AVILA BEACH, Calif. — Pretty regularly, the clouds cartwheel in from the sea and sock everybody in around here, except tiny Avila Beach. It will be dreary up in Morro Bay and dreadful down in Pismo, but here, the hills cut through the fog and leave a little circle of sunshine. It’s a microclimate, technically. But locals like to think of it as a halo.
Things often seem to just happen here, whether it’s a feeding frenzy of humpback whales in the bay or a nude volleyball game over at Pirate’s Cove. It had been a charmed existence on the Central California coast, with one disastrous exception: a massive leak from an oil-tank farm that sent 400,000 gallons of petrochemicals oozing under the town.
This underground lake of muck had built up over decades, polluting Avila Beach so severely before it was discovered in 1989 that the town had to be destroyed, effectively, to be saved.
Much of Avila Beach, including its entire business district, had to be torn down and reconstructed, its iconoclastic, working-class character, many believe, lost in a thicket of bulldozers, lawyers and regulators.
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Today, a final chapter to that saga is under way: An oil company wants to build a resort on the very land where the spill originated.
The development is viewed by many area officials as an inevitability — even, potentially, a transformative addition, one that would mark the opening of a spectacular seaside property to the public for the first time in a century.
But among some of the salty old guard in Avila Beach, word of the resort proposal has been sobering — as if the bitterness associated with “the trauma,” as one official called it, was always just a shovelful away.
“Whoever’s got the billions and the trillions always gets the last laugh, right?” said Michael Reichman, who was born here in 1962. Reichman sipped his coffee with a friend the other morning at Avila Grocery & Deli, a Front Street pillar. “It’s a joke.”
In 1906, Union Oil built the tank farm on 95 acres just south of San Luis Obispo. By World War II, 2 million gallons of crude a day was being pumped from huge storage vats into tankers in the bay. The pipes went right under Front Street.
In 1989, a man was working on his basement when he struck oil.
Diesel fuel, gasoline and crude, it turned out, had been saturating the soil under the town and its beach for years. Public-health advocates and the state accused Unocal of spilling toxic substances into a source of drinking water.
Unocal signed one of largest environmental settlements in California history: an agreement to cleanse Avila Beach that cost the company as much as $200 million, the equivalent of half a million dollars for each of the town’s 400 residents.
It was a terrible slog. Bulldozers removed about 300,000 cubic yards of earth, sometimes digging 15 feet deep in the heart of town to excise the last of the pollutants. Commerce ground to a halt. Many residents were displaced; some were given a check for their pain and inconvenience and never came back.
“We kind of miss the old town,” said Mike Cullen, 65, who lived and owned businesses here for more than three decades, and now visits from his home in Oahu. “The whole thing just got erased.”
The rebuilt town is more tourist-friendly: a little less dive bar, a little more wine and cheese. Many see it as a nicer, more welcoming place.
“It was, quite frankly, an eyesore,” said Rick Cohen, executive director of the Avila Beach Community Foundation. The agency dispenses at least $60,000 each year in community-building grants financed, still, through the Unocal settlement. “Now it’s beautiful.”
“But there is an acceptance that it is a different kind of town,” said San Luis County Supervisor Adam Hill, whose district includes Avila Beach.
Chevron bought Unocal in 2005, acquiring both the legacy of the oil-tank farm and the majesty of the bluff, which is now wiped clean of the massive storage tanks.
Talk of redevelopment has been percolating for years, but it is suddenly getting serious; Chevron was recently granted permission from the county to take the first substantive step, changing the zoning of the land.
Many people in town want the fenced-off property essentially opened up but undeveloped — summarized by Reichman, who said he’d like to see a “park for the people.”
Chevron, officials said, is well aware of the sensitivity of its new mission.
Its early plans call for an “intimate resort retreat,” including a 100-room hotel and 95 cottages, a spa, restaurants and a seaside amphitheater. But they call, too, for 60 percent of the property to be set aside for open space and natural habitat for scenic overlooks, a coastal trail.
Chevron has pledged low-slung construction, no more than two stories, to avoid disrupting the coastal vista.
Chevron declined to discuss the proposal in detail.
Locals will be watching carefully throughout, said Hill, the county supervisor.
“They’ve gone through stuff that most people don’t go through,” he said. “Their concerns are valid, and they are not easily mollified. This is a big deal, and there are a lot of people paying attention. There is no way you could just slip anything in here.”