City May Use Mediator in Impasse Over Sewer Plant

THOUSAND OAKS — Emotions have grown so heated in the sewer fight, the City Council’s stalemate over the $75-million plan to upgrade the Hill Canyon Wastewater Treatment Plant, that city leaders are considering the services of a professional mediator.

In a political hair-pulling match that has already lasted more than a year and a half, both sides are more entrenched in their positions than ever.

And the same two issues--whether Thousand Oaks really needs a sewer plant of the size being proposed by city officials, and whether current city residents should pay for part of it--are still the crux of the impasse.

So is either side right?

Interviews with state officials, engineers from other cities and experts on public financing all reveal the same thing: The sewer plan that Thousand Oaks officials and the majority of the City Council have steadfastly stuck to reflects the latest conventional wisdom on how to upgrade such facilities.

However, the experts agree, it is hardly the only alternative, even if state laws limit what Thousand Oaks can do.

“There is always the classic question, when a community expands its infrastructure, about who should pay for what,” said Peter Detweiler, a consultant to the state Senate’s committee on housing and land use. “This is an intrinsically political question. There is no one way to do it.”

Built in the 1960s, the Hill Canyon Wastewater Treatment Plant is operating at about 83% of its 10-million-gallon daily capacity, and state law requires that the city take action to ensure its capacity is not exceeded.

Much of its equipment is also outdated, and in numerous areas, the sewer plant no longer meets state health and safety requirements. The city also needs to replace some of the sewer lines leading to the plant, including one that ruptured in 1995, spilling 10 million gallons of raw sewage into the Arroyo Conejo.

City public works officials have come up with a 15-year plan to upgrade and expand the sewer plant. The plan calls for residents to pay about 30% of the cost while developers would pay the remainder.

But a sewer fee hike proposed as a way to pay for about 30% of the project has been opposed by Councilwoman Elois Zeanah, former Councilwoman Jaime Zukowski, and more recently, new Councilwoman Linda Parks. They have argued that the cost should be borne totally by developers and also feel the $75-million plan is more expensive than it needs to be.

On the other side, Mayor Judy Lazar and Councilmen Andy Fox and Mike Markey support the plan, saying it is the city’s best alternative. Three votes are not enough to raise sewer fees, however. That requires a four-fifths council vote.

Thousand Oaks has hired numerous experts--including an investigative auditor for more than $125,000--to review details of the city’s proposal. Council members have taken a field trip to the aging sewer plant to see its needs for themselves.

They have received motivation in the form of a warning from state water regulators that Thousand Oaks could be forced to repay $12.5 million in old water grants--and even face a state-imposed moratorium on growth--by failing to take action.

But nothing has worked. A year-end deadline set by the State Water Resources Control Board came and went last month. The plan was never close to being approved, or even significantly modified in the attempts to reach consensus.

“There’s been no progress, really,” Fox said. “It’s the same issue.”

At the heart of the debate over ways to pay for the sewer plant upgrade is a state law, commonly referred to as AB 1600 for its former legislative bill number, that requires cities to show a fair relationship between fees charged to developers and the public facilities the fees help to build. The City Council is scheduled to have a study session on AB 1600 on Feb. 18.

The law was the outgrowth of several landmark U.S. Supreme Court decisions in the 1980s--including one involving a Ventura County family--that favored property rights of landowners after decades of leaning in favor of government regulations.

The Nollan family of Faria Beach wanted to demolish its old bungalow on the coast to put up a larger home, but the California Coastal Commission demanded that the Nollans dedicate part of the property for beach access. In 1987, the high court ruled that the family did not have to do so because there was no connection between a family building a new house and the public benefit of providing beach access.

In the past, Thousand Oaks and other California cities had often charged developers entirely for sewer plant improvements. But after AB 1600 came into effect in 1989, municipalities throughout the state determined that doing so was no longer legal.

Since then, cities have traditionally divided the cost of sewer plant upgrades between current residents, who pay in the form of higher waste-water fees, and future residents, who assume the sewer connection fees from developers as part of the cost of buying a home.

“If you tried to put upgrades to facilities all on development, you’d get sued, no doubt about it,” said Lloyd Hubbs, city engineer for Carlsbad in San Diego County, which recently upgraded its sewer plant. “And you’d lose, too. We all live by the same rules, and you can’t charge development for something that benefits everyone.”

However, Councilwoman Zeanah is convinced that raising sewer fees is unnecessary, and that the precedent set by other cities and alluded to by several city consultants during the sewer fight is false.

Zeanah has refused to vote for the rate hike that city officials and the City Council majority of Lazar, Markey and Fox regard as necessary to improve the sewer plant. So did former Councilwoman Zukowski, and now, so has Parks.

Zeanah points out that AB 1600 only states that there has to be a correlation between the amount builders are charged and the portion of the public facility that will be used by new development.

In other words, the law does not require existing residents to pay higher fees for a specific portion of sewer plant improvements--it simply states that whatever developers pay has to be demonstrably fair. And according to Zeanah, that probably means that Thousand Oaks residents are paying plenty already.

“I will not put 40% of the burden of this plan on residents instead of developers,” Zeanah said. “That is an ethical issue, a fairness issue, and it would be wrong to do that.”

City officials disagree. They contend that Thousand Oaks’ current sewer fees averaging $12.30--among the lowest in Ventura County--barely cover operating costs, and that building the entire sewer plant with development fees would lead to costly lawsuits against the city.

“You’d be looking at legal tangles you don’t even want to imagine,” said Public Works Director Don Nelson.

Ironically, in its guide to complying with AB 1600, the League of California Cities, a trusted source of information for cities throughout the state, uses the example of a sewer plant upgrade to illustrate how the law works.

The guide concludes that cities must determine how much the sewer plant improvements cost, and then split the costs between developers and existing residents based on how much each will need the facility. And it specifically recommends that the portion of the improvements to be paid for by existing residents be “built into ongoing bills for existing customers.”

That is exactly the way city officials determined the amount they believe existing Thousand Oaks residents should pay for the sewer plant: 31.6%. Other experts agree with that method.

However, there are also other ways to pay for the sewer plant upgrade--although only one that would allow for developers to assume the entire burden, according to several experts.

For example, Thousand Oaks could legally use money from its general fund to pay for residents’ portion of the plan.

But because the Westlake portion of town is connected to the Triunfo Canyon sewer district in Los Angeles County and not the city’s waste-water plant, city officials contend it would be unethical to use a fund that everyone contributes to for something that will not directly benefit everyone.

“The key point is that the city waste-water utility does not serve everyone,” Nelson said. “It would be unfair to use money from the general fund for this.”

Thousand Oaks could also form an assessment district to raise fees for the upgrade. But city officials say that also would be unfair, because the Hill Canyon plant also serves residents in unincorporated county areas near Thousand Oaks. Since the city lacks the power to impose an assessment district on communities outside city limits, Thousand Oaks residents would be subsidizing those in the unincorporated areas, Nelson said.

Moreover, forming such a district would require the approval of two-thirds of voters, which city officials consider all but impossible.

“It would never happen,” said City Atty. Mark Sellers. “This is a city where [in last November’s election] two-thirds of voters wouldn’t even approve a raise of the bedroom tax on developers to pay for more open space. Do you think they’re going to place a new fee on themselves?”

The only way that Thousand Oaks could attempt to charge developers for the entire sewer plant upgrade is by taking the issue to voters, experts say.

With the approval of two-thirds of voters, state law allows for cities to use developer money for all such improvements. But experts say such an attempt would inevitably lead to a major political fight, with building industry powers spending major money in Thousand Oaks to defeat the effort. Growing companies such as Amgen Inc. would also likely protest such a move because they too would pay.

“Something like that would bring out big money on both sides of the issue,” said Ron Blair of the Water Resources Control Board. “And like everything else these days, getting a two-thirds vote is almost impossible.”

The other sticking point in the sewer fight--whether the upgrade is too big and too expensive--is strictly for Thousand Oaks politicians to determine, experts say.

Price Waterhouse, LLP, the auditing firm that reviewed the $75-million plan for Thousand Oaks last year, concluded that it may be larger and more costly than it needs to be to meet the city’s needs. It recommended a two-step fee hike approach to ending the stalemate.

The first step was for the City Council to approve an interim sewer fee increase to pay for the immediate things that needed to be done to satisfy state requirements.

The second was to hire an outside firm to conduct a value engineering analysis of the remaining elements of the plan to determine where money could be saved. Then the City Council could review what size a second fee hike needed to be to complete the plan.

But last month, at their last meeting of the year, council members were unable to adopt an interim $2.50-a-month increase proposed by city officials to follow the first recommendation of the audit. Zeanah and Parks voted against the fee hike, saying they did not believe it was the right solution.

Both council members believe the plan is extravagant, pointing to its $4.6-million operations building, which would include conference rooms and a lunch area, and some of its components.

Zeanah has said at council meetings and in a recent letter that a technical evaluation of the sewer plant done by Dames & Moore, an engineering firm hired by the auditors, stated that about $30 million could potentially be cut from the plan’s $75-million price tag.

Although the technical evaluation outlines some components of the plan as potential savings areas, which amount to about $27.4 million when tallied, it states only that the components “might be candidates for potential cost savings if given a more detailed scrutiny.”

Representatives for both Price Waterhouse and Dames & Moore reiterated when they presented the audit to the City Council last year that they were not saying any specific amount of money could be saved.

At the Oct. 22 meeting where Price Waterhouse presented the audit to the council, James B. Hunt, a partner in the firm who oversaw the audit, took exception to some of the conclusions Zeanah drew from the report.

“You have mischaracterized our entire presentation tonight,” he said, “and I am sorry for my outrage, but I don’t see any point in going forward with this.”

Zeanah said in an interview last week that one of her principal reasons for opposing the $75-million plan is that she believes it is an attempt by city officials to raise money for what she calls “more misadventures.”

She said she had no idea what those misadventures could be, but added that she is suspicious of the motives of city officials ever since it was revealed that various city funds were depleted to pay for the Civic Arts Plaza.

In her view, the City Council is being asked to approve a $75-million plan for something that will likely end up costing as little as $40 million.

“I am not willing to raise taxes for some $75-million plan that by everyone’s account, may be larger than needed,” Zeanah said. “I won’t vote for that. I’ll vote for a specific work plan, but not a blank check for city management.”

Zeanah contends that she and Zukowski, and now, she and Parks, have tried to get the council majority to cut the plant’s price tag, but that their political opponents stubbornly refuse to budge.

Fox disagrees with that, saying he and the rest of the council majority simply believe that at this point, the plan represents a conservative estimate of what needs to be done in the next 15 years. There are probably ways to cut several million dollars from the proposal, but traditional value engineering studies, which were always going to be part of the plan, will find those savings, he said.

Fox said that some of the components Zeanah has listed in her $30-million savings estimate are more expensive than other alternatives, but that those largely represent policy decisions by the council.

For example, he said, the audit suggested that chlorine could be used to disinfect waste-water instead of the more expensive ultraviolet rays, and that outdoor sludge beds could be used instead of bio-solids dewatering equipment. The Hill Canyon plant currently uses both chlorine treatment and outdoor sludge beds.

But due to safety reasons--chlorine leaks are extremely hazardous--more sewer plants are using ultraviolet these days, Fox said. And due to sanitary reasons, sludge beds are not a good fit for Hill Canyon, since there are residences nearby at Sunset Hills and city officials are pursuing plans for a golf course next door, he added.

“This is not a Cadillac sewer plant,” Fox said. “It is simply a state-of-the-art facility.”

Seeing that the Thousand Oaks sewer plant was updated to meet state health and safety requirements was the reason the Water Resources Control Board took an interest in trying to have the stalemate resolved by the end of 1996.

But Blair, who wrote the often-quoted letter warning Thousand Oaks that it could have to repay $12.5 million in water grants from the Environmental Protection Agency, said his remarks have been taken out of context.

He said he was simply trying to inform Thousand Oaks that when the city accepted the EPA clean water grants in the 1970s, it agreed to provide a certain level of service--a level they were no longer providing.

“It’s like that old pact with the devil,” Blair said. “Once you take the money, you have to live with it forever.”

Blair has not notified the EPA that Thousand Oaks is not in compliance with the grants conditions, and said he probably will not until he believes all hope is lost in Thousand Oaks.

Even then, he said, the EPA has never forced any California city to repay grants, so that he doubts anything that serious would occur.

“It is the worst-case scenario,” Blair said. “Realistically, I don’t ever see it getting to that point. This is not fraud or anything. . . . It would probably be more of a fine, and it would probably take years.”