Audit Fuels Rift Over Sewer Fee Increases

It was meant to bridge bitter divisions, not add fuel to them, but an in-depth audit of a proposed $75-million expansion of this city’s waste-water plant has only widened a year-old City Council rift.

After a meeting Tuesday to discuss findings of the Price Waterhouse LLP audit, released last week, council members remained as split as ever on the sewer fee increases needed to fund the proposal, and continued to fight over whether the expansion was larger and more expensive than necessary.

The audit, expected to cost more than $125,000, found there was no money missing from Thousand Oaks’ waste-water fund--refuting charges by Councilwoman Elois Zeanah that more money was taken from city coffers to pay for the $64-million Civic Arts Plaza than city officials had let on.

The audit, however, also concluded that the 15-year, $75-million upgrade of the Hill Canyon plant proposed by city officials was excessively ambitious and that Thousand Oaks could save millions of dollars and still take care of its future needs by building a smaller facility.

That bolstered Zeanah’s argument that the plan was too big and too costly.

Mayor Andy Fox and council members Judy Lazar and Mike Markey have consistently voiced support for the $75-million plan, arguing that it was the city’s smartest option.

Although Price Waterhouse found no mismanagement of funds in its audit, Zeanah continued to question the city’s financial practices.

At one point, the councilwoman said the way the city transfers money among various city accounts basically amounts to “money laundering.”

As the discussion continued, Jim Hunt, the Price Waterhouse partner who oversaw the audit, took exception to some of the conclusions Zeanah drew from the report.

“You have mischaracterized our entire presentation tonight, and I’m sorry for my outrage, but I don’t see any point in going forward with this,” Hunt said.

The audit recommended that council members consider a two-step sewer fee increase.

The first hike would be used to build improvements absolutely necessary for Thousand Oaks to keep its state waste-water permits, which are in jeopardy unless the city approves some type of upgrade soon.

The second increase would take care of Thousand Oaks’ long-term sewage needs.

Although agreeing with most of the audit’s findings, saying his department had “received an A” from Price Waterhouse, Public Works Director Don Nelson said recently that he took exception with some of the reasoning used by the accounting firm’s engineering consultant to conclude the expansion plan was too expensive.

Nelson pointed out that because of Thousand Oaks’ plan to build a public golf course next to the waste-water plant in Hill Canyon, the city cannot continue to use outdoor sludge beds to treat sewage--one of the cost-cutting measures suggested by the consultant, Dames and Moore.

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Moreover, Nelson disputed the engineering consultant’s assertions that Thousand Oaks was incorrectly basing the size of the plant on pre-drought data, when recent data suggested that water consumption in the city is permanently down about 15%.

Projections that water use is down in Thousand Oaks was only based on two years of post-drought information, Nelson said, and he argued that the data were not even conclusive, because consumption has recently begun to rise again.

“To base a capital improvement project of this size on data like that would be risky, if not foolish,” Nelson said in a recent interview.

The audit makes it clear that unless the City Council approves some type of waste-water expansion soon, Thousand Oaks will lose its state license to operate a sewer plant, which could lead to a state-imposed moratorium on growth in the city.

The 35-year-old Hill Canyon Wastewater Treatment Plant is at 83% of its 10-million-gallon daily capacity, and state law requires that the City Council take action to ensure that its capacity will not be exceeded.

Already, the state Water Resources Control Board has warned Thousand Oaks that if the city does not approve a spending plan by year’s end to upgrade the facility, it may have to repay $12.5 million in state and federal water-quality grants it accepted in the 1970s.

According to state law, the expansion plan must be financed with money from existing users as well as future residents. That has become one of the major sticking points for Zeanah, who believes longtime residents are being asked to pay much more than they should.

“Existing residents need to pay their fair share, and that is why we’re at this stalemate” Fox said.

Earlier this year, council members agreed to raise waste-water connection fees on new homes--the source of money from future residents for the expansion--from $3,900 to $5,310 per residential unit.

But the council remained divided on the average $7.35 per month fee increase proposed by city officials--the funding source from current residents--and approved a more modest average increase of $1.80.

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Public works officials, however, say the fee hike would only cover operating costs and not cover any upgrades and expansions of the waste-water system. Consequently, another, larger fee increase is still necessary.

Despite the extra $1.80, which residents have already begun paying, Thousand Oaks still has one of the lowest sewer rates in Ventura County.