Los Osos, California - Sewer Controversy

Sewer Controversy

Since 1983 a section of the community of Los Osos (Prohibition Zone) has been under a septic tank discharge prohibition, Resolution 83-13, issued by the Central Coast Regional Water Quality Control Board in order to obviate the need for septic tanks within the Prohibition Zone because that part of the town's septic tanks are too numerous and concentrated to dissipate nitrates. A building moratorium within the Prohibition Zone became effective in 1989 as part of the discharge prohibition. San Luis Obispo County was the original authority in charge of building the Wastewater Treatment System. Although the design of the County's selected project was nearly complete they were unable to bring the project to fruition. In July 1997, the County appeared before the California Coastal Commission to address an appeal of the construction permit for the project. Due to voiced opposition at the meeting from members of the Los Osos/Baywood Park Community, the Commission postponed its decision until a full hearing could be held. In 1998 an election was held to form the Los Osos Community Services District (LOCSD) by residents as a response to the high cost of the original sewer proposal. The original billing for the sewer of $50 a month in 1984 and is now (2010) estimated to exceed $200 a month with the current estimated cost of construction of the facilities and collection system to be well over $150 million before tax and interest. On January 1, 1999, the District was established and assumed responsibility for constructing the project.

There was also a controversy about where the sewer should be built. A location in the center of Los Osos (once known as the Tri-W site after the names of the previous owners of the property, now called the Mid-Town site), was chosen partly because of a desire for an additional park. The County, Planning Commission and the Coastal Commission approved a sewer at the site after hearing critic's claims.

In August 2005, despite a pending recall election, the LOCSD began building a sewer at the Mid-Town site, contractors began work on the project and were advanced payments from State Revolving Fund loan. Following a recall election which replaced the majority of the LOCSD board and enactment of an initiative measure that would require relocation of the project, the new board stopped building the sewer, despite a letter warning them of severe consequences from the Regional Water Quality Control Board. However, in late 2006, the LOCSD started to work with Ripley Pacific, a contractor widely known for designing STEP/STEG systems.

In October 2005, the LOCSD defaulted on a low interest State Revolving Fund loan and the state subsequently refused to disburse additional funds and demanded immediate repayment. Project contractors filed suit for more than $23 million in lost profits and costs. The Central Coast Regional Water Quality Control Board has used its enforcement powers to impose fines against the district in the amount of $6.6 million for violation of the discharge prohibition emanating from three LOCSD owned sites. During February 2006 the Regional Water Quality Control Board, threatened it would begin to issue cease and desist orders to citizens of Los Osos, and may require recipients to pump their septic systems every three years, and to stop using them by 2011.

On August 25, 2006, the district filed for Chapter 9 bankruptcy protection in federal court. While the district had enough money to cover day to day needs, they did not have enough money to cover their legal fees and consultant fees. This action stays the legal actions against the district related to money owed. Contractor lawsuits and other actions seeking monetary damages or claims against the district will be held in abeyance while the district addresses its financial situation.

Additionally, legislation has been approved by the California legislature that could return control of construction of the wastewater treatment facility to the County of San Luis Obispo but only after a due diligence period and a resolution by the County to accept the project. The legislation took the project away from the LOCSD. The LOCSD is still providing approximately one half of the town's drinking water, and is in charge of drainage, parks and recreation, street lighting, the contracting of fire, emergency and rescue services as well as solid waste services. The bill, AB 2701, was signed by the governor and went into effect January 1, 2007. A plan has been approved by the County Board of Supervisors, amended by the County Planning Commission pursuant to some of the objections raised by the community and its Community Advisory Council. The California Coastal Commission has denied the County a permit to proceed due to "Substantial Issues" that were cited during an appeals hearing. A De-Novo hearing is still pending. To date (April 2010) with more than $7 million spent the County has not voted to accept the project.