Council Puts $500-Million Sewer Improvement Bond on June Ballot

The Los Angeles City Council, faced with a $2.3-billion price tag to upgrade the city’s antiquated sewer system, voted unanimously Friday to put a $500-million sewer improvement bond issue on the June 2 municipal ballot to help pay the bill.

If approved by a majority of voters, the bonds will be used to partially finance a sewer renovation that stems from one of the Bradley Administration’s thorniest political headaches and now looms as one of the city’s most expensive public works projects.

In backing the bond issue, Councilman Zev Yaroslavsky, chairman of the Finance and Revenue Committee, said the costs of the sewage project would be spread among current and future users. “This is by far the most economical and the most equitable to the average taxpayer in the City of Los Angeles,” he said.

Mayor Tom Bradley and the City Council, beset by problems with the city’s aging sewer system, agreed last year to improve the city’s sewage treatment and disposal by spending $1.3 billion in capital improvements and another $1 billion in operation and maintenance costs. The costs include a federally mandated cleanup of Santa Monica Bay and the implementation of a program to fully treat waste water pumped through the Hyperion treatment plant in El Segundo.

The agreement to upgrade the sewer system came after the federal government penalized the city $625,000 for violating the federal Clean Water Act. The agreement represents one part of a tentative settlement of a 9-year-old lawsuit against the city by the Environmental Protection Agency.

The inadequacies of the sewer system angered local environmentalists and became a campaign issue in Bradley’s unsuccessful gubernatorial bid last year.

If approved, the $500 million in sewer revenue bonds would be sold and the proceeds used to help pay for the capital costs of the project, with the balance of the upgrade costs made up from user fees and federal grants.

Under the ballot measure, the revenue bonds would be repaid through increased sewer service charges, sewer hookup fees and an industrial waste surcharge. As part of the financing plan, each of these fees and charges would be increased.

For example, the current average household charge of $5.50 per month is expected to increase to $5.65 next year, and residential sewer charges will rise gradually to $11 per month in 1994, according to City Administrative Officer Keith Comrie. Without revenue bonds, city officials said an even larger increase in sewer charges would be needed to pay for the sewage system.

At a City Hall news conference before the council vote, Yaroslavsky said the sale of revenue bonds is “the cheapest form of financing” to rehabilitate the city sewer system, eclipsing such alternatives as a pay-as-you-go plan that would triple water rates on local user bills.

Comrie, who joined Yaroslavsky at the news conference, said the sale of revenue bonds would save the city $12 million to $24 million over other financing alternatives.