Section 53759 Means What it Says – Court of Appeal Once Again Enforces Validation Requirements for Proposition 218 Water-Rate Challenges

The First District Court of Appeal issued its published opinion on July 24, 2026 in Toy v. City and County of San Francisco, holding that Government Code section 53759 requires challenges to covered water and sewer rates to proceed under California’s Validation Statutes, and that compliance with those procedures is mandatory and jurisdictional. Accordingly, the Court affirmed the dismissal of the plaintiffs’ Proposition 218 challenge to San Francisco’s 2023 water rates for failure to comply with the reverse‑validation procedures. 

Toy is the second Court of Appeal decision in 2026 applying section 53759 to Proposition 218 water-rate challenges, following the First District Court of Appeal’s decision in Hiller v. Marin Municipal Water District.  

1. Section 53759 Applies the Validation Statutes to Covered Proposition 218 Challenges

There are more than 200 California statutes that subject certain challenges to validation procedures. In 2021, Senate Bill 323 added Government Code section 53759, which incorporated those procedures for covered water and sewer rate challenges, established a 120-day limitations period, and required that actions brought by either a local agency or member of the public proceed under the Validation Statutes. 

In Toy, the plaintiffs filed an ordinary class action and served only the City, but failed to follow the specific procedures governing validation actions. Relying on section 53759, the Court held that this failure deprived the trial court of jurisdiction to decide the validity of the challenged rates. Notably, the Court did not need to decide whether the complaint itself had been filed within the 120-day limitations period because the plaintiffs’ failure to follow the required validation procedures was independently fatal.

2. The Requirements of the Validation Statutes are Mandatory and Jurisdictional

San Francisco answered the complaint and litigated the case for more than a year — participating in discovery and dispositive motion practice — before moving for judgment on the pleadings and invoking section 53759.

The Court nevertheless rejected the plaintiffs’ argument that the City had waived the validation requirements. Compliance with those requirements was a prerequisite to the court’s jurisdiction over the matter and all interested persons, not simply an affirmative defense that an agency loses by participating in litigation. 

3. Toy Follows Hiller in Applying Section 53759 to Proposition 218 Water-Rate Challenges

BBK previously reported on the Court of Appeal’s published decision in Hiller v. Marin Municipal Water District, in which the District was represented by BBK. Hiller addressed a complementary situation to that of Toy – the District filed its own validation action. A ratepayer failed to appear in that action, instead filing her own separate challenge to the rates without complying with the Validation Statutes.  

The Court held that the ratepayer had two procedural options: she could have herself filed a validation action prior to the District filing its action, or she could have appeared in the District’s action. Because she did neither, the validation judgment barred her claims. 

Most importantly, Hiller rejected the argument that section 53759 and the Validation Statutes impermissibly conflict with Proposition 218. The Court explained that the statutes do not alter Proposition 218’s requirements and protections. Rather, they “provide the procedures for enforcing the provisions of the proposition.” 

Read together, Hiller and Toy establish a straightforward framework: Proposition 218 supplies the substantive and procedural requirements governing adoption and imposition of covered water and sewer rates. Section 53759 permissibly channels judicial challenges to those rates into a prompt and exclusive validation process.  

4. Takeaways for Public Agencies

Hiller and Toy confirm that section 53759 is consistent with Proposition 218, and that its validation requirements are mandatory and jurisdictional. However, a petition for review is pending before the California Supreme Court in Hiller, and the plaintiffs in Toy may also seek review. BBK intends to keep readers apprised of any developments. Unless and until further review, the law is clear and consistent – section 53759 is consistent with Proposition 218, and its validation procedures must be followed in Proposition 218 challenges to covered water and sewer fees or charges.  

For questions about how these decisions may affect your agency, please contact Lutfi Kharuf, Dean Atyia, or Richard Wall.

BBK Legal Alerts provide general information and are not legal advice. Specific facts and future developments may affect the analysis; consult counsel before acting.