Craig Hoshijima of Public Financial Management told LAFCO thatbond agreements would make it difficult to divide DWP among theproposed new cities in the San Fernando Valley and Harbor areas andwhat's left of LA. The latest secession movement, by residents ofHollywood, would further complicate matters, he suggests.

Public Financial Management was retained by LAFCO to conductstudies on dividing up citywide agencies like DWP. Hoshijima saysstate law and bond agreements forbid breaking up the utility if itwould jeopardize the value of the bonds.

Many residents of the sprawling San Fernando Valley want to formtheir own city, saying that such a divorce would improve localservices and lead to better government. The split would have to beapproved by LAFCO first.One way to continue uninterrupted water andpower service would be to form a joint operating agreement like theone Glendale, Burbank and Pasadena use to operate Burbank Airport.LAFCO has to devise a plan for the first three years of cityhood ifsecession is approved by voters.