What's developing in Price Canyon? 

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Some views you have to see to believe.

The high hills above Pismo Beach boast some of the best views in San Luis Obispo County. To the south, beaches stretch out in a sandy crescent toward Santa Barbara. To the north is a vista of green hills that roll into the Edna Valley, interrupted off and on by a train chugging down the tracks. It’s picturesque—so beautiful, in fact, the city of Pismo Beach has protected some of the views of Price Canyon in its bylaws.

But that may soon change. Some landowners are pushing through plans to transform the pastoral valley into a massive development consisting of 697 houses, a 20,000-square-foot conference center and hotel, a golf course, a winery, private and public parks, an equestrian center, and a wellness center.

Carmen Porco owns land next to Price Canyon, and he’s not happy with the planned development. He moved in 14 years ago and loves looking over the stretches of green.

But Porco is quick to point out he’s not opposed to development there.

“If I had my druthers, I wish the land would be used as a wild land park,” he said. “But I would not mind a golf course if it was done right.”

Porco won’t be facing a golf course. If all goes as planned, he’ll be gazing at the backs of hundreds of homes on small parcels of land. He dreads the traffic he’ll have to deal with and worries about the effect the project will have on the wells he and his neighbors depend on for water.

“It’s just going to be so big,” Porco said with a sigh. “The grandiose size of the thing—it’s just not compatible with the area.”

The project would nearly double the size of Pismo Beach and proportionally increase the strain on city services. In return, the city would net hundreds of thousands of dollars a year in taxes.

The Price Canyon Project is more than a typical San Luis Obispo County development. It has the support of Pismo Beach’s political hierarchy, but it also faces tremendous obstacles. If the developers can overcome the challenges, they might pave the way for future developments in the county to leap over growth restrictions. Among their hurdles:

• San Luis Obispo County believes the Price Canyon project, as currently planned, violates many of the rules designed to achieve smart growth and discourage urban sprawl. Though the city seems itching to move forward with the project, it faces several problems with the county. The project, presented to the public in April 2009, lies outside of Pismo Beach’s city limits and will require approval from the county to be annexed in.

• Though city officials have publicly denied that taxes would be necessary to get the Price Canyon project built, city documents indicate that additional taxes may be needed to expand roads to properly handle traffic anticipated to be created by the project.

• As one of the primary developers—the one city staffers said they work with—and a land owner who often speaks on behalf of the project, John King has a long history of financial difficulty and has seen chunks of land in the project foreclosed on by his bankers.

• Perhaps the most significant issue facing the development is water: The area doesn’t have enough of the resource to supply what the Price Canyon project needs. But Pismo Beach leaders’ enthusiasm is high, and the city let King negotiate on its behalf to buy water from Oceano, an unincorporated area miles to the south.

Define ‘sprawl’

The county has to approve this development vision to make it a reality. Much of Price Canyon sits in Pismo Beach’s sphere of influence, which means the city has dibs on the area and is a prime candidate to one day incorporate it. Yet a small part of the project sits just outside the shade cast by the city’s metaphoric umbrella.

For any city in the county to expand, it needs the approval of the Local Agency Formation Commission (LAFCO), an obscure county organization that determines spheres of influence and has the responsibility of protecting against suburban sprawl. Pismo Beach submitted both the request for a city annexation and the project’s draft Environmental Impact Report (EIR) in a single massive document to the commission in September 2010. According to LAFCO Executive Officer David Church, there are issues.

“This project fits the description of urban sprawl,” Church said. “It fits it really well, no matter what your definition of urban sprawl.”

King totally disagrees, but more on that later.

The commission responded to the city’s request and the project EIR with a letter that said the proposed project “is inconsistent with the County strategic growth principles, and the EIR does not adequately address potential environmental impacts.”

The letter has 20 pages filled with criticism for the project. Some of the highlights:

• The current plan has the farthest section from the rest of Pismo Beach, consisting of a hotel and large, single-family homes, being built first. The land in between the first developed section and the rest of the city would gradually be filled in. This is inconsistent with county planning principles, which require new growth to start next to an already built area.

• It has too many large single-dwelling residences and too to few multi-residential units for LAFCO’s standards. County rules support transit-oriented development and walkable communities over McMansions. LAFCO rules push a higher percentage of multi-residential units; this plan contains lots of big houses on small lots.

• It may ruin sightlines: “It appears that project components have the potential to silhouette against the skyline as viewed from many vantage points and change the character of the Price Canyon area.”

• Large areas of foraging habitat will be impacted by the proposed project, including areas that have the potential to support sensitive plant species. According to the report, “These areas along with the Pismo Creek riparian corridor are important wildlife corridors and provide general habitat for various ground-dwelling and semi-aquatic wildlife species.”

• The project will substantially add to traffic on local streets and Highway 101. Both Caltrans and the county have said there’s little chance the highway will be widened in the next 20 years, though the project plan presumes it will happen.

• The annexation of more than 1,700 acres of rural, agricultural land coupled with the extension of a city boundary more than two miles inland could potentially lead to the premature conversion of agricultural lands, urban development in an agricultural area, and an inefficient expansion of government services, in conflict with state and county laws.

Though LAFCO didn’t seem to care for the plan, the city and the developers will have another chance to modify it, said Jon Biggs, the community development director for Pismo Beach in charge of the project for the city.

The EIR will likely be modified, then go to the City Council for certification sometime this year, and then go back to the county. Many issues still need to be worked out, Biggs said, especially those dealing with water.

“Water is the ticket to moving this thing forward,” he explained.

Water on the brain

California law requires developers of large projects to verify each source of water and show it will be available over the next 20 years.

“The biggest problem is the water,” LAFCO’s Church said. “That’s a really difficult problem.”

The project’s EIR gives an assortment of possible water sources, including the city wastewater facility, the state water project, and groundwater and reclaimed water from the Price Canyon oil field. These sources weren’t up to snuff for LAFCO, and the missing-water problem is one the Price Canyon developers can’t solve themselves.

In fact, water is a tight commodity throughout the South County. Unlike areas in the North County and the city of San Luis Obispo—which can now tap into the Nacimiento Water project to meet foreseeable needs—the towns to the south get by on tenuous supplies. Most of the Five Cities depend on Lake Lopez, wells, and an allotment from the State Water Project, all of which have reliability issues.

Arroyo Grande vs. Price Canyon developers

There is one area that has surplus water available: the unincorporated town of Oceano. That fact has created a stir with desperate South County cities.

Take Arroyo Grande, adjacent to Oceano and just southeast of Price Canyon. According to Steve Adams, the city manager, Arroyo Grande is only using 80 percent of its water supplies, though only two years ago it was using up to 98 percent of its supply.

“Look, we’re looking for more water,” Adams said. He added that while the city is in good shape now because of rain over the last year and a half, it’s still in a fairly shaky position and hopes to get more water for future emergencies and development.

Developers can’t legally buy water that comes from the State Water Project; only cities and counties can do that in California. So the Price Canyon developers had a big problem. Then the Pismo City Council developed a solution: They would let the developers represent the city in water negotiations, so Price Canyon could get its water.

At the November Pismo Beach City Council meeting, King, representing himself and the other Price Canyon developers, stood before the council requesting help. Some of the interchange between King and the council showed how closely the Price Canyon developers are working with the city.

One of the council members seemed momentarily confused as to why King had written a letter asking the council for help in getting water and negotiating authority to get water from Oceano.

Councilmember Ted Ehring asked King why he had written a formal letter asking for Pismo Beach staff assistance in the negotiations for water.

“We were directed to submit a letter like that,” King said.

In the end, King got his authorization.

Oceano: A world of its own

A five-member Board of Trustees runs the district that handles water, sewer, fire protection, and street lighting services for the 7,000 residents in the unincorporated town of Oceano.

Oceano Community Services District meetings can be remarkable experiences. Regulars aren’t known for holding back when it comes to expressing their feelings for their elected representatives. The meetings are often wild and raw.

At the Jan. 26 meeting, a New Times reporter noticed that some members of the public who filled out speaker cards weren’t called, the board was presented with a three-minute sandglass timer (the president had apparently cut off some speakers at the last meeting), and someone in the back of the hall accused a director of flipping her the bird.

On the agenda that night was a contract for the sale of 100 acre-feet of water to developer Larry Persons, who wants to build on Los Robles Del Mar, land adjacent to Pismo Beach. He has the same water problem as the Price Canyon developers.

Arroyo Grande buys water on a temporary contract and would like to have a permanent allotment of water from Oceano. The night of the meeting, a contract from Persons came before the board. He was offering $500,000 for 100 acre-feet of water. The Price Canyon developers have offered $1 million for 200 acre-feet of their own.

Four of the directors were amenable to selling water to the developers, but, despite the promise of badly needed cash before them, they seemed to be hoping for a better deal. One said she was hoping the developer would up the offer to $1 million or $1.5 million.

The Oceano Services District desperately needs the money. It hasn’t raised its water fees since 1997, and the directors hope selling its extra liquid supplies will help cushion increases for the public.

More than 50 people showed up to the meeting, most protesting the sale. Oceano residents hastily put together a petition, and they gathered more than 500 signatures in protest.

The directors made no decision on water sales that night, but the likely direction was clear—and it doesn’t look good for Arroyo Grande.

“We’ll pick and choose for the best offer,” said Jim Hill, president of the Oceano Board of Trustees.

None of the public’s business

The letter offering $1 million to Oceano for water was signed by King on behalf of himself and his fellow Price Canyon developer, Rick Loughead, who did not return New Times’ calls seeking comment.

King dismissed LAFCO’s criticism of the plan and complaints from local residents.

“Calling this project urban sprawl is pretty easy to say, but really it’s as far from urban sprawl as you can get,” King told New Times. “When it’s done, it will be the least dense of any built-up urban area in the county.”

King attributed the LAFCO report to the county not being aware of various studies that have been done on the project. When the project is complete, the city will have more open space than it has now and will have vineyards within the city limits, he said.

“This is a good project,” said King, adding that any city in the county would love to have a project like this. “People should be thankful they’re getting such a good project.”

King made his name as one of the leading developers and employers in SLO County, but he’s been hit hard by the recession. He lost the Inn at Morro Bay and a large project he intended to develop in the North County called Vaquero de los Robles to foreclosure. He’s also lost much of his land slated for the Price Canyon project.

King lost 461 Price Canyon acres to his creditors in 2010. According to court documents, he was served a notice of default in October 2010 for a $13.25 million loan on more Price Canyon land.

When asked about the possibility of his defaulting on much of the property in Price Canyon, he told a New Times reporter, “You don’t need to know about that; it’s none of the public’s business.”

He added: “There is money behind this project. It’s very well funded.”

He then hung up.

 

Staff Writer Robert A. McDonald can be reached at [email protected].