By Arturo Castañares
Editor-at-Large

A local water agency board member violated a state conflict of interest law last year when he voted to approve a contract for a proposed 5 Megawatt solar energy project that is still being considered by his board.

Steve Castaneda, an elected member of the South Bay Irrigation District Board of Directors, voted in June 2023 to approve a contract with Noria Energy to move forward on the development of a proposed floating solar energy system at the 960-acre Sweetwater Reservoir in Bonita. 

Steve Castaneda

 

The proposed solar project would sell excess energy to San Diego Gas & Electric. 

Castaneda, who serves on the part-time board, also owns a consulting firm that has over a dozen clients, including Sempra, the parent company of SDG&E, thereby creating a "remote" conflict of interest, according to an advice letter published by the California Fair Political Practices Commission last week. 

The letter states that Castaneda has a “remote interest” in the contract and cannot participate at all in the process, but that his agency can still move forward as long as he recuses himself from any discussion or vote on the project.

“Therefore, Director Castaneda has a financial interest in the Authority’s contract decisions related to the Project,” the FPPC’s July 24th advice letter states. “Director Castaneda must disqualify himself from any participation or attempts to influence all future decisions concerning the Project,” the letter concludes.

The FPPC letter clarifies that the agency cannot give advice on past events, and does not opine on whether Castaneda’s participation in previous meetings constitute a violation.

“Director Castaneda has already taken part in Authority meetings concerning the Project, and the Commission does not provide advice regarding past conduct,” the letter states.

But two government law attorneys La Prensa San Diego spoke with concluded that having a conflict of interest going forward means Castaneda had a conflict when he voted on the contract last year, thereby invalidating the agreement.

The enforcement division of the FPPC can investigate suspected violations of the state’s conflict of interest laws and, if appropriate, pursue punishment including administrative fines or referral to the District Attorney or State Attorney General for criminal prosecution. 

Castaneda not only spoke in favor of signing the contract with Noria Energy but he made the motion to approve the agreement during the agency’s June 24, 2023, meeting. 

The agreement was a sole source contract that was not reviewed by any of the water board’s committees, much to the concern of at least one of his colleagues, Director Josie Calderon-Scott.

“I’m also concerned it didn’t go to committee to really get vetted, because if it had come to my committee I would have had a lot of questions,” Calderon-Scott said during the June 2023 meeting.

The sole source contract granted Noria an exclusive right to pursue the project if all permits and approvals are secured, and included a $110,720 “buy-out” provision where the water agency could purchase the project back from Noria and end the exclusive rights.

The project is being considered by the Sweetwater Authority which is a combined agency board of elected South Bay Irrigation District members, as well as two representatives from the City of National City.

The elected South Bay Irrigation members are Chairwoman Paulina Martinez-Perez, Manny Delgado, Hector Martinez, Josie Calderon-Scott, and Castaneda. National City’s two representatives are Mayor Ron Morrison and Councilwoman Ditas Yamane. 

The board voted 5-2 to approve the contract with Castaneda, Martinez-Perez, Delgado, Martinez, and Yamane voting in favor, but Morrison and Calderon-Scott voting against it. 

Castaneda has also participated in other meetings where the water board discussed the proposed solar project, but began recusing himself in recent meetings.

The proposed project would involve solar panel arrays mounted on floating platforms, a design that has never been used on any drinking water reservoir in California. The only existing floating solar project in the state is at a wastewater treatment plant.

Several critics have raised concerns about the untested design, including questioning whether such a system could add pollutants or contamination to the water supply that serves thousands of users in the South Bay area. 

Castaneda has been aware of his conflict of interest related to SDGE because he has recused himself from every vote to approve the water agency’s utility bills citing his on-going financial relationship with the utility’s parent company.

Under state conflict of interest laws, a wholly-owned subsidiary like SDGE cannot be separated from its parent company for purposes of determining a direct or remote financial interest.

In addition to his consultation work with Sempra, Castaneda reports income from the San Diego Unified Port District; construction company GAFCON Inc.; the Southern California Rental Housing Association; Seaport San Diego, which has proposed a new development at the site of Seaport Village; and RCS-Harmony Partners LLC, developers of a controversial housing development south of Escondido which has been locked in a long-running legal battle with opponents of the sprawl project.

This is not the first time Castaneda has faced issues with conflicts of interest.

Castaneda, who served two terms on the Chula Vista City Council from 2004 to 2012, was indicted in 2007 on 13 counts of perjury and 2 counts of failing to report income stemming from his involvement in an apartment complex which was being converted to condos and required the City Council’s approval. 

Prosecutors alleged Castaneda lied to a criminal grand jury that was investigating his connection to Ash Israni, a billionaire developer who was seeking City approvals to convert an apartment complex into condos.

Castaneda had rented an apartment within the complex and was accused of having lied about asking the developer for special favors while the project was up for approval. In the end, Castaneda never purchased the converted condo.

In that case, then-State Attorney General Bill Lockyer’s office determined that Castaneda had a “remote” conflict of interest which still allowed the Council to vote on the project as long as Castaneda did not participate in the action.

The trial judge dismissed three of the perjury counts during trial, and a jury later found Castaneda not guilty on six of ten perjury counts, and deadlocked on the remaining four counts, including one count where the jury voted 6-6 to convict him.

District Attorney Bonnie Dumanis’ office decided not to retry Castaneda on the four deadlocked counts.

During his two terms on the Chula Vista City Council, Castaneda ran for Mayor in 2006 and 2010, losing both races to Cheryl Cox. 

In 2013, he ran in a special election for the California State Assembly but lost to Lorena Gonzalez.

Castaneda ran for Chula Vista City Council’s District 2 in the June 2018 Primary Election and came in fourth place. Jill Galvez eventually won the General Election.

In 2018, Castaneda won his seat on the South Bay Irrigation Board’s District 1 after receiving 3,813 votes to first-time candidate Paul Crawford’s 1,098 votes. 

Castaneda was re-elected in 2022 without appearing on the election ballot after no other candidate filed to run against him. His current term will expire in December 2026.

La Prensa San Diego reached out to Castaneda for comment on this story but he did not respond.