Department of Water Resources
A daily compilation of significant news articles and comment
March 27, 2007
4. Water Quality
Los Osos asks county for financial rescue - San Luis Obispo Tribune
Bankrupt Los Osos services district asks SLO county for help - Associated Press
Los Osos asks county for financial rescue
By Sona Patel, staff writer
The Los Osos services district’s bankruptcy attorney is asking the county to bail out the nearly insolvent agency by buying or paying for the contentious midtown parcel once slated for a sewer plant.
Even if the county doesn’t use the so-called Tri-W property as the site for a sewage-treatment plant, the county should buy the land to pump millions of dollars to the bankrupt services district, and then resell the parcel or put it to public use, according to a confidential letter to the county.
The letter — which was posted anonymously Monday on a public forum on The Tribune’s Web site, sanluisobispo.com — outlines two complex scenarios under which the Los Osos Community Services District could pay off its creditors and still have enough money to keep operating.
Attorney Barry Glaser, representing the county in the bankruptcy proceeding, confirmed the letter’s authenticity.
He declined to comment on it because of ongoing discussions between both parties. Most district board members and other agency officials also declined comment.
The letter describes a sense of urgency by stating that even if its sewer-related debts are eliminated in bankruptcy court, the district is in such poor financial shape that it "represents an unacceptable level of risk for the district and the people which it serves."
The district filed for federal bankruptcy protection last year as a way to deal with nearly $40 million in debts.
"We’re looking for a way to be financially solvent," district board President Chuck Cesena said Monday. "It’s just a thought to keep us on our feet."
The agency was responsible for building a sewer in the unincorporated seaside town, but its board halted construction on a wastewater system in October 2005.
The board majority elected in the recall that September promised to stop a treatment plant from being built at Tri-W because the property is in the middle of town.
State water-quality regulators, who fined the district $6.1 million after the project was halted, want Los Osos to build a sewer in hopes of stemming nitrate pollution blamed on the many individual septic systems used for disposing the town’s waste.
Under legislation crafted by Assemblyman Sam Blakeslee, R-San Luis Obispo, and approved by the California Legislature, the county took control of preliminary design and construction of a project in January.
If the plan succeeds and property owners approve a tax to pay for it, after building the sewer, the county would turn it over to the services district, which would operate it.
Remaining in the district’s possession are the Tri-W parcel at Los Osos Valley Road and Palisades Avenue, a parcel on Broderson Avenue near the coast and $2.1 million left over from a defaulted state loan.
The county assessor’s office has valued the Tri-W site at $3.12 million for tax-collection purposes. That’s not necessarily the parcel’s fair-market value.
If the loan money is used toward paying creditors, the district proposes that the county offer compensation to the district if those sites are used for a future project.
If the land is not used, the district asks that the county agree to purchase the land for its fair market price.
If county officials chose the latter, the district would request that proceeds from a potential sale be divided between the district and creditors.
The letter calls for the district to receive enough money from a sale to remain financially viable, with other proceeds going to pay off creditors in the bankruptcy case.
It’s unclear what the county’s motivation would be to buy the Tri-W parcel.
Paavo Ogren, the sewer project manager for county public works, declined to comment on the letter.
But he said the county would not have to seek permission from the district if it decides that the sewer would include use of the two properties.
The letter by attorney Jay Michaelson of
It describes how the district does not have adequate reserves but could "squeeze by, assuming no extraordinary events not anticipated in the budget" take place.
The letter also states "the district severely impaired its non-wastewater related reserves pursuing a wastewater project." The services district also provides water service in parts of town and contracts for fire protection with County/Cal Fire, and is in the midst of paying down a long-term bond twice annually.
District board member Lisa Schicker declined to comment on the letter, adding that it was "unfair" that the letter was made public.
"It’s really heartbreaking," she said. "This is a very sensitive time right now."
County and district lawyers are expected to meet April 9 in
http://www.sanluisobispo.com/mld/sanluisobispotribune/16979367.htm
Bankrupt Los Osos services district asks SLO county for help
Associated Press – 3/27/07
The bankrupt Los Osos Community Services District wants the county to buy the property that became ground-zero in its money woes.
The midtown property was once designated as the site of a sewage treatment plant. The district's bankruptcy lawyer said in a letter to
The confidential letter suggested the property could be resold by the county or put to public use.
Posted anonymously on an online forum on the Tribune Web site, the letter outlined two scenarios under which the district could pay off its creditors and still have enough money to keep operating.
Attorney Barry Glaser, who represents the county in the bankruptcy proceeding, confirmed the letter's authenticity but wouldn't comment because discussions were continuing.
The district filed for federal bankruptcy protection last year as a way to deal with nearly $40 million in debts.
"We're looking for a way to be financially solvent," district board President Chuck Cesena said Monday. "It's just a thought to keep us on our feet." #
http://www.sacbee.com/114/story/144690.html
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