RANCHO CORDOVA -- Because of a decision made this week by state regulators, Russell Lee is out $160,000 he paid to begin building a house on the south shores of Lake Berryessa.

The Santa Rosa resident pleaded with members of the Central Valley Regional Water Quality Control Board on Thursday to let him be one of a few exemptions to a sewer connection ban on a small Lake Berryessa utility, a ban that could last for years. The ban effectively denies Lee and others the ability to get the permits necessary to build homes.

The Napa Berryessa Resort Improvement District, which provides water and sewer service to the Steele Park Resort and the Berryessa Highlands subdivision at the south end of the lake, has run afoul of state water regulations for more than a decade, regularly spilling sewage in the Lake Berryessa watershed. NBRID's history of violations prompted water board members to wonder aloud why it had taken so long for them to follow up with strict enforcement.

"I'm embarrassed by this," board member Robert Schneider said.

In September, the board issued a draft sewer connection ban on the 500-plus homes in the district, a move that followed up on a 1996 enforcement order. The board decided Thursday to extend the connection ban into perpetuity until the district cleans up its act.

That effectively bars all but five newcomers from completing the permits to build new homes in the district. About a dozen potential newcomers had applied for building permits, but there were an unknown number of other potential newcomers, like Lee, who were not listed in building records.

State regulators said the action was necessary to prevent even more sewage from spilling into Lake Berryessa than normally occurs under an aging sewage infrastructure, which Napa County officials said was first built in the 1960s. The Napa County Board of Supervisors acts as the district's board.

Wendy Wyels, environmental program manager at the regional water quality control board, said problems that resulted in the 1996 action against the utility have not been addressed in the past decade.

Wyels also said the some of the district's meters had been inaccurate for years, sewage sludge had been improperly disposed of and a key waste pond should be "15-20 times larger than it currently is" to stop wastewater from reaching Lake Berryessa.

Nate Galambos, district principal engineer, said he wouldn't argue with the board or contest the order. He said turnover of district engineers had harmed the utility's ability to address long-term issues.

"I am the fifth engineer to manage the district since 1995," he said.

Galambos said the district needed to come up with $7 million to $10 million to fix systemic problems. Board members estimated that even at the rate the district was moving -- it has already prepared contracts for consultants to perform financing work -- it could take a few years for the utility to come back into compliance with state regulations. Board members said similarly-situated utilities in the Sierra foothills had suspended sewer connections for as much as 20 years.

The board also pressured Galambos to raise water and sewer rates in the district, essentially asking district voters to underwrite the cost of financing.

Meanwhile, Berryessa Highlands homeowners like Lee said they were blindsided by news of problems with the utility. Homeowner Michael Dunn said he only heard of the problems the sewer system had in September when the regional board issued the draft connection ban.

Dunn wondered why there hadn't been more communication between the district and the board in the last decade, so that property owners would be dealing with a smaller problem than they face today.

"The residents are caught in the middle of that," he said.

And others, Lee among them. Board members decided not to allow him to get a building permit because he had not gone as far in the process as five other newcomers.

"This was my project, thank God, and not a client's," said Lee, who works as a real estate agent. "Otherwise I'd have a lawsuit on the other side."