L.A. lawmakers name conditions for paying $4 million to DWP trusts

L.A. Department of Water and Power union leader Brian D'Arcy said the union was still reviewing the proposal made by five City Council members about making payments to two nonprofits affiliated with the DWP.

Aug. 12, 2014 2:47 PM PT

Five Los Angeles lawmakers are proposing that the city provide a $4-million payment that is due to two controversial nonprofits affiliated with the Department of Water and Power only after city auditors are given “unfettered access” to their records and a long list of other conditions are met.

For months, the International Brotherhood of Electrical Workers Local 18 has been locked in a legal battle with the city over transparency at the nonprofit trusts, which are run jointly by labor and management-appointed trustees.

More than $40 million in ratepayer money has been directed to the nonprofits for employee training and safety over the years, but DWP executives say they have scant information about how the money has been spent. The union has so far blocked attempts by city leaders -- including Mayor Eric Garcetti, City Controller Ron Galperin and City Atty. Mike Feuer -- to gain access to the trusts’ detailed financial records.

The proposed plan released Tuesday would require the nonprofits to submit to city fiscal and performance audits for the last five years, along with annual audits in the future. If those audits found “any indication of illegality,” the money could not be spent. The proposal would also require both sides to drop lawsuits that they filed against each other.

City Councilman Bob Blumenfield, one of the five council members behind the proposal, said they were “setting the blueprint” for easing what has been a deadlock between city leaders and union officials. The council is slated to take up the plan Wednesday at a special meeting.

“We’re saying, Here’s a path ... Walk with us down this path. Put down your lawsuits. Put down these arguments. This is what you can get,” Blumenfield said.

Earlier this year, Galperin said he would not make the anticipated $4-million payment to the trusts, saying he couldn’t write the checks in “good conscience” without knowing more about the nonprofits’ spending.

Under the city charter, that decision would ultimately go to the City Council, which could overrule or sustain his objections to making the payment.

However, Council President Herb Wesson said that the lawmakers decided to explain where they stood before that decision came before the Council.

Members behind the plan argued that they had hammered out a set of conditions that would protect the city and its ratepayers.

In addition to the audit requirements, any trust payments would go into an escrow account and remain unspent for 120 days, according to the proposal. The trusts would also have to meet regularly and include management trustees chosen at the sole discretion of DWP General Manager Marcie Edwards.

Who represents management on the trust has been another bone of contention: Union trustees have refused to meet with management appointees allied with Mayor Garcetti. Their attorney argued that the two appointees were hostile to the goals of the nonprofits and wanted to shut them down. A Superior Court judge rejected that argument last month, saying the union appointees had to recognize them.

Reacting to the payment proposal, Galperin called on union leader Brian D’Arcy to cooperate with “the collective call for an unfettered audit and for accountability.”

“Today members of the City Council took an important step to support my call for a thorough audit of the two DWP trusts -- and to uphold my stand that funds must be withheld until a series of stringent conditions are met,” Galperin said in a written statement. “I have made it very clear that we must audit these trusts fully, make their workings transparent and hold the trustees accountable to ratepayers.”

Garcetti spokesman Jeff Millman said: “The mayor strongly supports this. We want transparency and this is transparency.”

However, the demand for both sides to drop their lawsuits could be a stumbling block. In reaction to the proposal, City Atty. Feuer issued a written statement saying, “We intend to proceed with our lawsuit to establish a receivership over the trusts in order to protect ratepayer dollars.” His spokesman Rob Wilcox did not immediately answer questions about whether that meant he would oppose the proposal.

D’Arcy could not be immediately reached for comment on the proposal Tuesday. Union officials earlier warned publicly that not making the payment would violate their labor contract.

Councilman Felipe Fuentes said that if the city was found to be in violation of that agreement, it could jeopardize other parts of the deal that saved money for the city, such as having workers forgo raises for three years.

He argued that their newly released proposal set out a way to avoid putting those savings at risk. Others added that the plan could help the city finally focus on other matters before the DWP.

“We have big issues to tackle ... aging infrastructure that’s falling apart,” said Councilman Mitch O’Farrell. “This has taken all the oxygen away from larger issues that are going to be important to Angelenos across the city.”

Times staff writer Jack Dolan contributed to this report.

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