Sanitation district review is the right thing to do

John Wallace
John Wallace jjohnston@thetribunenews.com

The South County Sanitation District is once again under scrutiny — this time from a member of its own board of directors, Grover Beach Mayor Debbie Peterson.

Peterson recently issued a report listing 28 areas of concern about the special district, which provides sewer service to residents of Grover Beach, Arroyo Grande and Oceano.

The items on Peterson’s list aren’t new — they originated with the 2010-11 grand jury, other regulatory agencies, court documents, audits and similar sources. But taken together, they make a compelling case for an independent, top-to-bottom review of the district.

Peterson is calling for the appointment of two consultants — an engineer and an accountant — who would examine the district’s accounts and facilities and “suggest efficiencies.”

We fully support that excellent suggestion.

We also agree that it’s time the district’s three-member board of directors re-examined whether it makes sense to continue to contract with John Wallace for part-time administrative services while also contracting with his firm, Wallace Group, for much of the engineering work at the plant.

As Peterson notes, that’s led to a public perception of a conflict of interest — aconclusion also reached by the grand jury.

In her report, Peterson states:

“It is my opinion and that of many members of the public that the district administrator has a conflict of interest between his personal financial interest, as the majority owner of the Wallace Group to whom he assigns much of the district’s work, and his duty as the district administrator to control and minimize the administrative and engineering costs of the district.”

We agree that the relationship appears too close for comfort.

There are other red flags: There have been some serious problems with operations at the plant, including a sewage spill that led to a $1.1 million fine levied by the state Regional Water Quality Control Board and to a lawsuit filed by homeowners. (Neither of these cases has been decided.)

Peterson’s list also questions “constant repairs and breakdowns” at the plant; high staff turnover; adramatic drop in reserves, from $7.5 million to $3 million; an adversarial relationship with regulatory groups; and a “culture of secrecy” within the district.

Specifically, she states that the district has been resistant to suggestions; has issued defensive responses; and has not been helpful in providing information. In fact, Peterson had to go the county auditor-controller for some accounts and even then, some information remained unclear.

The sanitation district, it should be noted, already has responded to some of the older allegations.

In its response to the 2010-11 grand jury report — a document the sanitation district described as “largely inaccurate” — the district’s governing board defended contracting with Wallace for both administrative and engineering services by pointing out that other public agencies follow similar practices. It noted that the 1992-93 grand jury looked into a similar situation at the San Simeon Community Services District, and concluded there was no conflict of interest there.

Even so, the sanitation board needs to keep in mind that it represents South County ratepayers, and if they perceive aconflict of interest, a 20-year-old grand jury report pertaining to an entirely different community isn’t likely to carry much weight.

We strongly urge the South County Sanitation District to drop its “culture of secrecy,” and invite the thorough, independent review that Mayor Peterson requests.

If operations are running as smoothly as the agency claims, it should welcome this as an opportunity to clear the air, once and for all.