San Simeon CSD refuses to apologize to owners of Hearst Ranch

November 13, 2021

OPINION by HANK KRZCIUK

In 2016, San Simeon Community Services District negligently constructed part of a water treatment building on Hearst property and the Hearst Ranch conservation easement. Then they concealed the encroachment for years from Hearst and State and Federal grant providers ($900,000 in grants involved.)

They finally got caught by Hearst in late 2020.  Then things got shady, twisted, and stupid and ultimately so harmful to our community.

At the SLO County Board of Supervisor’s meeting on Tuesday, San Simeon CSD is set to lose a $500,000 grant as a related consequence of this encroachment and its handling by district management.

Late last year, Hearst acted in good faith and was going to give the district an easement to resolve the original encroachment. The district signed a temporary agreement for an easement.

Then the district reneges on that deal saying the district owned the land. This because some unknown party pays a law firm in San Luis Obipso to issue a letter to the district saying the district owns this land, not Hearst Corp.   The “general manager” (at least the person we thought was San Simeon’s general manger for years) immediately sends this unverified letter and assertion to Hearst Corp. and to the county who is doing a grant investigation. Was that all a bit of CYA for the negligent encroachment?

Hearst challenges the district to proof they own that land. Then the district does nothing for almost a year. This even though the county warned them they needed to get this matter settled or lose a $500,000 grant for a new water tank.

After months-and-months, the district finally pays for its own survey and title search.  To the district’s great surprise that survey confirms the Hearst encroachment.

Now a year later, at the Nov. 9 San Simeon CSD Board meeting, the Directors discuss signing the encroachment easement agreement that Hearst offered in January. But not before they negotiated a $50 annual savings in the Hearst land rental fee. A most commendable achievement.

The board barely passed a motion with just three votes to sign the easement agreement with Hearst.

There was an extended discussion by the directors before three finally acted to proceed with the Hearst Easement Agreement.

Chair Gwen Kellas was defiant and “passed” on the vote. She was demanding a clause to allow the district to reopen ownership of that portion of land at any time. She sounded unhappy about not getting her way.

Another Director wanted to try and swap a piece of district land. After a year of challenging Hearst to land ownership that seemed out-of-place and bad timing. The discussion went on for some time. District Counsel Jeff Minnery then tried to bring some sanity and realism to the discussion.

First of all, any amount of encroachment on someone else’s property is illegal.

Intentional, or not, there was a negligent act committed with the building’s encroachment. Adding to the insulting handling of the encroachment was the district’s unwarranted delays and resolution of the encroachment matter over the last year that were unnecessary, costly and inexcusable.

Citizens asked that the board apologize to Hearst and the California Rangeland Trust which is responsible for the Hearst Ranch Conservation Easement. The directors did not even acknowledge the request for an apology.

Last month, in a presentation to County Supervisor Gibson’s North Coast Advisory Council, Chair Kellas places a large portion of the blame on “past district dounsel” Heather Whitham, of Carmel & Naccasha LLP (who is now the City Attorney for Santa Maria). A USDA Rural Development Grant form signed by Whitham certifies that she, “had done a search prior to construction and assured the CSD that we did own the property.”

Chair Kellas blames the county. She also blames a disabled person for blowing the whistle on them despite that person asking them to settle the encroachment with Hearst in the background more than once since early construction in 2016.

Chair Kellas has now made her statements part of the official district record by placing the NCAC report in the district board package with supporting documents like the Heather Whitman attestation of the district’s ownership of that land.

In refusing to apologize and blaming others (who did not construct the building), the district has Charles Grace as the lead settling this matter with Hearst. When this all happened, he was “general manager” of San Simeon and in charge of the project. (He and his attorneys have since denied he was ever legally the San Simeon CSD general manager.)

No apology. Now this arrogant, inconsiderate, and insulting move to put Grace right back in Hearst’s face.

Now the really stupid part.

All the while major grant investigations are underway by the state and County.

Unfortunately, the district’s own survey confirms that even with execution of the Hearst Encroachment Easement Agreement that the district will remain in violation of $900,000 in state and federal grants. That is, because the water treatment building is also partially built into the Pico Avenue public road right-of-way which is also not part of a parcel of property owned by the district.

If that is not bad enough, at the upcoming Tuesday SLO County Board of Supervisors meeting, the county is set to pull $500,000 of grant funding San Simeon CSD planned for a new water tank. They are pulling this grant because the district’s project is far behind where they claimed it was. A big challenge is that the new water tank was planned to be built on Hearst property.

Understandably, Hearst was not working on an easement for such a water tank until the encroachment of the district’s water purification facility is resolved.

It appears after over a year of gaming to resolve the encroachment, that the San Simeon Directors have noticed that they will lose a $500,000 grant. So now they are on top of things (well at least three of them) and are trying to get this easement agreement completed before Tuesday’s BOS meeting.

It is too little, too late.

The way this was handled as far back as 2016, when they intentionally or unintentionally constructed the unit on Hearst property, is a sad statement about the management of our community. It brought out the dark side of San Simeon CSD management and its influential players.

Our community has been harmed and no one is being held accountable for the encroachment or the impending loss of the $500,000 grant for a new water tank.

Hearst isn’t asking for an apology, but it is, or would have been, the right thing to do.