L.A. City Council adopts plan to end feud over two DWP nonprofits

Union members and Department of Water and Power workers rally outside the utility agency headquarters in June. They called on the city to fulfill its agreement to pay into two nonprofits affiliated with the agency and co-managed by the union.

Aug. 13, 2014 9:04 PM PT

Los Angeles lawmakers Wednesday approved a plan meant to end a drawn-out legal and political battle over financial records at two Department of Water and Power-affiliated nonprofits, adopting a laundry list of conditions that would have to be met before additional ratepayer money is provided to the groups.

The plan would link a pending payment of nearly $4 million to more than a dozen requirements, chief among them that city officials be given “unfettered access” to the nonprofits’ internal documents needed to complete audits covering the last five years.

The proposal, which still needs to be negotiated with the utility’s largest employee union, also would require city officials to abandon an effort to seat two allies of Mayor Eric Garcetti on the nonprofits’ boards. As part of the plan, both the city and union officials would have to drop lawsuits related to the dispute.

The effort to end the feud Wednesday stood in marked contrast to nearly a year of contentious charges and countercharges surrounding the nonprofits and the union’s refusal to release detailed records showing how in excess of $40 million had been spent over the last decade.

The nonprofits, created to improve management-labor relations and advise the DWP on safety, have been jointly overseen by representatives of the International Brotherhood of Electrical Workers, Local 18, and DWP management.

Garcetti and City Controller Ron Galperin, who together repeatedly and unsuccessfully demanded the release of financial records to auditors, declared their support for the City Council plan. And Brian D’Arcy, the leader of the DWP union, released a statement supporting the “principles” behind the plan.

“There is still much work to do … but we are confident that there are solutions that result in the desired outcome,” he said.

The dispute erupted in September, after The Times reported that DWP officials had very little information on what the two nonprofits — the Joint Training Institute and the Joint Safety Institute — had done with tens of millions of ratepayer dollars since their creation. D’Arcy argued that DWP funding ceased to be public money — and subject to public records requests and auditing by the city controller — when it was transferred to the nonprofits’ bank accounts.

D’Arcy has said the groups have played a vital role in promoting a culture of safety at the city-owned utility. About $1 million a year has been used to pay salaries of a few of the nonprofits’ employees, including an IBEW president.

In recent months, D’Arcy rallied workers outside the DWP’s downtown headquarters and warned city officials they were asking for “trouble” if they withheld this year’s payment. Last month, after the nonprofits sent invoices for this year’s funding, Galperin announced he could not in “good conscience” write the checks without completing a thorough audit of the nonprofits. In reaction, the union filed an unfair labor practices claim accusing the city of violating its labor contract approved last year.

The plan adopted Wednesday says the city controller and city administrative officer would audit past spending and performance at the nonprofit trusts. But future annual audits would be performed by an auditor agreed to by both labor- and management-appointed trustees of the organizations. City officials said that would not prevent the controller from doing future audits.

The city also would withdraw its demand that union representatives recognize two new management trustees at the nonprofits who were appointed by the DWP commission and are allied with Garcetti: mayoral counsel Richard Llewellyn and DWP board member Michael Fleming. Under the council’s proposal, management trustees would include DWP General Manager Marcie Edwards and other managers or supervisors she chooses.

Replacing Llewellyn and Fleming was an incentive offered to union leaders in the proposed deal, said DWP commission President Mel Levine. He and Garcetti said that with new rules in place to ensure transparency and accountability, there would be adequate scrutiny of the nonprofits by new management representatives.

“Trust me, they will be tough,” said Garcetti, who was in Sacramento with other California mayors Wednesday. “Trust me, they will look at every penny.”

The DWP union has put financial resources into election efforts of at least nine of the City Council’s 15 members, giving directly or through a campaign affiliate, Working Californians. The union also has backed opponents of some of those now on the council.

City Council President Herb Wesson said lawmakers hadn’t given in to the union, arguing that tough conditions were being placed on release of any additional money to the nonprofits. If the union doesn’t accept those terms, “there’s no agreement,” he said.

“Nobody is doing this because they are kowtowing to anyone else,” Wesson said.

Lawmakers said the plan could steer the city away from a knotty legal dispute.

Union officials said Galperin’s refusal to release this year’s funding for the nonprofits violated their labor contract. Several lawmakers warned that continuing to withhold the money could jeopardize hard-won concessions in that deal, including an IBEW agreement to forgo raises for three years.

The proposed settlement “removes the risk of losing all those savings,” City Councilman Bob Blumenfield said. “That’s the last thing the city needs.”

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Times staff writers David Zahniser and Chris Megerian contributed to this report.