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Part and parcel 

Supervisor John Peschong can vote on SGMA subsidies despite land ownership, FPPC says

Despite owning property over the Atascadero Groundwater Basin, 1st District SLO County Supervisor John Peschong is free to vote on groundwater management funding decisions that affect his land, officials at the Fair Political Practices Commission (FPPC) indicated.

Peschong owns a 19-acre parcel overlying an unincorporated area of the Atascadero basin, one of six water basins that the Board of Supervisors recently voted to subsidize management for—at $2 million per year—under the Sustainable Groundwater Management Act (SGMA), rather than seek funding from affected property owners.

FPPC officials told New Times on June 12 that as long as the SGMA subsidies are "applied equally, proportionally, or by the same percentage to every property" in areas of the county subject to SGMA, Peschong is cleared of a conflict of interest under a specific exemption for adjusting water rates or assessments (FPPC regulation 18703e).

click to enlarge GRAY AREA Despite owning land in a county-subsidized groundwater area, Supervisor John Peschong (pictured) is eligible to vote on Sustainable Groundwater Management Act matters, the FPPC indicated June 12. - PHOTO BY JAYSON MELLOM
  • GRAY AREA Despite owning land in a county-subsidized groundwater area, Supervisor John Peschong (pictured) is eligible to vote on Sustainable Groundwater Management Act matters, the FPPC indicated June 12.

While not an official FPPC ruling, the opinion provides some clarity on the legal landscape of a much-debated water policy reversal decided by the Board of Supervisors.

Before Peschong's election, the county's policy was to carry out the requirements of SGMA (writing and implementing sustainability plans) for unincorporated basin areas if landowners would fund that management through a property tax. If landowners refused a tax, the county would not assume responsibility for management, and the state Department of Water Resources would step in to the county with the authority to tax and set fees.

That policy changed on April 4. The board voted 3-2 to abandon the property tax and fund SGMA with general funds. Dissenting Supervisor Bruce Gibson (2nd District) raised the issue of Peschong's potential conflict at the time. Gibson, Supervisor Adam Hill (3rd District), and several city mayors and community services district (CSD) officials also decried a lack of equity in the strategy, since city and CSD ratepayers are already paying for their own groundwater management—and will now have their property tax dollars go toward landowners on private well systems as well. SLO County operates a handful of wells in the SGMA-affected basins, which serve residents in Santa Margarita and Shandon.

Whether the county subsidies are "equal or proportional" to every property affected by SGMA, as required by the FPPC, is not completely clear. The county has unequal jurisdiction over each of the six local water basins subject to SGMA, and the expected costs vary by basin.

County subsidies going to the Atascadero basin, where Peschong owns land, is estimated at $80,000 over the next five years, according to county data. That estimate is modest compared to the more than $1 million projected for the Paso Robles Groundwater Basin over a similar time frame.

The Political Reform Act (1974) outlines conflict of interest laws for elected officials. The act broadly states that, "No public official shall make, participate in making, or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest."

One exemption to the act is if an elected official's benefit from a decision is "indistinguishable from the public generally," per FPPC regulations. When a decision stands to have a material financial effect on an official's property, the "public generally" line can be defined by the decision affecting at least 25 percent of all real property in the agency's jurisdiction or the official's representative district.

While Peschong said he has not sought an opinion from the FPPC on the matter, he shared a memo with New Times prepared by his Sacramento-based attorney Charles Bell, of Bell, McAndrews, and Hiltachk.

In the memo, Bell argued Peschong would not receive a foreseeable or material financial benefit from the decision because his property is not "explicitly involved in the decision." Bell also cited the "public generally" exemption based on the 25 percent threshold.

Countywide, the SGMA policy affects 10 percent of all parcels.

In Peschong's district, 34 percent of the total parcels are affected by the policy. The 1st District contains 22,590 total parcels, the Assessor's Office said. According to Public Works, 7,748 total parcels are in areas of the Atascadero basin and Paso Robles basin that are receiving SGMA subsidies in District 1.

But the FPPC indicated that the threshold is moot when it comes to tax adjustments related to SGMA.

"So long as the proposed tax is applied equally, proportionally, or by the same percentage to every property in the SGMA, the 'public generally' exception applies even if the properties in the SGMA doesn't make up 25 percent of the official's district," FPPC Communications Director Jay Wierenga said.

Peschong's personal involvement in the North County groundwater basins extends beyond SGMA compliance. Peschong is also among a group of property owners who are in a "quiet title" lawsuit against SLO County to obtain a court ruling that the county and three other public agencies have no right to the water underlying their properties.

First filed in SLO County Superior Court in 2013, Steinbeck Vineyards, et al. v. County of SLO et al. gathered steam over the past four years and today includes hundreds of property owners and parcels in North County overlying the Paso Robles and Atascadero basins.

Peschong added his properties to the suit in 2014, more than a year before he announced his campaign for supervisor. During his 2016 run for office, Peschong received $14,948 in campaign donations from 38 plaintiffs on the suit.

About 75 percent of the properties in the quiet title suit are in areas of the Paso Robles basin receiving a general fund boost due to the county's policy change. Plaintiffs' properties add up to more than 700 parcels, making up 10 percent of the affected parcels over the Paso basin. The litigants account for about 5 percent of the total parcels countywide (12,840) benefiting from the policy.

County Counsel Tim McNulty told New Times that Peschong has recused himself from any discussions on the Board of Supervisors directly pertaining the quiet title lawsuit.

Contact Staff Writer Peter Johnson at



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