Troubled Water District Seeks Candidates to Replace Chairman : Government: Santa Margarita board will contact community members and those who ran unsuccessfully in November election.

The Santa Margarita Water District will solicit a replacement for former board Chairman Don B. Schone from among the record number of candidates who ran unsuccessfully for office last November and others in the community who have not sought the position before.

Dan Miller, the district’s acting general manager who turned his job over to a new permanent manager Monday, said the board of directors will meet Wednesday night to figure out exactly what approach to take in filling the vacancy.

Miller said several people already have expressed interest in Schone’s seat on the water board. He resigned effective Monday amid revelations by The Times that he took free trips from a contractor but failed to report them, as required by state law.

One candidate who ran in November and won a seat on the board, only to find that she lost when the vote tally was miscalculated, said she will ask to be considered once again.

“If the opportunity comes up to apply, I will apply,” said Betty K. Olson, a UC Irvine professor of environmental science for 20 years.

“I think the district faces difficult problems created by the unfortunate management that preceded” the new board, she said.

Olson was one of 12 candidates for four seats on the board last year, a record number for the Santa Margarita Water District. Few seats on the water board have ever been contested.

Olson, an expert on water quality issues and environmental biotechnology, said she can bring a new perspective to the district.

“I think I’ve got the expertise,” she said. “We need to be cost-effective in bringing water to our customers in the future.”

No matter who is selected, all five board members must run for reelection this November.

Under a new state law, the district has been switched to “one man, one vote” from the old system in which each vote was based on a landowner’s assessed property value. A landowner with $1 million worth of assessed property, for example, would get 1 million votes.

Schone, a 17-year board member, resigned after revelations that he accepted--but did not report on economic disclosure forms--two trips to Cabo San Lucas paid by a prominent engineering firm that received lucrative contracts.

Schone acknowledged taking the trips to inspect a water reclamation plant being built by the engineering firm of Robert Bein, William Frost & Associates. In the past five years, the district has paid the company nearly $14 million in contracts. Schone should have reported the trips on state disclosure forms, but did not.

Walter W. (Bill) Knitz and Michael P. Lord, the district’s top two managers, resigned last May after disclosures that they took an inordinate amount of gifts from contractors who did business with the district and treated themselves to lavish perks with district funds.

Prosectors, who are conducting a criminal investigation of Knitz and Lord as part of a state-federal probe of conflict-of-interest violations, say they are looking at Schone’s records as well. None of the three men has been charged.

With Schone’s departure, all five board members who were in charge when the Knitz-Lord scandal erupted are now gone. One retired. Three lost their seats in last November’s board election and Schone submitted his resignation letter to the district on Monday.

Miller said that while Schone’s departure was regrettable under the circumstances, it gives a new board and a new general manager, John J. Schatz, a chance to rebuild.

“With Don resigning, the old regime is gone,” he said. “Now a new board and general manager can move on.”