Who on earth would want to become involved in the operations of a sewer district? Special districts such as the South San Luis Obispo County Sanitation District (SSLOCSD) are as close to grassroots as you can get in local government. They are formed to manage enterprise agencies—the ones that have a specific business remit—such as to supply water or sewer service.
Because they are nearly invisible, special districts are an easy target for all kinds of mischief. John Oliver in his Last Week Tonight special districts diatribe describes it well at youtube.com/watch?v=3saU5racsGE, where he refers to special districts as “ghost government.”
In the case of SSLOCSD, concerned citizens have once again come forward to question the board and administrator about actions that seem to be taking us back to the “Wallace years.”
Until five years ago, I was not involved in local government. After hearing about problems at the South San Luis Obispo County Sanitation District, I started going to meetings.
The plant has served Arroyo Grande, Grover Beach, and Oceano for more than 50 years. Starting in 2000, things began going downhill and reports of discrepancies involving board members and John Wallace, the longtime administrator, started to surface.
Between 2009 and 2011, the sanitation district settled with three whistleblowers who lost their jobs. Legal fees skyrocketed from $33,000 in 2005 to $413,000 in 2013 for the small sewer plant with 10 employees and annual revenues of $3 million to $4 million. Reserves of $11 million were drained, while the district broke promises to the Regional Water Quality Control Board to update the plant.
A spill in 2010 resulted in a fine of $1.1 million.
Meanwhile, the SLO County grand jury called out a conflict of interest. Local officials questioned Arroyo Grande and Grover Beach mayors Tony Ferrara and John Shoals, respectively, who refused to make changes and defended their positions.
Then, Oceano Community Services District board member Jim Hill resigned because he couldn’t sanction the corruption at the sewer district and Oceano Community Services District. Fellow director Lori Angello continued to assert a conflict of interest but was outnumbered by Ferrara and Grover Beach Mayor Pro Tem Bill Nicolls.
In 2013, then-Grover Beach Mayor Debbie Peterson presented a review of the grand jury audit, and other reports to the board. The review highlighted red flags and suggested a forensic audit and restructuring of the district. Soon after, Wallace retired and the district was reorganized.
John Clemons, the current superintendent, was hired along with a part-time team of an administrator and two engineers. Within two months, the nearly bankrupt plant rebounded, halving chlorine costs and changing annual operating losses of $1 million to income of $1 million.
From 2013 to 2016, the plant ran very well, regaining financial stability and producing the best statistics since 2000. However, the board refused to do a forensic audit. After more than a year of public pressure, the board hired renowned investigator Carl Knudson to investigate past practices. Even with limited scope, Knudson identified multiple issues and recommended submitting his findings to law enforcement.
The board sent Knudson’s report to county District Attorney Dan Dow. In February 2017, the DA’s office charged Wallace with two felony and two misdemeanor charges of conflict of interest.
Late in 2015, the part-time administrator retired and the board appointed Clemons as acting administrator in addition to his role as superintendent.
In 2016, the board hired Gerhardt Hubner as a full-time administrator. Since then morale has sunk to the point of multiple investigations, a formal complaint to the board by two operators, and half the staff unionizing. Legal costs are averaging more than $30,000 a month; far more than agencies much larger. The bylaws were amended to prevent any one of the three directors from agendizing any matter, quashing any minority view.
Hubner’s total package is $200,000 a year with full pay plus insurance for him and his family after three years. The board said his salary was offset because he could manage plant redundancy and reclamation projects. Hubner is a geologist, not an engineer or a qualified sewer operator. He hires consultants to manage projects. Many recommendations of investigator Knudson have not been implemented.
Despite these red flags and public complaints, the board refuses to reprimand or remove Hubner. Instead, they have joined the investigation into the one board member, Arroyo Grande Mayor Hill, who stood up for his principles and was vindicated by Knudson. The irony is that the investigation into the mayor of Arroyo Grande was raised the day the district attorney announced Wallace’s arraignment.
Soon after, in early March, Hubner placed Clemons and Amy Simpson, the plant secretary, on paid administrative leave. Many members of the public were outraged! No reason has been given for the action and the plant has been operating without a full-time licensed superintendent for two months. The crew at the plant is very competent, but they need Clemons back at the helm now!
Hubner’s draconian approach to management, lack of knowledge of sewer plant operation, and excessive legal costs are the past practices of Wallace, whereby staff and directors who didn’t fall in line with him were ostracized and disposed of. Hubner goes way back with Wallace, having worked with him on the cleanup of Avila Beach and throughout the county.
Grover Beach Mayor Shoals supports Hubner, as he did Wallace since 2002, voting against Hill at almost every turn.
For three years, despite requests from Grover Beach’s City Council majority, Shoals refused to replace his designee, Nicolls, whose wife is now the alternate for Mayor Shoals in Grover Beach. For two years, Shoals dragged his feet on the sanitation district in settling the $1.1 million fine and more than $1 million in legal fees due to the 2010 spill. He refused to consider an investigation of the Wallace years until public pressure was so intense it became unavoidable.
It takes research and diligence to stay engaged with the activities of local government. It’s the only way to prevent inequities and misuse of funds. We depend on this district to look out for our health and safety. Please take the time to exercise your responsibility to your community and pay attention—it will pay off for all of us in more representative government and honest representation.
Please, take an hour to attend a meeting and see if you become intrigued, as I did, by the challenges of local government! You can make a difference!
The South San Luis Obispo County Sanitation District Board meets on the first and third Wednesdays of each month at 6 p.m. in the Grover Beach council chambers.
Patricia Price is a longtime resident of Arroyo Grande and regular sanitation district board meeting attendee. Send comments through the editor at [email protected] or write a letter to the editor and submit it to [email protected].