Opinion
No. 75-791
Decided July 8, 1976. Opinion modified and as modified petition for rehearing denied October 21, 1976. Certiorari granted January 17, 1977.
In declaratory judgment action by city council challenging right of petitioning citizens to require referendum on water rate ordinance, the trial court held the ordinance not subject to referendum, and petitioning citizens appealed.
Reversed
1. INITIATIVE AND REFERENDUM — Water Rate Ordinance — No Exemption — City Charter — Subject to Referendum. Since city charter contains no provision exempting from the referendum ordinances pertaining to water rates nor exempting therefrom ordinances pertaining to proprietary functions, ordinance passed by city council to increase water rates was a proper subject for a referendum petition.
2. Defeat of Ordinance — Water Bond Obligations — Not Impaired. Although, if referendum election were held on city water rate ordinance, a defeat of the ordinance by the electors would result in greater reliance on other sources of income such as sales and general ad valorem taxes to provide necessary funds to meet the general obligation water bonds of the city, nevertheless, such defeat would not impair the contractual obligations between the city and its water bond holders.
Appeal from the District Court of Arapahoe County, Honorable M. O. Shivers, Jr., Judge.
Leland M. Coulter, Richard Kaufman, for plaintiff-appellee.
Bader Dufty, Robert A. Dufty, for defendants-appellants.
Dawson, Nagel, Sherman Howard, Robert M. Johnson, Michael L. Cheroutes, for amicus curiae — Colorado Municipal Bond Dealers Association, Inc.
Susan K. Griffiths, for amicus curiae — Colorado Municipal League.
On July 22, 1974, the Aurora City Council enacted Ordinance No. 74-146 (the ordinance), in which the rates, fees and charges for water supplied to residents of the city were raised. A referendum petition, proper in form and content and bearing sufficient signatures, was timely filed with the city. The petitioners protested the ordinance and demanded that, if the ordinance were not repealed by the council, the matter be submitted to a vote of the qualified electors of the city for their approval or rejection. Instead of repealing the ordinance or calling an election on the matter, the city initiated this declaratory judgment action against the defendants individually and as representatives of the class of persons who had signed the referendum petition.
At an evidentiary hearing, over the defendants' objections of irrelevancy and immateriality, the city presented evidence concerning the reasons for the increase in water rates. No claim was asserted nor evidence offered to show that the new rates were in any way unreasonable or discriminatory. The trial court held that the ordinance was not subject to referendum. Challenging that judgment, defendants appeal. We reverse.
In support of the judgment, the city states that the establishment of a water rate is an executive and administrative function of the city council and is necessary for the operation of the city utilities department, an operation which is proprietary and nongovernmental in nature. We agree. However, it does not follow that, as contended by the city, the act of establishing such rates is not subject to the referendum provisions of the city charter.
The Aurora City Charter, Art. VI, Sec. 6-4, provides that:
"The referendum shall apply to all ordinances passed by the council, except ordinances fixing the rate of taxation on property each year for municipal purposes, making the annual appropriation, calling a special election, or ordering improvements initiated by petition and to be paid for by special assessments" (emphasis supplied)
[1] Accordingly, inasmuch as a water rate ordinance is not included within the specified exemptions to the general referendum power stated in the Aurora Charter, such an ordinance is subject to that power. See Fort Collins v. Dooney, 178 Colo. 25, 496 P.2d 316; Brooks v. Zabka, 168 Colo. 265, 450 P.2d 653; Burks v. City of Lafayette, 142 Colo. 61, 349 P.2d 692. Nowhere in the charter is there any exception made for ordinances pertaining to proprietary functions.
The trial court, in justification of the limitation it placed on the referendum power, determined that "as to fixing rates, it is almost impossible for an electorate to have or digest the necessary complicated data and facts to arrive at a proper judgment as to the correct and accurate schedule adequate to sustain, maintain and operate a utility system." However, that conclusion was not predicated on any evidence, is without justification, foundation, or authority, and is totally irrelevant to the referendum right. In any event, if the people choose to vote down a rate increase, that is their prerogative.
"All political power is vested in and derived from the people; all government, of right, originates from the people, is founded upon their will only, and is instituted for the good of the whole." Colo. Const., Art. II, Sec. 1.
In Bernzen v. City of Boulder, 186 Colo. 81, 525 P.2d 416, the court stated:
"We view . . . the initiative and referendum, as fundamental rights of a republican form of government which the people have reserved unto themselves. . . . 'Such a reservation of power in the people must be liberally construed in favor of the right of the people to exercise it. Conversely, limitations on the power of referendum must be strictly construed .'. . . [W]here the constitution protects certain fundamental values, neither the legislature nor a home rule city has the power to act to infringe upon such values.
[2] The City argues that allowing the submission of an ordinance establishing water rates to a referendum and vote thereon by the people would impair the obligation of contracts entered into by the City with its water bondholders. We do not agree.
The bonds referred to are general obligation bonds rather than revenue bonds and contain the statement "that provision has been made for the levy and collection of an annual tax on the taxable property in the City sufficient to pay the interest and principal of this Bond when the same becomes due." The Charter provisions in question were in effect before the bond ordinances were enacted or the bonds issued. The only effect on these prior obligations which would result from a defeat of this ordinance would be a greater reliance on other income sources such as sales and general ad valorem taxes in order to provide the necessary funds. The obligations are in no way impaired.
The judgment is reversed and the cause is remanded to the trial court with directions to enter judgment consistent with the views herein expressed.
JUDGE ENOCH and JUDGE SMITH concur.