Metro Water District proposes first-ever land fee.

Utility to seek $5 per acre or parcel to lower its deficit

The Southland's largest water wholesaler plans to impose its first-ever fee on land this year.

The Metropolitan Water District, water supplier to most L.A. County businesses and residences, is hoping to raise $50 million to narrow its projected budget deficit in part by collecting $5 an acre from every landowner in its 5,200-square-mile sales region. For holdings of less than one acre, $5 would be charged for each parcel.

That would raise an estimated $25 million. Another $25 million would be charged to the 27 water-retailing agencies it supplies. Those agencies typically pass on higher wholesale costs to their users.

The MWD board of directors has called for a series of public hearings on the issue in March and April, with a board vote in May. If approved, the $5 fee would likely show up on property tax bills in the fall.

The MWD already collects a land tax on property tax bills. Last year it levied a 0.0089 percent tax on assessed land values, collecting some $77 million.

Ironically, the MWD says it needs more revenue because its water sales have declined, thanks to the drought and to conservation measures which it and other agencies have successfully promoted.

The fee could run into some resistance, if the recent experience of one of its retailers -- The Los Angeles Department of Water and Power -- is any guide: The DWP, after forcing conservation, fought for an 11 percent rate hike last year to make up for drought-slackened sales. The L.A. City Council rebuffed it, with vocal council members saying consumers shouldn't be penalized for conserving.

The council shot down several compromise measures floated by DWP, which finally had to settle in January for a 3.6 percent rate hike and vow to cut DWP staff, capital projects and maintenance.

As for the MWD, officials already are saying rate hikes won't be enough. Even after raising wholesale rates 13 percent last July, the MWD expects to run a $265 million deficit on its $800 million budget for its fiscal year, which ends June 30.

Next year it plans to trim that deficit to $70 million on a $829 million budget. But that is dependent on another rate hike -- 20 percent -- to be levied this July, plus the $50 million in land taxes.

MWD officials say deep spending cuts are out of the question because nearly 80 percent of expenditures are fixed for overhead, such as payments on water delivery systems.

In fact, the MWD is aggressively expanding its infrastructure even while the drought and conservation are eroding demand.

MWD spokesman Bob Gomperz said the irony is due to the "temporary phenomenon" of the drought. "But what we're preparing for is the ability to withstand future droughts."

Facilities are planned or under construction for extra reservoirs to catch more rainfall and new delivery systems to take water where it's most needed in dry times.

Despite conservation, the Southland overall is experiencing "tremendous increases" in population that are creating "burgeoning water demands," said MWD General Manager Carl Boronkay.

At a meeting this month, the MWD board noted its intention to discontinue the land fee within two years and "seek other means to raise firm revenue," according to a public statement.