Morro Bay City Council
June 23, 2026

Due Diligence Report and Recommendation to
Proceed with Closing under Purchase and
Sale Agreement for Jointly Owned Wastewater
Treatment Plant Property
June 23, 2026
1 Background
2 • Purchase and Sale Agreement with Cayucos Sanitary District (CSD) to buyout interests in the jointly owned and operated former Wastewater Treatment Plant (WWTP)
o Approved on March 24, 2026
o Effective on April 2, 2026
• Purchase Price $3,867,800
• Buying Property “As Is”
• 90 Day Due Diligence Period to review title and obtain qualitative environmental assessment
• Anticipated Closing Date July 1, 2026
Background
3 • Purchase includes:
o Former WWTP
o Former concrete plant
o A portion of the Morro
Dunes RV park
o Public beach
o Other jointly owned
assets like sewer lines
and ocean outfall
Due Diligence Report
4 • Qualitative Environmental Assessment
o Performed by environmental firm Roux Associates, Inc
o Evaluated hazardous waste issues that may be
implicated during future redevelopment
• Two Phases
o Historical Site Investigation and Document Review
o Limited Subsurface Investigation
Due Diligence Report
5 • Historical Site Investigation and Document Review
o Four potential environmental concerns identified
 Release of 50 gallons of diesel fuel at concrete plant  Removal of underground storage tank at concrete plant  Oil staining on WWTP maintenance building floor
 Detections of Per- and poly fluoroalkyl substances (PFAS) in wastewater and drying bed concrete samples
o Soil management plans recommended for first two
items and would be standard practice
o Limited subsurface investigation recommended for last two items
Due Diligence Report
6 • Limited Subsurface Investigation
o Soil testing for total petroleum
hydrocarbons (TPH) and soil
vapor testing for volatile organic
compounds (VOCs) within
Maintenance Building storage
room
o Soil testing for PFAS near drying
beds and groundwater testing for
PFAS from two existing
monitoring/dewatering wells
Due Diligence Report
7 • Limited Subsurface Investigation Results
o No TPH or VOCs detected in soil, low detections of
VOCs in soil vapor
 Typical for observed surface staining; can be addressed during normal excavation and modern building code
o Only one soil sample contained a type of PFAS above
typical background levels (7.9 v. 3 micrograms per
kilogram), low detections of PFAS in groundwater below
regulatory thresholds and below other wells to NE
 Low level detections common for wastewater facilities, no evidence of widespread PFAS impacts
Due Diligence Report
8 • Title Review
o Work with Title Company to finalize legal descriptions for real property acquired over multiple years and joint power agreements
o No defects in title or recorded interests identified that would impact future allowed uses of Property
Conclusion
9 • Due diligence provides increased confidence Property does not contain any significant hazardous materials
• Any localized impacts can be addressed during demolition project and would be within normal expectations
• Closing under Agreement remains preferred path for
WWTP demolition and potential reuse of the site
Recommendation
10 • Authorize City Manager to proceed with closing under the Agreement and take such other actions and execute
documents necessary to complete acquisition
Questions
11 Questions