Lawyers making bank with sanitation district

January 20, 2015
Debbie Peterson

Debbie Peterson


Wednesday night at 6 p.m. in the Arroyo Grande City Hall, 38,000 users of the South San Luis Obispo County Sanitation District serving Arroyo Grande, Grover Beach and Oceano may finally get some answers about the 2010 spill and subsequent $1,100,000 fine.

While I was a member of the district board, there was regularly information that was unavailable to me. I found it almost impossible to get direct, complete, comprehensible answers to questions.

Having heard late last year that more has come to light, I went looking for some answers. I wanted to know three things:

1. How much has been spent on legal fees since 2010?

2. How much money was diverted from the capital expansion fund to shore up the operating fund and how many sewer hookup fees went to the operating fund, rather than to the capital expansion fund?

3. What really happened with the insurance at the time of the 2010 spill?

In order to get the answers I had to make several public records requests of the county and the district.

Staff was very helpful in providing me with budgets, audits, bank statements, county ledgers and agenda packets dating from 2000 to the present. I discovered that not only had the district strayed from the mandate to deposit connection fees into its long term expansion account, but the district was also pulling $50,000 a month from its capital expansion fund, the Local Agency Investment Fund (LAIF) for payroll.

The District also failed to report bank balances annually to the county auditor as required by Health and Safety Code. As a result, the county’s records showed over $6,000,000 in the LAIF account when the actual amount was nearer $2,500,000.

I found payments to lawyers since 2005 in the county’s records of vendor payments. From the LAIF statements I added up amounts withdrawn for payroll. The district budgets provide hookup fee figures. I entered these into a spread sheet. If I wasn’t sure a payment was a legal expense I didn’t use it. These numbers are therefore quite possibly on the low side, but they provide answers.

1. How much has been spent on legal fees since 2010?

Legal fees spent or committed for the past five years were nearly $1,500,000, ten percent of the $15,000,000 revenue over the same period.

2. How many sewer hookup fees went to the operating fund, rather than to the capital expansion fund as required?

Total connection fees not deposited into the LAIF account plus funds removed for payroll since 2005 is over $7,000,000. These practices redirected revenue reserved for expansion to shore up the operating account.

A 2012 letter from the District’s auditors identified the above practices as “material weaknesses” and “significant deficiencies that merit attention by those charged with governance.” With reorganization, staff have worked diligently to cut costs and are now depositing retained earnings to repay the expansion fund. The practice of diverting reserves to cover payroll is no longer needed and hookup fees are now being allocated correctly.

3. What really happened with the insurance at the time of the 2010 spill?

At the last meeting the attorney promised to explain why the insurance covering the district administrator lapsed for 18 months around the time of the 2010 sewage spill. It is not clear how much the district has lost as a result. This is on the agenda for Wednesday’s board meeting. Also on the agenda is a forensic/operations audit, and review of the attorney’s contract. That will be in closed session along with discussion of current legislation. Hopefully the board will consider mediating rather than continuing to raid funds needed for plant upgrades.

Questions remain for me. Is it kosher for interest earned on the long term expansion account to be transferred out to the repairs and maintenance fund and why, when the district enters the county figures, did the county and district year end statements never agree on the LAIF account balance?

These are good questions for a forensic auditor.

Since the reorganization of 2013 staff have successfully brought expenses back under control. Now it’s the board’s turn. Will the new board step up and address these issues? Will they allocate funds to a forensic audit? Will they reconsider the attorney’s contract? Will they stop spending hundreds of thousands a year on legal battles?

You can make the difference by showing up. Come to the South San Luis Obispo County Sanitation District board meeting Wednesday night at the Arroyo Grande City Hall at 6pm.

Debbie Peterson was a director of the South San Luis Obispo County Sanitation District from 2012 – 2013.

For more information contact Debbie Peterson – Tel/Text 550-4490 or

Ted Slanders

Seriously, I don’t understand what the big deal was when this sewage emptied into our Hebrew God’s ocean because it is ordained that Jesus is coming back for his Second Act any day now. Therefore, why should any true Christian care? I know, it’s been 2015 years thus far, but that only alludes to Jesus coming sooner than later.

Besides, in the following passage we Christians are specifically told that we’re NOT to love the world, so we can do anything we want with it, and that includes letting sewage waste enter it’s waters at will!

“Do not love the world or the things in the world. If anyone loves the world, the love of the Father is not in him. For all that is in the world—the desires of the flesh and the desires of the eyes and pride in possessions—is not from the Father but is from the world. And the world is passing away along with its desires, but whoever does the will of God abides forever.” (1 John 2:15-17)

As the 1 John passage above so states, if we mistakenly love the world so much as to make a big deal out of some sewage being emptied into it’s ocean, then we do not love of the Father!

Ask yourselves, what’s more important, sewage or God?

On a sidebar; I am sure that our Christian Hebrew God was pleased when He saw Debbie Petterson use the term “Kosher” within her treatise about this Sanitation boondoggle. I am sure that any recognition towards Him makes Him smile.


Brother Ted …remember too, that God set forth, in the very first chapter of Genesis mind you, that :And God said, Let the waters bring forth abundantly the moving creature that hath life, and fowl that may fly above the earth in the open firmament of heaven.

And God created great whales, and every living creature that moveth, which the waters brought forth abundantly, after their kind, and every winged fowl after his kind : and God saw that it was good.

And God blessed them, saying, Be fruitful, and multiply. and fill the waters in the seas, and let fowl multiply in the earth. – Genesis 1:20-22

This substantiates that it has been thus ever since the fifth day of creation, and all the time, all of these creatures and great whales and birds have been pooping in the oceans.

If God says that it’s good, who are we to argue ?


I think this will be one, with many others to follow, instances where the results of the AG election will have an impact.

Replacing Ferrara as Mayor, as well as each of the boards he sat on, is much like removing the wart AND its roots.

I am hopeful for improvement, and believe we are beginnig to see signs of it already.


The ratepayers and the people who swim in the ocean effected by the Sanitation District’s ocean outfall deserve an investigation of financial and operational practices at SSLOCSD since 2004. Information to support an investigation has been in lock-down by a combination of sworn secrecy of the Board of Directors (Closed session) or in litigation, all of these under control of District Counsel. Unlock the allegations of whistleblowers Mascolo, Douglas, and Appleton! The public has the right to know because our health is at risk. Remove the barrier which has dragged the District operations into the shadows for so long (i.e. Seitz).

See Surfrider SLO’s comments here:

And… See you tonight!


Thank you Debbie for your commitment to the residents served by the Sanitation District.

Your determination to bring these issues to light is much appreciated.

Will be attending the meeting tomorrow in a show of support for your efforts.

Thank you!


I am tickled to announce that tomorrow (Wednesday) I will be guest hosting The Dave Congalton Show, our local Hometown Radio from 5-7pm.

My guests and topics include: 5-5:30pmFormer Grover Beach Mayor, Debbie Peterson Subject: South San Luis Obispo County Sanitation District and her hard hitting OpEd on She will be promoting the SSLOCSD meeting scheduled for 6:00pm Wed. in the Arroyo Grande City Council Chambers. The Agenda for the meeting will discuss a forensic audit, ongoing litigation and the performance review of the district’s legal counsel.

5:30-6:00pm Concerned Arroyo Grande Resident, Vanessa Andrews Subject: Anticipated litigation regarding former Arroyo Grande City Manager Steve Adams. She will be promoting the Special Closed Session AG City Council Meeting on this topic scheduled for Thursday,

7:00pm. 6-7:00pm Cambria Community Services District Director, Amanda Rice Subject: Cambria’s emergency water plant start up this morning.

You are invited to tune in at or find the show locally at 920 on your AM dial.


Julie, because you misled senior voters and got your recall, then trashed a going funded, valid and vetted public works project when in office, and because of the resulting ugly weedy overlook with boxes and pipes sticking out of the ground due to your vanity, and because of the $ 24,933 hole YOU personally made in the pocketbook of nearly all L.O. property owners, MILLIONS, you nut job, I won’t be listening to a single thought you have.

Thank you for saving me the sprained wrist or broken radio knob I might have gotten from energetically reaching to rapidly turn off the volume until your time on air was concluded.

Also, WHAT is Congalton smoking to let you back on the air? You have no credibility in public works issues. You had your elected day in the sun, and you screwed an entire town for your vanity and extremism.

Ted Slanders


Don’t hold back, just let it all out and tell us what you really think! You’ll feel so much better if you do.


Finally a voice of reason in this pathetic stream of tabloid comments.


Thank you. I couldn’t agree with you more! Spot on. Radio off! No air time for lunatics!


So much for “home town radio.”


Lenny Bruce Lives !

Follow the S**T ! The money comes after.


Time to hold these special districts more accountable to the ratepayers.

The era of automatic rate increases must come to an end.


It would have to coincide with the end of the era of the self serving government employee, and how likely it that to happen?


I can understand your skepticism about self-serving government employees but, believe it or not, there are a lot of them that are no more self-serving than your average private sector employer or employee. The greedy, power-hungry jerks get the attention while the others quietly keep working. This doesn’t mean they will make huge sacrifices but they are willing to earn their pay honestly.

I think that, with one possible exception, the SSLOCSD finally has this type of staff again. Be skeptical — but keep an open mind about the possibility that your generalization has many exceptions and be willing to acknowledge that if that proves to be true.


I have to second that comment, OTOH. There are countless public agency employees who crank away at their jobs with excellence. Oftentimes it’s the brainless megalomaniacs we publicly elect which are the problem.


staff rules


You could be right, but when a privately employed person is self serving it mostly effects the business they are employed by, and should I also be employed by the same company I would speak up, unless I am also being “self served”, a public employee who serves themselves effects all taxpayers and when it comes to speaking up those “other” non-self serving employees should be speaking loudly, since they are in the best position to know the details, but we very seldom hear anything, which in part puts them in the same self serving group.

So it is only right for those non self serving employees to speak up and speak up often or they become what you claim they are not.


That is a problem not limited to public employees but maybe offering better protection for “whistle-blowers” would make it speaking up more likely to occur. That will take pressure on politicians to enact.


I have heard no plans for “automatic rate increases” for the SSLOCSD. It is possible that a rate increase may be needed to replenish the capital improvement funds that were wasted by the past administrator if major improvements become necessary in the near future. However, I trust the current board and staff to be up front and open about it and to listen to public input as well. However, I am hoping that luck holds out and we have enough time to replenish needed capital improvement funds gradually as is currently being done.

I can’t speak to other special districts and their policies — you may be right about them.

Ben Daho

Very Good work Debbie, but you know as well as I do that NOTHING will be done NOTHING. I’ve never in my life seen so much questionable management. I sit back and watch and I can tell you Unless there is Sex involved, Nothing will be done and then the only thing to happen is we want to read the details.


It was done properly before the Ferrara-Wallace years (and even at the beginning of them). It can be done again. I understand the cynicism about overcoming corruption in government and bureaucratic inertia as well — I would agree with you on that at the federal and state levels. However, it is possible for active and informed citizens to control these problems at the local level. We just need to make a commitment to do so.

Like Ms. Peterson, I think that the new district manager and changes in the staff he has under him are a big step in the right direction. I am also pretty sure that Jim Hill will do what he can to make sure the process stays on track. I think that John Shoals and Matt Guerrero will go along — especially if the community support is there. The biggest question is the District’s legal council, Mike Seitz. If he proves to be a saboteur, he can and probably will be dropped. The next question is how much damage would he do before that happens or on his way out.


And why do Peterson & Hill get to rewind – they were both on the Board when the alleged offenses accrued ? – and now they will spend MORE money cleaning up their own mistakes ? Move it forward! For the life of me, I don’t understand why the same people who screw things up get continued support from the rate-payers! Guerrero & Shoals were making huge strides in the right direction & now Hill, et. al come along … Take X#’s giant steps backwards. Take a hint from LameCommenter & stop listening to garbage. It’s not Shoals & Guerrero who need to follow – It’s Hill (who has zero leadership skills) who needs to follow.


Now, now Ms. S, don’t get your panties all wadded up backside. Your hubby cashed in on millions off the tax payers backs. We’re all sure you had fun, but now its time to come clean and pay back what your hubby made off with. Just think of it this way, its not wasted money unearthing the truth. It will be just like winning the lottery when tax payers get our millions back so we can fix everything your husband and his boy John john worked so hard to take avoid for two decades ;) But to be fair, how about sharing three things your husband did that benefited the public or the plant at the San Dist.


The problems mostly occurred before Peterson was on the board and Hill was in the minority opposing some of the problems that occurred on his watch. Both of them were also handicapped by an inability to get accurate information (or any information on some subjects) from the old SSLOCSD staff.

Wallace did a good job of keeping the Board Members (including Guerrero and Shoals) ignorant of what was happening during his reign as SSLOCSD manager. I don’t know if Ferrera was also conned or was a party to Wallace’s game but he was the biggest and longest-term supporter of Wallace and endorsed his dual positions that created the conflict of interest he so smoothly exploited.


Follow the money!


What? No song about sewage?