Troubled District Hires Trouble-Shooter : Management: Specialist takes helm at Santa Margarita where top managers have been suspended during probe of gifts from contractors, lavish expense accounts.

A city management consultant was appointed Monday to take temporary control of the troubled Santa Margarita Water District whose two top managers have been suspended with pay while authorities investigate their acceptance of gifts from contractors and handling of the district’s affairs.

Daniel T. Miller, a former chief of staff to Orange County Supervisor Roger R. Stanton, specializes in performing management audits, planning budgets and helping communities such as Dana Point, Lake Forest and Mission Viejo make the transition to cityhood, according to his resume.

Miller, 42, of Santa Ana, will begin immediately, overseeing district operations while also analyzing management policies, examining district procedures for awarding contracts and assisting in an internal investigation of suspended general manager W.W. (Bill) Knitz and his top assistant, Michael P. Lord, said district spokesman Scott Hart.

“We now have some fresh eyes from the outside to review district policies and operations,” Don. B. Schone, chairman of the district’s Board of Directors, said in a statement after the board voted to hire Miller as interim district manager.

The board is still negotiating Miller’s pay and length of employment, Hart said.

Stanton praised Miller’s work, both as an employee of his office and as an outside consultant after he left the supervisor’s employ.

“He did an excellent job,” Stanton said. “He is definitely the trouble-shooter needed to steady the ship down there through rough waters. You don’t need to worry about Dan taking free lunches. He’s a straight arrow.”

Considered an expert in consolidating existing agencies, Miller may be best remembered in working to merge the Orange County Transit District and Orange County Transportation Commission into a new entity, the Orange County Transportation Authority, OCTA.

“If you wanted someone who knew government well to help with something, Dan would be the guy you choose,” Stanton said. “He has shown great attention to detail.”

While in Stanton’s office, Miller created a political flap by criticizing two of Stanton’s colleagues in stories that appeared on consecutive days in The Times in 1984.

Referring to Supervisor Harriett M. Wieder, Miller said, “Most people know Harriett is involved in a lot of fluff and that there’s little substance. Nobody listens to any of that stuff.”

The following day, Miller’s comment made print again, this time more harshly in speaking about then-Supervisor Bruce Nestande.

“You can always tell when Bruce is lying,” Miller said. “He starts stuttering and talking very fast and gets very defensive. I don’t think we trust Bruce very much, but we get along very well. He’s Machiavellian at times. That’s fine . . . we’ll deal with it.”

Miller was made to apologize to Nestande. He left Stanton’s office the following year, in 1985.

Tim Casey, city manager of Laguna Niguel, said Miller did an excellent job of getting the fledgling city up and running, including setting up city contracts for everything from banking to civil engineering, street maintenance and sheriff’s services.

“He left the place in good shape for me to jump right in and take over,” said Casey, who took over in 1990. “He was really the administrative coordinator and leader here. I’m not surprised to hear that he’s been asked to take over at the water district.”

Miller’s resume lists him as being chairman of the Santa Ana City Planning Commission, although he is no longer chairman. He still serves on the commission, however. Before joining Stanton’s office, Miller was a staff member of the county administrative office.

Both Knitz and Lord were placed on administrative leave, with pay, after disclosures of their extensive gift-taking and lavish spending on the district’s tab sparked a joint federal and state investigation. Both men have denied any wrongdoing.

Knitz and Lord came under fire after it was disclosed they received more than $60,000 in gifts from contractors, and had claimed things on their expense accounts such as a $1,500 room service tab, and a $245 sightseeing tour of Manhattan in a stretch limousine.

A task force formed by the Orange County district attorney’s office and the FBI is looking into whether the men improperly influenced decisions to award non-bid contracts to the firms that had lavished gifts upon them.