Royal Flush

Escalating in cost and controversy, the Los Osos sewer project is nearing its groundbreaking. But can the community afford it?



If all goes well, construction crews will break ground on the Los Osos sewer project before the world comes to an end in late 2012.

After decades of bickering and strife, the likelihood of about 12,000 residents having a viable sewer system seems on par with crappy Hollywood action directors dreaming up a new way to blow up the White House.

Really, though, after 30 years of bitter fighting over a project that bankrupted a government agency and is now hovering just around $189 million, the Los Osos Wastewater Project is about to go in the ground. Or, at least, the money needed to get it there is lining up, and the red tape seems all but cleared.

All that’s necessary is to dot and  cross some bureaucratic i’s and t’s to finalize funding and officially kick off construction.

But the finish line, now just barely lurching into sight, hasn’t come cheap. Behind all the cheerful political hand-shaking and a project now loosely deemed affordable given its immensity, there’s a very real chance that this behemoth piece of infrastructure could serve to kill the community it’s meant to save.

Sometimes, though, it’s hard to see through the perpetual controversy. When the Los Osos sewer is on the agenda—and even when it’s not—county meetings can devolve into a civic pissing match between a public often too quick to shout conspiracy and San Luis Obispo County supervisors who can sometimes look like they just don’t give a damn anymore.

The debate over one of the most expensive projects in SLO County’s history—the other top contender is the $176 million Nacimiento Water Project serving five towns and cities—has reached a severe conversational stalemate.

Yet outside the core group of regular critics and noisemakers, there remains a relatively silent population, most of whom are waiting for the financial guillotine to fall when sewer bills hit their mailboxes. But until they receive an accurate cost estimate, it’s difficult for the people who will be footing the bill to gauge the extent of the damage.

The real problem is that many of the people about to have their lives changed by the project have no idea what’s going on. On a sunny windblown afternoon, while knocking on doors in one neighborhood in the prohibition zone, one reporter was met with barking dogs, caretakers watching after 90-something-year-old homeowners who were still sleeping in the late afternoon, and one man who said he wouldn’t be a good interview because he just didn’t know anything about the project.

But what he does know about the cost, he said, is “frightening.”

“I really don’t know how we’re going to come up with it,” he said. “We’re just barely getting by.”

The sentiment seems fairly ubiquitous among longtime residents. Few know exactly what they’re dealing with; all they know is it’s going to hurt. One couple has already gotten rid of phone and Internet service to start saving for the impending bills. And in a self-described bedroom community of elderly and low-income residents still struggling in the recession, it’s not uncommon to hear some locals worry that this project—whether by accident or design—is about to further gentrify Los Osos. The burg could indeed be poised for a forced evacuation, altogether washing away the lowest income bracket.

“We’ve got so many people that are so depressed over the thought of this sewer because they’re going to have to move,” said Jerri Walsh, a director with the South Bay Community Center.

The Cadillac of crap

The Los Osos sewer project has tripled in cost in the last decade or so.

After at least three project iterations since the late ’90s—moving from the county’s jurisdiction to the Los Osos Community Services District and back to the county—the estimated construction cost stands at $173.6 million. Back in 1998, when the project was organized by the county and a Los Osos advisory group, the cost was projected at closer to $58.9 million, according to a study at the time.

Even adjusting for roughly 34 percent inflation from 1998 to 2010, according to Consumer Price Index data, that $58.9 million price tag should only have jumped to about $78.9 million—still less than half the current cost.

Hell, between 1987 when the first cost proposal was released, and 1998, construction costs were said to have increased by $1 million per year. Even with an additional $15.6 million, it should have cost $94.5 million in 2010.

Yet it cost even more in 2007, when the county took over the project with the help of Sam Blakeslee’s Assembly Bill 2701. During that transition, the expense was estimated at more than $100 million.

In 1998, residents were expecting to pay a share of $67 per household, per month, based on a 30-year funding scheme.

There’s also the dirty little secret of on-lot costs—the embarrassing moocher relative of the Los Osos sewer project. Project officials tend to gloss over the cost of patching into the sewer because, simply put, the county won’t pay for that part—though it’s still a requirement for residents. In 1998, the county estimated residents could secure a loan for about $30 per month. More recently, it’s expected they can snag a home-equity loan and fork over about $50 per month over 10 years in order to get off septic tanks and pump into the county’s sewer collection system.

All considered, the project is expected to cost $189 million, which also factors in about $6 million the county had to eat in leftover costs from the Los Osos Community Services District and an $8 million hit to the General Fund to redesign and get the project moving again. The county expects to repay the $8 million through bond sales when state and federal funding is secure.

Late last year Rep. Lois Capps and California Sen. Blakeslee stood side by side in front of the County Government Center to commemorate an $87-million funding package through the U.S. Department of Agriculture, comprised of an $83-million, 40-year loan and a $4-million grant out of federal stimulus dollars.

About a week from now, county officials hope to have a list of terms from the state to acquire another $86 million through the California State Revolving Fund loan program. Other funding opportunities could later come into play, but with the USDA and SRF money, the project piggy bank is on the verge of getting the hammer.

KEEP IT LOCAL :  Even without paying for a new sewer, Volumes of Pleasure Bookshoppe owner Carroll Leslie hasn’t taken a salary in two years because of the economy, and she’s laid off one of her three part-time employees - PHOTO BY STEVE E. MILLER
  • KEEP IT LOCAL : Even without paying for a new sewer, Volumes of Pleasure Bookshoppe owner Carroll Leslie hasn’t taken a salary in two years because of the economy, and she’s laid off one of her three part-time employees

That leaves the grand monthly total for residents—with an estimate of $194 per month maximum to pay the capital costs, operations, and maintenance—at around $250 per month. This assumes most people in Los Osos can still land a home-equity loan for $50 a month to pay for the on-lot costs.

It’s difficult to approach the question of cost without bias: Is the Los Osos sewer too expensive? Could someone, at some time, have figured out a cheaper project? Or, as you might hear at a public hearing, is the county trying to force a Cadillac sewer on residents when they’d settle for a Prius?

According to one county report, the average Los Osos family household is looking at $25,000 in assessments alone. Patching into the sewer could run another $6,000 paid out over 10 years, depending on the type of loan and extent of work needed to tear up any given lawn to get hooked to the sewer.

The MSRP on a 2011 Prius is about $24,000.

SLO County Supervisor Bruce Gibson said he doesn’t like to look back on the history of the project, nor at what could have been.

“I understand the mistakes of the past,” he said. “But this effort—the county effort—is all about moving this thing forward.”

Gibson and a team of Public Works administrators continue to pursue other funding options through grants, loans, and community programs that could ease the individual costs, particularly for the most indigent residents, Gibson said.

“I know it’s going to be difficult,” he said. “This is an expensive project. There’s no sugarcoating it. But as I’ve told people in Los Osos since I started it in 2007, this is something that has to be done. We can’t not do this project just because it’s going to be expensive … the standard is we’re going to do the best we can.”

 Circling the drain

Molly O’Leary turned to her 3-year-old daughter, Bridget, who was tugging at her mother’s pant leg and softly singing “Itsy Bitsy Spider.”

“Where do we live?” O’Leary asked.

“San Francisco,” Bridget answered.

“We don’t live in San Francisco; we live in Los Osos.”

“Los Osos,” Bridget repeated.

Outside, O’Leary’s boyfriend Ryan manned the barbecue as the couple prepared the house for a visit from grandpa.

The couple has two children between them: Bridget; and Carson, 5.

O’Leary moved to the Central Coast from the Bay Area about 10 years ago to be closer to her friends. She got her degree in biological psychology from UCSB, teaches physiology part-time at Cuesta College, and attends school with the hope of getting into a nursing program.

O’Leary bought the home two years ago. It’s a nice house, with big, plush couches and dark, mahogany-colored floors.

Right now, O’Leary likes that she can come home and be with her daughter. Bridget clung to her after an eight-hour day apart—a long separation for them. O’Leary admits she doesn’t pay much attention to the sewer, partly because she’s distracted by everyday things and partly because she doesn’t fully understand it all.

“I think I’ve become so overwhelmed with the thing, I don’t pay attention as much as I should. … I think I haven’t heard anything about the sewer that has stayed the same,” she said.

Actually, the way O’Leary talks about it, she might have thought there never would be a completed sewer and she’d never have to worry about paying a monthly bill.

“I don’t think the sewer would make or break us … but it would put a tremendous strain on our finances,” she said. “I mean, no more mommy and daddy home full-time.”

“If we had to come up with an extra $300 a month,” she went on, “I can’t even see how we would do it, because things are pretty tight as it is.”

Indeed, O’Leary doesn’t know how her family will come up with the on-lot costs.

GETTING BY :  Molly O’Leary and Ryan Risley are getting by now, but they don’t know how they’ll afford to stay at home with their kids if a $250-per-month sewer bill forces them both to work full time. - PHOTO BY STEVE E. MILLER
  • GETTING BY : Molly O’Leary and Ryan Risley are getting by now, but they don’t know how they’ll afford to stay at home with their kids if a $250-per-month sewer bill forces them both to work full time.

“A loan would be out of the question,” she said. “I don’t have any idea what we would do if we had to come up with some crazy lump sum.”

Given the already hefty monthly cost, combined with the unlikelihood that any homeowner has equity after the housing bubble crash, it’s not uncommon to hear some Los Osos residents worry that the town’s middle- and lower-income population is about to be wiped out and replaced with an affluent wave of developers and WASPy upper-crusters.

According to the most recent census data, the average Los Osos resident makes $29,125 per year, per capita. There’s a median income of $71,958 per family. With a median age of 44.3 years versus the U.S. median age of 36.5 years, 17.4 percent of the Los Osos population is older than 65 as compared to the national average of 12.6 percent.

And the economy still sucks.

Walsh of the South Bay Community Center said she’s seen nearly twice as many families come to the Wednesday morning food giveaways after the economic fallout in recent years.

“We’re talking lifelong people,” Walsh said.

Businesses, also, are experiencing a severe crunch.

“How many people will buy books when the sewer comes in?” Walsh said. “Because they don’t have money for food.”

Carroll Leslie, for example, hasn’t taken a salary in two years. The 20-year owner of Volumes of Pleasure Bookshoppe on a small strip mall off Los Osos Valley Road, Leslie says her business of selling books, incense, and other oddities dropped about 30 percent in 2009, then another 20 percent in 2010. This year’s outlook isn’t any better.

“So the way we stay in business is I don’t pay myself,” she chuckled sardonically. “Now how’s that for dedication—or lunacy?”

It’s not that people don’t like her store, Leslie said. Actually, she’s approached constantly by residents who thank her for staying open, even if they can’t afford to buy anything. So Leslie subsists on social security and her fast-depleting savings.

Though she doesn’t live in the prohibition zone and won’t have to pay for the sewer when and if it’s built, her business will be affected. Depending on her water usage, Leslie should expect to pay the same to connect her business to the county sewer as any resident. Then tack on the expected loss of business from residents who are already hurting without having to pay monthly sewer bills. Leslie was part of the advisory group until 1998 before the community formed a Community Services District, but even she can’t explain how the project’s cost has skyrocketed so much. Maybe it’s the delay, she surmises, or pervasive egos that have boggled up each iteration.

“It probably will lead to further gentrification,” she said of the cost. “It’s a very desirable place to live. The air’s good; the water’s OK—if we don’t run out.”

Don’t forget the water

By all appearances, the three points of the unholy trifecta—the economic fallout, the sewer project, and a lack of useable water—have coordinated their attacks. Los Osos’ three main water purveyors—the CSD, Golden State Water Company, and S and T Mutual Water Company—are expected to release a basin management plan that will outline how the town will continue to supply its residents with water.

Los Osos’ groundwater is derived from two basins that sit essentially on top of each other. The upper basin was declared to be polluted with nitrates from area septic tanks and therefore unsuitable for drinking. However, the lower basin has been over-pumped, allowing for seawater to seep in.

Whatever the solution, it’s going to cost residents more money. Though no one’s said how costly it will be to develop infrastructure and policies to save the town’s water, it’s likely that rates will increase for all residents. More alarmist predictions from residents have come in at $100 to $200 per month, though officials are adamant that such estimates are completely unfounded.

The CSD Board of Directors voted to raise its water rates in 2009. But after a heavy campaign encouraging residents to conserve water, they conserved too much. According to CSD General Manager Dan Gilmore, the CSD will almost certainly raise its water rates again.

“I don’t think anyone is trying to say it’s going to be easy,” Gilmore said of the looming water and sewer costs. “But it’s the right thing to do in Los Osos. … The work that’s taking place, I think, is appropriate for the issues we’re dealing with.”

“The idea of a wave of rate increases is right,” said Jeff Edwards.

Edwards and Julie Tacker live one house down from O’Leary. Edwards and Tacker are part of a regular group of people who appear at nearly every government meeting to talk sewer. They actually met because of their involvement in the project.

“We still don’t have water,” Tacker said.

The couple’s house is filled with papers and maps detailing the project and its various phases over the years. Tacker, a former CSD director, and Edwards, a local developer, offer a wealth of history. They’ll happily outline the escalating costs that came with each new project design under whoever was building it. First was the county. Next came the new CSD and its project, which was put on hold after a 2005 recall election. But the recall and project delay spooked state officials, who pulled a multi-million-dollar loan, leading to district bankruptcy and moving the project back to the county, where its cost continued to rise.

County officials still haven’t gone to owners of undeveloped properties for their share. Unless those owners choose to assess themselves, Los Osos homeowners, renters, and business owners will end up subsidizing the cost. The undeveloped property owners could reduce the monthly bill for residents by more than $30 per month.

“The 50 feet of pipe in front of the vacant lot, I get to pay for,” Tacker said.

For a non-Los Osos resident, it might be hard to still care about this 30-year-old political bitching marathon. Many locals simply want to build the thing and move on. But it’s easy to forget that a lot of residents don’t have the luxury of moving at will, nor of staying if the cost becomes too dear. Many are elderly, on fixed incomes, or both.

A week after this printing, the state should have a financing package lined up for its share of the project. By late summer, the project could be going out to bid. And barring any unforeseen catastrophes, and with the benefit of a hell of a lot of luck, construction could begin late this year or early 2012.

By 2014, the economy may start to rebound if county financial experts are correct, and bills will start going out in Los Osos. For many residents, the cost to continue flushing their toilets could round up to $250 per month, plus whatever it costs to salvage the water basin. After that, stay tuned. 

If you think News Editor Colin Rigley is full of crap, tell him so at




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