The Dana Reserve housing project cleared another procedural hurdle Wednesday during a packed meeting of the Nipomo Community Services District.
Before a crowd of about 100 people that spilled out of the Nipomo CSD meeting room, the Board of Directors, which is responsible for water, sewer and waste services for Nipomo residents living in the service area, was faced with the decision of whether or not to include the Dana Reserve land near Highway 101 in the service area.
With the construction of nearly 1,500 housing units, Dana Reserve will significantly increase Nipomo’s overall population and water consumption.
Although the project land was considered part of the CSD’s ‘sphere of influence’, the directors had to approve the terms of the annexation agreement. This agreement will be submitted to the Local Area Formation Commission before the CSD could begin supplying urgently needed water.
Previously, the San Luis Obispo County Board of Supervisors approved a resolution that would have eliminated Nipomo CSD from receiving property taxes from the county, but instead would receive annual tax increases of just under 2.4% beginning in the 2025-26 budget year.
While this agreement will likely result in an annual net deficit of $139,707 to $882,618 for the district budget, staff recommended that the Board of Supervisors abandon the policy and accept the financial hit.
During Wednesday’s meeting, NCSD directors voted unanimously to approve the annexation agreement and 4-1 to approve the tax sharing agreement, with Director Ed Eby voting against the agreement.
“I’m disappointed,” Eby said before the vote. “I told the negotiators I would support a 3.7% share, but I wouldn’t be excited about a 2.7% share — and what’s being asked for now is less than 2.4%.”
Water rights at the heart of complaints
During the meeting, many opponents of the project within the Nipomo Action Committee expressed concern about the amount of water the project would use annually.
Since the project approval process began more than two years ago, opponents have raised the water issue as a concern, often claiming that Nipomo does not have enough water to meet increased demand.
The NCSD gets its water from the Santa Maria Valley Groundwater Basin, which extends from Orcutt to Pismo Beach and supplies northern Santa Barbara County, the Nipomo Mesa Management Area and the North County Management Area, which includes Los Osos.
The NCSD, Golden State Water, Woodlands Mutual Water Company and Rural Water Company will receive an additional 650 acre-feet of water from the City of Santa Maria through the Nipomo Supplemental Water Project Water Management and Groundwater Replenishment Agreement.
According to the staff report, the district will be required to purchase 2,500 acre-feet of water from Santa Maria each year beginning in July 2025, up from 1,133 acre-feet in 2023.
A third of this goes to other service providers in the region, the report shows.
At full scale, the Dana Reserve project uses 377 acre-feet of water annually.
An analysis of the Nipomo CSD’s projected water levels in the year 2045 showed that there would still be a surplus of 415 acre-feet.
In the absence of Dana Reserve’s population, current ratepayers would be responsible for a 35 percent increase in water rates, while an expanded customer base could absorb the additional water costs, according to developer NKT Commercial’s presentation. The additional population would likely result in a 30 percent decrease in sewer rates for ratepayers for the same reason.
Still, many Nipomo residents worried that the project would overwhelm the county’s water supply, citing examples of prolonged droughts in the region.
According to NKT Commercial’s presentation, NKT Commercial will pay a total of $45 million to the NCSD over the life of the project and will install or pay for all necessary water and sewer improvements for the Dana Reservation.
What’s next for Dana Reserve?
At the meeting, project developer Nick Tompkins said full construction could take about seven years, not including legal challenges.
“The time for planning approval and technical implementation of the basic infrastructure is 12 months, but that 12 months is now linked to the completion or resolution of any legal objections that currently exist,” Tompkins said.
Attorney Babak Naficy, who represents the NAC in a lawsuit against the county under the California Environmental Quality Act, said Dana Reserve still has a number of hurdles to overcome before ground can be broken.
Naficy said that while the annexation agreement will go to LAFCO next, but its final approval is still uncertain, it could be some time before construction on the Dana reservation begins due to the lawsuit.
“We will likely amend the complaint to add another claim against NCSD for what they approved today, and then the focus of the activity will shift to LAFCO, because all they really approved today was a decision to file an application with LAFCO to approve annexation,” Naficy told The Tribune.
