Residents Asked If Sewer Fight Should End : Survey: The city seeks feedback on a county offer to stop charging property owners for the never-built project. But some funds would never be returned.

Sue or settle? That’s the question Malibu leaders are posing to residents as they try to decide how to wrap up the community’s long wrangle with the Los Angeles County government over sewers.

The city sent out 6,500 surveys last week asking every property owner whether it should accept a settlement offer from the county or take the matter to court.

In essence, the county is offering to drop its plans to build a regional sewer to serve much of eastern Malibu and stop all project-related assessments on the 2,200 residential and commercial properties in the sewer district. But if Malibu residents want to try to recoup some of the taxes they’ve already paid to finance the never-built project, they’re going to have to litigate.

The dispute over the sewer, which residents said was unnecessary and would invite too much development, was a central issue in Malibu’s long fight to break away from county control. The coastal community was incorporated as a city in 1991.

Despite the objections of residents, the county established a special assessment district and began collecting sewer taxes from east Malibu property owners in 1989 to build a $43-million sewer system. County officials contended that leaking septic tanks posed a health and safety hazard and that a comprehensive sewer system was needed.

By the end of the 1992-93 tax year, property owners will have been billed more than $12 million. Some owners paid their total assessment in advance, others have paid in yearly installments, and others have stopped paying and are considered delinquent.

The county proposal, initially presented in January, offers to abandon all plans to implement the sewer system and halt all assessments that would be due after the April 10 tax bill. Owners who are delinquent on their taxes would have to pay them over a period to be agreed on.

Owners who have paid in full would receive a refund for the amount overpaid. Any other refunds would come from any surplus funds left over after the sewer assessment district has been dismantled.

The county must settle its obligations with investors who purchased more than $34 million in bonds. The county estimates that by the time the project is shelved, it will have cost nearly $11 million for engineering, legal and other fees for the project, even though not a shovel has been lifted to build it.

Under the proposed agreement, the city must implement what has been called the Warshall Plan, an alternative to the county sewer developed by city consultant Peter Warshall. Warshall has recommended an assortment of improvements to individual septic tanks and additional improvements to five small, aging sewer plants that serve about 1,000 homes and businesses.

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The city must also agree to accept liability for future claims against the county that result from the county’s inability to install its sewer system.

In an explanatory letter accompanying the mailed survey, City Manager David Carmany warns that if the offer is not accepted, “the county will likely proceed to implement the sewer system, assessments will continue . . . and supplemental assessments may also be levied.”

The survey also says that if the city takes the county to court to seek full or partial assessment refunds, the county’s litigation costs would be charged to the assessment district.

The survey asks property owners three questions:

* Should the city accept the county settlement offer?

* If the offer is accepted, should city funds be used to partially compensate those in the assessment district for their costs?

* Do you own property within the assessment district?

The city will conduct an informational meeting on the sewer proposal at 6:30 p.m. March 30 in the Malibu High School auditorium. Residents are asked to return the surveys by April 2.

Mayor Walter Keller said he had reservations about the proposal but that he wanted “to present it impartially to the community. I don’t want to prejudice the vote of the community. I want to hear from them.”

Keller said if the majority of property owners wanted to go along with the proposal, he would agree to it.

Keller has said he wants the county to refund more than $250,000 of the assessment money it spent in legal fees while fighting Malibu cityhood.

Councilman Jeff Kramer said he, too, had reservations, and was opposed to the county’s condition that the city protect it from liability claims that might arise from the county not building a sewer system.

But Kramer said, “I want to take the community input seriously. We really need take a reading of the community’s temperature” on this issue.

“I think the community will settle for nothing less than to get a refund of the money already spent on the sewer.”

But, Kramer said that even if the city does take the county to court, there is no assurance the results would be better.