San Simeon Community Services District General Manager settles lawsuit with SLO County DA

SAN SIMEON, Calif. – San Luis Obispo County District Attorney Dan Dow announced on Monday that a settlement was made with Charles Grace and his company, Grace Environmental Services, LLC (GES) over nine alleged violations of the Unfair Competition Law (UCL) and False Advertising Law (FAL) filed on September of last year.

The settlement and resulting judicial order resolved that September lawsuit based on the contract between GES and the San Simeon Community Services District while Grace was serving as the Community District's General Manager and contracting his own company with majority of the Community District's water and wastewater services.

The Judgement and Order, signed by San Luis Obispo County Superior Court Judge Rita Federman, requires that GES and Charles Grace not violate conflict of interest laws, will train staff regarding conflicts of interest and the Public Records Act or the Ralph M. Brown Act, and that they will pay $75,000 in civil penalties.

“Public officials such as city council members, county supervisors, appointed officials including general managers must exercise their authority in a way that upholds the public’s trust. For this reason, California law forbids even the perception of self-dealing in contracts between these officials and government agencies they serve,” said San Luis Obispo County District Attorney Dan Dow. “As such, elected officials and the attorneys advising them must be vigilant to ensure that they follow the law and earn the trust of the people they serve. In this case, both parties agreed that this contract created a financial conflict of interest that violates the laws of California.”

The parties stipulate in the agreement that GES will not seek a future contract with the District as either the manager or providing operations function nor can GES enforce the remaining time of performance or indemnification rights under the existing contract.

Additionally through the agreement, GES will not seek to renew their contract and may not seek reimbursement from the District for the legal costs associated with this litigation.

The San Simeon Community District has already reimbursed GES over $125,000 in legal expenses detail San Luis Obispo County District Attorney's Office in a press release.

According to the San Luis Obispo County District Attorney's Office, the Fair Political Practices Commission and Charles Grace entered into an agreement in 2021 that included Grace admitting to violating conflict-of-interest law and paying $4,500 in civil penalties.

The District's 2023 Requests for Proposal separates the responsibilities of general management from wastewater and water operations services.

In 2018, the San Luis Obispo County District Attorney's Office stepped in to charge John L. Wallace with two misdemeanor counts of conflict of interest during his tenure as District Administrator of the South San Luis Obispo County Sanitation District and simultaneous tenure as General Manager of the Avila Beach Community Services District.

This case was prosecuted by Deputy District Attorney Ken Jorgensen who is assigned to the Special Prosecutions Unit.