San Simeon CSD considers protecting manager from financial liability

November 29, 2021

By KAREN VELIE

The San Simeon Community Services District Board will consider indemnifying its district manager, shortly after the state discovered the community could seek reimbursement for funds spent under an illegally executed agreement. Currently under an investigation by San Luis Obispo County prosecutors that could result in fines and legal costs, the district’s manager is also facing approximately $400,000 in liability over the illicit contract.

As manager of the district, Charlie Grace negotiated a contract with Grace Environmental Services, a private company he owns. Grace then used his position as the head of the district to funnel money to his private company.

On Nov. 18, the California Fair Political Practices Commission (FPPC) voted to have Grace pay a $4,500 fine for illegally sitting on both sides of the negotiating table.

The FPPC commissioners also agreed to bring back for clarification in January, whether or not voiding the contract requires a civil court action. The district is entitled to recover any compensation that it paid through the voided contract, according to the Government Code. If the contract is voided, the district could recover the $393,734 in compensation it paid Grace from Jan. 2016 through Dec. 2020.

On Monday’s agenda, Grace listed Government Code §54956.9(d)(2), which is an occurrence that might result in litigation against the district, as the reason for holding the discussion about Grace Environmental Services’ request for indemnity in closed session; without public scrutiny.

When asked why the district was holding a closed door session about a private company under a code that only allows threats against the public agency to be considered in closed session, San Simeon district legal counsel Jeffrey Minnery noted the possibility Grace could take future legal action against the district.

“I am aware of no direct threat of litigation from Grace Environmental Services, however, facts and circumstances do indicate that litigation might occur if the district does not address the indemnification issues,” Minnery responded.

Minnery did not respond to questions about whether or not indemnifying Grace and his private firm would be a gift of public funds. Minnery said he had “not been granted any authority to speak on this matter.”

San Simeon is a small, disadvantaged community with under 500 residents that sits on the coast between Cambria and Hearst Castle.