County agency accused of misuse of state funds

January 5, 2010

1114 Marsh StreetBy KAREN VELIE

The California Department of Transportation (Caltrans) has accused San Luis Obispo Council of Governments (SLOCOG) of the inappropriate expenditure of more than $1 million in taxpayer funds, claiming the county agency transferred funds slated for road maintenance to purchase new office space.

In an August letter demanding SLOCOG return misused funds, Caltrans officials contend that SLOCOG used tax revenues ear marked for the maintenance and construction of public streets to purchase a building at 1114 Marsh Street in San Luis Obispo and asked what actions SLOCOG will take to “resolve the issue in a timely manner.”

In an odd twist, SLOCOG administrators admit they failed to inform either the County Board of Supervisors or the SLOCOG Board of Directors of the alleged misspending of taxpayer funds and the state’s reimbursement demand.

“I decided not to bring in the full board,” said SLOCOG Executive Director Ron DeCarli, who admitted he regrets the lack of disclosure even though, at the time, he did not see the issue being a problem.

In February, when SLOCOG staff and attorneys informed their board that the use of street maintenance and construction funds to purchase an office was legal, the board approved the expenditure. SLOCOG is an association of county governments that serve as a regional transportation planning agency, metropolitan planning agency, regional census data affiliate, and service authority for freeways and expressways.

In April, Caltrans officials told SLOCOG administrators they thought the purchase of a building might be an impermissible use of state funds. Nevertheless, SLOCOG forged ahead and purchased the new office building in May.

“When Caltrans raised their concerns with us, we said, ‘You use the same funds,’” DeCarli added. “Our attorney (Assistant County Counsel Rita Neal) agreed.”

As a result, county attorneys are battling Caltrans attorneys over whether funds allocated for road maintenance and development can be used to purchase a building for a regional agency that has duties that are not transportation related. If attorneys for the state prevail, state highway funds could be withheld from the county until the alleged misused funds are recovered.

In response to the state’s demand for reimbursement, Neal countered with claims that SLOCOG’s use of State Highway Account (SHA) funds to purchase an administration building was an allowed use. Neal noted a 1944 decision in which the Attorney General said that the Department of Motor Vehicles had a legal right to use highway funds to purchase office space, according to an Oct. 2 letter from Neal to Caltrans.

In a Catrans interoffice communication provided to CalCoastNews, state officials disagreed with Neal’s response, “The issue is not whether SHA funds can be used to purchase an office building. They can be. The issue is whether SLOCOG can use SHA funds for the purchase of an office building.”

“It could have statewide ramifications if it is permitted,” said Michael Giuliano, Department of Transportation district local assistance engineer. “The use of state highway account money is always subject to being audited and it is likely we will exercise that option.”

Within the next few weeks, Caltrans plans to respond to County Counsel’s October rebuttal. Both sides expect it will take some time for their attorneys to “hash out the issue.”

“It ultimately may end up in a court,” Giuliano said.

However, DeCarli notes that SLOCOG has over 19 funding sources from which they can transfer the contested funds and avoid further conflicts.

“It is not worth fighting over in court,” DeCarli said. “We can find a different funding source and transfer the monies.”

In addition to the purchase of SLOCOG’s new administrative building, CalCoastNews uncovered the agency’s acquisition in 2007 of a small narrow lot on Mill Street between Palm and Santa Rosa Streets for $1,050,294 through the use of — primarily SHA funds. SLOCOG administrators originally planned to construct an administrative building on the property, though they later determined it was not financially feasible.

“It was part of a larger plan, working with other county agencies, to consolidate property there,” said SLOCOG Administrative Director Pete Rogers. “The plan was to jointly own the new building that would consolidate the parcels.”

SLOCOG officials said they approved the purchase of the lot, using state road funds, in order to eliminate monthly lease expenditures. However, as the economy weakened, they believed the project was no longer viable and decide to hang onto the “asset” until the real estate market rebounds.

Gas taxes, often touted as being a great form of taxation because they charge the gasoline purchaser for road maintenance, have generated the necessary funding to maintain our nation’s byways throughout the past century. Californians pay 62.8 cents per gallon, the highest gasoline tax in the country.

Inline Feedbacks
View all comments

This is a good article about Caltrans and the County of San Luis Obispo. I have had many experiences with both. To find out alot about Caltrans and the County of San Luis Obispo you can vie my web site at

Money, that is supposed to be used by Caltrans for our State Highways should be used for State Highways rather then building new buildings.

In Oceano we have flooding of our State Highway that Caltrans Can fix for only $43,295.00. The Oceano residents have already paid their share being $5,000.00 in 1985 according to Caltrans documents seen in PDF files at

It is now time to show what Caltrans and the County have been up to!

“However, DeCarli notes that SLOCOG has over 19 funding sources from which they can transfer the contested funds and avoid further conflicts.”

Does this statement bother others?

Seems they are a bit drunk on our money!

You got that right! Kudos!

Sounds like a real good administrator to me, pushing the envelope for funding but backing the bets.

Good on ya Ron!

Missing “W”: When was the building purchased?

Who was the seller? That building was occupied by Knobbe Martens, a law firm, at one point, but I don’t know if they owned it. It was a diner years ago with artwork on the wall bearing price tags. I don’t know commercial real estate — is $1M a good deal?

Liberandos: “Have any of you fire starters considered the possibility that the purchase of a new building is actually saving this agency money?”

Well, there’s money and then there’s short-run cash flow in a tight budgetary situation. When your household is short of cash, you don’t buy a house to save money on rent when your kids need clothes.

If you can get the cash you do, and in this case it appears they did have the cash, it’s just that the particular piggy bank they took it out of didn’t like their fingers.

It all boils down to a lawyer pissing match an Ron didn’t tell the overlords that there might be a pissing match.

He also said he can get the cash from some 19 other piggy banks.

Looks to me like Ron is trying to save money, but CalTrans is power brokering.

Have any of you fire starters considered the possibility that the purchase of a new building is actually saving this agency money? I would bet they were paying rent near downtown before this, and probably at a rate above their current mortgage payment.

There are absolutely no allegations or insinuations that any pockets have been lined with this deal. In fact, it sounds like they got a pretty good deal on the building.

I am just saying…

Go Chargers; }

[…] This post was mentioned on Twitter by CalCoastNews, SLO News. SLO News said: County agency accused of misuse of state funds: The California Department of Transportation (Caltrans) has accu.. […]

It almost seems like it doesn’t matter. As a taxpayer, I gotta fund the CalTrans State Highway Account, and as a taxpayer I gottta fund SLOCOG in all its various nefarious activities.

Who knows, a case could be made that I saved money by buying SLOCOG a building with funds collected into another account.

Regardless, let’s roll some heads.

Few if anyone fail to understand that SLOCOG Staff works for the County Board of Supervisors. That is the way it works throughout the State of California. To bad we have a County Board of Supervisors that don’t understand how it works.

Makes one wonder how deep and far the corruption and/or embezzlement go in is organization.

People we are talking about Gas Taxes to fix our roads!

You simply need to understand the difference between Capitol Cost and Administrative Cost.

Reference: Article XIX of the State Constitution.


SLOCOG does NOT work for the County Board of Supervisors. The Supervisors are 5 members of a 12 member board, which also includes 1 city council member from each of the incorporated cities in the county. The Board of Supervisors understand exactly “how it works”.

Transparency, accountability, and a true commitment to serve, trust seems broken again.

This is a reply to myself,”“I decided not to bring in the full board,” said SLOCOG Executive Director Ron DeCarli, who admitted he regrets the lack of disclosure even though, at the time, he did not see the issue being a problem.” and now we get to pay for the court battle!

“It ultimately may end up in a court,” Giuliano said.

Does anyone else out there consider this fraudulent misuse of county funds? Or are we merely supposed to sit on our hands and take this time and time again, I have watched this counties corruption grow over the past forty years, to astronomical proportions!

Maybe I’m pushing it but, doesn’t this sound like how Gearhart fast tracked the city planning department on his projects, and just did what he wanted, wonder if they are buddies.

Gearhart again! But isn’t O’Malley from Atascadero on SLOCOG? What a coincidence.

rukinding, my friend! Do you think I can sue O’Malley too?

That was intended to be a joke, just like this town!


How correct you are! It has often been said that San Luis Obispo County is the MOST CORRUPT in the State. It’s way past time for changes to be made. Git ‘r done!


First, I choose not to believe that,”I decided not to bring in the full board”, is accurate. How long would an executive last who did that? Ron has been doing this for about 30 yrs. How many SLOCOG board meetings have you attended? If this article and this site is your only source of information, you may want to expand your informational boundaries.

Chesehead? informurself on exactly how immature that statement is all by it’s self, (one word), and you have removed all doubt that you are an _______! I get rightfully deleted when I lash out!

What the hell is wrong with this town, corruption in every nook and cranny, this clown says,

Ron DeCarli, “who admitted he regrets the lack of disclosure even though, at the time, he did not see the issue being a problem.” and his stupid attorney is backing him, because attorneys always backup whose paying them! Then both sides spend tax payers monies and laugh about it over cocktails that evening, Ron DeCarli added,” Our attorney (Assistant County Counsel Rita Neal) agreed.” So he consulted an attorney before he committed the fraud and that’s exactly what it is!

Now there going to fight it out in court, no wonder Los Osos is so full of pot holes and road hazards, and we a singled out few, get to pay for the whole sewer, when Questa and the Mens Colony are seriously adding to the pollution in the back bay.

Can we fire some of these creeps or are they more bullsh*t elected officials, Sixth graders, have better morals! Transparency, accountability, and no more freaking sneaking around with the tax payers money, this guy would be stoned to death in the street, in some countries, that’s the only thing that will stop all this San Luis Obispo Fraud from happening over and over again.