Community Member Industry Vendor

Frequently Asked Questions

  1. Q – How much will the project cost?

A – The most recent opinion of cost for the WRF with full recycling at the South Bay Boulevard site is $126M. The Draft Facility Master Plan and Draft Master Water Reclamation Plan were completed in early 2017. After those documents were completed, the recommended project, which included all construction costs for treatment and groundwater recharge and all soft costs (design, permitting, and contingencies) was estimated at $167M. After the costs for the recommended project were presented at the July 11, 2017 City Council Meeting, staff was directed to investigate ways to review costs and to conduct a peer review. The panel recommended several project refinements early in this planning process, including odor control and layout revisions that resulted in lowering the anticipated project cost. The program costs were revised to $150M based on those efforts.

In June 2018, the cost estimate was revised to $126M. This revised estimate reflects the outcome of review of the design-build proposals for the WRF onsite improvements and recommendations from the Blue Ribbon Commission. The Blue Ribbon Commission is composed of four members of the community that were appointed by the City Manager to oversee the rate study process. The Blue Ribbon Commission made several recommendations that resulted in a reduction in the program costs including postponing the demolition of the existing WWTP. All components of the WRF Program have been structured to maximize competition and to help ensure the project is as affordable as possible.


  1. Q – How have the funds collected from the 2015 rate increase been spent?

A – The funds that have been collected as a result of the 2015 rate increase have been used to support the planning effort for the WRF Program. Between March 2013 and June 2018, approximately $5M has been spent to advance the program and has resulted in the development of the Draft Facility Master Plan, Draft Master Reclamation Plan, Draft and Final Environmental Impact Reports (EIR), preliminary design of the conveyance facilities, numerous siting studies, program management, funding support, and other technical services. Revenue not used to fund the WRF Program, other water and sewer capital projects, or operations and maintenance costs have gone to accumulation. In fiscal year 2016/2017 the combined accumulation fund for the water and sewer enterprises was approximately $9M. Accumulation funds will be used to reduce the amount the City will have to borrow for the WRF Program through bonds or low-interest loans.


  1. Q – Why are the 2015 rates not sufficient to fund a viable project?

A – The 2015 rate increase was structured to fund a project with a total cost of $75M. At the time of 2015 rate increase, it was assumed that the cost of the project would be split between the City and Cayucos Sanitary District, and therefore the City’s contribution would be $56.2M. The main focus for the 2015 rate increase was the water rates, which had not been increased in almost 20 years. The City was also running an annual $900,000 budget deficit and needed to fund near-term capital projects to improve the reliability of the water system.


  1. Q – Why can’t we build a new plant at the existing plant’s location?

A – The existing WWTP site and adjacent area is within the floodplain and the tsunami inundation zone. Direction was provided by City Council in April 2017 to re-evaluated alternatives to the South Bay Boulevard site, which resulted in the City receiving a letter from the CCC on July 11, 2017 emphasizing their concerns with sites located west of Highway 1. Furthermore, recent and ongoing discussions between City and CCC staff have re-emphasized that there is no support from CCC staff for pursuing a new WRF adjacent to the current WWTP site because it is inconsistent with previous CCC direction to move the facility farther from the coast to better implement relevant Coastal Act policies. Coastal Commission staff also expressed support for moving the project forward at the South Bay Boulevard site instead, and also submitted a letter confirming this approach prior to the September 22, 2017 City Council decision confirming the South Bay Boulevard site.


  1. Q – Can we be confident that the project can be completed with the revised price tag?

A – The City has received proposals from design-build teams for the WRF onsite improvements component of the program. The proposals included a maximum price for this component of the program. The onsite improvements represent over half of the total program cost. For the other components of the program (i.e., the conveyance lift station and force main and offsite recycled water facilities) are in the preliminary design and planning stages, respectively. These costs include appropriate contingencies for the level of project definition at this time. 


  1. Q – If the WWTP needs to be moved, will the CCC allow construction of a lift station near the existing WWTP site?

A – City staff has been engaged in ongoing discussions with CCC about the new lift station. CCC will require an alternatives evaluation and justification for constructing a new lift station near the existing WWTP site. That evaluation is being accomplished in the context of the EIR for the project. The City’s sewage collection system drains to the existing WWTP from multiple directions. The existing WWTP lies within a floodplain. With construction of the WRF at a new location, the City’s collection system will need to be modified to flow to the new WRF. Rerouting the existing collection system to drain to the new location would involve considerable design and permitting and would significantly increase overall project costs. Instead, a lift station at or near the existing WWTP is proposed to receive the City’s sewage and pump it to the new WRF. The lift station will be designed with flood proofing measures, including submersible pumps that continually operate underwater. Structures will be set two feet above the 100-year flood elevation. The electrical panels will also be located at an elevation to avoid flooding and conduits will be sealed.


  1. Q – Where will the new facility be located?

A – The proposed site for the new facility is near the South Bay Boulevard exit from Highway 1. The City and property owner have executed a Memorandum of Understanding for future purchase of part of the property after the Final Environmental Impact Report is certified.


  1. Q – What are the potential benefits of moving the WRF to the South Bay Blvd site?

A – Aside from locating the facility outside the area of coastal hazards (i.e., sea-level rise, tsunami, and flood inundation) and being conducive to surrounding land uses, another advantage of the South Bay Boulevard site is its ability to support reclamation in the form of indirect potable reuse. The Draft Master Water Reclamation Plan recommended injecting recycled water into the Morro Valley groundwater basin upstream of the City’s water production wells as it had the greatest water supply benefit for the community.


  1. Q – Is potable reuse feasible and how much will be recycled?

A – Two critical questions need to able answered in order to determine the feasibility of potable reuse. First, the new facility needs to be designed to meet the pathogen removal credits mandated by the Division of Drinking Water (DDW). The preferred proposer selected based on the design-build procurement process includes treatment processes that have been proven to meet these limits. Second, a minimum travel time of 2 months in the groundwater between when the water is injected and when it is extracted must be met. The Screening-Level Groundwater Modeling for Injection Report (GSI, May 16, 2017) evaluated four options for groundwater injection and extraction in the Morro groundwater basins. For all four alternatives, during both dry and wet conditions, the 2 month travel time was met.

The City’s goal is to recycle as much water as possible. Preliminary estimates of recycled water production from the Draft Facility Master Plan and Draft Master Water Reclamation Plan indicate that roughly 0.74 MGD (825 acre feet/year) could be produced, about 76% of the WRF’s average daily flow design capacity (0.97 MGD). Planning-level groundwater modeling results indicate that all recycled water could be used for groundwater injection and extraction in the Morro Valley. Subsequent groundwater studies will be done to determine the exact injection location and determine the maximum amount for groundwater that can be extracted without impacting water quality.


  1. Q – When will the project be completed?

A – The WRF Program, including construction, is scheduled to be completed in late 2021. This will include a lift station, pipelines, and full advanced treatment to produce water fit for supplementing the City’s potable groundwater supply. Plant testing will continue into early 2022. The City received a time schedule order from the Regional Water Quality Control Board on June 27, 2018 that requires the City to be in compliance with new full secondary treatment requirements by February 28, 2023. 


  1. Q – How will the City pay for the project?

A – The project will be financed through a variety of sources. The City is pursuing grants and low-interest loans through the State Water Resources Control Board (SWRCB) and other state and federal agencies to help fund the project. The SWRCB awarded the City a Recycled Water Planning Feasibility Study Grant for $75,000 and a Clean Water State Revolving Fund (SRF) Planning and Design Loan for $10.3M. The City has been in regular contact with SWRCB financing staff regarding a potential SRF construction loan. The SWRCB also has a loan forgiveness program for water recycling projects and “green projects,” Water recycling projects can receive a maximum of $2.5 million in loan forgiveness and “green projects” can receive a maximum of $4 million, including the $2.5 million from water recycling.

The City submitted a letter of interest to the EPA regarding WIFIA financing in April 2017 and was selected along with 11 other prospective projects around the nation from a group of 43 interested entities to apply for WIFIA financing, which will fund up to 49% of the total project costs. The WIFIA application will be submitted in early July 2018.

Kestrel Consulting is identifying additional grant and loan opportunities and leading the City’s strategy to secure funding from the programs that best fit the City’s project. A grant from the Bureau of Reclamation WaterSmart program is also being pursued. It is a competitive program that could fund up to $20M for the City’s project if awarded.

Any loans will need to be repaid through user rates. New wastewater rates went into effect on July 2015 to help fund the first phase of the project. An additional rate increase is needed to help fund the remainder. The updated Draft Rate Study was presented to a joint meeting of WRFCAC and the CFAC on June 25, 2018 and to the City Council on June 28, 2018. The proposed increase is a combined surcharge to the water and sewer bill of $41 per month.  This resents the “maximum allowable” rate increase that could be implemented, but the City will not increase rates to that maximum amount if lower construction are realized over the course of the program.


  1. Q – How can I calculate what the impact of the rates will be on my bill?

A – Below is a sample calculation for a typical single family home using 5 units of water a month.


WRF Surcharge = $16.00

Fixed Portion = $32.00


Tier 1 (0 – 3 hcf) = $6.00 x 3 = $18.00

Tier 2 (4 – 10 hcf) = $8.50 x 2 = $17.00


WRF Surcharge = $25.00

Fixed Portion = $83.00

Total = $191

hcf = hundred cubic feet

  1. Q – How would the rates be impacted by eliminating reuse?

A – The primary reason the City was selected to submit a WIFIA application was that the project included potable reuse and was creating a new water supply for the community. The rate study completed by Bartle Wells Associates determined that eliminating reuse from the project and financing the project with revenue bonds (i.e., no WIFIA loan or other low interest financing) would reduce the surcharge by about $1.50 per month.


  1. Q – What will be done to improve Morro Bay’s aging water and sewer system infrastructure?

A – The City’s OneWater Plan identified necessary improvements to the City’s water and sewer infrastructure through 2040. The capital improvements plan (CIP) for water and sewer are $26.1M and $18.2M, respectively. In order to reduce the impacts of a potential rate increase on the community, the City worked with the Blue Ribbon Commission to focus the City’s investment on the first 5 years of the water and sewer CIP on the most critical projects. For the water utility, this includes replacement of the Nutmeg Tank and system improvements to allow for the removal of the Vashon Pump Station. For the sewer utility the immediate focus is replacement of the sewer main in north Main Street.


  1. Q – What conclusion did the Blue Ribbon Commission reach about the reasonableness of the rates?

A – The recommendations of the Blue Ribbon Commission are summarized in their report dated June 21, 2018. Their report states “Based on the information provided to the Commission for analysis at the time of this report, the Commission considers the City’s rate proposal to be reasonable.”


  1. Q – Will the project be required to comply with the CEQA environmental review process?

A – Yes. In addition, the project will be required to comply with requirements of the National Environmental Policy Act (NEPA) in order to receive state and federal funding for parts of the project. NEPA compliance must be consistent with the requirements of the various federal agencies that may provide funding for part of the project.


  1. Q – What permits will be required for the project?

A – The most critical permit the project will require is a local coastal development permit (CDP) and Coastal Commission CDP. The City is working with San Luis Obispo County as the agency who will potentially issue the local CDP since the project spans City and County jurisdictions. The opportunity does exist to consolidate the CDP application to the CCC. This approach would have the benefits by helping avoid confusion to the public, the potential for fragmentation of project components in different CDP actions hindering public participation, and a significant amount of City expenditure and investment of time on each process separately.


  1. Q – Will the project have environmental impacts?

A – The project is intended to accomplish two primary tasks:

1)  Improve water quality by improving the level of treatment of wastewater, and

2)  Enhance water supply by producing recycled water.

While some temporary construction-related impacts are expected as a result of constructing the new WRF and related facilities, these impacts will be identified and mitigation measures will be developed through the CEQA compliance process, to be reported in an Environmental Impact Report (EIR). This is a process that encourages public review and input, and involves many agencies and stakeholders. Public hearings and opportunities for comment will continue through into 2018.


  1. Q – What will happen to the old wastewater treatment plant (WWTP)?

A – The old WWTP will be taken out of service after the new WRF is constructed, commissioned, and ready to reliably produce treated effluent.


  1. Q – How can I receive community email notifications about the project?

A – Sign up through this website by clicking here.


  1. Q – Who can help answer my questions?

A – Send us your questions and comments here.


Contact Info

Eric Casares
WRF Program Manager
595 Harbor Street
Morro Bay, CA 93442
(559) 240-2739

Recent News

  • California Coastal Commission Coastal Development Permit Conditions

    The Coastal Development Permit (CDP) for the Water Reclamation Facility (WRF) issued by the California Coastal Commission (CCC) on November 8, 2019 requires the City to comply with a number of special conditions prior to formal receipt of the CDP, prior to the start of construction, and prior to the …