A Santa Maria Valley water district that oversees Twitchell Dam and Reservoir hired a contractor without financial due diligence and has operated without transparency, a government watchdog panel said.

The Santa Barbara County Civil Grand Jury released a pair of reports focused on the Santa Maria Valley Water Conservation District.

The jurors spotlighted significant concerns and issued 10 recommendations that mostly call for new policies. The Grand Jury investigated after receiving a complaint that the district is “poorly run.”

The small district oversees the maintenance and operations of Twitchell Dam and Reservoir, which helps recharge the groundwater basin, is essential for the area’s water supply, and provides some protection from flooding. 

One report, “Aspects of Governance,” from the 2022-2023 Grand Jury centered on the special district’s operations while the other noted a lack of transparency and due diligence when hiring a contractor.

“The Jury found the District Directors are overwhelmed by the complexities of running a special district,” one report says. “The Santa Maria Valley Water Conservation District needs improvement in its management, training, stewardship of public resources, and overall transparency.”

A Contract Under Scrutiny

The other report focuses on the district decision to hire Mitigation Solutions, LLC to remove dirt and vegetation from the dam’s intake area and sediment from the reservoir to boost storage capacity.

The district needs to “operate in full public view,” inform district constituents about district developments, and vet the financials of potential contractors, the Grand Jury report concluded.

MSL apparently approached the district, which did not seek bids because the firm claimed the contract would be a net zero cost to the district.

In a news release, MSL’s parent company Western Sierra Resource Corporation claimed the contract had a value of $1.976 billion payable over the 7-to-10-year term of the project, and that the firm has $190 million in financing, all unverified by the district, the Grand Jury said.

MSL claimed it would seek federal funding for the district work, and a January news release from the firm said the work at Twitchell had started.

“The contract has been characterized as self-funded meaning responsibility for performing mitigation activities and obtaining government or other financing for the work rests solely and exclusively with MSL, at a net zero cost, and no liability nor obligation to the district.”

After the heavy rains in the winter, Twitchell made $13.6 million of disaster expenditures for purposes not spelled out in the report. 

That $13.6 million is far more than the district’s funds on hand or its ability to generate additional revenue, and MSL had not provided funding, grand jurors said.

In late March, the district requested funds from the California Office of Emergency Services.

The Grand Jury recommends new policies for the district to vet financial capacity and routinely post updates on its website about mitigation projects.  

In early June at the board’s direction the water district’s attorneys notified MSL the firm had breached five sections of the contract, according to the district’s meeting minutes.

“Due to the current and ongoing breaches,” the attorneys write, the mitigation contract will end Sept 3, 2023.

MSL still listed the Twitchell project on its website Monday.

Problems With District Administration

In the other report spurred by a complaint about the “poorly run” agency, the Grand Jury said directors were untrained about state open meeting laws and parliamentary procedures, and have conflicts of interest.

While some initial allegations remained unfounded, grand jurors still found a number of concerning items including a dam tender who worked as a district secretary and is married to a board member. 

Two years of board meeting minutes had not been approved or posted to the district website, but the Grand Jury report said steps had been taken to resolve the issue after it began looking into the deficiency.

The district has seven divisions and seats, but only four were filled, leading Grand Jurors to recommend the Santa Barbara County Board of Supervisors fill the vacancies. A fifth seat has since been filled, with Randy Sharer, but two vacancies still remain.

The report also noted a constantly late annual audit. For instance, the report for the fiscal year ending June 30, 2022 still needed to be completed.  

“This lack of timeless diminishes the usefulness of the audit,” the Grand Jury said. 

The water agency lacks personnel policies regarding district-owned vehicles, equipment and other resources along with rules ensuring board members don’t supervise a close relative who also serves as an employee, the report concluded.

The board president, Keith Hadick, did not return a call from Noozhawk seeking comments about the report.

However, at Thursday night’s meeting the board will discuss the executive director position.

The other board members are Sharer, Andrew Adam, Casey Conrad and Gerald Mahoney.

Grand Jurors requested that the district respond to the findings and recommendations made in the two reports within 90 days.