1. Why the Moratorium Exists
When Los Osos was first developed, homes relied on septic tanks and leach fields to handle wastewater. Over time, nitrates from these systems began leaching into the soil. Since Los Osos draws its water from underground aquifers, this created a problem:
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The upper aquifer became contaminated with nitrates.
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The community relies on the lower aquifer for drinking water, which is still potable — but vulnerable.
In the 1970s and 1980s, Los Osos experienced a housing boom. Officials worried that rapid growth would place too much pressure on the groundwater basin. Over-pumping could draw seawater into the aquifer — a process known as saltwater intrusion, which makes water permanently undrinkable.
By the mid-1980s, the County and the State imposed a building moratorium, halting most new construction. The idea was simple: no more growth until Los Osos had a long-term solution for wastewater and water supply.
What This Has Meant for Los Osos
Because the building moratorium has been in place since the 1980s, Los Osos has often felt like a community “frozen in time.” Drive around town and you’ll notice there hasn’t been much, if any, new home construction since then. A few neighborhoods and commercial areas were built outside the moratorium’s boundaries, but overall the town has remained largely unchanged.
This created a unique dynamic:
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Some residents appreciate the small-town, unchanged character that the moratorium preserved.
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Others believe development of vacant lots could bring new homes, improved roads, sidewalks, and pathways — potentially increasing property values.
As the moratorium nears its possible end, the tension between pro-growth and anti-growth perspectives will shape how the community moves forward.
2. The Sewer System and Big Changes
After years of delays and community debate, the Los Osos Wastewater Treatment Facility was finally built between 2014 and 2016. During that time:
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Roads were dug up to install sewer lines.
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Homeowners were required to decommission their septic tanks (pumping, sanitizing, and filling them with sand or concrete).
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Some residents repurposed tanks for rainwater collection and irrigation.
The sewer was a major step forward. Treated water from the facility is discharged into large leach fields above Broderson Avenue, where it percolates back into the ground to help recharge the aquifer.
Despite this milestone, the moratorium wasn’t lifted. Why? Because the central issue had shifted from wastewater contamination to water supply sustainability.
3. Water Supply Challenges
Los Osos’ water comes from the lower aquifer of the groundwater basin. But decades of pumping, combined with drought cycles, raised concerns about long-term sustainability.
Studies confirmed:
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Current pumping levels are unsustainable.
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Seawater intrusion is already happening, particularly near the coast.
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Without supplemental water sources, the aquifer could deteriorate further.
The Basin Management Committee (BMC) — made up of the Los Osos CSD, Golden State Water, S&T Mutual Water, and San Luis Obispo County — was formed to manage the basin and explore solutions.
4. A New Pipeline Project
In response to a 2021 County report highlighting Los Osos’ water vulnerability, the CSD began pursuing a pipeline connection to the State Water Project.
The plan is to bring in about 200 acre-feet per year of supplemental water:
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Use it during wet years to recharge the basin.
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Rely more on groundwater during dry years.
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Reduce long-term pressure on the aquifer.
Environmental review was completed in 2023, with no unmanageable impacts identified. The pipeline project could cost around $8 million, with potential funding from federal and state programs, as well as partnerships with other water providers.
5. The Path Toward Lifting the Moratorium
For decades, the moratorium froze nearly all new construction. The sewer system was supposed to end it in 2016, but water supply concerns kept it in place.
Recently, progress has been made:
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San Luis Obispo County supports phased growth, proposing up to 1% population increase per year through development of vacant lots.
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The California Coastal Commission, historically cautious due to environmental concerns, has also signaled support for this plan.
This collaboration means Los Osos is closer than ever to allowing new homes. Some believe permits could begin issuing in the next 6–12 months.
6. What It Means for Buyers and Owners
The moratorium has created a unique real estate environment:
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Vacant lots remain, but not all are buildable until restrictions are lifted.
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Existing homes are more valuable because new construction has been frozen for decades.
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Long-term, supplemental water projects could stabilize the basin and open the door to carefully managed growth.
For buyers, sellers, and investors, this makes Los Osos both challenging and full of opportunity.
Conclusion
The Los Osos building moratorium has been in place since the 1980s, shaping the community for nearly four decades. While the sewer system was a milestone, the future hinges on securing sustainable water supplies.
With the pipeline project moving forward and regulatory agencies cooperating, Los Osos may finally be on the brink of lifting the moratorium.
👉 At BH Realty Group, we track these updates closely to guide our clients. If you own property in Los Osos — or are considering buying — we can help you understand what the moratorium means for your goals.