County wants to speed up Morro Bay sewer project, sends review straight to Coastal Commission

The review of the planned — and controversial — $124.5 million Morro Bay wastewater treatment plant is skipping a key step that could have added a year and significant cost to the project’s bottom line.

But many residents, who have fought against it at every step along the way, aren’t happy about it.

San Luis Obispo County supervisors voted 4-1 on Tuesday to consolidate the approval process and help expedite the planning, sending its anticipated coastal development permit review straight to the Coastal Commission this summer.

The planned site for the wastewater treatment and water reclamation facility is on county land, though plans are for it to be annexed eventually into the city, according to county staff members.

Delays in project planning could add significant cost by putting loan funding at risk and adding higher construction fees, according to Morro Bay city council members.

“This is a path to consolidate for efficiency,” county Supervisor Bruce Gibson said. “I am in support of consolidation and hope the other supervisors are, as well.”

This property off Highway 1 near South Bay Boulevard has been chosen as the location of the new Morro Bay sewer plant/water reclamation facility. David Middlecamp dmiddlecamp@thetribunenews.com

Low-interest loans at risk with delays

The city is in line to receive a $60 million, low-interest Environmental Protection Agency loan for the project with the application proceeding well “to complete technical underwriting requirements to receive the low interest loan,” said City Manager Scott Collins.

“We have a high level of confidence that we’ll receive this loan,” Collins said. “We remain on the path to funding.”

But the city is at risk of missing out on the loan if delays continue, according to city officials, because the EPA has other projects to fund.

“The EPA has become very uneasy about the length of time as we work our way through the process to get our permits,” Morro Bay Councilman Robert “Red” Davis said.

A review of the proposal by the county Planning Commission and Board of Supervisors could have delayed the process by about a year, according to county officials.

sewer site map
Morro Bay’s new wastewater treatment and water recycling facility will cost an estimated $124.5 million at its new site at the intersection of South Bay Boulevard and Highway 1. Source: City of Morro Bay

Morro Bay Mayor John Headding, who spoke in favor of expediting the project at the county meeting, said the EPA loan between 2.5 to 2.7 percent would save the city about $20 million in financing costs, in comparison with a bond or certificate of participation at an expected 5 percent rate.

Additionally, Headding said the city has scored 14 out of 14 in a point scoring system on a low-interest State Revolving Fund (SRF) loan application. The city expects to find out this week whether the loan will be offered. The SRF loan, if granted, would fund the remainder of the project at 1.7 percent.

But any SRF funding, administered by the Department of Water Resources, needs to be used in the year of its award, Headding said.

The low-interest loans could help lower ratepayer costs from an additional $41 per month, which has been approved, to $34 per month, Headding said.

“Our goal is to build the best project for the lowest possible cost,” Davis told The Tribune.

Opposition to the faster track

But members of the public who lobbied against consolidation said it removes a key avenue for local control of the project.

“The county’s staff report was deceptive and misleading,” said Marla Jo Bruton, of the group Home Front Environmental Justice, Morro Bay. “Consolidation is not allowed here because the project is heavily opposed, and eliminating the hearings will substantially impair participation by the opposition. This is about silencing the opposition.”

Other comments expressed need for review of environmental issues, traffic disruptions and emergency service impacts, among other concerns.

“The location is on land adjacent to a northerly extension of South Bay Boulevard, immediately behind a senior-care facility occupied by some of our most fragile citizens,” Morro Bay resident Barry Branin wrote in a letter to the board. “This location is also within one half mile of Chorro Creek, which drains into the National Morro Bay Estuary and any spills from the pressure pipe line to the plant or the plant will do irreparable harm to this National Treasure (sic).”

Branin is an active member of the Citizens for Affordable Living in Morro Bay, which led the effort last year to stop the last City Council vote in favor of rate increases to help build the plant at the proposed location.

Branin added: “I am asking that when the request to combine the in depth permitting process of the County with the California Coastal Commission’s permit process you do not give your approval. If you do this there will be no local hearings. This project impacts many lives outside of Morro Bay and their voices need to be heard as well.”

But Davis said he supported the board’s decision to expedite the permitting process for a variety of reasons. Those include an agreement with contractor, Black & Veatch, to start work on the project by Oct. 23, 2019, for the $124.5 million price tag, or the city will have to renegotiate that price, and the expectation is the project will be more expensive.

Morro Bay sewer
Morro Bay’s wastewater treatment plant supervisor Les Girvin walks the facility in 2006. The city is planning to build a modernized sewage treatment plant and water reclamation facility. Jayson Mellom

But indicative of the community divide, Bruton told The Tribune that “the City of Morro Bay made the ridiculous agreement with the design/builder that it would pay more money for the same work if construction wasn’t started in a year when it hadn’t even applied for the development permit yet. This is mismanagement of public funds.”

Davis also said the new infrastructure will provide the city with a needed new facility that includes a valuable new water source in the form of recycling.

Gibson said that environmental impacts and consideration will be fully vetted by the Coastal Commission.

A meeting held by the Morro Bay City Council to field public comment on the project will be held in May, though a date hasn’t yet been set.

Supervisor Debbie Arnold dissented on the vote noting she disagreed with a secondary provision at Tuesday’s hearing that now allows all county-related coastal development permitting requests to be forwarded to the Coastal Commission for consolidation at the discretion of the county planning director.

That’s unless a supervisor chooses to place the item on the county’s agenda for public discussion and determination of board review.

“I would just like to have public notice on upcoming items, whether it’s a big project or a small project,” said Arnold, noting that concerned members of the public may not research Coastal Commission meetings, which are held throughout the state during the course of the year.

The argument in favor of changing the planning process is that the Coastal Commission has ultimate authority over coastal development permits, and “permit consolidation will save time and expense for all jurisdictions involved,” according to a county staff report.

Correction: A quote attributed to Barry Branin was corrected. Information related to the EPA loan application was also clarified.

Related stories from San Luis Obispo Tribune