San Simeon officials knowingly deceived a grant provider

November 11, 2020

By KAREN VELIE

The National Fish and Wildlife Foundation (NFWF) accused the San Simeon Community Services District of knowingly applying for a grant they were not eligible for, according to an Oct. 23 email rescinding the grant. The NFWF also alleged that the district failed to comply with guidelines after the grant was approved.

After discovering multiple conflicts of interest, activist Julie Tacker reported her concerns to the providers of $250,000 in grants to the district. In addition to confirming the conflicts of interests, the NFWF discovered the district and its consultants knew they were ineligible for the grants, but decided to move ahead anyway

“I believe the district knowingly committed fraud,” Tacker said. “And the evidence supports my opinion.”

In early 2019, a group of consultants and several district officials began eyeing a portion of $29 million in grant funding the NFWF was providing for “restoring coastal and natural estuarine systems.” Initially, the district was seeking funding for “cleaning Padre San Juan Creek,” but later decided to request funding for restoring the current sanitation plant site, according to district emails received through a record’s request.

A few months earlier, the district entered into an agreement with the California Coastal Commission regarding work done on its sanitation plant without necessary permits. The district agreed to mitigation which included moving the sanitation plant away from the coast and restoring the site. In exchange, the district received an after-the-fact permit for the work.

On May 8, 2019, the San Simeon board voted to pay Wood, an energy services company, $10,500 to write a grant application seeking funding for the restoration of the sewer plant site.

But NFWF grant funds were not available for projects involving mitigation or settlement agreements, something both the consultant who applied for the grant and district officials knew, according to district emails.

“NFWF funds may not be used to support ongoing efforts to comply with legal requirements, including permit conditions, mitigation, and settlement agreements,” Marie Laule, an employee of Wood, wrote in a July 2, 2019 email to San Simeon CSD Board Chair Gwen Kellas and General Manager Charles Grace. “However, grant funds maybe used to support projects that enhance or improve upon existing baseline compliance efforts.”

In her email, Laule gives Kellas and Grace three options:

1. Continue on without disclosing or questioning the ineligibility.

2. Inform the NFWF of the issues and let the grant provider determine whether or not to approve the grant.

3. Pull the grant application because of ineligibility.

They district decided to move forward with option one, according to district records.

After discovering the email chain, the NFWF rescinded the grant.

“Moreover, we have additional information that indicates that your organization was aware of the ineligibility of the project and continued forward in seeking the NFWF award,” wrote Daniel Strodel, general counsel for the NFWF, in an Oct. 23 email to the district. “Accordingly, for all of the above reasons, I am notifying you herewith that the award has been rescinded.”

In his correspondence with the district, Strodel also voiced concerns over conflicts of interests with Grace and Kellas and awarding contracts without the bidding process.

First, Strodel questioned District Board Chair Kellas’ promotion of a project adjacent to condominiums where she lives and has a significant financial interest. Also, Charles Grace allotted $22,400 to Grace Environmental Services, a waste water consulting and management company he owns, in another potential conflict of interest.

In addition, while the district planned to allot $16,000 to Oliveira Consulting, $86,600 to Wood and the $22,400 to Grace Environmental Services, none of the contracts were put out to bid.

In an email on Oct. 27, Kellas voiced concerns about losing the grant that she helped submit, and the damage it could do to their reputations.

Kellas asked if the “team” could set time for a conference call, noting they could not discuss the issue at the next board meeting. More than a year earlier, the FPPC told Kellas she had significant conflicts of interest and that she should not participate in discussions or voting related to restoration of the sanitation plant site.

“I see Wood, the District and Jeff as a team in a District that can only survive through grants; therefore, we need to pull apart in minute detail as to what happened and ensure it does not happen again,” Kellas wrote in the email to Jeff Oliveira of Oliveira Consulting, Grace and Laule.

However, both Grace and Oliveira agreed not to try and salvage the grant.

“I agree with Charlie, the NFWF guidelines were pretty clear on funding for projects required as conditions of approval (i.e.,’mitigation’),” Oliveira wrote in an Oct. 27 email to the group. “This will have a domino effect with the OPC grant as well, since that funding was tied to the NFWF grant matching funds requirement.”

In the summer of 2019, San Simeon applied for and received confirmation they would be getting $125,000 from the NFWF and a matching $125,000 grant from the Ocean Protection Council. Both grants were rescinded because of ineligibility issues and failures to abide by conflict of interest rules and bidding requirements.