Water District’s Conduct Code Sparks Interest : Ethics: Other agencies ask for copies of tough Santa Margarita guidelines on conflict of interest, adopted after controversy over gifts to two top administrators.

The Santa Margarita Water District, which adopted some of the state’s toughest conflict-of-interest guidelines after a controversy that unseated its two top administrators, has been asked for copies of its new ethics code by several other agencies, one of which is incorporating elements of the code in its own new policy.

Among the six agencies getting the district’s new guidelines is the Los Angeles-based Metropolitan Water District of Southern California, the nation’s largest water agency and provider to 27 other water agencies scattered across the region, including the Municipal Water District of Orange County and the cities of Anaheim, Santa Ana and Fullerton.

Of the MWD’s 51 board members, 10 are from Orange County.

Others showing an interest in Santa Margarita’s new guidelines include the Municipal Water District of Orange County, the South Coast Water District, the Trabuco Canyon Water District, the Water Replenishment District of Southern California and the Orange County Transportation Authority.

Mike Hondorp, the Los Angeles agency’s auditor, who lives in Huntington Beach, said Monday that he sought a copy of the guidelines after reading numerous articles about the Santa Margarita Water District in The Times.

In a series of articles starting two months ago, the newspaper disclosed that former general manager Walter W. (Bill) Knitz and his top assistant, Michael P. Lord, had accepted at least $60,000 in gifts from bankers, builders and engineering consultants that they acknowledge recommending for millions of dollars in contracts awarded the gift-givers without competitive bidding.

As a result of the disclosures, Knitz, 61, and Lord, 49, announced their retirements, and the water district’s board of directors adopted guidelines that impose restrictions far tougher than those mandated for public agencies in general by California’s Political Reform Act of 1974.

“I have an interest in what (the Santa Margarita Water District) has put together and how it applies to our agency,” Hondorp said. “We have a large portion of their policy already included in our policy, but theirs is pretty restrictive and all-inclusive. This whole area is of interest to me.”

The MWD’s ethics code is, in fact, far less restrictive than the measures adopted by the Santa Margarita Water District. For example, the Santa Margarita code requires that district employees go strictly “Dutch treat” when they share meals with contractors. The MWD code has no such restrictions.

And while the Santa Margarita district has adopted a total ban on gifts from vendors, including meals and entertainment, the MWD does not ban gifts outright and is governed by state law, which only requires officials to abstain from using their influence on behalf of a company or individual that has given that official more than $250 in gifts during the previous 12 months.

Hondorp said he has not yet completed his study of the Santa Margarita district’s code and is uncertain whether he will recommend that the MWD adopt any of its more stringent provisions. He said, however, that he is particularly interested in the part of Santa Margarita’s policy that prohibits employees from accepting meals from vendors and contractors.

At the Trabuco Canyon Water District, which serves Trabuco Canyon, a portion of Portola Hills, Dove Canyon, Brock Homes, Robinson Ranch and Rancho Cielo, the board of directors is scheduled to vote next week on new guidelines, inspired by the Santa Margarita district, that would require vendors, contractors and consultants to submit an annual report of gifts provided to all employees.

Among other restrictions, the board is also considering a ban, similar to Santa Margarita’s, on the employment of district employees’ dependents by vendors doing business with Trabuco Canyon. The Times revealed that the children of four district officials had been employed by vendors who reaped millions in non-competitive contracts.

J. Fred Sims, the district’s general manager, said the board is considering new guidelines “due to recent press publicity,” adding that portions of the new policy were taken directly from the Santa Margarita Water District’s guidelines.

Kennard Smart, attorney for the Orange County Transportation Authority, said he requested a number of new ethics policies, including that of the Santa Margarita Water District, for incorporation into the revised rules on gift-taking and reimbursements the authority is considering.

Smart said new guidelines may be in place by the end of this month.

“We’re just putting together the best package of all that’s out there,” he said. “We want to see what others are doing.”

A spokesman for the Municipal Water District of Orange County said its general manager requested a copy of the Santa Margarita guidelines as part of a continuing review of its own policies and procedures.

“We are always examining the things we do here,” said spokesman Keith G. Coolidge. “We always are looking to see where we should add to our administrative code.”

Whether or not many of the Santa Margarita Water District’s guidelines are used, district spokesman Scott Hart said, it is important that other water districts are at least reviewing the Santa Margarita code.

“We are glad to see that other water districts and other government agencies feel that the code of conduct approved by the Santa Margarita Water District Board of Directors included some new rules and standards that will help re-instill public confidence in public agencies,” Hart said.