Los Osos sewer costs escalating

April 10, 2013

lososos sewerBy KAREN VELIE

The cost to construct a sewer system in Los Osos is slated to run over its $173 million budget because of pay raises, extended contracts and under estimated workloads.

On Feb. 24, San Luis Obispo County’s Public Works Director Paavo Ogren approved a 3 percent pay raise for employees of HDR Engineering. The amendment makes the pay increase retroactive to Jan. 1.

As a result of the amendment, Cal Poly interns working on the project are now paid $49.44 an hour, five of the 27 HDR Engineering employees are making over $200 an hour with the highest paid employee making $267.20 an hour.

“The total of all payments to engineer under the agreement shall not exceed the agreement amount $6,891,632,” the amendment says.

However, on the county’s website it explains that the original estimates of construction management and designer costs are for a time period shorter that then the actual construction schedule because of a large number of lateral change requests and utility line conflicts.

“The planned schedule in each engineering agreement is significantly shorter than the actual construction schedule in the approved contracts for the collection system,” according to a report by project manager John Waddell. “The scope of work for both the construction manager and designer is required to continue throughout the duration of the construction contracts.”

County staff has recommended agreement amendments for both the construction manager and designer to provide them the additional funding. The county is planning to process the agreement amendments within the next two to four months.

In addition, the area in need of road repair is running about 50 percent larger than anticipated and the cost of digging the water recycling ponds is estimated to run several million dollars over budget, the county’s website says.


Jorge Estrada

A name change may help, from Los Osos to Monteshito.




Everyone talks about the projected cost of the sewer system and monthly maintenance fees, BUT no one addresses the FINES that were incurred when the project was scrapped the first time. Do you believe those fines will be forgiven? Considering the state of the California economy, it makes sense that they would want to collect those fines to fill their dwindling coffers. I haven’t heard anything from the WQCB saying the millions of dollars in fines would disappear when the sewer is completed.


Hi mrcy…,

The $6,5000,000 fine placed upon Los Osos has been resolved through the County Project. I believe that the fine was rescinded; and if not rescinded entirely was financed/paid through a new State loan. It is the preference of the water board that they rather see a project built to resolve the ongoing pollution than impose and collect the fine.


I understand the delay has been costly. But I don’t blame the community for being livid over the placement of the sewer next to the community center,just above sweet springs. It’s still bad placement,especially when recommendations for better sites were there. The csd did what they had to do to represent the community. Imo the placement is all about who is profiting from the placement. My post above was a response to Lynette T comment on the next page. But being that I am posting from my Kindle, it didn’t place my comments as a reply as I had intended. ?? She had accused me of being against the sewer because of my concern over the open ended costs. It seems it’s a perfect scenario for the residents to be financially taken advantage of. Who is there to hold this company accountable for their original bid? Giving them a raise then having them tell us repairs will be doubled, should have everyone in an uproar. Lynette disagreed! It’s understandable there are unforseen costs,but where is the cap?


“Where is the cap”?

That’s a good question LAH.

Under AB2701 there is no cap. It’s (AB2701) what could be referred to as a “blank check agreement” to build a WWT system & get-er done at any cost, then dump it back in our laps, if we’re gullible enough to accept it.



I understand that you did not like the prior location for the sewer plant; and other folks will agree too.

However, the location was selected by a majority or the community in two separate elections.

The first time the community selected the site was in the 1998 general election that formed the LOCSD to begin with; and during which the majority of the voters (85% of the 87% who voted) rallied behind The Solution Group proposal to place an open pond/park sewer treatment system at the Midtown site (the location many dislike).

While that plan was never built, the fact remains that a majority of the community had no problem then with a ‘drop-dead gorgeous’ sewer pond/park at the Midtown location.

The second time the community selected the Midtown site was in October of 2001.

Based upon the 1998 election results showing strong support for using the Midtown site, the LOCSD developed a plan for sewering Los Osos using the Midtown site as the treatment plant location.

During October of 2001, an overwhelming majority (80% of the 72% who voted) of the property owners passed a $21,000,000 Bond issue to build the sewer as proposed.

As to the issue of escalating costs to build the Los Osos sewer; I too insist that costs be contained; and that the County use all their powers to ensure that costs are kept in line with expectations. As to final cost, it will whatever it takes to guarantee that the work is completed correctly.


I did not know about the 1998 nor the election in 2001. I am very surprised the majority voted for that site. What other sites were available for vote at that time? Good info MrM!



The general election of 1998 which resoundingly formed the LOCSD, followed by a comprehensive site selection process conducted by the LOCSD, resulted in waste water project and treatment site location which was approved by a majority of the property owners in Los Osos in 2001.

Several sites were investigated by the LOCSD during 1999 to 2001; with the sites located all over town.

The properties investigated were the Pismo property adjacent to the Junior High School (On SBB, across from Pismo St), south of the driving range at Sea Pines golf course, the Andre site east of the cemetery, and the Oto farm land.

The site selection process used by the LOCSD was based upon fulfilling the guidelines of Los Osos Vision Statement; as developed by LOCAC; and officially adopted by the County in 1996. This plan is a blueprint for the future development of Los Osos. The site selection process took the LOCSD 2 years, and was conducted through dozens of publicly held LOCSD BOD and LOCSD waste water committee meetings. The site selection process determined that using the Midtown (aka Tri-W) site best met the guidelines and intent of the Los Osos Vision Statement.

The Oto and Pismo properties were not selected as the property had by that time become part of the greenbelt surround Los Osos; and were not available for development.

The Golf Course property was not used due to neighborhood and community resistance.

The Andre property was not used as PG&E has a power line right-of-way easement over the entire property which forbids any building or treatment facilities; and that the costs to pump effluent over the creek and treated wastewater back again were operational costs that could be avoided with a site located in town.

That the community later, through a recall wherein a 50.95% majority to 49.05% minority voted to install a new CSD board majority dedicated to redesigning the waste water project then financed and under construction, was an unfortunate turn of events that has only needlessly acerbated the problems for Los Osos.


We have agreed to assess ourselves for almost $25,000 per property, that is the cap.



The overages will be in your rates and charges.


That makes no sense – this is being paid out of the construction phase of the project which are capped costs that we assessed ourselves to pay. Two different loaans

Water usage will determine our sewer rates and there will be costs for the maintenance of facilities and pipes too. These are NOT construction costs.

There are monthly reports that show where every penny is spent.


Check under “Recent News and Events.”


So you disagree that we should be concerned over escalating costs? We should close or eyes and just give them a blank check?

How can you have no concern unless you are profiting from the project?

I am all for the sewer! The thought of so many homes, that close together, leeching bad water into the ground is disturbing. It should have happened many years ago. Then at least we would not have to watch these elderly folks lose their homes over the high costs of their new sewer bill.


Of course we should be concerned. the focus however should be concentrated on those who chose to spend years delaying the inevitable.

there was a time when there was a fully funded, approved, permitted project, only to be stopped by those very people who are directly responsible for ANY and ALL escalating costs.

All those who can’t afford the sewer today, should sue those who stopped the sewer yesterday.


LAH – You are certainly correct.

At this point in time we need to be seriously concerned about overruns & more importantly, how we are going to pay for the maintenance & staff for the next 30 years, which hasn’t had much if any press, or seemingly any consideration.

Pelican 1 – the last thing we need in our Community is more divisiveness. Rather, we need to get over the blame-game & focus on plan B. As almost every one in the Community understands, when we stopped the County project & formed a CSD our ‘focus’ was on ‘affordability’ and that brought the Community together (rich & poor) with 87% or so votes.

Before we decide to accept this County project when we get the final bill & if we still have a CSD, one should think in the long-term maintenance costs & the fines for spillage & leaks etc as we are witnessing all around us in neighboring communities.


“Those who fail to learn from history are doomed to repeat it.” Sir Winston Churchill


“When I hear a number on a big construction project, I routinely just add 50% to it. For the most part, assumptions for these cost estimates are that everything is going to work perfectly. I’m old enough nowto assume that nothing works perfectly.” Words spoken by Richard Little , director of the University of Southern California’s Keston Institute for Public Finance and Infrastructure Policy.

It’ irrational costly optimism to believe otherwise and it’s not because the contractor is lying, but instead for the most part as one professor put it “more bad things can happen than good things and yet many budgets are based on everything running as expected.”

An interesting issue is whether an irrational optimistic bias is publicly overall a good thing, as it leads to large projects like the LOWWP —– whereas any realistic projection of costs and overruns would probably have a rejection.

Historically huge costly public projects with skewed incentives can contribute to poor cost estimates and when costs do overrun, public agencies don’t always have the effective mechanism for retrieving them or any initiative to do so as in the private sector.

Like Mark Hallenbeck from the University of Washington’s Washington State Transportation Center said, “A lot of it has to do with where the buck stops, and historically the buck stops elsewhere.”

Once the bill comes due, the sponsoring official might say, “I,m out of office, and hey, you got a cool train.”

Booty JuJu

Unsurprisingly there is virtually zero sympathy for whatever happens to LO homeowners during the course of finally building their sewer system. Thirty years of kicking the can down the road has a steep and terrible cost, which unfortunately is being paid predominantly by the kids and grandkids of the kooky, delusional, self serving can kickers.


I remember looking to move to Los Osos in the late 90’s – right when the sewer project was gaining momentum (I think at that time it, the processing plant was to be built across from a school or something silly). Anyway, we were told (by our agent) that the options were $50 a month forever, or families could “buy out” for a lump sum of $10,000 or something (can’t remember exact figures).

Needless to say, I added that $50/month to my amortization of what we could afford and realized that it was another $50,000 of home. Thus, we moved to SLO instead.


For many of us, it boils down to an issue of fairness. If we need a sewer, let’s have everyone who has a septic tank in the prohibition zone connect to the sewer. So why is it that a house 100 yards from my house is “sewer exempt”? Is it that my poop pollutes and theirs does not? Someone please give me an explanation of why the larger properties don’t pay for the sewer but all of the smaller properties do. Additionally, the last vote to build the sewer was not anonymous and was done under the threat of giant fines for homeowners. How fair and democratic is that?

There is a right way to implement projects such as this; they way it was done in Los Osos is the wrong way. Your attempt to blame the people of Los Osos for seeing a lame project for what it is horribly flawed logic.


In the engineering world, the company strives to have a employee multiplier at or above 3. In other words, if an employee makes $50/hr., then the company would want to be able to bill that employee at or above $150/hr. in order to cover company expenses directly related to the employee, plus company overhead/profit.

Compounding this in Los Osos is the company may have to pay prevailing wage for any CM work performed in the field, which in turn results in an even higher rate to the customer. The key here is to watch the billings to make sure that they are not billing PW rates for drive time to/from the jobsite unless they are required to transport materials, tools, or equipment. Also, PW rates do not apply to office work etc. performed at headquarters.


Prevailing wage is only for trades. It does not cover management or engineering positions.


True, however It does apply to field surveying/staking etc.


As a resident of Los Osos I am very worried about the final cost of this sewer system, especially the final monthly cost. There’s only + or – 15,000 people here to pay the bill. Plus the problem that it might not even solve the problem of nitrates, or that we can’t build anything new because there’s no water (so no new residents to spread the cost out). I can cut back on food I guess, but if it goes way over $200 a month I’m sure quite a few people will leave.


I’m not sure why someone would “Dislike” my worry about affording the sewer, but remember if you live somewhere other than Los Osos chances are your sewer system was paid for by all of us! The State and the Feds used to help pay for it, not here.


If the Morro Bay taxpayers continue to follow the new Morro Bay City Council down the yellow brick road they will discover that, years from now, the price of the Los Osos sewer project will look like a bargain compared to what’s going to happen to Morro Bay. Every restaurant owner, motel owner and private homeowner should be at the JPA meetings letting this council know that “no plan plan” they are engaged in will be a disaster for the citizens of Morro Bay. It’s time people realized that the emperor (the city council) has no clothes. They have no concern for the costs it will bring to retired and other long time residents. If it doesn’t work out, they will just move on. The rest of us are going to be stuck with the bill. They care nothing about Morro Bay and are only using this to promote themselves into some othe higher office. Morro Bay is about to become Los Osos on steroids.

Niles Q

There’s one big difference between MB and LO — LosOsos has only itself to blame for the delays and the escalating costs.

Morro Bay/Cayucos can point the finger at the Coastal Commission for its escalting costs. It was the Commission that redefined the project from an upgrade to a brand new project. It was the Commission that then used its new policy of “planned retreat” to address climate change, sea level rise and coastal hazards, to force the new plant to be moved.

Funny thing is, there is no such policy. The commission has never put this planned retreat into writing, in a draft form that can then be vetted in public hearings, tweaked and changed. Then it would go to another hearing with the changes in place for another vote and finally there would have to be a Resolution passed to actually enact a policy.

None of this has been done and the Commission staff is enforcing its planned retreat policy on a case by case basis, whicch means they are making it up as they go along.

The MB city Council AND the Regional Water Board are guilty of having zero balls to stand up to the Coastal Commission, and unfortunately, you are right, it is going to cost another $50 million plus interest.


The hypocrisy of Christine Johnson was in full view during the election. While campaigning she said that she would look at all options, including the present site, before making a decision. At the same time, her husband was appealing the current site to the Coastal Commission. She’s another example of ” say whatever it takes to get elected” politicians. Telling the truth to the voters doesn’t matter at all. I would bet that in the two years that Jamie Irons is in office, there won’t even be a site picked. The majority of this new City Council have no idea how to set goals and accomplish them. They don’t care what the costs are. They’re good at stopping things but don’t know how to get anything done. Morro Bay is in for a long and expensive two years.


Oh, here we go again. The special interest groups and their pals are at it again – still mad that they lost the June election, and never missing an opportunity to attack the first ethical, decent and intelligent Council majority we’ve had in years. Once again, nice try, but no cigar.

The prior Council majorities created a mess by refusing to face reality – the beach is a dumb place for a sewer plant, and for many reasons. Their bad decisions cost residents millions.

Thank goodness the majority of Morro Bay residents are smart enough to see through the nonsense and support the new people who are taking us in the right direction. Your ranting is not going to change that.


Interesting take.

Those who really want to understand what is behind this project and why it is so costly, need only look as far as the SRWQB. Local agencies and the taxpayers have little to say in the matter…

It is another politically appointed board with the supposed power to mandate unfunded requirements and enforce the mandate, based on polluting the bay. Los Osos is just the latest poster child for the SRWQB to pick on. Be aware that this ‘pollution” of ground water is coming to all unincorporated communities state wide. Any community that uses septic tanks and leach fields is on their screen, for attack and the elimination of all septic systems is their goal.

Perfect example is the little village of Santa Margarita with it’s population of 1300 and a total of 553 homes, all on private septic systems. All these properties have been informed they are in violation of the SRQWB mandate of no septic systems within 600 feet of “any blue line water course”, which in this community includes not only true streams or creeks but has included the man made drainage ditches which convey flood water away from the homes.

The state and the county have come to the Santa Margarita CSA 23 meetings on more than one occasion to layout their coming plans, which ultimately end in a new sewer treatment plant and infrastructure and explain why this will happen. Now, compare the community of Los Osos and its population of 16,000 with a projected build out of 26,000 with Santa Margarita. If the ever growing cost to build that sewer is projected to be $173 million and growing, and the current 16,000 feel that cost is outrageous, imagine how it will be for the 1300 people of Santa Margarita.

And yes, bad planning by the county has led to many of the problems of flooding, ground water pollution and booming growth without adequate infrastructure, that each community is now faced with. These problems did not just pop up last night.