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Cambria CSD short on cash

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Once the Cambria Community Services District balances its checkbook at the end of the month, about $1 million will be left in the account. Basically, the district’s about to be broke.

That amount is only enough for the district to operate for approximately three more months, according to an update issued by General Manager Jerry Gruber. That update was included in the agenda for an Aug. 19 special meeting for the CCSD Board of Directors. In his report, Gruber writes that the district has been expecting a $4.3 million grant from the California Department of Water Resources for the district’s Emergency Water Supply project, but those funds haven’t come in yet.

“Although we all believed that we would have received the funds by now, as of this report we have not,” Gruber writes. “The CCSD has committed several million dollars of its own funding for the Emergency Water Supply Project and has made daily operational financial decisions for all the departments within the organization based on those assumptions.”

The CCSD was awarded the grant in 2014 as part of a package of Proposition 84 funds—which are awarded to projects geared toward providing drinking water, improving water quality, or water conservation—given to San Luis Obispo County. The funds were promised, with payment to be made once the CCSD provided the invoices for the project’s construction.

In addition to the Proposition 84 grant, the project’s funding comes from the CCSD budget, including a $13.2 million loan hastily approved by the CCSD Board of Directors in August 2014. That loan combines the $8.8 million to build the project with the projected interest on the loan. In seeking the Proposition 84 funds, the emergency water project was recognized as a priority for state water department funds and promised the $4.3 million, according to SLO County Chief Administrative Officer Dan Buckshi.

With the loan and promised funds, the CCSD went forward with the water project under an emergency coastal development permit issued by the county. It went operational in January.

Payment from the state water department, however, is stalled, because the CCSD hasn’t met all the requirements to receive the funding, said Zaffar Eusuff, a project manager for grant implementation with the department. Specifically, the CCSD was required to update its Groundwater Management Plan by July and did not. Eusuff said the $4.3 wouldn’t be issued until that plan is updated and reviewed.

Eusuff told New Times that the state was initially concerned about a lawsuit brought against the CCSD and the county because of the water project. In October 2014, the environmental group LandWatch filed a lawsuit, arguing that the CCSD should conduct an environmental impact report for the project and demonstrate how the project would eventually comply with the California Environmental Quality Act (CEQA) and the Coastal Act. Part of the lawsuit challenged a notice that the CCSD filed in September 2014 saying the project should be exempt from CEQA review.

Proposition 84 grants have a no-lawsuits clause in them. Eusuff said that that concern was alleviated because the agency considered CCSD’s notice of exemption to be sufficient.

While that lawsuit is no longer a factor holding up the $4.3 million, it complicated the situation. Because water department funding is given to the county, which then passes it on to the CCSD, there’s an issue of who assumes liability for the funds, should the lawsuit create problems for the project in the future.

While the state says the lawsuit isn’t an issue, CCSD General Manager Gruber’s staff report certainly makes it one.

“I want to emphasize the severe financial impact that the LandWatch lawsuit is having and will continue to have on the community and the CCSD, in terms of cash flow and the future level of services the CCSD will be able to provide,” Gruber wrote. “This not only applies to the continuing legal costs the district has had to bear, but as noted it also has resulted in the delay of our grant funding.” 

In response to those sentiments, Deborah Sivas, director of the Stanford Environmental Law clinic, which signed onto the lawsuit on behalf of LandWatch, said that the issue goes back to the project’s compliance.

“[The CCSD] needs to come into compliance with the law, because they built this thing by stepping around the law,” Sivas told New Times. “If they created that path, then I think the state might be more interested in funding this project.”

Until the Proposition 84 issues are resolved, Cambria looks to be heading into financial straits. In the staff report, Gruber said that the CCSD has already taken measures to decrease expenditures, and recommended a list of ways the CCSD can continue to tighten its belt.

Eusuff said the state won’t be turning over funds until Cambria meets the necessary requirements.

“They were supposed to update it within a year, and if somebody didn’t do that, whose fault is it?” Eusuff said.

In an email to New Times, Gruber said he is optimistic that everything will be resolved.

“We are working closely with both the county and the [state] to resolve any and all matters relating to the Proposition 84 grant funding and the $4.3 million the district is slated to received,” Gruber wrote. “Everyone is working together, and I am pleased with everyone’s efforts.”

-- Melody DeMeritt - former city council member, Morro Bay

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