Despite Truce, County Still at Work on Sewer : Development: More than $1 million has been spent on the project. Stunned city officials, calling spending an ‘outrage,’ say it violates a moratorium negotiated in March.

Los Angeles County has spent more than $1 million on a proposed sewer plan for Malibu despite a March truce between the city and the county that ostensibly froze further expenditures on the project.

Harry Stone, the county’s deputy director of public works, confirmed in a telephone interview that work has continued on the project since March. He said it will continue “for at least another 60 days until the major engineering contracts are finished.”

Stone said he did not know how much has been spent by the county since March but would not be surprised at the $1.136-million figure on the bond trustee’s books.

Malibu officials were stunned to learn that work was continuing.

“This is an outrage,” said Councilman Larry Wan, who has been negotiating with county officials on sewer issues since March. “The truce was to suspend all activity, including legal, administrative and engineering work. If no work is being done, then why is money being spent? I think the community will agree with me that the county has broken the cease-fire.”

Councilwoman Carolyn Van Horn called the expenditures atrocious and added: “Why are they spending money on a project which may not be built? Why are they going forward with engineering studies if they’ve agreed not to pursue regulatory permits?”

Mayor Walt Keller said simply, “The truce has been violated.”

The county’s insistence on developing a regional sewer system for Malibu, despite residents’ objections on the grounds that it would invite development, was the primary impetus for the cityhood movement.

The moratorium, dating from March 12, was part of a broader agreement in which the county dropped its opposition to cityhood, paving the way for incorporation March 28. The County Board of Supervisors agreed to halt work on the $43-million sewer project to give the new city time to hire a consultant to devise an alternative plan.

The city, in return, has agreed to suspend lawsuits meant to stop the sewer.

The moratorium on sewer work, initially set at 90 days, has since been extended until December, at which time the city’s consultant is scheduled to present his first findings. The supervisors are to choose between the two plans, or a combination of them, sometime next year.

The county’s sewer expenses, meanwhile, are being paid from proceeds of a 1989 bond issue for the sewer district. About 2,000 homes in the district have been assessed $13,000 each to repay the bonds; most homeowners are paying the bill over 20 years, with interest, as part of their property taxes.

Malibu City Atty. Michael Jenkins said the language of the moratorium agreement specifically states that the county would stop spending money on its sewer project.

The agreement, ratified by the supervisors, “is quite plain,” Jenkins said. “It says, ‘The county is to suspend project expenses associated with moving the present (sewer) plan forward.’ ”

Jenkins said the city “took the county at their word that no more money would be spent.”

“It never occurred to the city to check the books,” he said. “If it is true that they’re still spending money, perhaps we should ask for a full-scale audit.”

Councilwoman Missy Zeitsoff agreed, and called for “not only an audit but a grand jury investigation into the uses of the bond money.

“The city hasn’t been aggressive enough on this,” Zeitsoff said. “My understanding is that not another nickel was to be spent. That’s what a truce is: a halt. It’s a contradiction to stop a project and yet to spend money on it.”

County Supervisor Ed Edelman, whose district includes Malibu and who negotiated the truce, said in an interview that Public Works Department officials had assured him “that expenditures since March were to pay for work already started, nothing else.”

He said that no expenses were to be incurred during the truce that “moved the sewer project forward,” but he could not say how such expenses could be identified.

He promised to get a report from public works within the week to find out if the moratorium has been broken.

Bill Pellman, senior assistant county counsel, said he could not account for the continuing spending on the sewer project.

“I really can’t address why public works bills the district for engineering services since March,” Pellman said. “You’ll have to ask them.”

Pellman added that his own office since March has billed the sewer district “only for legal services to carry out the truce; for example, to suspend our permit application before the Coastal Commission.”

Stone defended some of the disbursements as payment for work done before the moratorium. But he also acknowledged that substantial payments had been made to the engineering firms for work done since March. Three engineering firms have combined contracts with the county for about $7 million.

However, he denied that the $1 million in disbursements violated either the spirit or the letter of the moratorium.

“I have no idea how the City Council got the idea that expenses would drop to zero,” Stone said. “The truce says public works is to minimize expenses where possible. It says nothing about stopping work altogether.”

He also contended that the truce was not a binding agreement between the city and the county but a directive given to public works by the board.

“We explained to the supervisors at the time that we would have to do an orderly shutdown of the project, that we couldn’t just tell the consultants to stop work altogether,” Stone said.

Wan disagreed.

“The county must draft poor contracts if they have no escape clause allowing for the stopping or redirecting of work,” Wan said, adding that his own electronics firm hires consultants “all the time--so I ought to know.”

The dispute over the continuing expenditures is the second to erupt in recent months over the county’s handling of sewer district bond money. In recent weeks, two Malibu residents have begun a campaign to force the county to refund bond money they allege was spent illegally to try to defeat Malibu’s incorporation.

Leon Cooper and David Kagon, representing Malibu Citizens Wastewater Committee, have scheduled a meeting next week with Edelman to discuss their contention that the county violated Securities and Exchange Commission regulations by using sewer bond money for purposes not directly related to the sewer project.

Cooper and Kagon first raised the issue in April, without apparent effect. In July, records show that the county paid $21,000 to Jones, Day, Reavis & Pogue, one of two law firms it hired late last year to fight lawsuits brought by Malibu civic organizations in an effort to gain cityhood and block the sewer project. Stone said the payments to the firm were for services performed before the moratorium took effect.

Stone acknowledged in March that the county had used nearly $1 million in bond proceeds to pay legal fees and lobbying expenses incurred in the county’s effort to block Malibu’s incorporation.