MWD’s Proposed Rate Increases Draw Fire : Money: Taxpayer and business groups say the public is being penalized for an income reduction caused by heeding conservation pleas. The agency’s spending is also criticized.

Citing tough economic times and suspicions of wasteful spending, several taxpayer, consumer and building industry groups Friday criticized proposals for steep rate hikes by Southern California’s largest water supplier.

Reaction was particularly harsh because critics believe the public is being penalized for having responded to calls for water conservation, thus cutting into the Metropolitan Water District’s billings.

They also got ammunition from the fact that news that the MWD may boost rates by more than 75% came out of the Lake Arrowhead Hilton Hotel, where dozens of water officials were holding a three-day retreat.

“(When) I saw Lake Arrowhead, I thought, what are they doing up there?” said Rosalinda Lugo, a leader of the 93,000-family United Neighborhoods Organization, based in eastern Los Angeles County. “Right now the economy is so bad. We are in a recession (and) we get punished for saving water.”

Joel Fox, president of the Howard Jarvis Taxpayers Assn., said: “They’re going up to a resort to tell us all we are going to have to pay more money. It’s terrible.”

Lynn Wessell, a lobbyist who represents Los Angeles County Realtors and many major builders, said the MWD has to look at cutting spending and trimming its bureaucracy. “We are in a depressed economy,” Wessell said. “Houses are not selling. There’s been a reduction in appreciation of homes by 20% and these people don’t understand it. All they see is a cash cow.”

On Thursday, the final day of their gathering in Lake Arrowhead, MWD officials disclosed that sharp rate increases, higher property taxes and a new surcharge on vacant land will be necessary next year to offset a projected $350-million budget shortfall.

The 17 million water users in the six-county area supplied by the MWD could see higher water bills as early as March. MWD officials said Friday the highest proposed increase would be 78%, rather than the 88% initially reported.

Household increases could be as high as $86 per year on a typical $130 annual bill in cities such as Beverly Hills, El Segundo and San Diego, which rely almost exclusively on MWD-supplied water, according to MWD Assistant General Manager Michael McGuire.

Increases in other cities would depend on how much MWD water they purchase. The city of Los Angeles has purchased about 60% of its water from the MWD in recent years.

MWD property taxes in much of the area would rise about 20%, or $4 on a $200,000 home, under some staff proposals.

The MWD staff also is proposing special fees for vacant land that could amount to $40 to $80 annually per acre. In some areas of Riverside and Ventura counties, those fees could be $100 or more per acre.

Under the state laws that govern the MWD, the rate increases and property levies can be passed by the agency’s 51-member board without voter approval. The board represents 27 water agencies from Ventura County to San Diego, as well as representatives of municipal and regional water departments.

The proposed increases, which have met resistance on the MWD board, are needed because of reduced income, fixed costs of the water-carrying system, water storage improvements to help get through drought years and higher costs of buying water, officials said.

Belt-tightening has not shrunk the $350-million deficit the agency faces in 1992-93 on its $925-million budget, they said.

“No one is suggesting a rate increase that is frivolous,” said McGuire.

McGuire defended the Lake Arrowhead retreat, which cost the agency an estimated $15,000. The session was highly productive and focused on the course the MWD should take in water purchases and extending service to undeveloped areas, he said.

“The people on the board of directors are extraordinarily busy,” he said. “In order get everyone together and away from the fax machines and the telephones, we have conducted these workshops over the last couple of years.”

Critics of the proposed rate increases, nonetheless, said the timing of the retreat and the news of the proposed rate and tax increases could not have been worse.

“(It’s) symbolic of a certain attitude, (a) sort of elitist feeling toward the condition of (low-income) people in our society today,” said Marv Tavlin, president of the Los Angeles chapter of the Congress of California Seniors. With the recession and low interest rates, Tavlin said, many senior citizens are seeing their incomes fall.

“It’s hard as hell to get an increase in income, but merrily we go along raising prices” of basic utilities, he said.

McGuire said public hearings will be held in late October or early November on the tax and rate increase proposals, and the board could act in December.

Tavlin and other critics said they would fight the increases and instead demand cuts in MWD spending.

“I see us coming together, if indeed they push this obnoxious idea,” said Wessell, the real estate industry lobbyist.