The California Supreme Court will decide the fate of a controversial franchise fee lawsuit that if the City of Santa Barbara loses, could cost it $700,000 and possibly “several hundred thousand dollars” in taxpayer refunds dating back to 2010.

The high court on June 10 agreed to review the City of Santa Barbara’s case over the potential loss of franchise fee revenue. 

The city charges Southern California Edison a 2 percent franchise fee for the right to use the city’s poles and rights of way to deliver electricity.

Initially, the fee was just 1 percent, then the city in 2004 increased the fee by another 1 percent, which Edison passed on to customers in the form of a surcharge. 

The lawsuit was filed by Rolland Jack, owner of the downtown Hotel Santa Barbara. Santa Barbara won the initial lawsuit, then lost in the court of appeal. The city petitioned to the California Supreme Court, which agreed to hear the case.

“We are extremely excited that the Supreme Court granted review,” City Attorney Ariel Calonne said. “I am pleased that the Supreme Court took the case because it gives us a chance for us to argue for the residents and taxpayers of Santa Barbara.”

If the court rules against the city, Santa Barbara would lose about $700,000 out of its general fund and be forced to pay several hundred thousand dollars in refunds to taxpayers dating back to 2010, according to City Administrator Paul Casey. Santa Barbara has already set aside the $700,000 from its general fund in anticipation of not having it next fiscal year. 

The loss of the $700,000 and potentially much more is just one of three big civil lawsuits for which Santa Barbara paid $1.5 million in 2015.

In fiscal year 2015, Santa Barbara paid $677,000 in attorneys fees from the California Voting Rights Act lawsuit that will result in district elections this November.

The city also paid $800,000 in damages and attorneys fees to five homeowners who successfully sued the city for the right to rebuild after the 2008 Tea Fire.

“This level of exposure in one year is unusual and, of course, disappointing,” Caloone said.

The financial losses from the civil lawsuits fueled much of the heartache in the debate over the passage of the city’s $292 million budget and its $124.4 million general fund.

The city is looking to fill a $1.8 million shortfall in its general fund reserves.

Noozhawk staff writer Joshua Molina can be reached at jmolina@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

Joshua Molina

Joshua Molina, Noozhawk Staff Writer

Noozhawk staff writer Joshua Molina can be reached at jmolina@noozhawk.com.