The Los Osos sewer project will get $87 million in federal stimulus money, it was announced Friday.
Most of the money is categorized as a low-interest loan, but $4 million is a grant.
The money came from the USDA Water and Environmental Program and is funded through the American Recovery and Reinvestment Act.
Los Osos currently uses individual septic tank systems for waste disposal, and residents obtain their drinking water from underground aquifers that contain excess levels of nitrate. The new system will serve approximately 15,000 residents and is expected to bring wastewater discharge levels into compliance with environmental protection requirements, while also ensuring that the residents of Los Osos have an improved drinking water supply and that the Morro Bay National Estuary is protected.
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USDA's Water and Environmental Program provides loans and grants to improve water and wastewater infrastructure in rural areas, and to deliver safe drinking water and protect the environment.