The City of Morro Bay has reached a deal on a permanent easement and greater access to the site of its new sewer treatment plant, and also agreed to help the property owners change their land into a denser residential zoning.

In early July, the City Council approved a “Purchase and Sale Agreement for Permanent and Temporary Easements” with a group of people who share ownership in a 44-acre parcel adjacent to the Water Reclamation Facility (WRF), being built now on a site above the terminus of South Bay Boulevard.

The City will pay $495,000 (plus closing costs of $5,000) for the easements, which a staff report said address an access problem the City has known about for some time.

“The City purchased a site for the WRF,” said a report by the City Attorney, Chris Neumeyer, “which did not have direct and adequate access from the nearest street. In addition, the City needed additional space for access for construction of the WRF and for a construction staging area.”

Of interest, the City purchased the 27.5-acre plant site for $325,100.

Part of the need for the easement results from a landslide that has forced the City to seek a larger area to store dirt.

Last November, the City entered into a “Right-of-Entry Agreement” with the owners of the property that gave the City adequate access to the site. Meanwhile, the parties continued to negotiate and the project got underway earlier this year.

That temporary agreement cost the City $178,500 and was for 10 months. The $178,500 is included in the overall $495,000 price, according to the report; so the City agreed to pay an additional $316,500 to seal the deal.

Had they not reached agreement, the City said it was prepared to go to court under eminent domain.

The purchase price includes compensation “for the impact of the easements and the WRF project on the value of the remaining property,” Neumeyer’s report stated.

The agreement includes a vow by the City to support a zoning change.

“As was also provided in the Right-of-Entry Agreement,” the report reads, “the City agrees to cooperate with the property owners in processing and considering a zone change application from the existing Suburban Residential/Planned Development Overlay (R-A/PD) to a more dense zoning, including, but not limited to, Multiple-family residential (R-3) for the approximately 44-acre parcel.”

Asked if such a change would be through the County or City, or if the plan was to eventually annex that property, City Manager Scott Collins said the agreement included, “discussion of facilitating the process to increase density on the remaining portion of that small easement [not to be confused with the Tri-W site],” Collins explained. “That portion of property is within the City if I am not mistaken. We have not discussed annexation for a while, that could come up in the future once we have completed the project.”

Previously, the City had carved out a 27.3-acre parcel for the plant site from a larger property, agreeing to support having the property brought under the City’s sphere of influence, as it was before 2007. Fears in town are that the owners could try to be annexed and then subdivide the pastoral hillsides that border the city.

The project’s $1.28 million “property acquisition budget” would cover the costs for the easements, according to the staff report. And Collins said, “The purchase price is accounted for in the original budget estimate for the project.”

The City is under orders from the Regional Water Quality Control Board to reach full secondary treatment — essentially to finish the new sewer treatment system — by February 2023. “Failure to comply by the deadline would result in the City being subject to substantial fines and penalties,” according to Neumeyer.