Civil Grand Jury’s investigation finds Sunnyslope water improperly set new rates

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In its 2026 report, the San Benito County Civil Grand Jury raised numerous issues following its investigation of the Sunnyslope County Water District, including that the district bypassed state notification laws when it implemented new wastewater rates. 

The report also includes findings that the water district lacks transparency and failed to follow adopted procedures.

Water district General Manager Drew Lander said some of the issues were “mischaracterized” by the grand jury while others were issues the water district was already working on resolving. He said the formal response to the report will be considered by the board in the coming weeks.

The water district has until Sept. 8 to provide a response to the grand jury’s report, which was published on June 10. 

In order for the board to approve a response before the September deadline, the district would apparently need to hold a special meeting because the district’s next scheduled one is Sept. 25 and a response was not part of the agenda for the Aug. 25 meeting.

In its report, the grand jury made several recommendations for changes to be implemented by the water district by Aug. 19. Those include suspending its wastewater rates until it complies with the 45-day noticing requirement under Prop. 218 and to rebate or credit its customers the amount of the increase. The report does not provide a reason for the Aug. 19 deadline.

The report also recommends the water district board approve future easement contracts and that management provide its staff clear direction on policies and procedures after the report found communication issues within the agency. 

“The Civil Grand Jury identified significant transparency concerns within Sunnyslope,” the report said. “The lack of transparency stems from two factors: inconsistencies in the implementation of processes and policies, and a communication approach that often omits pertinent details of the public, staff, and the board.”

The civil grand jury is convened annually and composed of 19 citizens who serve as grand jurors and investigate the operations of various government departments and agencies. This year’s report also looked at the Hollister biker rally and the San Benito County Sheriff’s Department.

According to the report, the water district changed its methodology of charging its customers for wastewater services without following the state’s notification procedure as well as its own. 

The report said a flat-rate structure was implemented and customers received bills “substantially higher” than previous billing cycles starting in April.

“However, under Proposition 218, notices to customers and scheduling a hearing should have been completed before changing the rates,” the report states.

According to the water district’s July 28 meeting agenda, the public hearing was postponed and filed under “future agenda items” without providing a date, instead labeling it “TBD,” or to be determined. 

The public hearing is presented in a similar way on the district board’s Aug. 25 agenda. 

Lander said the district had caught and began looking into reversing the wastewater new rate model before the grand jury began asking questions about it. 

“It was accidentally done. We weren’t not trying to slip that under somebody. We brought it up. It just happened to be that the grand jury was sitting in our meeting when it was brought up and then they asked about it and  we explained it to them and then they put it in their report like they came up with something new.”

He said the mistake, arising from miscommunication in the office, cost some of its customers as much as an additional $80 between April and June. He said all customers who were negatively impacted received a reimbursement and added that the board will hold the public notice period in the coming months. 

Lander noted some customers saw a decrease in their rates during the period the new rate was implemented.

The report also noted transparency issues within the water district such as missing minutes for “multiple” meetings and the absence of existing records on its website. 

The grand jury also found that some management staff were unaware the district board meetings were audio recorded. 

The report said that even though Lander told jurors the meetings were not recorded, the grand jury “confirmed that Sunnyslope’s general manager is aware of these recordings.”

“If recordings of public meetings are hidden, it can affect how much citizens believe Sunnyslope, as a public institution, is acting ethically and competently,” the report states. 

Lander said the grand jury “misunderstood” the issue and said the water district does not have a policy that requires them to record the meetings, which he said would be costly. 

He said the recordings are used to produce accurate minutes, which are then made available on the website. He added the minutes are always available to people who request them, but that like recordings, there are no requirements to place them on the website.

The grand jury also noted the district’s inability to produce copies of contracts for easements or information about the amounts of each of the contracts.

As for adhering to established procedures, the grand jury report noted that the board did not follow a conflict resolution process that was part of a contract with San Benito County Water District. BenitoLink reported in 2025 about a director’s opposition to the board’s handing of a reliability fee that was not initially agreed upon by the directors but still imposed by the San Benito County Water District.

It also found that, although the board is required to approve contracts of $15,000 or more, Lander did not obtain approvals before signing a $40,000 agreement with the city of Hollister for consulting services.

In response to this issue, Lander said the district has a policy of the board approving expenditures of $20,000 or more, but not on revenue. He said the agreement is for Hollister to pay the water district for any consulting services it provides.

In recent years, the water district has increased its service area. It took over potable water services from the Tres Pinos Water District in June, with a stated goal of providing safe water to customers by the end of December.

Previously, the water district took over servicing the Heatherwood Estates, Fox Hills and Fischer subdivisions off Fairview Road, which until last year had been relying on bottled water. 

Earlier this month, the San Benito County Board of Supervisors agreed to pursue litigation against the water district for failing to provide documentation stemming from a public records request. 

County Counsel Gregory Priamos told BenitoLink on Aug. 17 that Lander initially agreed to produce the documents but later failed to do so. Priamos said after obtaining approval from the supervisors to pursue legal action, the district’s lawyer contacted him and pledged to provide the documents the county is seeking.

The documents relate to the Small Water System Consolidation Project, the Best Road Water Project and several grants.

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