Due Diligence and County Mistakes

The San Luis Obispo County Board of Supervisors unanimously approved their staff’s recommendations for the Los Osos wastewater project last Tuesday. Since the County provided their first wastewater project update for this year, many Los Osos residents were left bewildered about the details. One of the bigger issues that County Public Works Director Paavo Ogren talked about was the due diligence review. Here’s a breakdown of what that is.

A due diligence review is a process conducted by a government agency, which reviews and acknowledges all the vital factors that come into compliance with a project. For Los Osos, the due diligence review — which would take place if or when the California Coastal Commission grants the County a Coastal Development Permit (CDP) for the wastewater project — would cover all the County’s milestones and they would be assessed thoroughly. Once the review is placed in front of the board for deliberation, the board will vote to approve or deny the project.

Here are the elements of the due diligence review as designated by Assembly Bill 2701 (if you want to follow along, see page 6 of the April 27, 2010 staff report):

Completed Rough Screening, Fine Screening and Assessment Engineer’s Reports (2007)

Though the County satisfied this specific requirement, it’s important to note that the screening reports and the Assessment Engineer’s Report never thoroughly discussed the elimination of engineering and infrastructure alternatives with the exception of vacuum systems, which is mentioned in the Rough Screening report. Contrary to what some County supports claim, both gravity and STEP/STEG collection systems were equally considered as viable options.

Obtain property owners from developed property owners (Proposition 218 vote)

The County claims — in the staff report — that 80% of property owners approved the assessment. Upon closer inspection of the assessment results, 30% of property owners didn’t vote and 20% voted no. The assessment was, in fact, a 50-50 split. Out of the 70% that voted, 80% approved. Many properties with a “yes” vote were County government and Los Osos Community Services District-owned — not homeowners. Both of those agencies strongly urged a “yes” vote. The assessment results remain unclear to this day.

Established a Technical Advisory Committee (2007)

Oddly enough, the majority of committee members did not have the professional experience or capacity to review project reports. It’s like getting a group of kindergarten students together to solve a calculus equation. Prior to being appointed to TAC, many of the members have publicly and emphatically stated their preferences for previous wastewater treatment plans and technologies. The TAC was like a tainted jury pool — except there’s reason to believe that it was not by coincidence.

Completed an Aerial Photo Survey (2008) in which each property owner was sent an aerial photo of their individual property and asked about their preference for STEP

The results of that survey were never made public. As of May 4, there are no documents referring to that survey or acknowledging the results.

Completed a Community Advisory Survey (2009)

The survey, designed by Opinion Studies, was the first survey to be weighed with ballot vote-esque importance for the wastewater project. On April 7, 2009, despite acknowledgment from the board majority that it heavily favored County preferences, the survey was utilized by County Public Works as one of the key reasons for eliminating STEP/STEG from the design-build process to the chagrin of critics. Additionally, only 34% of the entire community returned the survey. The results were not community-wide.

Completed and certified the Final EIR (2009), which included a co-equal analysis of multiple project options

The Environmental Impact Report was widely criticized by both County sewer proponents and critics. Many concerns about the Final EIR evolved into project appeals that were presented before the County Planning Commission and the Board of Supervisors. All appeals (Gibson later referred to the appeals as “assertions”) were denied. Several of the appeals were submitted to the California Coastal Commission. Many of those appeals were recognized as providing a score of substantial issues that required a de novo hearing (tentatively scheduled for June 10-12 in Marina Del Ray).

Issued a Coastal Development Permit by the County Planning Commission and Board (2009)

Nearly a hundred project conditions later and months of deliberation — which would eventually cause the County to change course by moving the project from Tonini to Giacomazzi — the Planning Commission and the BOS issued the CDP. Critics often chastise the board and Public Works for spending $7.25 million for a project that required significant, costly changes by the Planning Commission.

Coordinated with the State Water Board and the USDA on project funding alternatives, including grants and low-interest loans to help mitigate affordability impacts on the project.

The County has yet to receive actual approval of USDA grant and loan financing, however they’ve projected costs based on a series of assertions (i.e. 25% construction cost inflation, current project financing) and variables (i.e. interest rates, financing term, number of ratepayers, and project cost) that have yet to be determined. In short, the County has made many promises, but ratepayers have yet to see the results. Current USDA financing will tack on 4% for interest, which would likely convert additional monthly sewer costs. Additionally, the claim that USDA financing would yield $40 cost savings is based on the assumption that the USDA will grant $64 million in loan (at 4%) and $16 million in grant money. According to John Diodati — who originally asserted with confidence that the County would receive receiving this package  — later conceded that this scenario was unlikely to occur. As of May 4, the project costs are estimated at $200 plus on-lot costs (estimated at $50). If the 218 assessment for undeveloped lots did not pass, monthly costs would increase and they would effectively negate any USDA cost savings.

The due diligence review will uncover many crucial mistakes by the County, but it is up to Los Osos residents to be vigilant in addressing these issues. Both the County’s accomplishments and their flaws should be included as parameters for a debate — whether Paavo Ogren wants to have that debate or not.

– Aaron Ochs

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