2nd Subject of Water District Probe to Retire

The second highest ranking administrator at the Santa Margarita Water District has decided to follow his boss into retirement, claiming he has lost his effectiveness because of several investigations into the public agency’s management.

Assistant General Manager Michael P. Lord, in a letter to the district, said he intends to retire June 24, exactly one month after board officials were scheduled to decide whether he should be fired.

“I do this not because I have done anything wrong, but because I wish to spare the district and myself the problems that have come with the recent publicity,” Lord wrote in a letter to Chairman Don B. Schone.

Lord’s boss, General Manager Walter W. (Bill) Knitz, submitted his resignation Wednesday and said he would retire after more than 17 years with the water district. Knitz said he would continue to “vigorously refute the accusations against me by the press.”

Knitz and Lord are the subjects of a joint FBI-Orange County district attorney’s task force inquiry into possible conflict-of-interest violations at the water district. Both men have denied any wrongdoing.

“Mr. Lord is confident he is going to be exonerated. This retirement has nothing to do with him being guilty of anything or admitting any wrongdoing,” said Gary Pohlson, Lord’s attorney.

The Times reported in March that both men had accepted nearly $60,000 worth of gifts from contractors and other vendors. Knitz and Lord then recommended that those donors receive millions of dollars worth of contracts. None of the contracts were put out for competitive bidding.

Under state law, public officials must abstain from taking any official action on behalf of a donor who has given them $250 or more in any 12-month period.

Knitz and Lord also had spent public funds on luxuries such as a $245 limousine ride in New York, $1,500 in room service and $200 Broadway theater tickets.

The men were suspended with pay last month after the FBI-district attorney investigation was begun. Since then, the U.S. Securities and Exchange Commission also has opened an investigation into the district’s $150-million investment portfolio.

It was unclear Friday whether Santa Margarita’s board would accept Lord’s retirement proposal. The board is scheduled to vote Monday on his future--they could approve his retirement, fire him, keep him employed but suspend his pay or reinstate him.

If the board allows Lord to remain employed through June 24, he will receive retirement benefits of $19,062 a year, or about 17.5% of his yearly salary of $109,116. He also is entitled to about seven weeks of vacation pay, district spokesman Scott Hart said.

Knitz, 61, will receive $42,918 a year in retirement pay and another $1,429 a month from an annuity purchased for him in November, 1987.

“What Knitz presented to the board was much cleaner in that he made a unilateral decision with no options for the board to consider,” Hart said. “Lord’s letter presents the board with a couple of options that they will need to consider.”

Both men are still accountable for any administrative wrongdoing that occurred during their tenure, Hart said.

“Everyone is entitled to retire or say they’re going to retire, but it has no impact on the water district’s internal investigation,” he said.

Lord was hired by the Santa Margarita district in August, 1977. He previously worked for the city of Garden Grove. He has been married five times, has four children and lives in Vista.

Shirley L. Grindle, who helped put together a tough new set of guidelines banning political gifts for Orange County, said Knitz and Lord should not be afforded benefits that would have been coming to them had they retired scandal-free.

“It seems to me that both Knitz and Lord have helped themselves to benefits a little early,” she said, referring to their gifts, free meals and other gratuities. “They already got their benefits.”

Besides the gifts, Lord received thousands of dollars worth of landscaping and home improvement work from two contractors. He insisted that he had paid market price for all of the work but failed to completely back up that claim with receipts or canceled checks.

Lord was not the only one who benefited.

The Times reported that two of Lord’s children were hired by district contractors. And Santa Margarita’s banking was handled by a friend of Lord’s who is under FBI investigation on a matter separate from the district. The district’s $150-million investment portfolio was also managed in part by one of Lord’s friends.

Lord said in a March interview that Santa Margarita’s ratepayers were getting their money’s worth when compared to his job performance.

“The landowners and the board are aware of the expenses that we incur on behalf of the district,” Lord said, adding that none of them were out of line in terms of “what we . . . have achieved.”

Should Lord’s retirement proposal be accepted, it will start on his 50th birthday.