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Arroyo Grande mayor seeks sanitation district audit

December 5, 2014
John Wallace

John Wallace

By KAREN VELIE

Arroyo Grande Mayor Jim Hill has asked the South San Luis Obispo Sanitation District to initiate a forensic audit of the district in an attempt to recover the cost of a fine and mismanagement attributed to the former plant administrator.

At Wednesdays sanitation district meeting, Hill’s first action as a district board member was to place the request for an audit on the first agenda in January. The sanitation district, which serves the residents of the Oceano Community Service District, Arroyo Grande and Grover Beach, is governed by a three person board consisting of one representative from each community.

In 2013, amid allegations of mismanagement, John Wallace, the sanitation district’s former administrator, stepped down. Within months, the plant was operating cleaner at less than 50 percent the cost, according to financial reports obtained from the district.

Following Wallace’s resignation, former Grover Beach mayor Debbie Peterson requested a forensic audit of past practices in an attempt to possibly reimburse ratepayers for misappropriated funds. However, former Arroyo Grande mayor Tony Ferrara and Oceano Community Services District Board President Matt Guerrero voted against Peterson’s proposal, and it failed.

The current board consists of Guerrero, Hill and new Grover Beach Mayor John Shoals.The three are slated to vote on the proposed audit in January.

Under Wallace, the district regularly exceeded its more than $6 million per year budget and ran at a deficit. Currently, the district is running at less than 50 percent of its budget, with overages being placed in a reserve account.

For decades, Wallace acted as chief administrator of the district, and also as owner and president of the Wallace Group, a private engineering consulting firm located in San Luis Obispo. For years, the Wallace Group received between $50,000 and $80,000 a month from the district for a variety of engineering services.

In a 2010 exclusive, CalCoastNews detailed allegations that Wallace had been funneling thousands of dollars to his private engineering company, while concealing environmental violations.

In June 2011, the San Luis Obispo County Grand Jury said that the district board failed to recognize the conflict of interest between Wallace’s administration of the district and his private engineering firm, and that Wallace’s contract had never been competitively bid as required by law. The three-person district board led by Ferrara fired back a response saying that the Grand Jury’s allegations of district mismanagement “were largely inaccurate.”

The district currently owes the state a $1.1 million fine for a 2010 sewage spill determined to be the result of Wallace’s mismanagement. Several weeks ago, the district board under Ferrara’s leadership voted to sue the state over the fine. However, the new board is also planning to take another look at its previous decision to sue the state.


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Disband the Cambria CSD.


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Disband the Ogren Community Services District in Oceano.


They continue to waste and spend. Create financial crisis.

Then use unfair prop. 218 voting procedures to raise the rates.


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Los Osos is in good hands??? Forget it.


Another reason that the LOCSD should have been disbanded long long ago. It should never have been put in in the first place.


John Wallace should be made to pay the fine with his millions he scammed over the years!


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after watching the LOCSD meeting last night I can’t help but shudder recalling outgoing board president Baltimore’s statement reassuring everyone that with there work with the Wallace group etc. that Los Osos is in good hands.


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Residents/rate payers of the Nipomo CSD also have had to–for YEARS–hear from the BOD what a great job the Wallace Group was doing.


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We can see clearly now, the old mayor is gone,

We can see all obstacles in our way

Gone are the dark clouds that had us blind

It’s gonna be a bright (bright), bright (bright)

Sun-Shiny day.


We know we can make it now, the pain is gone

All of the bad feelings have disappeared

Here is the rainbow we’ve been prayin’ for

It’s gonna be a bright (bright), bright (bright)

Sun-Shiny day.


Look all around, there’s nothin’ but blue skies

Look straight ahead, nothin’ but blue skies


We can see clearly now, the old mayor is gone,

We can see all obstacles in our way

Gone are the dark clouds that had us blind

It’s gonna be a bright (bright), bright (bright)

Sun-Shiny day.


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Thankfully Santa Margarita is a stand alone community of large lots and private septic tanks. Arroyo Grande exemplifies what is wrong centalized sewer systems. The rate payers of every public sewer system should demand a third party audit as well as all public water districts.


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I remember watching the Meetings of the Oceano district and laughing my ass off. I lived in Morro bay and once a member of the community accused the board member of not paying taxes on ALL of her property. Her reply was “Well, if you’re going to audit me, you MUST audit EVERYONE” and boom. That was it. Not another peep.


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So you lived in Morro Bay and drove to Oceano to watch a district meeting? Tell me this was on a dare or something, k? :)


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This latest news about the district’s financial hijinks continues CalCoastNews’ four-year coverage of this issue. Here’s some background on John Wallace’s lucrative tax-funded activities.


http://calcoastnews.com/2011/01/state-finds-fraud-and-deception-at-sanitation-plant/


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How on earth does this keep going without the F.B.I getting involved? There is simply too many things that have allegedly occurred to be ignored. It’s astounding that this was news. The three-person district board led by Ferrara fired back a response saying that the Grand Jury’s allegations of district mismanagement “were largely inaccurate.”


This is absolutely ridiculous.


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Way to go Jim! It’s your second trip to the plate and bingo..another (((HOME RUN))) (((HOME RUN)))


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FINALLY!! 2015 should be a great year- Tony Ferrara finally an EX Mayor, Jim Hill (man of calm and sensibility) is at the helm, and hopefully John Wallace will be caught with all the millions he took from the ratepayers and have to pay it back!


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