Attorney General Calls Water Fees Illegal : Budgets: Nearly 500,000 people in Ventura County are affected by the MWD’s plan to impose $50 million in charges.

The Metropolitan Water District’s plan to impose $50 million in new fees on 17 million consumers in its giant six-county service area is illegal, according to the state attorney general.

Nearly 500,000 people in the eastern two-thirds of Ventura County receive MWD water through the Calleguas Municipal Water District.

The attorney general, in an opinion written last month but made public only Thursday, found that the MWD cannot impose both a service availability charge and a parcel tax as it had planned. “Either one or the other may be chosen by the board, but not both together,” Senior Assistant Atty. Gen. Rodney O. Lilyquist said.

The legal opinion sends the water wholesaler back to the drawing board in its efforts to come up with $50 million to bail it out of financial difficulties.

Though the agency staff has not backed away from its opinion that the two fees are legal, it is recommending that the board of directors rescind one of the special assessments at its meeting scheduled for Tuesday.

“Serious concerns exist as to the advisability of moving forward with the planned revenue-raising program,” wrote MWD General Manager Carl Boronkay in a letter to the board.

The parcel tax would be assessed directly on most property owners as part of their annual property tax bills, though some of the MWD’s 27 member agencies--including the Los Angeles Department of Water and Power--have agreed to incorporate the tax directly into their rate structures.

The other fee--essentially a charge for water service availability--would be levied on the agencies that buy MWD water.

Both of the charges, however, ultimately would be shouldered by consumers.

Donald Kendall, general manager of the Calleguas Municipal Water District, said the attorney general’s opinion would have no immediate impact on water users.

“It’s a wait-and-see approach,” he said. “One way or another, MWD will get their revenues.”

Kendall said that beginning July 1, the start of the fiscal year, the Calleguas district began imposing the availability-of-service fee formula for the 21 cities and private companies it supplies in the county.

If MWD opts for this system, Calleguas won’t be affected, he said. But if MWD uses the parcel charge, “it could play havoc with our rate structure,” he said.

In the latter case, he said, water retailers that have been paying the service-availability fees would have to be credited, “and I assume they would pass it on to consumers.”

Calleguas gets all its water from MWD.

Each of the charges would raise $25 million. If one is canceled, the staff said, the board could double the remaining fee, raise water rates or increase property taxes to make up the loss in revenue. Boronkay recommended, however, that the board simply absorb the loss and rely on its reserves.

Michael P. Gage, head of the Los Angeles delegation on the MWD board, said that in light of the new legal opinion, “I think the board will endorse wholeheartedly” the recommendation to rescind one of the charges.

That is a drastic turnaround from just one month ago, when the board defiantly reaffirmed its stand on the fee and tax proposal in the face of mounting opposition in the state Legislature and a weakening legal position.

State Sen. Ruben Ayala (D-Chino), who sought the attorney general’s opinion, initiated a legislative effort to roll back at least one of the MWD charges. His bill cleared the Senate and is awaiting action in the Assembly.

Earlier, at Ayala’s request, the state’s legislative counsel also issued a legal opinion that found the MWD’s position indefensible.

Ayala said Thursday that he welcomed the MWD staff’s change of heart. “They know they will lose in court,” Ayala said.

But Ayala, chairman of the Senate Agriculture and Water Resources Committee, said he will forge ahead with his legislation “to establish once and for all that this won’t happen again.”

The MWD board, trying to firm up a budget ravaged by low water sales during the continuing six-year drought, adopted the two charges in May. The fees went into effect July 1, but no money has been collected.

The new fee and tax followed the adoption in March of a 21% rate increase that went into effect July 1 and is expected to raise about $80 million annually. The rate hike is costing the average consumer about $1.25 a month, depending on how much water the local agency purchases from the MWD.

The MWD supplies about 60% of all the water consumed in a six-county area stretching from Ventura County to the Mexican border and inland to Riverside.

Under the parcel charge, land owners would be assessed $5 a year per parcel. Parcels of more than one acre would be charged $5 per acre. The Los Angeles DWP and the city of Santa Monica have said they will absorb the parcel charge for their customers.

The service availability charge would be assessed on the MWD’s 27 member agencies, based on their water purchases over the last four years. It is up to the member agencies to determine how they raise the money--either folding it into their general rate structure or assessing customers.

Even with the higher rates and new fee and tax, the giant water agency had to stall or cancel hundreds of millions of dollars in construction projects in the current fiscal year.

Last month directors overwhelmingly agreed to freeze their own travel perks and hold the line on pay for senior management as they adopted an $817.9-million annual budget.