Garden Grove Sanitary District Battle Heats Up : Services: Agency plans higher rates because of its losses in the county bankruptcy. The city says it can do the job cheaper.

When he carries out his trash each week, retiree Robert Spier doesn’t care who picks it up, just so the job gets done on time.

He doesn’t give much thought, either, to who controls the sewer lines that carry away the water that goes down the drains of his Garden Grove home.

But Spier and his neighbors, already facing a rate hike in June, are being drawn into an increasingly nasty 2 1/2-year fight between the city and the Garden Grove Sanitary District over which agency should be responsible for collecting trash and maintaining sewer lines.

“I like the service now, but it’s getting more expensive,” said Spier, 79, a former tool engineer at McDonnell Douglas. “If the city can do it with less money, I’m all for it.”

The issue has been complicated by Orange County’s Dec. 6 bankruptcy filing.

The sanitary district, which also serves parts of Westminster, Stanton, Fountain Valley and some unincorporated areas, borrowed more than $5 million last year to invest in the now-bankrupt county investment pool and stands to lose about $1.3 million of that, district officials have said. The notes come due this month, and district officials are raising fees and scrambling to obtain a bridge loan to avert a default and potential bankruptcy.

City officials contend that the district gambled with the people’s money and should now dissolve itself to make amends for the mistake.

The city and the sanitary district have been at odds, though, since December, 1993, when Garden Grove filed an application with the Local Agency Formation Commission to take over trash collection and sewer maintenance within its city limits.

City officials contended at the time that the sanitary district was a layer of bureaucracy that could be eliminated and that the city could provide trash collection and sewer services more efficiently and at a lower cost.

Officials of the sanitary district, which was formed in 1924 and now serves 27,000 single-family homes, 15,000 apartments and 5,000 commercial customers in Garden Grove, objected strongly, arguing that efficiency would suffer and trash collection rates would rise.

The city, which did not invest in the county fund, is well positioned to take over the sanitary district’s functions, officials say.

District officials admit that their investment in the now-collapsed county pool was a mistake, but they point out that they were not the only ones to err. Practically every agency in the county, lured by the promise of high returns, invested too.

The city has offered to lend the district the money to pay off the notes, contingent on the district agreeing to dissolve itself. “If they can restore the funds, we can forget the whole thing,” said Mayor Bruce A. Broadwater, a strong advocate for a city takeover.

Instead, the district board voted last week to fight a city takeover, with only Kathryn Barr, a former city mayor, supporting continued negotiations with the city.

Sheldon Singer, president of the district’s board, argued that city officials “haven’t shown us that they can do a better job. We’re not being stubborn, but we know how to run a business. Rates will go higher if the city takes over.”

Board director Jan Dunn agreed, adding, “I’m not overwhelmed by the efficiency of the city.”

Ronald Cates, the district’s general manager, said that the agency will be able to meet the $5.3-million note payments due today. It has lined up a six-month, $3.4-million loan from the county sanitation district, he said, and has won Bankruptcy Court approval for release of $1.9 million in emergency funds from the frozen county investment pool.

Under Option A of the county’s settlement agreement with pool investors, Cates said, the district expects to recover 80% of its money by June and would use that to repay the loan. To cover the remaining 20%, the board has applied for a $1.3-million, five-year loan from Bank of America.

The bank loan is contingent on raising monthly fees, effective June 1. Though the increase is small--70 cents a month for residences and about a $1 a month for commercial users--it would generate about $27,000 a month, which would be designated to pay off the loan.

Residents like retiree Spier, however, say that even a small fee hike is too much. It would be the sixth increase in five years and would raise the fee to $41.70 a quarter. Five years ago, quarterly trash fees were $20.61.

District officials cite increasing costs, state mandates, purchase of new trucks and trash bins and, finally, the county bankruptcy as reasons for the higher fees. Cates said that, of the district’s $5.2- million budget for fiscal 1994-95, more than half is allocated to pay a private contractor who picks up the trash. With eight full-time and one part-time employee, the district spends about $325,000 a year in salaries, plus $21,000 for directors’ fees.

Income from property taxes, trash collection fees, interest earnings and other sources will total more than $5 million for the current year, he said, enough to cover expenses.

City officials are adamant, though, that they could do the job for less because city employees already on the payroll could take over administrative functions.

With the district’s refusal to accept the city takeover, LAFCO will have to resolve the matter, but because of the county bankruptcy that forced cuts in LAFCO staff, it will take about a year before hearings could be conducted, officials said.

The city would also have to reach settlements with Fountain Valley, Westminster and Stanton.

Earlier this month, city officials amended their LAFCO application to include information about the sanitary district’s borrowings. They also put added pressure on the district by asking for higher rent for city facilities that the district is using.

Mayor Broadwater said there is some sentiment to recall board directors for borrowing money to invest in the county pool.

Singer dismissed that as “pettiness by some members of the council.”

“The district is 70 years old this year,” Singer said. “It’s going to be here long after we’re all gone.”

Spier, who has lived in the same house on Leonhardt Circle since 1975, said that residents are probably better off with the city handling trash pickup and sewer services.

“I appreciate the city’s financial conservatism,” Spier said. “It seems it can do a better job.”

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Garbage Gauge Since 1989, the Garden Grove Sanitary District has more than doubled the cost of trash pickup in its service areas. The annual rate trend: 1989: $82.44 1995: $166.80* *Effective June 1 Source: Garden Grove Sanitary District; Researched by / For The Times