Livermore settles lawsuit with $3.78 million in utility credits

The city of Livermore has agreed to credit a total of $3,783,000 to water and wastewater utilities to settle a lawsuit alleging the agency’s overcharging and misuse of utility fees.

The settlement follows nearly two years of litigation wherein the Alameda County Taxpayers’ Association Inc., a California nonprofit corporation, and Livermore resident Alan Heckman claimed that the city unlawfully inflated water, sewer and stormwater charges to generate excess revenue.

Plaintiffs also argued that the city diverted $2.5 million annually since 2020 from utility rental charges to pay for unrelated general government expenses in violation of the California Constitution.

Through the settlement agreement and mutual release, Livermore residents receive financial relief and gain assurance that water and sewer funds will be used solely for their intended purpose of providing safe, reliable utility service, ACTA officials said in a statement.

“This is a victory for every Livermore resident who has been overcharged on their utility bills,” ACTA President Marcus Crawley said in a statement. “For years, the city treated water and sewer bills as a slush fund to prop up the general fund, in violation of Proposition 218. That practice ends today.”

The lawsuit was brought against the city in October 2023 and the settlement agreement was executed Sept. 16.

According to the settlement, the city denied the petitioners’ material allegations and asserted various affirmative defenses.

The city showed that during the fiscal years at issue, transfers were made from the city’s stormwater utility to the general fund. But in those same fiscal years, the city’s general fund transferred greater amounts to the stormwater utility, the settlement states.

In effect, the city showed that the general fund subsidized stormwater utility services and it was not charging stormwater customers for any transfers to the general fund, according to the settlement.

“This settlement is not an admission of wrongdoing,” city officials wrote in a statement. “This deliberate choice to avoid the significant cost and risk of prolonged litigation reflects our continued commitment to sound governance and financial prudence that our residents have come to count on.”

Under the settlement, customers will not receive direct refunds, city officials explained. Rather, the credits will be factored into estimated expenses, which are used to develop future rates. This means less revenue will be collected from customers than would be otherwise required, city officials said.

At the beginning of the next water rate adjustment, tentatively scheduled for Jan. 1, 2028, the total estimated expenses used to develop rates will be reduced by $312,475.80 annually for five years, according to city officials. Water rates will include a pavement maintenance fee.

Also at the next wastewater rate adjustment, tentatively scheduled for July 1, 2030, the total estimated expenses used to develop rates will be reduced by $444,124.20 annually for five years, according to city officials. Service charges will include a pavement maintenance fee.

As part of the settlement, the city agreed to stop charging water and sewer utilities rent for the use of the public right-of-way. 

“The new approach will now tie transfers directly to the verifiable costs of pavement degradation caused by the presence, operation and maintenance of underground utilities,” city officials added.

The city also agreed to create a restricted, special-use fund for street pavement maintenance, set to be paid into by the water and sewer utilities. 

“The city agreed to stop the very practice we challenged, return $3.78 million to ratepayers, and change its policies going forward”, Heckman told Livemore Vine. “That outcome speaks louder than their formal denials,” he added.

As part of the settlement, the city is also on the hook to pay $271,000 in attorneys’ fees and costs to ACTA’s counsel, Benink & Slavens, LLP.

“This case reaffirms that taxpayer protections in the California Constitution have real teeth,” said Vincent Slavens, attorney for ACTA with Benink & Slavens, LLP. “Cities cannot disguise hidden taxes as utility fees. Ratepayers have a constitutional right to pay only the true cost of service.”

The city of Livermore and related parties have been released from all claims and liabilities relating to any transfers from the city’s water, sewer or stormwater utility funds to the general fund as a “Right-of-Way Charge” or charge for the “Use of City Property” during the fiscal years ranging from 2020-21 to 2024-25, the settlement states.

Station closed? BART could abandon Tri-Valley stops under doomsday budget cutsFebruary 9, 2026 8:36 am

Smash hit: Pleasanton's first rage room, splatter paint destination now openFebruary 8, 2026 1:17 pm

'United and serious': Dublin teachers union authorizes strike amid stalled negotiationsFebruary 8, 2026 12:48 pm