ESCONDIDO -- The city won't privatize its sewer system as a way to pay for much needed upgrades, city officials have decided.

After the privatization idea was floated at a City Council workshop in January, the issue has not been heard again at any council meetings or workshops. But council members and city officials said this week that a subcommittee addressing the city's sewer needs decided last month that privatization would not work.

"It's too much risk for the return," Mayor Lori Holt Pfeiler, one of two council members on the subcommittee, said Wednesday.

A city-commissioned report released at the end of last year says the Hale Avenue sewer treatment plant, which now handles about 15 million gallons of waste a day from Escondido and Rancho Bernardo, will reach its capacity of 18 million gallons a day by 2014.

Deputy City Manager Charlie Grimm said last week that the city had contacted a consulting firm to determine what would be involved in privatizing a sewer system and got answers to three important questions:

- Could the sewer system be run more efficiently?

- Would the city reap any financial benefits?

- Would the city still have some control of sewer operations?

"Basically, down the line it's no, no and no, so we didn't spend a lot of time with it," Grimm said. "It didn't make any economic sense."

Councilman Dick Daniels, the other council member on the panel, said privatizing the city's sewers seemed "cumbersome" to the subcommittee, but he was glad the idea had been considered.

"We need to kind of examine anything we can do outside the box," Daniels said.

Grimm said there is still "a sense of urgency" to find a way to determine what improvements are needed and how to pay for the sewer system's expansion. Instead of privatization, a bond measure eventually may be needed to pay for the improvements, he said.

According to last year's report, the plant and the pipeline that carries its treated waste to the Pacific Ocean near Encinitas will need "near-term" improvements, construction of which should begin next year at a cost of about $10 million.

Long-term improvements to increase the plant's capacity from 18 million gallons a day to 27.5 million gallons a day need to be in place by 2041, the report says.

Expanding the Hale Avenue plant will cost about $120 million, the report says, which is more than the city's 2006-07 budget of $83.8 million. Replacing the pipeline, which Escondido shares with other cities, could cost more than $200 million, the report says.

While the report took into account future Escondido developments, including Palomar Pomerado Health's hospital planned for east of Interstate 15, the city is still waiting on more information to make a decision on the sewer, Grimm said.

An environmental report on the city's downtown specific plan, which includes increased residential development in the city center, is expected in six to seven months, Grimm said. That report should help city officials determine what kind of expansion the treatment plant needs, he said.

City Manager Clay Phillips said this week that the sewer project still is in an "exploratory phase," but he expects a decision to be reached within a year.

The key, Phillips said, is figuring out "how can we ratchet it down to an option that's least costly, but still does what we're trying to do."

Contact staff writer Paul Eakins at (760) 740-5420 or peakins@nctimes.com.