South San Luis Obispo County Sanitation District board wants review of wastewater plant

Newest member of board worries about policies, finances and potential conflict of interest

clambert@thetribunenews.comFebruary 11, 2013 

John Wallace

JOE JOHNSTON — jjohnston@thetribunenews.com

The newest board member of the South San Luis Obispo County Sanitation District has requested a thorough review of the wastewater treatment plant’s finances, operations and organization, including the dual role played by its administrator and his private engineering firm.

After several months spent reviewing budgets, audits and other documents, Grover Beach Mayor Debbie Peterson put together a list of concerns, which she reviewed at the district board’s meeting last week.

Chief among those concerns is the public perception that a conflict of interest exists at the plant, where John Wallace serves as district administrator and his firm, San Luis Obispo-based Wallace Group, provides engineering services.

“Everything is under one person who controls all the information, and that causes me concern,” Peterson said at the meeting Wednesday. “I haven’t seen that there have been historically checks and balances built into the system.”

On Monday, the three-member board held a special closed session to review Wallace’s performance. A performance evaluation is normally conducted annually; the most recent review was completed in November, said the district’s attorney, Michael Seitz.

Arroyo Grande Mayor Tony Ferrara, who chairs the district board, had requested the meeting. Wallace was not present, and no reportable action was taken.

The sanitation district serves about 38,000 residents in Arroyo Grande, Grover Beach and Oceano. Wallace has had a contract with the district since 1986.

It’s overseen by a three-member board of Peterson, Ferrara and Oceano Community Services District board member Matt Guerrero.

Guerrero had been the lone voice in publicly questioning district finances and operations until Peterson succeeded Grover Beach Councilman Bill Nicolls on the sanitation district board.

The sanitation district faces a $1.1 million fine for a large sewage spill in Oceano in December 2010 and has had a history of legal troubles — most recently a lawsuit filed by seven residents affected by the spill.

A few months after the fine was issued, water board regulators said they found additional problems at the sewage treatment facility, though Wallace said some of the issues were already being addressed and that others were potential misunderstandings.

At the Wednesday meeting, Seitz was directed to meet with Peterson to draft a request for proposals for an outside review.

Peterson said her proposal seeks a temporary district administrator and an accountant to review and evaluate district operations and finances, analyze whether it should have a full-time administrator and engineer onsite, and recommend an organizational structure.

The three-member board still needs to approve the request for proposal, which it could consider at its next meeting later this month.

Peterson’s list of concerns includes 28 items and covers a variety of financial and water-quality issues, such as the hundreds of thousands of dollars spent in legal fees in the past five years and the three recent samples that tested higher than they should for fecal coliform bacteria.

She also found it difficult to obtain financial documents from the district and called this a “culture of secrecy” in her list.

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