted,” Costanzo, the PCWD attorney said.

Court records show the district met with city officials in 2015, including then-City Councilman Steve Brandau. Brandau had no knowledge of the city’s litigation, which predated his time on the council.

Speaking with GV Wire, Brandau — now a Fresno County supervisor representing the Pinedale area — still does not have much recall about the meetings with PCWD officials. He said the situation is “unfortunate.”

“It’s really not about some needed infrastructure. It’s about paying some attorney’s fees. So that sucks. But I think that they are probably going to have to raise those funds,” Brandau said.

In those 2015 meetings, then-City Manager Bruce Rudd and then-Public Utilities Director Thomas Esqueda allegedly told the district they didn’t plan to conduct the audit, PCWD district officials said.

The district believed city officials also agreed to “renounce” the accrued legal fees, although there is no written record backing that claim. PCWD board president Rodriguez also claimed that city officials told him they would ask the city council to not pursue the debt.

The district offered to settle the dispute for $40,000. The city council met in closed session on June 8, 2017, but did not take action.

The city filed litigation in 2017, demanding payment. PCWD tried to block the move — with the main argument that the PCWD-City contract dating back to 1976 was illegal from the start — with the case being heard in Kings County. The judge ruled in the city’s favor and tacked on $92,000 in attorney’s fees.

With interest, PCWD’s debt to the city could balloon to $300,000.