Should Los Osos dump Wallace and Seitz?

January 24, 2016


On Sept. 30, it was brought to the attention of the Los Osos Community Services District (LOCSD)  Board that General Manager Kathy Kivley had overpaid herself. This was less than a month after independent auditors would not give an opinion on the districts books reflecting her first year as the district manager.

Kivley had made illegal journal entries, overpaid staff members, overpaid herself by thousands of dollars and failed to provide reports that the auditor could qualify. Upon reading the audit and speaking with the independent auditor, on Oct. 7 County Auditor Controller Jim Erb wrote the district a letter raising many concerns that still haven’t been responded to.

It wasn’t until Oct. 12 that the board met to discuss Kivley’s performance after overwhelming evidence had been presented. Her contract gave the board many outs to sever ties cleanly and easily, yet they chose to hire a private investigator to drag out the inevitable.

The private investigator, former San Luis Obispo City Chief Jim Gardiner, never completed his report.  It is unknown if it will ever be completed and/or released to the public who, to date, have paid this friend of LOCSD attorney Mike Seitz $14,000 to investigate the $6,000 allegation.

At the same time, they’ve paid Seitz his hourly rate to oversee the investigation and offer a confidential/conditional settlement to sever ties with Kivley.  A complete waste of monies.

It took tenacity and energy to force Mike Wright and Marshall Ochinsky to remove Kivley, but not until paying her $10,000 to leave our community. This is a person they were warned about, her previous jobs and how she was fired from the previous two. They agreed that she lied on her job application, but still hired her and after a year gave a bonus and 10 percent raise.

Kivley’s performance as a manager has been an issue since her hire, but for board members to cover for her and lie just adds to the mess that is the LOCSD.

In the 15 years since the creation of this waste of a district, the LOCSD has hired at great costs 15 general managers and has fired most of them. No person can see this as a success.
Now Mike Wright and Marshall Ochinsky want to bring back a general manager they already let go. How would Einstein explain this?

Now information has come forward, giving evidence of malfeasance and extortion, by the district engineering firm Wallace Group and legal council Mike Sietz. There is now a request for criminal investigation into Wallace and Seitz.

Mimicking so many other agencies in our area, the LOCSD has purposely used these firms for guidance and assistance for the last 17 years. Never reviewing there contracts or quality of opinions.

We have overspent and wasted tens of millions of tax dollars due to Sietz and Wallace’s constant failures. All of the directors have been in bed with these firms. Why? Because we have been incapable of electing honest directors. Mike Wright and Marshall Ochinsky are just the latest, but also the worst.

There many other agencies that no longer use either Seitz or Wallace Group, is it not appropriate to  reevaluate these contracts?

California codes have been broken. Logic  forces us to realize the terrible direction put forth by Sietz and Wallace. Mike Wright and Marshall Ochinsky both have a personal stake in keeping both Mike Seitz and Wallace Group’s Rob Miller.

Why do we need complete failures and dishonest contracts in Los Osos? We have enough problems of our own without these companies. Please contact the LOCSD and force Wright and Ochinsky into becoming honest elected officials, I am disturbed by there rampant dishonesty! While we experience the failures of our government, we are bound to repeat history by setting up another failure and each time we will pay.

Tom Salmon is a longtime Los Osos resident with 35 years of expertise in statewide public infrastructure.

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There is ample evidence that it would have been far more efficient and enviromentally sound had Los Osos never formed a CSD in the first place. The fact that it was formed on a bald assed lie only illuminates that fact


Provide the evidence.



Perhaps you are unaware of the letter written by the Water Board to the Solutions Group prior to the formation of the LOCSD that told them they would NOT approve their plan for ponds and STEP/STAG they were proposing at just $32 million.

This was the pivotal point in which Los Osos bought the bull and formed the LOCSD.

Let me know if you want to read the letter, I’ll find it for you. Or, if you don’t trust my word for it, you can do a Public Records Request of the RWQCB or LOCSD and get it yourself.



Julie writes:

Let me know if you want to read the letter, I’ll find it for you.

No need, Juliana.

I first exposed that amazing letter (that I got through a Public Records Act request with ol’ Roger Briggs), years ago, including at this link:

… where I also exposed that, when the Karner’s received that January, 1998 letter — that was addressed directly to them — they actually confess they knew that their “better, cheaper, faster” disaster was “blown out of the water,” in January, 1998, yet they spent the rest of 1998 over-the-top hyping to their victims (read: the property owners of Los Osos) that the “maximum monthly sewer payment” under the Karners’ fake “project” would be “$38.75,” the entire time the Karners knew that would NEVER be the case, and that’s what was solely responsible for forming the LOCSD in the first place, as I’ve been reporting forever.

Which, of course, was all a calculated scam to make a lot of money off of their (what I term) “SWA Group scam,” which I also exposed at this link, back in 2009:

… and their scam worked, perfectly. AND they got away with it (well, at least until I started reporting on it), all the while “one million gallons per day” of water pollution continues to pollute the groundwater — solely due to the Karners’ SWA Group scam, dating back to 1997.

Like I call it, “best story in the history of SLO County,” and I have had it all to myself for the past 18 years. I’m SO stoked : -)

I’m tellin’ ya, it’s a VERY good thing for the Karners that they are “friends” with DA, Dan Dow, AND that they run their scams in SLO County — which is SOOOOOOOOOOOOO corrupt — or they would have been in prison long ago.

I’m also tellin’ ya, that what’s happened in Los Osos over the past 17 years (and what continues to happen in Los Osos) makes the South County Sanitation District mess look like peanuts.

Nice job on the South County Sanitation District, CCN, but, compared to Los Osos? Minor league.


I am acutely aware of the letter as well as the Solutions Group admittance of failure as far as a cheaper, faster, better concept.

The difference between you and them is that you and your board NEVER came up with a actual plan of any kind…the SG did. It was permitted, and funded and YOU killed it.Then, you proceeded to default on the State low interest loan, you refused to return the first loan installment, and you bankrupted a community…just for starters.

You of all your obstructionist colleagues should not fault the Solutions Group any more than yourselves for the mess Los Osos is today.


The Los osos sewe and everything associated with it for the past 25 years is a small scale equivalent of the waste and fraud and incompetence associated with most government contracts. Like a mini “big dig” in Boston.

When people know the governments paying, they get in line to rip it off.


Considering the decades of corruption, wasted dollars, some 15 managers and still you have to ask this question? Seriously? Every home owner in Los Osos is paying the Wallace group a extortion fee every year in their taxes, look at your damn statements!!! It’s for engineering of the plant etc,etc. Somebody needs to get a hold of Seitz, Wallace, Nichols, Ferrara and these two chuckle heads at the LOCSD and review their bank documents. Friends are friends, but when the likelihood of jail time is part of the game there has to be a payola taking place somewhere, nobody is that foolish. Seems we love to keep things local yat we never hire new talent locally. Its always from out of town of the state. Same needs to go for engineering legal services, there’s plenty of good ones other places sides corrupt county SLO.


CCN, please put a link to the Knudson report in each and every story about Wallace or the Sanitation District. Ratepayers paid for that report but hopefully others will take the time to read it.

Warning: reading the report has been known to cause nausea, and may make the reader physically sick.


Knudson Report here:

Go to the document posted Jan. 17


We need more people to read the pages from the Knudson report.

Be not afraid of the 124 page length as 23 pages were redacted. WOW!

The Executive Summary and Conclusion are like a trailer for a good crime movie.

Perhaps titled: ” The Big Flush: the Swindling of the South County” produced by John Wallace & Mike Seitz

Visit page 20 for great visuals!


No, no, no…nominate them for Board President and LOCSD Manager…they fit the previous role models for both.


“Should Los Osos dump Wallace and Seitz?”

Duh…… Any other questions?


Wallace has proved lack of ethics based on his actions, ie conflict of interest that was long standing. he will get away with it because sanitation district went along with it ,particularly tony ferrera . but that does not mean other jurisdictions can be more careful

that is the best that can hoped for .

on another note who of CCN articles was pulled from web site why?


A thorough investigation will follow the $$$. Wallace wasn’t the only one getting rich. Ferrara, Shoals, Nicolls, and how many others are probably in this up to their eyeballs.


Maybe the Anarchists are right…


uh. doh.


To answer your question, YES.