DROPPING SEWER FEE WON'T REDUCE BILLS.

Byline: Rick Orlov Staff Writer

The elimination of the wastewater franchise fee for sewer construction will not actually cut homeowner bills $20 a month but could help avoid long-term fee hikes of about that much, Los Angeles city officials said Friday.

The Daily News had reported Wednesday that the City Council approved eliminating the sewer service charge itself. But in fact, the council approved ending the transfer of about $20 million a year from the wastewater franchise fee to the city's general fund, where it was spent for other purposes.

Councilwoman Laura Chick has called for an accounting of how money from the sewer construction fund was actually spent. Mayor Richard Riordan and the council have raided the fund since 1997 to help balance the city's budget even as plans were under way to phase out the controversial fee.

``We took some $90 million from the sewer construction account and I want to know how that money was used and also what wasn't done in terms of construction,'' Chick said Friday.

Officials said the city's decision to discontinue shifting sewer revenue to the city's General Fund will not reduce homeowners' bills by $20 a month.

Shahran Kharaghani of the Bureau of Sanitation said elimination of the franchise fee does not eliminate the need for the sewer service charge.

``The costs of paying the franchise fee are not exclusively charged to homeowners, but are a small part of the sewer service charges paid by all sewer customers,'' Kharaghani said. `(It will) help delay future increases in the sewer service charge.''

Riordan's office has estimated it will eventually save homeowners $20 a month by deferring sewer service charge increases, although sanitation officials estimate that increases could be needed in 2003 and 2004.

Chick, who is looking at the fund in her role as chairwoman of the council's Government Efficiency Committee, said paying back the money could help defer those increases.

In 1997, the city began charging the franchise fee, taking the dollars from sewer system revenues and justifying it as compensation for right-of-way costs associated with pipes under city streets.

Chick called for a inquiry into how the sewer system has been affected, and will be affected, by the loss of those dollars.

``What I'm afraid of is that we took this money to balance the budget and are now just forestalling the time when a new City Council will have to raise sewer rates and we won't be held accountable for it.

``I know the mayor suggested this when we had severe budget problems and the council approved it, but now that we're in better shape, maybe we should pay back the fund,'' she said.

The council on Tuesday agreed to a three-year phase-out of the wastewater franchise fee.

A Bureau of Sanitation report said: ``Phasing out the franchise fee will mitigate reduced net income and allow the city to avoid raising rates more than this amount''

Chick said she has other concerns about a variety of new regulations on the city that could result in hundreds of millions of dollars in further expenses. Among these is a federal order to halt sewage spills during periods of heavy rain by upgrading the city's 6,500 miles of sewers. Also, the city is being required to meet higher standards for the discharge of water as well as upgrading its treatment of biosolids.

Additionally, the city now faces at least $700 million in new projects to build interceptor sewers throughout the city's system.