San Simeon loses grant money, conflicts of interest exposed

November 3, 2020

Charles Grace


A local government watchdog’s action has led to the loss of $250,000 in grants to the San Simeon Community Services District. The National Fish and Wildlife Foundation and the Ocean Protection Council both rescinded the grants after learning that a member of the board of the community services district had voted in favor of applying for the grant despite a conflict of interest.

Good government advocate Julie Tacker raised the conflict of interest issue over Board Chair Gwen Kellas’ actions to seek the grants which would protect the condominium complex where she lives. In addition, Tacker raised questions about the use of federal grant money for mitigation purposes, which was prohibited by the grant provider.

After investigating Tacker’s complaint, both the National Fish and Wildlife Foundation and the Ocean Protection Council rescinded their grants.

“There are needy communities legitimately eligible for these grant monies and San Simeon misrepresented themselves,” Tacker said.

The controversy had its beginnings in 1995 when John Wallace, the administrator for San Simeon’s sanitation plant, directed his private engineering company, The Wallace Group, to repair piping, remove riparian vegetation and place large rocks around the building to protect it from ocean waves. The sanitation plant is located on the coastline south of Hearst Castle.

Neither Wallace nor his company obtained needed permits for the work.

Eventually, Wallace’s unpermitted work caught the eye of the California Coastal Commission. But, in 2019, the commission agreed to retroactively permit the work at the San Simeon sanitation plant.

In the agreement, the San Simeon district agreed to mitigation in exchange for the retroactive permit, which included moving the sanitation plant away from the coastline and restoring the site within 10 years.

In addition to placing the large rock, known as riprap, in front of the sanitation district, Wallace provided riprap protection in front of the condo complex next door. Kellas, the owner of one of the condos, wrote the San Simeon district a letter voicing her support for the riprap work in 2016 after the project came under fire.

Shortly afterwards, Kellas sought a vacated seat on the San Simeon Community Services District Board. She was appointed to the board in Oct. 2017.

At the time, Kellas asked the Fair Political Practices Commission if she had a conflict of interest regarding voting on the sanitation plant property.  The commission told her in a letter on Nov. 6, 2017, she needed to send a request for a formal written opinion.

However, it would be 19 months before Kellas sent a formal request to the FPPC. During those 19 months, she took parts in board discussions of the rip rap and sewer plant projects and repeatedly voted on issues regarding the riprap and the sewer plant.

On May 8, 2019, as a member of the San Simeon board, Kellas voted to pay Wood Environmental and Infrastructure Solutions $10,500 to write a grant application seeking funding for the restoration of the sewer plant site. Kellas did not return requests for comment.

On Aug. 28, 2019, the FPPC replied to Kellas’ formal request for an opinion. The letter noted her significant conflicts and said that she should not participate in discussions or voting related to the existing sanitation plant, or the mediation plans.

“You state that the waste water treatment plant and riprap has secured the bluff, and you believe its removal will lead to bluff erosion and a structural collapse of your condominium complex,” the FPPC said in its reply. “You have a prohibited financial interest in these decisions.”

In the summer of 2019, San Simeon applied for and received confirmation they would be getting a grant for $125,000 from the National Fish and Wildlife Foundation to clean up and restore the existing sanitation plant site, with a matching $125,000 grant from the Ocean Protection Council.

As part of the process, on July 6, 2020, Charles Grace, the general manager of the San Simeon Community Services District, executed a contract noting how the district planned to spend the grant funds.

To oversee the project, Grace allotted $22,400 to Grace Environmental Services, a waste water consulting and management company owned by Grace. Another $86,600, was slated to go to the grant writer, Wood Environmental and Infrastructure Solutions, all without a competitive bidding process.

California Government Code § 4529.12 requires all architectural and engineering services shall be procured pursuant to a fair, competitive selection process which prohibits governmental agency employees from participating in the selection process when they have a financial or business relationship with any private entity seeking the contract, and the procedure shall require compliance with all laws regarding political contributions, conflicts of interest or unlawful activities.

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Dissolve the district and many others. Pure petri dishes for corruption and multiple layers of management under corrupt officials no one pays any attention to as opposed to established county management answerable to elected officials we do pay attention to. CSD’s have proven themselves to be nasty, corrupt failures, San Simeon, Los Osos, California Valley, Oceano, all bad, corrupt, and wasteful.

wonder if the D A will file charges or even an investigation into fraud? Thanks Julie.

To expand CCN, along with confroning Gearhart and his relations with Tom O Malley, guys Tom was his bud, Heather Moreno is his student!!!, and his mayoral appointee whom was re elected, uncovered Wallace contracting Avila Sewage, firing whistleblowers, the bird sanctuary cover up, and still how the F*ck our local politicans bend over for him, Democrats and Repiblicans, for what shady back deal gift? Wtf is going on here, DAN DOW! Wake up Slo, wtf is going on? Can I report this story to the DA, Cunningham, or Salud? Karen or Julie or CCN, have you filed a FOIA?

Thanks to Julie And Karen, for keeping things transparent. Otherwise, how would anyone have a clue on what is really going on? Keep the issues in the light where they belong!

That’s a lot of money to loose up there! How could they Not see that coming? Some people have a Lot of nerve, shady. Did they really think they could get away with it? Just like Wallace’s little scheme?

Damn.. Julie, I sincerely thank you, it’s truly apparent your heart is in a good place, these local acts of corruption are plaguing us. How the hell is Wallace firm so cozy with every damn town and all political elected officials. San luis Obispo and atascadero both use them, and apparently Cambira and San Simeon. Your journalism is shining some lights.

UH, ok, Julie again ferrets out some significant local shenanigans, but at the cost of a quarter mil in grant money that would have protected property? I’m not certain that was an excellent trade.

This is the same public watchdog who won a razor-thin margin recall in Los Osos and then voted and DID stop a funded, permitted, survived-nine-lawsuits, UNDER WAY WWTP project, resulting in ten years of added septic tank operation and pollution and also an added cost to property owners of tens of thousands EACH, for thousands of Osos properties.

Sometimes, letting a stinking governmental agency pile (lots of those in SLO County) albeit sometimes corrupt and sometimes not, ALONE is better than being a fifteen minute of fame heroine that wipes out six and EIGHT figure monies for your fellow residents. Just an opinion.

We need to ask the same questions about all the cozy relationships attorney Tim Carmel has.