HAYWARD -- Joan Shumate lives just outside the city limits and pays 50 percent more for her water than her neighbors across the street, who are city residents, and that's not fair, she says.

"They're in the city, and they don't pay a service charge," Shumate told the City Council on Tuesday. "Their meter is in my front yard on my property next to my meter, and I do pay a surcharge."

Hayward has levied a 50 percent surcharge to provide water to the 202 homes in unincorporated Castle Homes in the Fairview Avenue area since at least the 1970s, and many residents have known about it for several years, although it is not listed on their bills. Now, their high water bills after this year's dry spring has brought the issue to the fore, and they want the city to justify the extra charges.

"It really hit critical mass in the spring when we got our water bills," said Dale Silva, president of the Hayward Hills Property Owner Association. He and several other residents went before the City Council with their complaints on Tuesday.

"We're more than willing to take a look at the surcharge and figure out whether it's appropriately charged or not," City Manager Fran David said.

Nobody seems to know how, or exactly when, the 50 percent figure was settled on. It stems from the fact that it costs more to deliver water to those Castle Homes properties than to customers who live in the city, said Alex Ameri, Hayward director of public works.

Some of the water lines stretch two miles outside city limits. "I know for sure that we provide more services to these properties, do much more flushing of the lines," Ameri told the council.

Hayward is served by a loop system of lines, and water not being used by one customer can be shifted to another because the water is constantly moving in the grid, he said. But the lines running up to Castle Homes dead-end.

"We have to flush the lines frequently to make sure that the water remains fresh and the line is sanitary," Ameri said.

Flushing those lines is more work because, for most of the area, there are no sewer lines or storm drains to pour the water into, he said. The water has to be hauled off in a tanker truck.

Ameri attributed some of the high cost to the amount of water being used. Some residents use more than 1,000 gallons a day, he said. By comparison, the average Hayward water customer who lives in a house uses 225 gallons daily.

Some of the water usage can be attributed to fire protection and the size of the lots, which are a minimum of an acre, Silva said.

"We rely on keeping greenery around our houses for fire protection. This area is fire-prone," he said.

John Kriege, another Castle Home resident, told the council his April-May water bill was $795, and it may be more than $1,000 this summer.

Most Castle Home residents do not live in large houses, Kriege said. He uses more water because he has a lawn and rose garden, but said he is an exception. "We don't use much water because we have to pay so much," he said.

Several Castle Homes residents questioned whether the cost to deliver water to them was actually higher than nearby areas that have been incorporated into the city. They said they are served by the same lines.

However, when an area is incorporated into the city, it is hooked into the water grid, and storm drains and sewer lines are added, Ameri said later in an interview. So even though it appears that all the houses in the area are on the same lines, they may not be, he said.

He wasn't sure why the surcharge is not listed on bills. "Who knows? There may have been limitations on what a mainframe computer could produce in the 1970s and nobody thought to change it later," he said.

The staff will make a recommendation on the surcharge to the council this fall.

Mayor Michael Sweeney said that while the surcharge may be too high, it also could be too low.

By comparison, Santa Clara also levies a 50 percent surcharge to unincorporated areas, and Daly City and Mountain View have 100 percent surcharges, Ameri said.

"We need to look at whether 50 percent is appropriate and proper," Sweeney said. "We also need make sure we're not asking the citizens of Hayward to subsidize other folks."