Sanitation district attorney under fire

January 8, 2015
John Wallace

John Wallace


After San Luis Obispo County Sanitation District staff failed to follow board direction and agendize the settlement of a $1.1 million fine with the state, the board voted Wednesday to seek a review of district legal counsel Mike Seitz’ performance and contract.

At a Dec. 17 sanitation district meeting, the board unanimously voted to direct staff to seek a mitigated settlement with the state water board and to place a discussion of the settlement on the next agenda. However, staff failed to place the item on Wednesday’s agenda.

“I am going to insist that at the next meeting of this district on the agenda appears a status of the mediated settlement,” Hill said. “I also want to review the contract with our attorney. I am very, very displeased that this item is not on the agenda tonight.”

Seitz, who formerly worked as an attorney for the Wallace Group, has supported continuing the legal battle against the state’s fine. If the fine is paid, the district could then seek restitution from John Wallace and his engineering firm The Wallace Group.

In 2010, 384,000 gallons of raw sewage flowed in Oceano homes and the ocean, and the state later determined the spill was the result of mismanagement and fined the district $1.1 million. At the suggestion of plant administrator Wallace, the district board then agreed to pay about $750,000 to Wallace’s engineering firm and a team of lawyers to battle the fine and allegations of mismanagement.

On Oct. 24 of this year, the state water board rejected the sanitation district’s petition for an appeal of the fine. In turn, the district board voted to file a lawsuit against the state while multiple members of the public requested an investigation into Wallace’s management of the district.

But, following the November election, the makeup of the board changed with Arroyo Grande Mayor Jim Hill and Grover Beach Mayor John Shoals joining Oceano Community Services District President Matt Guerrero. The board then voted in closed session to pursue a settlement of the state fine.

On Wednesday, Hill became chairman and Shoals was selected to serve as the vice chair. The next meeting is scheduled for Jan. 21.


Those of you who are trying to connect dots, & so forth. Those of you, looking back to see who is to blame – you are missing a piece to the puzzle. At the time of the “spill” and the alleged insurance lapse: Jim Hill was the president of the San District Board. And now Hill wants to investigate what went on during that time? He was there – isn’t that the same as investigating yourself? Seems to me, he’s trying to cover his own behind. And shifting ALL focus on Seitz & Wallace. Why did the San Board let the insurance lapse? Why didn’t “the guy who walks on water” do something about it at the time? Connect THAT dot! Just sayin”

Kevin Rice

Well, you’d be wrong… recall, Jim Hill resigned back then because the other two board members obstructed every attempt he made. Staff obstructed providing information to the board and putting things on the agenda (just like now); and the insurance is staff’s responsibility.

So, connect that dot as well.


Hill had stepped out long before the Dec 2010 spill in question. With regards to the insurance it was Wallace’s own Errors and Omissions insurance that had been cancelled and Wallace claimed he was unaware of this cancellation. Let the records show when the time comes who is covering up what. The Sanitation District like many/most municipalities is insured under a jointly owned entity who covers just gov agencies who’s name escapes me at the moment.


Thanks for the opportunity to respond to the “ignorance is bliss” camp. The reason tough questions weren’t adequately answered in the first place is because two directors blocked efforts for deeper analysis and oversight. Also, the dominant role of the Wallace Group served a “you’re either with us, or against us” culture which had a negative effect on Staff’s ability to improve the sewage plant’s operations. What happens when you support (or choose to ignore) an organizational structure which empowers an Engineering firm to contract public funds? Lawsuits, more lawsuit, and your Plant Superintendent testifying against you in a Water Board trial. No surprise!

Now there’s a new Board of Directors, new Staff (Seitz is the only remaining hold-out of high level personnel), and the public’s questions are perhaps going to be addressed. It’s never too late to ask good questions. If you support the old ways which created so many problems at the Sanitation District, why don’t you come to the next meeting, step up to the microphone, and tell everyone why it’s good to support a system which has been proven wasteful and hazardous. The board would like to hear from you, and I would too.

Ben Daho

I’ve been reading about alleged financial issues for YEARS. Get back to kite flying. Whoever WOULD have done something by now has lost interest. Other than the recent write in, when have the people been heard?



Perhaps with a new board the information will come to light.

There’s no doubt the relationship, and actions of Wallace, Ferrara and others has been cause for concern.

We may finally be getting somewhere now that a couple of the obstacles have been removed.