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Board approves study steps for San Simeon district; staff asked to issue RFP, approve $20,000 for initial work
Summary
County staff were directed to issue an RFP and develop a reimbursement agreement to support a potential dissolution of the San Simeon Community Services District; staff noted LAFCO had held the district's application incomplete and flagged infrastructure, regulatory, and fiscal questions.
The San Luis Obispo County Board of Supervisors on Oct. 22 authorized staff to begin a formal analysis that would support a possible dissolution of the San Simeon Community Services District and to approve a $20,000 budget adjustment to cover initial county staff time.
Rebecca Campbell, assistant county administrative officer, told the board the CSD — formed in 1960 and serving roughly 307 permanent residents and about 230 water connections supporting hotels and restaurants — filed a May 2024 application with the Local Agency Formation Commission (LAFCO) requesting dissolution and formation of a county service area. LAFCO returned the application as incomplete and listed materials it needed, including a comprehensive analysis of current challenges, regulatory obligations, projected future rates for residents, and cost and staffing implications if the county assumed service.
"LAFCO will need clarification of whether the dissolution transferred or born to the county will need to be identified, and future rates to the existing community will also need to be projected," Campbell said. She described aging water and wastewater infrastructure, filtration and turbidity issues in rainy seasons, an expired 50‑year outside‑user agreement with California State Parks and required Coastal Commission actions, including hazardous response planning and relocation of the water treatment plant.
Campbell told the board staff proposed issuing a request for proposals to hire a firm to do the comprehensive analysis, to negotiate a reimbursement agreement with the district, and to seek a $20,000 budget adjustment from general fund contingencies to cover initial public works staff time. She also noted in the presentation an earlier staff reference to a larger figure — "$2,020,000" — when describing the potential scale of resources needed to initiate RFP processes, which was presented as a planning reference rather than an approved appropriation.
Mike Brown, a CoLab representative who spoke in public comment, warned that the San Simeon situation is one of several small special districts showing fiscal stress and urged long‑term financial planning. Supervisor Gibson said the item was a necessary step to assemble facts before deciding whether the county would assume services.
The board voted unanimously to direct staff to issue the RFP, work on a reimbursement agreement with the district, and approve the $20,000 budget adjustment for initial staff work.
What happens next: Staff will prepare the RFP and the reimbursement agreement and return to the board with the consultant results and a fuller fiscal plan for any proposed assumption of services or formation of a county service area. If LAFCO ultimately approves dissolution, state law requires a protest period and the process is subject to environmental review under the California Environmental Quality Act.
Notes on figures: The transcript of the presentation included both a $2,020,000 figure (described by staff when discussing potential work to initiate the RFP process) and a separate $20,000 budget adjustment request to cover immediate staff time. The board approved the $20,000 adjustment and authorized issuance of the RFP; it did not appropriate $2,020,000.
