Los Osos Valley Associates v. City of San Luis Obispo

During a drought condition, a city supplies its citizens with water it draws from the ground. The groundwater pumping causes subsidence resulting in damage to buildings.

Here we hold the city is liable in inverse condemnation to the owner of the buildings.

We affirm the judgment of the trial court that appellant, the City of San Luis Obispo (the City), is liable in inverse condemnation for physical damage to the buildings of respondent, Los Osos Valley Associates (LOVA).

Facts

In 1985, the City implemented an annual water plan because the amount of water the citizens used each year had reached the “safe annual yield”—the normal supply of water equaled the demand. The former utilities director for the City, William T. Hetlund, explained that the City viewed this as a “. . . critical point of water supply.” The City wanted to ensure that it did not run out of water.

Hetlund explained that the plan was created “. . . to manage what water we had better” and “to maximize use of the reservoirs and be able to project further into the future the impact.” This plan was “based on a six-year dry cycle that occurred back in the late 1940’s, early 1950’s.” As of 1985, the City “.…