Residents in Cayucos are facing a proposed water rate increase that could raise bills by more than 35 percent over five years, with some community members arguing that the county should address financial planning and infrastructure concerns before asking ratepayers to pay more.
The increase applies to customers in County Service Area 10A (CSA 10A), the county-operated water system serving the South Cayucos community. The system provides drinking water to about 950 customers and is funded almost entirely through customer rates and charges.
Under the county’s proposal, the base rate would increase 15 percent in the first year, followed by 5 percent annual increases for the next four years. The average bi-monthly bill would raise from about $217 to approximately $304 by the fifth year.
During a July 7 Board of Supervisors meeting, some residents said the county has not provided enough information to justify the increase.
South Cayucos resident Susan Dunn said the proposed increase would disproportionately affect year-round residents in a community with many vacation homes and vacant properties.
“Our South Cayucos neighborhood consists of roughly 50 percent vacant houses, vacant lots, or vacation rentals,” Dunn said. “About 50 percent of the residences house full-time locals consisting of young families, renters, students, retirees, disabled, and senior citizens.”
The San Luis Obispo County Board of Supervisors is scheduled to hold a public hearing on the proposed increase Sept. 1, where it will consider the ordinance, and any protests submitted by affected ratepayers.
According to a county rate study, the increase is needed to address rising operations and maintenance costs, meet debt obligations, update the CSA 10A Master Water Plan, rebuild reserves, and fund future capital improvements.
CSA 10A currently generates about $1.19 million in annual revenue, but projected costs for operations, debt service, capital planning, and reserve contributions are expected to total about $1.35 million in fiscal year 2026-27, creating an estimated $160,000 shortfall.
County staff noted in the study that the system’s current rates were established in 2018 and no longer cover increasing expenses. The rates included authorizing annual Consumer Price Index adjustments, but that authorization expired in 2023, leaving rates unchanged as costs increased.
Recent and planned infrastructure investments are also a factor in the system’s financial needs. The Hacienda Pipeline Replacement Project replaced a deteriorated waterline to reduce water loss and the risk of leaks and service interruptions.
The proposed Chaney Waterline Upgrade would increase fire flow capacity for properties on Studio Drive west of Highway 1, improving fire protection and public safety. The project is estimated to cost about $208,000.
That infrastructure work has reduced available reserve dollars and created additional debt obligations. CSA 10A currently owes almost $1 million to the larger CSA 10 Parent Fund. If the Chaney project is financed internally, that obligation could increase to about $1.27 million.
During public comment at supervisors’ July 7 meeting, Cayucos resident Charles Bergson also urged the county to provide more information before moving forward.
“We’d like to see a master plan. We’d like to see a financial plan,” Bergson said. “They speak of debt and financings that are needed to deal with the debt service and infrastructure, but we haven’t seen it.”
Water Utilities Program Manager Laura Holder said in a March email to the Cayucos Citizen Advisory Council that rejecting the increase would not result in bankruptcy or dissolution of the system but could require delaying some maintenance activities while continuing to meet health and safety requirements.
The proposed increase will go through the Proposition 218 process, which allows affected property owners to submit written protests. If a majority of valid protests are submitted, the increase cannot move forward. ∆
This article appears in July 9-16, 2026.
