Thorny Issues Arise as Negotiations Near on Sewer Contracts : Sanitation: New agreements may give Los Angeles the power to limit growth and standardize the rates charged contract cities and agencies.

More than two dozen cities and agencies, including Burbank, Glendale, San Fernando and a sewer district serving portions of the west San Fernando Valley, are preparing to negotiate new sewer contracts with the city of Los Angeles. And officials predict residential, commercial and industrial users in most of those areas will pay higher rates as a result.

The new contracts, moreover, may give the Los Angeles City Council the power to monitor--and perhaps stymie--planned development in some of its neighbor communities.

The upcoming negotiations represent the most ambitious effort yet to standardize and make more equitable Los Angeles’ agreements with so-called “contract cities and agencies,” some of which have been dumping waste into its sewer system under arrangements that date to the 1920s.

The talks will also give Los Angeles a chance to bring the contracts in line with federal clean-water regulations that have been hanging over the city’s head for more than a decade. State officials charged with enforcing those regulations have threatened to withhold sewer-related grants from the city--estimated at $50 million over the next five years--if the contracts are not updated.

The negotiations are not expected to begin before September, but potentially troublesome issues have already emerged in preliminary talks. Key among them is the Los Angeles City Council’s intention to use the new sewer agreements as a growth-control tool.

The council, at the request of members Marvin Braude and Ruth Galanter, voted this month to require all cities and agencies with new sewer contracts to furnish Los Angeles with regular reports about zoning changes and building permits. The council also voted to give itself, rather than city staff, control over contract cities’ and agencies’ requests for additional capacity in the sewer system.

Refusing such a request could thwart development in communities that contract with Los Angeles for sewer service.

“The interest of the city is in controlling the regional decisions that are made,” Braude said at a recent council committee meeting. “Those are going to be the key decisions in the next decade. . . . If the city had utilized its power more aggressively . . . we could have limited the growth in the Malibu area and prevented congestion on Pacific Coast Highway, we could have controlled what goes on in the Marina del Rey area in a much more effective way, and perhaps other areas, as well.”

Los Angeles is already locked in legal disputes with several contract cities that have refused to comply with similar requirements for reporting zoning changes and building permits, which were included in a temporary sewer-limitation ordinance passed two years ago.

Officials from those cities--Burbank, Glendale, El Segundo and Culver City--and others have accused Los Angeles of trying to exert too much influence over their cities’ affairs.

“Our perception is that Los Angeles is using” federal clean-water regulations “to change a lot of other things in the contracts,” said Ora Lampman, director of public works in Burbank. “The Los Angeles City Council is apparently looking for some type of land-use controls of areas outside its city boundaries. Our position is that Los Angeles doesn’t have any authority to do that.”

Galanter said grumbling from the contract cities and agencies is to be expected.

“I can’t criticize them for that,” she said at a recent council committee meeting. “It is their job to maintain as much autonomy and control as they can, but it is our sewer system, and they are buying into it.”

Los Angeles officials predict that the new agreements, to take effect next summer, will earn the city an additional $80 million over 10 years, mostly from higher sewer fees.

Los Angeles officials have been unable to say how much the new contracts will cost each client community, but bills are expected to go up across the board because the city intends to pass along costs associated with the $3.4-billion renovation of the Hyperion Sewage Treatment Plant at El Segundo. The expansion and upgrading project at Hyperion, begun in 1987, is to be completed in 1998.

In anticipation of the higher costs, the Las Virgenes Municipal Water District in the unincorporated west San Fernando Valley last month more than doubled its monthly rates for customers using Los Angeles sewers.

For years, sewer users within Los Angeles and some contract areas have been subsidizing those in other contract areas because many agreements do not adequately cover the cost of services, officials said. One of the goals of the contract talks, they said, is to treat all users alike.

“The contracts are so old they are just not reflective of the system that the city now operates,” said Jim Gratteau, head of financial management for the county Sanitation Districts, which has several agreements with the city.

Representatives of Los Angeles and its contract cities and agencies have been meeting for more than two years to prepare for the formal contract talks, which both sides acknowledge are likely to be rocky at times. Several officials have said privately that they expect to end up in court before the negotiations are over.

“Everyone is trying to jockey for position,” said one negotiator for a contract city. “Each agency is trying to minimize its costs. The city of Los Angeles is sitting all alone on the other side of the table.”

Negotiations at first were to open late last year, but delays in drafting a model contract--to serve as the city’s starting point with each of the 29 contract cities and agencies--have pushed the opening session into September. The delay means that the city will not be able to keep its promise to state officials that new contracts would be approved by Dec. 21.

“Obviously, no one knew how complex this would be,” said Fred Hoeptner, a senior civil engineer for Los Angeles who is overseeing the talks. “It is something you do once in a lifetime.

State officials, increasingly impatient with the slow progress toward talks, announced last week that they will impose a new deadline for meeting the federal clean-water regulations after the first round of negotiations is over. Frank E. Peters of the State Water Resources Control Board said he may “have no alternative but to stop payments” on grants to the city because “cooperation seems to be dwindling” between the city and the contract groups.

To meet the federal guidelines, the city must base its charges on both the volume of sewage flowing into the system and the strength of the flow. Current charges are based on volume only, so cities that dump particularly strong effluent requiring extra treatment pay the same rate as cities dumping waste that is more easily treated.

Under the proposed rate structure, for example, Burbank would have to pay higher fees than Beverly Hills because Burbank dumps concentrated sludge into the Los Angeles system, while Beverly Hills dumps mostly residential effluent, which is less costly to treat.

The regulations also require the city to revamp the contracts so that each agency pays a fair share of the system’s construction, operation and maintenance costs, and that users of the three treatment plants within the Hyperion system are treated equitably.

Although the contract cities and agencies say they want a more equitable fee system, Los Angeles city officials predicted that the transition will not be easy.

“The agencies are going to be most concerned about the bottom line,” said Hoeptner, the Los Angeles engineer overseeing the negotiations. “They are not going to be too concerned about fairness and consistency.

“No matter what system is implemented, some will be winners and some will be losers. There is no way of avoiding that.”