SLO County sanitation district is not acting in the public’s best interest

August 27, 2022

OPINION by JOHN CLEMONS

If the South San Luis Obispo County Sanitation District continues it’s current trajectory with regard to funding the redundancy project, the total cost of the project, including interest charges will be over $50 million. Paying the USDA back would require a commitment of district funds of approximately $2 million dollars per-year for 30 years through calendar year 2051. This is not necessary, there’s a better way that the district can manage project cost.

According to the district’s 2021 audit report, the district intended to borrow $23 million through USDA bonds. The interest charges for this money would be $8.8 million over 30 years. For every $2.6 you borrow, you pay an additional $1 million in interest charges (over 30 years).

If the district continues with its current plan to use $37 million in USDA bond monies to fund this project, the resultant interest charge would be $14.2 million, resulting in a total project cost of $51 million.

Minimum payments would be $1.6 million a year through 2051. Federal interest rates have changed significantly since July 2021, so the numbers here are very conservative, actual costs are probably greater.

A preferable alternate plan would be to stop using USDA money immediately. Instead, use the district’s cash “reserves,” currently approximately $11 million, to pay redundancy project costs this fiscal year. This way you do not incur the additional $5 million in interest charges, and you do not end up with a $50 million debt to pay when the project is complete.

John Clemons became the chief plant operator of the South San Luis Obispo County Sanitation District in May 2013. Less than a year later, the plant was operating cleaner at less than 50 percent the cost. He left the district in 2017 amid allegations of racism.