Los Osos taxpayers to pay $10M in pre-trial settlement to sewer contractor

San Francisco-based contractor ARB Underground is receiving $10 million as pre-trial settlement after it has alleged San Luis Obispo County with short-changing it for construction completed as part of the Los Osos Wastewater Project.

The county has announced Feb. 14 that it decided to settle with the company to avoid incurring additional costs that may rise if the four-year-old case continues. Ultimately, such bill will be shouldered by none other than the county’s residents.

“Trying this case in court would take significant time and money and wouldn’t benefit the people of Los Osos,” said Wade Horton, San Luis Obispo’s chief administrative officer.

He added that the settlement would end “the main construction component” of the Los Osos Wastewater Project which costs a total of $183 million and includes the installation of a 50-mile pipeline, 21 pumps, and a recycling plant.

The plan has long been functional and taxpayers began connecting to its system as early as spring of 2016 despite the lawsuit filed by the contractor in February 2014.

Previously, ARB Underground demanded $15 million from the county for its failure to meet its financial commitment as construction progressed. It claimed that the local government refused to detail its alterations to the original scope of work and refused to conduct investigations on any errors.

The contractor later increased its asking price to $22.9 million. By April 2014, the San Luis Obispo County responded with a cross-complaint stating that ARB Underground did not follow procedure by not submitting an itemized breakdown of costs associated with modifications.

The agreement was made in mediation in January 2018, the county staff report. It will be discussed by the Board of Supervisors on Feb. 20 for approval.