Sanitation board shuffle costing ratepayers

August 31, 2015

By JOSH FRIEDMAN

It is often a mystery who will appear behind the dais at the next South San Luis Obispo County Sanitation District board meeting, and the shuffling of representatives is coming at a cost to ratepayers.

All three of the regular board members have missed at least one of the past three meetings. Oceano’s representative, Matt Guerrero, showed up to none of them.

Arroyo Grande Mayor Jim Hill and Grover Beach Mayor John Shoals each gave notice of their absences in advance of the meetings they missed. But neither Guerrero, nor his replacement, Mary Lucey, have announced publicly who will represent Oceano at the sanitation board meetings.

With rotating representatives, the district board has spent several meetings repeating discussions on the same issues, causing the length of meetings to increase from less than an hour to often more than three hours. The sanitation district covers the cost of staff and consultants to attend the meetings.

At the board’s Aug. 19 meeting, former IRS investigator Carl Knudson requested additional funds to complete an audit of district finances and managerial practices under past general manager John Wallace.

At a cost to the district, Knudson and an associate drove from the Los Angeles area to request an additional $22,000 for the audit. During an earlier meeting, the board had agreed that Knudson might need additional funding to complete the audit.

Prior to the Aug. 19 meeting, Knudson wrote a status report revealing some of the initial findings of the audit and explaining why he needs more hours and money to complete the investigation.

Nevertheless, the board postponed the decision to the next meeting, or possibly an even later date, because both Lucey and Grover Beach alternate board member Barbara Nicholls said they were not prepared to vote on the issue.

“I actually would feel better tabling this for at least till the next meeting or the meeting after that to look at it a little bit more closer,” Lucey said. “I would be supportive of maybe reviewing it a little closer, asking staff the questions I have and then moving forward. Because I just can’t see, I know there’s a value there of spending additional funds, but I have to make that argument because the report doesn’t make it for me.”

Nicholls said she supported Lucey’s suggestion of postponing the vote.

“I would be much more comfortable with Mr. Shoals, who has been fully briefed on all of this, to be the one to help make the decision,” Nicholls said.

Nichols made a motion to postpone the vote to a time when the three regular board members are present. District Manager Rick Sweet then chimed in with a suggestion that the board continue the item to its Sept. 2 meeting, and if regular board members are again absent, they could postpone the vote a second time.

The board voted 2-1, with Hill dissenting, to approve Nicholls’s motion and to follow Sweet’s advice.

Some critics, though, question whether Nicholls should have even voted on the audit item.

Nicholls’s husband, Bill Nicholls, is a past sanitation district board member. Bill Nichols served on the board at a time when complaints from sanitation district staff about overspending were ignored.

Since Wallace’s departure, the district’s wastewater treatment plant has been operating cleaner and at less than 50 percent of the prior cost.

During the first phase of the current audit, Knudson found that, under Wallace, the district wiped away 4.5 years of computerized accounting data, according to Knudson’s report. Knudson also released an estimate that the district paid Wallace and his engineering firm, the Wallace Group, more than $5 million from 2004 through 2013.

Knudson’s report was marked confidential, but Sweet placed it in the public board packet for the Aug. 19 meeting. Both board members and public speakers chided Sweet for doing so, saying he may have compromised the investigation by making the initial findings public.

Sweet resigned effective Sept. 11, and the district is preparing to search for a new manager. Board members and the public have accused Sweet of sidestepping board direction on items, such as the audit and an ongoing billing dispute. During an earlier meeting, Sweet said he had a relationship with Wallace, and he could not be a point person with Knudson.

Prior to hiring Knudson, the board debated the merits of an audit for multiple years. In similar fashion, the board has been grappling with a billing dispute for several months.

In June, the Oceano Community Services District demanded that the sanitation district sign a contract stating it would pay the OCSD approximately $22,000 a year for billing services. The OCSD then followed through on a threat to stop acting as a bill collector for the sanitation district.

At the last meeting, the sanitation board agreed to meet Oceano’s demand. As a temporary measure, the board voted unanimously to pay the OCSD $3,666 for the next billing cycle.

The cities of Arroyo Grande and Grover Beach also provide billing services for the sanitation district. Both cities bill many more sewage customers than Oceano, yet they charge less in totality than what the OCSD is demanding.

Additionally, San Luis Obispo County is offering to serve as a bill collector for the sanitation district. The county’s proposed price for billing services in Oceano is just $3,500 a year, according to sanitation district staff.

The county has also offered cheaper billing services for the Arroyo Grande and Grover Beach areas.

The sanitation district is considering the county’s offer, but has made no indication it would accept it. The board is hoping the finance managers of the three cities will meet and reach an agreement on billing rates.

The Aug. 19 meeting concluded with confusion over yet another issue.

Two district staffers accrued more unused vacation pay than district rules allow. In response, district management proposed increasing the vacation accrual limit from 180 hours to 240 hours. District management also said it would pay off the two employees to bring them below 180 accrued hours.

The proposal passed, but Lucey abstained from voting on the issue and at one point during the debate, she poured part of her drink on the carpet.

Prior to the vote, Lucey expressed concern that employees would decide to take six to eight-week vacations.

In response, a human resources consultant said district policy requires staffers to get permission from their supervisors before taking a vacation — thus, their absence does not harm district operations.

“I just don’t see any language protecting us from the six-to-eight-week vacations,” Lucey said before the vote.

Lucy also expressed concern that new employees would immediately build up unused vacation pay.

“We’re saying you can accrue up to 240 hours the first day you start working, basically,” Lucey said.

The consultant said that would not be possible until an employee has been working for the district for at least a couple years.

Similarly, sanitation plant superintendent John Clemons corrected Lucey during a testy exchange at the previous board meeting. Lucey mistook maximum limits for current levels of E. coli levels and chastised staff for endangering the community.

Clemons then pointed out that the report showed the plant’s fecal coli-form levels were 90 percent below the allowable limit.

The next board meeting is scheduled for Wednesday. The agenda again includes the audit funding issue and the billing dispute.