Is the Morro Bay/Cayucos WWTP Project Already "Another Los Osos?"

by Kari Olsen

Synopsis: Some residents believe that the history of the Los Osos wastewater project is being repeated in the Morro Bay/Cayucos wastewater treatment plant (WWTP) upgrade.  Reported problems with the two communities' projects are strikingly similar.    Both projects have been the subject of resident concerns regarding the refusal of some officials and staff to consider less-expensive and more environmentally-friendly alternatives.  For both projects, residents have cited issues with out-of-control costs, the presence in the project areas of Chumash and Salinan archaeological sites, and allegations of inappropriate ties between government officials and Montgomery Watson Harza (MWH).  These issues have been raised in public meetings and documented several local news sources.

Is the history of the Los Osos wastewater project being repeated in the Morro Bay/Cayucos wastewater treatment plant (WWTP) upgrade?  Some residents think so, and allege that the similarities between the two communities' projects are difficult to deny.  Both projects have been the subject of resident concerns regarding the refusal of some officials and staff to consider less-expensive and more environmentally-friendly alternatives.  For both projects, residents have cited issues with out-of-control costs, the presence in the project areas of Chumash and Salinan archaeological sites, and allegations of inappropriate ties between government officials and Montgomery Watson Harza (MWH).

Morro Bay Mayor Janice Peters has often expressed the fear that a change of the wastewater treatment plant design and/or consultants could result in the project becoming "another Los Osos."  However, Peters' concerns were expressed with regard to the project schedule, potential project delays, and the ability to complete the plant by a deadline imposed by the Regional Water Quality Control Board (RWQCB). 

The Los Osos sewer project has been delayed a number of times due to resident concerns regarding cost, the location of the plant, and alleged malfeasance by local officials and Montgomery Watson Harza (MWH), the vendor originally contracted for the project.  The RWQCB has threatened to impose large fines if the Los Osos project is not completed on time.  Peters has said she fears that delays in the Morro Bay/Cayucos project could also result in financial penalties.  Citing that concern, Peters and others have insisted that staying with the current WWTP design and consultant is the best path for the community.

Warnings from a "Voice of Experience"

At the September 9, 2010 Joint Powers Agreement (JPA) meeting, Los Osos Community Services District (LOCSD) Board member Chuck Cesena warned that the Morro Bay/Cayucus WWTP project may already be on a dangerous path, but for a very different reason than the one cited by Peters. Cesena cited issues related to the project design consultant, MWH.  Cesena, who said he had spent decades working for a large government agency that dealt with many consultants, offered the JPA Board some advice.

"What I see working in a small government entity," he said, "is that you get relationships developed where the relationship becomes more important than the product you're getting,  just because of comfort, and I would  - I would recommend that you be very wary about that,  particularly with the consultant you're thinking about."

Regarding the past history of MWH in Los Osos and in New Orleans, Cesena said, "We will never know if the problems that happened back east happened in Los Osos because of the break-in in which all the MWH in computers disappeared from Los Osos."  Shortly after the LOCSD announced it would be investigating alleged malfeasance by MWH, mysterious break-ins occurred at MWH facilities, and computers holding project records were reported stolen.  At that time, Morro Bay's Capital Projects Manager Dylan Wade was employed by MWH, and his computer was one of those that disappeared.

Addressing the fears that the RWQCB would not be amenable to delays resulting from attempts to reduce project costs, Cesena told the JPA, "But we do know that when the 2005 construction bids came in at 48% over MWH's estimates, and the regional Water Board said,  "whoa, slow down, and maybe wait for a better bidding environment"  - which in my mind could have delayed a project significantly – to wait for a better bidding environment, MWH was the only entity to say, press ahead–and why not? They stood to make even more money because they had the construction management contract.   Be very careful."  Some Morro Bay residents have alleged that because MWH offers no guarantee of the final cost of its work, a similar scenario could play out in that community, and may already be in progress. 

Refusal to Consider Less Costly, More Environmentally Friendly Alternatives

Many Los Osos residents allege that County officials have consistently pushed for the most expensive technical approach for addressing Los Osos' wastewater treatment needs.  Numerous lower-cost and environmentally-friendly solutions were presented to the County, and rejected.  Serious concerns regarding the current Los Osos and Morro Bay project approaches have been expressed by local experts, including the late Dr Tom Ruehr, a Cal Poly professor, and internationally-known water expert Dr. John Alexander. 

Ruehr was an expert in earth and soil sciences.  As reported by the Rock of the Coast,  Ruehr served on the Los Osos Wastewater Alternatives Technical Advisory Committee,  the County Health Department's Technical Advisory Committee on Biosolids, the Solutions Group seeking an effective wastewater treatment process for Los Osos, the Ripley Pacific Engineering team, which provided a report on alternative water treatment for Los Osos, and as chair of the Los Osos Blue Ribbon Committee on Water. 

Ruehr was quoted as saying, "After reading the recent report to the TAC, I am firmly convinced the intent is to force the Tri-W site with the deeply buried large-diameter sewer pipes working as a gravity collection and using the Broderson recharge site, plus avoiding dealing with the issue of biosolids and ignore including the cost of the homeowner connection from their homes to the system, thereby running up the price on the sewer, especially with add-ons to each home owner. The intent is to use the excuse of federal and state support for the loan as a means to have a vote for a blank check with continually escalating costs."

Ruehr further stated, "I served on the Los Osos Wastewater Alternatives Technical Advisory Committee. This committee of 12 dedicated Los Osos citizens reached a consensus for a sewer based mainly on some of the basic ideas promoted by the recent Ripley Pacific Engineering report. This was presented to the County Board of Supervisors before the turn of the millennium. If the County had listened to us, we would now have a sewer installed and operating in Los Osos today.
    
Instead, the RWQCB persuaded the Engineering consultant to counter any ideas from the alternatives TAC. The Engineer used "voodoo" economics to charge the cost of the full sewer against each of the other recommended sewer processes identified by the community TAC. This made it appear all alternatives would be much more expensive, whereas they would actually be less than half the cost of what the Engineer had recommended. This "voodoo" economics was accepted by the County Board of Supervisors and served to prolong the sewer to this current date. The Solutions Group was formed and I participated with the hope of developing another alternative solution."

Internationally-known Civil engineer and environmental scientist Dr. John Alexander has twice been nominated for the Tyler Foundation Environmental Award. He received the International Order of Merit for "his development of technology to reduce or eliminate famine, pollution, water shortage and resource depletion worldwide."  Dr. Alexander has served on U. S. Presidential Commissions and several scientific boards.  He was selected as the first president of the International Precast Concrete Contractors Association Developed various construction methods used today worldwide.  Alexander is an expert in wastewater treatment.

Sewer System Upgrade Far Too Costly and Won't Solve Problems

As reported in another Rock of the Coast article, Alexander has advice for both Morro Bay and Cayucos.  The article states, "The $25 million ‘upgrade' to the (Morro Bay/Cayucos) sewer system is far too costly and will not solve the contamination problem," Dr. Alexander said. "The consultants have not kept abreast of the changes with immunity of pathogens, and the mutation which takes place in the so-called secondary treatment of a standard treatment plant." 

As reported by the Rock , Alexander has expressed strong views regarding the Regional Water Quality Control Board's apparent preference for expensive project alternatives for Los Osos.  "Dr. Alexander believes the water boards promote an imperial strategy designed essentially to secure and expand their power base. ‘The water boards like their projects as expensive as possible. If the projects aren't expensive, no one will appear before them and the room will be empty. But if the expense is so great that it requires State and federal money, then all must kneel before them and beg.'  ‘Most expensive' also has a loud outpost in Los Osos. ‘There are quite a number of people who would like to see the most expensive operation possible go in.'"

Driving Out the Riff-Raff

Several Los Osos residents have reported being told of another alleged objective of making project costs as high as possible.  One Los Osos resident was told by a developer that the objective is to drive out the "riffraff," a term presumably intended to describe lower-income residents. The resident reported being told that developers wanted the "riffraff" out so that their properties could be bought at bargain prices and redeveloped.  Another resident was told by a homeowner from the Monarch Grove neighborhood, one of Los Osos' most affluent areas, that "We'll get rid of the riffraff when the sewer goes in.  They'll never be able to afford it."  Some Morro Bay residents have noted that local developers are among those who have most strongly resisted the lower-cost PERC Water alternative for the Morro Bay/Cayucos project, and have wondered if a similar attitude and objective are at work in Morro Bay.

Alternatives

Among the lower-cost, more environmentally-friendly wastewater treatment approaches rejected for Los Osos is the STEP/STEG process by Orenco systems.  The system would not only be far less expensive than the project currently favored by the County, but according to the company's website, the approach has been endorsed by both the Sierra Club and Surfrider in the following statement, "Based on our review of the Los Osos Wastewater Project reports and our own research, a STEP/STEG collection system affords significantly greater protections to the groundwater, sensitive ecosystems, and culturally significant sites in the area than either a conventional gravity collection system or a low pressure-conventional gravity combined system—while also providing other benefits important to a sustainable project." 

In Morro Bay and Cayucos, staff members working on the WWTP project, along with some elected officials, have strongly resisted attempts to bring in PERC Water, a firm that could have provided a lower-cost facility that would have occupied a much smaller footprint, and would have produced irrigation-ready water at no extra charge.  PERC guarantees final project cost and quality of effluent and, if hired to operate the plant guarantees rates for 30 years.

A serious environmental and health concern shared by the Morro Bay/Cayucos and Los Osos projects is the fact that conventional sewer plants can serve as breeding grounds for pathogens.  According to  the report, "Drug Resistant Bacteria in Conventional Water Treatment Systems" by John Alexander Research, a troubling "mechanism for the transfer of multi-drug-resistant bacteria is also found at the local sewer treatment plant,"  and, "As bacteria wind their way through these treatment processes, the selective pressures against them increase. In consequence, there is a greater effort by bacteria to pass on survival-enhancing genetic information. Additionally, as the environmental stresses increase, the bacteria up-regulate numerous other survival mechanisms to assure that they and their genetic material survive. These survived mechanisms can include increased chlorine resistance."
    
Some treatment systems such as the oxidation ditch design currently being developed for Morro Bay do are not effective in addressing this issue.  However, ultraviolet light processes have been found very effective, and are readily available.  Ultraviolet light is widely used in wastewater disinfection as an alternative to chlorination and ozonation processes.  According to the  "Handbook of Water and Wastewater Treatment Technology," by Nicholas P. Cheremisinoff, "Ultraviolet light has long been known as a means for killing pathogens.  If water is exposed to enough of the light, the pathogens will be killed." 

The process is considered environmentally safe, and effective for killing a wide range of pathogens, including viruses.  It has been reported that most advanced treatment facilities use ultraviolet light to disinfect.  At present, over 2,000 plants worldwide use the technology.

Chereminsinoff also states that some pathogens are less sensitive to ultraviolet light, and that the least sensitive are protozoan cysts, such as Giardia.  However, these may be filtered out of the water through mechanical means.  Methods such as the MBR and SBR processes designed by PERC Water have been reported to be excellent supplements to UV disinfection, as they have been proven very effective in removing Giardia and cryptosporidium from wastewater.

Out-of-Control Costs

In Los Osos, the cost to homeowners for the County's favored gravity system is expected to be at least twice the cost of the more-affordable STEP system preferred by many residents.  In addition, MWH has been accused of driving up project costs through a variety of mechanisms.  Lisa Schicker's October 21, 2009 article in the New Times  states, "They had a habit of securing reasonable contracts that were repeatedly "amended" into millions of dollars of additional costs; essentially no-bid, no-competition. Their last so-called "amendment" with LOCSD was a no-bid contract for $7.48 million dollars; one they recommended for themselves."

 An August 14, 2006 letter to Marshall W. Davert, MWH, from the Los Osos Community Services District alleges a variety of inappropriate actions by the firm, including these items related to cost:

"Violation of Section 6 entitled "Compensation of Consultant, in that MWH and individuals employed by MWH:

• Have submitted invoices not in accordance with the Agreement;
• Have submitted invoices and has been compensated multiple times for the same work;
• Has knowingly submitted multiple false claims in violation of Government Code (GC) §12650"

Spokespersons for concerned Los Osos residents note that $6 million has been spent and essentially no progress has been made. Much of the money was reportedly paid to MWH.

Similar allegations were made against MWH by the Inspector General of New Orleans, as reported by Jack McCurdy in his October SLO Coast Journal article, "Leading Construction Firm for Wastewater Treatment Plant Loses Big Contract with City of New Orleans."  Since that article was written, the Cal Coast News has published another article on the subject, "Morro Bay and Cayucos waste water plant bidding process under fire."  The article, by Karen Velie, notes that, "Two weeks ago, the city of New Orleans canceled their $48 million hurricane-recovery contract with MWH after the city's inspector general found that the firm charged for time spent doing contract negotiations, over billed the city, gave gifts to city employees overseeing MWH's work, engaged in noncompetitive bidding and disregarded "truth in negotiation" contract provisions."" and, "In addition, a New Orleans city board member was sentenced to 22 years in prison for taking kickbacks involving MWH funds."

Ms. Schicker alleged that MWH increases its earnings through extra charges not included in original contracts.  Some Morro Bay residents allege that an example of this kind of "earnings enhancement" may have already been seen on the Morro Bay/Cayucos WWTP project.  The firm asked for an additional payment of $18,700 for preparing project cost estimates for the October 14 JPA meeting.  Local residents experienced in project management allege that a consultant should keep such data current and available to its clients at all times, and should not be permitted to charge extra fees for the information. 

Referring to the fact that WWTP site soil preparation costs do not appear to have been well covered in project documentation, a local engineering and project management expert stated, "This was never spelled out in the Facilities Master Plan and will be a "surprise extra to the contract." We won't know what that cost is until the bids are all in. This is the usual way things go if you have an engineer/consultant design the project and then it is sent out to bid. The successful low bidder hopes to make up for his low bid with extras. The advantage of a Design/build/operate method is that the costs are known before you ever dig one shovel of dirt." 

Guaranteed cost is a reason many residents say that they supported and continue to support PERC Water, despite the firm's withdrawal from the scene.  PERC states and guarantees final cost before a project commences.  Citing concerns including alleged flaws in the Draft Environmental Impact Report (DEIR) that prevented development and delivery of final design and cost estimates,  along with staff's failure to work cooperatively with the firm, PERC has withdrawn from competition for the contract to build the plant. 

Cost estimates for the Morro Bay/Cayucos project have risen from $27 million in 2006, to $31 million in early 2010, to the $34.5 million figure presented by MWH at the October,  2010 JPA meeting.  It was noted that the $34.5 million estimate does not include facilities to produce irrigation-ready reclaimed water, which would cost an additional $4.5 million.   

A 2008 California Coastal Commission letter to then-Public Services Director Bruce Ambo may indicate that the current cost estimate for the plant should be raised $39 million to incorporate the $4.5 million necessary to produce reclaimed, irrigation-ready water.  In December, 2008, Mike Watson, Coastal Planner with the California Coastal Commission, wrote to Ambo with comments and recommendations for the project DEIR.  Among the comments was this one:  "Water Reclamation. It is our understanding that tertiary treated wastewater with additional sanitation/purification can potentially be used for irrigation, wetlands enhancement, or re-injection into deep water aquifers, and potentially other uses. The EIR should identify a suite of potential beneficial uses for this treated water along with any additional infrastructure and processes that would be needed to reclaim this potential source of water relative to various alternative beneficial uses."   

Site-related Issues can also drive up project costs. This has been the case in Los Osos, and site problems are responsible for increases in the cost of the Morro Bay/Cayucos plant.

In Los Osos, issues with the TRI-W site, located in the middle of town, caused major project delays that increased project costs.  The site-related issues included environmental damage, odor (the site is adjacent to the community center, library, a church, parks, and homes), and traffic from trucks carrying sludge out of town.  The three CSD members who had backed the site were voted out of office in a recall election.  The current plan is for the Los Osos WWTP to be built on a site outside the town.

The Morro Bay/Cayucos facility site is in a 100-year flood plain and a tsunami zone.  Special construction is required to help protect the plant from being inundated by water, adding to project costs.  

Another critical issue is the fact that the entire area is a major Native American archaeological site.  In Los Osos and in Morro Bay, when excavation work is done at a known archaeological site, experts in both Salinan and Chumash archaeology must be present.  When an artifact or burial is found, work must stop while the archaeologists determine the proper course of action, and that action is taken.  Given the site information already provided to the JPA by the Chumash and Salinans, numerous and lengthy project delays can be expected during the very major excavations that will be required for the current plant design - delays that will translate into cost increases.

Respecting and Preserving History – the Chumash and Salinan Archaeological Sites

Costs are not the main issue for many who oppose the current site for the Morro Bay/Cayucos WWTP.  Also at stake is the integrity of the major archaeological site that includes countless artifacts and burials.

At the November 5, 2009 JPA meeting, Salinan representatives told the Board of their concerns. According to the minutes, "John Birch, Traditional Lead for the Salinan Tribe stated this is an extraordinary Native American burial area. Ms. Winholtz asked for clarification of the area in question. Mr. Birch confirmed approximately 1/8th of a mile around Lila Kaiser park. Noted the burial areas are large. Mr. Smukler asked if he was intending to submit comments. He indicated his statement at the meeting represented his comments. He has had discussions with the Archaeologist who indicated there was difficulty obtaining information. He stated that the information resource appears to be approximately 5 years behind. There have been a number of studies completed in the area. He shared his knowledge of previous projects with the Archaeologist." And "Gary Pierce, Traditional Lead, Salinan Tribe – stated that the area along the creek is a huge cemetery. He expressed concerns regarding utilizing an out of the area archaeologist with no local knowledge."

Although the Salinan representative comments referenced here appeared in a document in the Appendix of the project DEIR, there is no evidence within the DEIR that the comments had any influence regarding the choice of a site for the plant.  The failure of the DEIR to present viable alternate sites was noted when the document was reviewed by the Morro Bay Planning Commission.  All of the commissioners expressed concern and/or disappointment regarding the lack of alternative sites for the plant.

Fred Collins, representing the Northern Chumash, spoke at the October 14 JPA meeting.  Collins told the Board that the WWTP site is "right in the middle of a Chumash village," and reminded the Board that the site includes burials.  He stated that his ancestors would never have believed that another race would come along and dig up their graves in order to build.  Collins emphasized the disrespect involved in building a sewer plant over graves.  "What is the most important thing we have to give future generations?" he asked? "How are we going to exist into the future without respect for other races and other people?"

Noting that the Chumash have considerable experience working on large projects such as the WWTP upgrade, Collins asked the Board to "Bring us into the fold now."  He stated that although he had spoken to the Board in the past, he had never been contacted by Board members or project staff.  Collins made it clear that it was possible for Native American groups to begin bringing 500 people to the public meetings on the project to "tell how we feel," and again asked the Board to bring the Chumash into the project without delay.

Echoing the sentiments of the Chumash and Salinan representatives are other Morro Bay and Los Osos residents who oppose the unnecessary disturbance of numerous graves and artifacts.  In Morro Bay, a number of residents have criticized the failure to explore alternate sites for the WWTP.  Morro Bay's Local Coastal Plan (LCP) provides strong support for their views.  LCP Policy 4.07 states, "All available measures including purchases, tax relief, purchase of development rights, etc. shall be explored to avoid development on significant archaeological sites.  Where sites containing significant archaeological resources are already in public ownership including ownership of the City, the City shall encourage retention of the site in public ownership and the protection of the archaeological resources. The transfer of City owned properties containing significant archaeological resources shall be accompanied by a deed restriction containing provisions protecting the archaeological resources of the site."

In Los Osos, residents have spoken out in favor of project approaches that would minimize impact on Native American archaeological sites, and have opposed any sewer approach involving deep trenching.  It has been noted that use of a STEP system would considerably reduce the risk of disturbing graves and artifacts.   Some Los Osos residents also allege that there may have been significant disturbance of artifacts and burials when the TRI-W site was excavated, alleging that a great deal of excavated material was dumped into a creek at night. 

Allegedly Inappropriate Ties Between Contractors and Government

As reported in the October SLO Coast Journal story, "Is Big Business Using SLO County Communities As Piggybanks?," four local news sources have reported allegations of inappropriate ties between MWH and local government staff with regard to both the Los Osos and Morro Bay/Cayucos projects.  The article cites several stories in the other publications.

County Public Works Director Paavo Ogren, a key player in the Los Osos project, is a former MWH employee, as is  Dylan Wade, Morro Bay's Capital Projects Manager.  Both are reported to have had significant involvement in processes that resulted in the decisions to hire MWH to work on their respective projects.

Questions have also been raised about the appropriateness of the hiring of the team of Dennis Delzeit and Wallace Group to manage the Morro Bay/Cayucos project.  Delzeit was a member of the committee that chose MWH.  That committee's vendor evaluation sheets, which are a significant part of the "audit trail" that would show how MWH was chosen, could not be produced by the Morro Bay City Attorney in response to a Public Records Access request.  Some residents have asked if Delzeit was being "rewarded" for his support of MWH and the allegedly-outmoded oxidation ditch design currently being prepared by MWH.  Project staff offered the JPA only option for the project management contract – the Delzeit-Wallace team.  Another reported connection between Morro Bay City staff and the WWTP contractors is Morro Bay's Public Works Director Rob Livick, who is a former Wallace Group employee.

Critics of both projects note that other government officials also seem unduly attached to MWH, and appear more concerned about MWH than the residents they were elected and hired to serve. At one JPA meeting, when the possibility of bringing in another vendor to replace MWH was being discussed, some officials, including Morro Bay Council member Rick Grantham expressed concern for the welfare of  "the guys" already working on the project—MWH.  During that meeting, they did not express similar concerns for the taxpayers who will foot the bill for the plant.