A long-simmering struggle between two agencies that manage sewer services in the Ukiah area has escalated into a $27 million financial claim.

The Ukiah Valley Sanitation District filed the claim against the city of Ukiah, which owns and operates the municipal wastewater treatment plant. It alleges that the city has been overcharging the district for services and joint capital projects since 1967, 12 years after the agencies signed their first sewer-services contract. Such claims typically precede a lawsuit.

The city is responsible for most costs within city limits while the district is responsible primarily for services just outside city limits, although there is overlap in the service areas. The city has about 5,150 customer accounts while the district has about 2,540, according to city officials. About half of the district's customers are within city limits.

The claim alleges the city breached its fiduciary duty to the district in several ways, including failing to properly calculate the district's share of operational costs and overcharging the district for its share of a $72 million upgrade and expansion of the wastewater treatment facility.

City and sanitation district officials declined to comment Wednesday, but the district's attorney, Duncan James, said the city appears to have treated the district unfairly for decades.

He said he was shocked by the discrepancies he found when he began investigating the issue on behalf of the district a year ago. Among other things, the city has poor bookkeeping and a system that makes it nearly impossible to accurately calculate how much the district should be paying for services.

"It's a mess," James said.

For decades, no one at the district paid much attention to the contract, in large part because the district's board was comprised of county and city officials, James said.

That changed after 2006, when an independent sanitation district board was elected, he said. Since then, the district and city have been at odds.

"The relationship between the city of Ukiah and the (sanitation district) is not working," the county grand jury said in an April 2013 report.

The two agencies' contract is "flawed and unworkable and favors the city," according to the report. "Both sides are to blame for the current situation," which includes sharp increases in sewer rates, the report said the report.

It recommends that the agencies work out their differences.

James said that's also what the district wants, but time is of the essence.

The city has 45 days from the filing of the claim to decide how to react. "I've given them a shorter deadline" to start discussions, James said. He would not divulge his deadline.

(You can reach Staff Writer Glenda Anderson at 462-6473 or glenda.anderson@pressdemocrat.com.)