Council Panel Agrees to Slash Sewer Hookup Fee

By JODI WILGOREN

April 10, 1996 12 AM PT

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TIMES STAFF WRITER

In a rare convergence between environmentalism and economic development, a Los Angeles City Council panel voted Tuesday to chop sewer hookup charges by two-thirds, offering what officials believe is the largest reduction in fees in city history.

Intended to lure new businesses and home builders to Los Angeles, the massive decrease grew out of the $85-million package of tax breaks and other incentives the city offered to entice the star-powered studio DreamWorks SKG to anchor the Playa Vista development project. The reduction is made possible, in part, because the proliferation of low-flow toilets citywide has slashed the amount of water Los Angeles needs to process at sewage treatment plants.

“We are in the enviable position of having done something for the environment, which is now resulting in an economic benefit for the entire city,” said Councilwoman Ruth Galanter, who has been pushing for reduced water use for years and is the prime sponsor of the fee reduction.

“People laughed at us,” Galanter recalled of the early days of the toilet replacement program which has, to date, resulted in 620,000 new low-flow toilets citywide. “Nobody’s laughing now.”

Although the fee reduction was designed to lure DreamWorks, it will--like the other incentives--be extended to all businesses or homes built or expanded in the city, if the full council approves it as expected April 17.

Instead of calculating the one-time hookup fee based on the rate of $1,032 per 100 gallons of water used per day, the city would charge users just $352 per 100 gallons per day of usage. For the average new home, that means a fee of about $2,374 would be cut to about $810, officials said.

While this decrease applies only to new construction, low-flow toilet users have seen a savings in their monthly bills because they now use less water. Sewage fees are based on the amount of water piped into a home.

“This proposal will bring businesses and families to Los Angeles and encourage those here to stay,” Mayor Richard J. Riordan said in an unusual appearance before a council committee. “It will create new jobs, build new homes and send a message that Los Angeles means business.”

The fee cut comes as the city faces a $200-million deficit in next year’s budget. Although the reduction will result in the loss of about $4 million a year in revenue, officials hope it will pay for itself in other taxes from new business development.

In his presentation to the joint meeting of the council’s Environmental Quality and Public Works committees, Riordan focused on the question of competitiveness with neighboring communities in terms of friendliness to business, saying Los Angeles’ current sewer connection fee “is way off the charts.”

For example, the hookup fee for an average single-family home in Burbank is $761, while in Beverly Hills, there is no such fee. Sewer connection for a 75-seat restaurant now costs about $35,000 in Los Angeles, compared to $18,000 in Glendale and $13,680 in Long Beach. Under the proposed fee reduction, Los Angeles would charge $11,460.

A 100,000-square-foot office building has a hookup fee of $103,000 in the City of Commerce, compared to $154,800 under the current scheme in Los Angeles, and $51,600 under the new system.

Hookup fees in Los Angeles have skyrocketed over the past decade, but the total revenue from the charges has not kept pace. The fee has jumped from $41 per 100 gallons per day usage to $1,032 since 1985-86, while the total income from the charge has dropped to $6 million from $9.9 million.

The proposed reduction earned wide support from the public and policymakers, although Councilman Nate Holden--who has been the lone City Hall voice opposing the DreamWorks deal--voted against it.

“That fee is for a service. If you’re going to provide the service and you don’t get the fee, who’s going to pay for it?” asked Holden, who did not attend the committee hearing but rushed in as the ballots were being cast to register his dissent. “By the time you realize there’s a deficit, this puppy [ordinance] will be gone and we’ll be left holding the bag. This is gimmickry in government.”

Others agreed with Galanter and Riordan that the move was a historic accomplishment in terms of conservation as well as incentives for business.

“The most important statement that we are making today is that environmentalism works for our economy,” Councilman Richard Alarcon said. “Environmentalism creates industries. It can be a means to economic recovery.”

Since 1990, the city has given out hundreds of thousands of low-flow toilets through grass-roots community organizations and also provided rebates of $75 to $100 for people who bought their own low-flow toilets. Any new construction since 1988 has been required to install low-flow toilets.

George Martin of the city Department of Water and Power said the new toilets have resulted in a 25,000 acre-foot reduction in water usage per year, enough to provide for 50,000 families. While the replacement program has cost the city about $65 million in rebates, it has triggered savings of about $15 million annually because the city must buy and process less water.

“I do remember when people were laughing about the toilets,” said Martha Davis, executive director of the Mono Lake Committee. “This is a powerful statement to the people of L.A. that they’re doing the right thing.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Sewer Hookup Fees Drop

In what officials believe to be the largest rate decrease in city history, a City Council panel voted Tuesday to cut the sewer connection charge by two- thirds. Here is a look at how the new and old Los Angeles fees compare to each other and to those in other cities for homes and various businesses:

City: Los Angeles (current)

Single- Family Home: $2,374

75- Seat Restaurant: $38,700

Office Building*: $205,400

69- machine Laundromat: $156,658

Textile Industries: $2,336,438

City: Los Angeles (proposed)

Single- Family Home: $810

75- Seat Restaurant: $11,460

Office Building*: $51,600

69- machine Laundromat: $40,351

Textile Industries: $771,024