Whistleblower suit accuses San Luis Obispo officials of unlawful conduct

June 15, 2026

San Luis Obispo City Manager Whitney McDonald

By KAREN VELIE

San Luis Obispo’s former chief building official filed a whistleblower lawsuit against the city on Friday. Michael Loew’s  suit describes a “sustained campaign to silence, punish, and ultimately force him out” after he refused to “participate in unlawful conduct.”

From March 2022 through June 19, 2025, as chief building official Loew was responsible for enforcing state and local building codes, overseeing the building and safety division, managing fee-supported regulatory programs and enforcing building codes.

Loew’s lawsuit alleges city administrators directed him to doctor financial records.

While California law only allows city’s to charge applicants the actual cost of permit processing and inspections, Loew’s lawsuit describes city administrators knowingly overcharging through fees and then “diverting fee revenues.”

A 2024 fee study by an outside consultant recommended a 35% reduction in fee rates. That recommendation would have reduced building and safety fee revenues by approximately $1 million annually, according to the lawsuit.

At the direction of city administrators, Loew developed an entirely new cost-justification methodology fees, one based not on actual historical expenditures, but on an estimate of what it “should” cost to operate at the level its services warranted.

The forward-looking cost model justified maintaining existing fee revenues rather than reducing them to comply with the consultant’s findings.

Another bone of contention was over the safety of a building at 1150 Laurel Lane that housed multiple businesses, including the popular Bang the Drum Brewery.

In Nov. 2024, Loew determined the building was being used and occupied without valid occupancy. In addition, he determined that the “building posed a serious and unreasonable risk to the life safety of occupants and the public.”

“The law says the chief building official ‘shall’ condemn unsafe buildings, ‘shall’ post condemned placards, and ‘shall’ take immediate action following a board of appeals determination,” according to the lawsuit.

While Loew wanted to shutter the building, city leadership directed him to stop the condemnation, leading to another six months of occupancy.

On May 1, 2025, Mayor Erica Stewart promoted a social event at the building, “thereby exposing members of the public to known life-safety hazards,” according to the lawsuit.

Throughout this period, city leadership, including City Manager Whitney McDonald, Assistant City Manager Scott Collins, and Community Development Director Timothea Tway directed Loew to refrain from condemning the building, according to the lawsuit.

At an administrative hearing on May 5, 2025, “Fire Chief Todd Tuggle stated on the record that the building was too dangerous for firefighters to enter in the event of an emergency, confirming the severity of the life-safety risks Lowe had identified and reported.”

The city then condemned portions of the building leading to the closure of multiple businesses. The city continues to permit Ernest Packaging Solutions and Empire Electrical to continue operating in the building.

The suit accuses the City of San Luis Obispo, City Attorney Christine Dietrick, McDonald, Collins and Tway of retaliation and infliction of emotional distress.

After Loew disclosed his concerns, he was stripped of enforcement authority, directed to refrain from exercising his mandatory enforcement duties, sent hostile and threatening communications and questioned in meetings.

City management staff “collectively creating working conditions so intolerable, hostile, and humiliating that a reasonable person in Loew’s’s position — a senior public safety professional directed to violate mandatory legal duties, denied resources proven necessary, and accused of immorality for attempting to enforce the law — would have had no reasonable alternative but to resign,” according to the lawsuit.

The retaliatory conduct allegedly continued until Loew resigned on June 19, 2025.

The suit seeks general, compensatory and punitive damages along with attorney fees and costs.

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