Town’s Sewer Project

Reclamator creator touts plan for Osos: Fix sewer woes and get services district out of bankruptcy

The maker of the purported toilet-to-tap device says a proposed partnership with the district will solve the town’s problems — including bankruptcy

By Sona Patel

The creator of a device who claims it can turn sewage into drinkable water now has a plan he said would fix Los Osos’ sewer worries and bail the town’s services district out of a multimillion-dollar bankruptcy.

That plan includes working with the Los Osos Community Services District to provide the Reclamator to most property owners in the coastal town.

It’s the latest move by Tom Murphy of AES Central Coast Discharge Elimination Co. to persuade authorities to scrap the long-awaited sewer for his unconventional treatment system.

As part of the plan, Murphy sent petitions to property owners in two of the town’s neighborhoods asking them to support the partnership and “be indemnified of all liability” from a multimillion-dollar fine the district owes to the state Regional Water Quality Control Board.

The official-looking petitions surprised or confused some property owners and alarmed others. District and state officials have not recognized the petition’s merits.

The regional water board, the local arm of the State Water Quality Control Board, in early 2006 imposed a $6.6 million fine on the district for taking too long to build a sewer.

Water-quality regulators have been pushing Los Osos for decades to build a sewer. They blame nitrate pollution in the groundwater and Morro Bay on the town’s individual septic tank systems.

After multiple attempts to build a sewer failed, the county took over design and construction of the project under a deal brokered by Assemblyman Sam Blakeslee, R-San Luis Obispo, and approved by the Legislature and Gov. Arnold Schwarzenegger.

The district filed for Chapter 9 bankruptcy protection in August 2006 to stave off creditors while trying to figure out how to deal with an estimated $45 million in debts.

Murphy says that the petitions — sent to about 240 property owners in Bayridge Estates and Vista de Oro — would preclude them of an obligation to pay part of the $6.6 million fine and would acknowledge a partnership with the services district.

But Harvey Packard—the regional water board’s enforcement chief — said the petitions have no effect on property owners because the fine applies only to the district.

The district’s general manager, John Schempf, said the services district has not consented to a partnership with the company.

Murphy said the petitions were part of his company’s proposed plan of debt adjustment to bail the district out of bankruptcy.

Joe Sholder, one of the district’s bankruptcy attorneys, said Chapter 9 bankruptcy cases preclude anyone except the debtor from submitting a plan of debt adjustment to the U.S. Bankruptcy Court.

Murphy said his proposed plan would be profitable for both agencies but did not say how. He also would not elaborate on the district’s role in a partnership with his company.

Some property owners said they worried that the language in the petition would mislead their neighbors.

“It kind of plays on fears of everything,” said Kay Blaney, a property owner in Vista de Oro. “There are older people who are being misled.”

Blaney said, and Murphy confirmed, that AES representatives were going door to door in her neighborhood a few days after she received the petition.

Sona Patel can be reached at 781-7924.