Top 10 of 2010: No. 8: Protesters prolong Paso’s struggle to fund pipeline debt

The countdown continues for the Top 10 Stories of 2010 as selected by the Tribune editorial staff. The series publishes every day, culminating New Year’s Day with the top story.

New drinking water is on its way to San Luis Obispo County in early 2011 — but the city with the largest share continues to struggle through civil litigation and public protests in finding a way to pay for it.

The 45-mile, $176 million Nacimiento Water Project pipeline — marked as the county’s largest public works project ever — will carry millions of gallons of water from Nacimiento Lake to Paso Robles, Atascadero, Templeton, San Luis Obispo and part of Cayucos. Each entity is contracted into 30-year repayment plans with additional interest charges.

Paso Robles is the only entity among the five that doesn’t have an established way to pay back the county, which sold bonds to fund the project.

Atascadero and San Luis Obispo will pay for their respective shares through user rate increases. Atascadero paid some of its debt up front. Cayucos paid for all of its share upfront and its existing water rate structure covers the maintenance. Meanwhile, Templeton plans to pay its debt through selling water meters for new construction.

As a result of Paso Robles not yet securing sufficient revenue to pay the debt, the city doesn’t have the money to build a treatment plant for its 4,000-acre-feet annual share. That means city water users are paying for water they can’t drink until the treatment plant is built.

The city has tried five times over several years to increase its water rates so it doesn’t have to dip into dwindling reserves that already help fund services such as police and fire.

Each time, though, the city has been met with backlash from a protest group, Concerned Citizens for Paso Robles, which has long argued that the increases should be labeled a special tax, not a fee, and thus require a two-thirds approval by voters.

Its members include seniors on fixed incomes, no-growth advocates and others who take a taxpayer-rights platform.

The city needs $13 million a year to meet its debt commitments to the pipeline, officials say. That’s more than double its current annual water fund revenue of $6.3 million.

“Without a water rate increase,” Public Works Director Doug Monn has said, “the water fund will go broke by 2014.”

The contentious debate has included numerous rate plan proposals, rate recalls, petition drives and a failed ballot measure in November 2009.

The latest round in the saga occurred in late October when Paso Robles lost part of a civil suit against five members of the Concerned Citizens group.

A San Luis Obispo County Superior Court Judge ruled the city’s proposed rate increases are a fee — finally putting to bed the special tax issue. But the city does need to redo the notices it sent out informing the public of the proposed rates because, the judge said, officials didn’t print enough information the first time.

If the city doesn’t appeal the court decision, it will give ratepayers yet another opportunity to protest the rate hike. That’s because renoticing prompts another round of the voter-approved Proposition 218 process. The proposition also allows the public to keep increases from taking effect if a majority of those affected protest the rates in a set period of time.

County officials have said that if Paso Robles defaults on its loan, the first step will be to meet with city officials to assess the situation.

Meanwhile, construction of the pipeline wrapped up this fall, and the project is now in the final testing stages. The water is slated for delivery near the first of the year.

That’s later than a 2009 estimate county officials gave when construction was slated to wrap up six months ahead of schedule. A design change involving the pumps for the pipeline’s intake station caused the delay, according to the county.