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Residents sue over 'hidden taxes' in utility transfer

Coalition files suit a year after officials dismissed civil grand jury's advice.

February 26, 2014|By Brittany Levine, brittany.levine@latimes.com
  • Harry Zavos, a board member of the Glendale Coalition for Better Government, the organization that is suing the city over money transfers, speaks out at a Wednesday press conference.
Harry Zavos, a board member of the Glendale Coalition… (Courtesy of Diana…)

A concerned residents group filed a lawsuit this week asking a Los Angeles County judge to force Glendale to stop transferring tens of millions of dollars from its utility to the city’s coffers and return $90 million it had shifted from one fund to another since 2010.

“These transfers amount to hidden taxes that are unlawful unless submitted to a vote” of the people, said Arthur Jarvis Cohen, attorney for the Coalition for Better Government, at a press conference in front of City Hall Wednesday.

Members of the coalition that filed the lawsuit in Los Angeles County Superior Court on Tuesday have long complained about the city’s money transfers, describing them as backdoor taxes that artificially inflate utility rates.

Even as Glendale Water & Power slid into multimillion-dollar deficits, the city continued to transfer money the utility received from ratepayers to cover general government expenses, such as those for fire, police and libraries.

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At the same time, the City Council approved multiyear rate increases for both water and electric services in 2012 and 2013, respectively.

The lawsuit comes nearly a year after a Los Angeles County Civil Grand Jury said Glendale should stop using its utility as a “piggy bank.” City officials decided not to take the grand jury’s advice, calling its analysis flawed.

In addition, officials have said the transfers are the only way to maintain the current level of public services.

“When the voice of the people falls on deaf ears, the only remedy is legal action,” Cohen said.

Even Mayor Dave Weaver challenged transfer opponents to sue the city recently.

“Well that’s what we’ve done,” said Harry Zavos, a board member of the coalition, which was founded last year.

While the city used to transfer money from both the water and electricity sides of Glendale Water & Power, Zavos’ complaints prompted officials to halt the water transfers in 2011 because it could leave Glendale vulnerable to a lawsuit.

City officials declined to comment on the recently filed lawsuit because they have yet to analyze its contents.

Paul Jarvis Cohen, another attorney representing the coalition, alleged there were other illegal transfers made before 2010, but due to statute of limitations, the lawsuit focuses only on those made since then.

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