William McCarley

When William R. McCarley started in the Los Angeles Bureau of Street Lighting in 1965--his first full-time job--he planned to spend a couple of years and then “look for a real job.” But he never left City Hall, instead climbing the Civil Service ladder to the highest levels.

A decade as chief legislative analyst, the top policy aide to the City Council. A year as chief of staff to Mayor Richard Riordan. And 2 1/2 years as head of the behemoth Department of Water and Power, the nation’s largest publicly owned utility and the city’s largest department, with a budget of $2.5 billion and about 9,000 employees. He even met his wife at City Hall.

A sign that his era had ended, McCarley said, is the city’s plan to build a new sports arena on the site of the Convention Center’s North Hall--one of the first projects he worked on. “I’m like an old NFL quarterback,” McCarley said during a conversation at his Mission Viejo home the first Sunday of his retirement. “My bell’s rung, my knees are shot, but I do have everybody’s playbook.”

The native California son of an Irish truck driver, McCarley arrived at City Hall when it was the tallest building downtown. In 1984, he became CLA, considered one of the city government’s toughest posts because of the politics involved in serving 15 separate lawmakers. When Riordan--a lawyer-venture capitalist with little government experience--was elected in 1993, he picked McCarley as his chief aide in an effort to complement his outsider perspective. The relationship was rocky, lasting only a year.

Close to the three decades of service required for a full pension, McCarley was named head of the DWP--a move many believe was simply a holding place until his retirement. But instead, McCarley--the first non-engineer to run the city-owned utility--attacked the new job with vigor. Responding to a private study showing the department rife with waste, he cut $100 million from its annual budget by slashing 2,000 jobs, partly through a controversial buyout plan. Then he reduced the rates for DWP’s large industrial customers, which bring in nearly half the department’s revenue.

All this was to prepare for 1998’s deregulation of the utility industry, when DWP will, for the first time, have to compete with private companies for customers. The city faces a staggering $7.9 billion in debt because of its investments in the water and power system. Now, leaders must figure out how to pay that debt off while continuing to lower industrial rates--or risk a politically unpopular rate increase for residential customers.

McCarley, 57, decided to leave this spring, after a spat with the City Council over whether to boost his salary. He has had job offers, but vowed to spend at least 60 days at home, some 52 miles from Los Angeles, where he says he left his heart.

The garden needs attention, and it’s been a long time since he worked on his beloved photography. The first weekend of his retirement, he baked banana bread. “I’ve been riding the tiger a long time,” he mused. “I need a little rest.”

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Question: You’re leaving DWP at a time when the department faces its biggest challenge ever: competing in a newly deregulated marketplace. How can the city best adjust to the changing environment and avoid a huge rise in residential rates?

Answer: It’s never a good time to leave, there’s always something going on.

To the people within the department: Learn how to work differently. This is no longer a utility where hardware is the answer. The system is not king. The customer is king or queen.

One of the more controversial things I did at the end was suggest that the dividends [rate discounts and subsidies to other city departments] be reduced . . . [Other utilities], over the past several years, they’ve been cutting dividend, and the price of their stock went up. They were using those dollars to buy out their debt to make themselves competitive.

During that same period, Water and Power--at least until I got there--was going on issuing debt, business as usual, and the dividend was high. Our dividend is 17%. Now what utility’s commission would allow it to pay out a dividend of 17%?

It’s a fool’s paradise to think that rates don’t need to be adjusted. The higher industrial rates need to be brought down to a competitive level, and I think it’s possible to keep the residential rates substantially and significantly below that of Southern California Edison and still pay the debt. It’s possible to keep rates below Edison’s . . . but higher than they are now.

All of this is very complicated when you get into it, but it’s really simple when you back off: Whose ox is going to get gored?

Q: You were the first person to run DWP who was not an engineer. What challenges did you face as an outsider, and how did you overcome them?

A: Leadership is not a function of technical expertise. When I first went to DWP, there was a lot of resentment. How could anyone who’s not an engineer run it? But the general manager’s job is not the job of an engineer. It’s leadership, finance, business, customers and so forth.

What is leadership? Leadership is the ability to bring people together, with different skills and talents, and get them to accomplish what’s necessary. That’s what needed throughout the city.

Q: You often refer to DWP as “the company”--interesting coming from a 32-year veteran of government work. With all the talk about running government more like a business, what’s ahead for the career bureaucrat?

A: Government is not monolithic. That’s a mistake that a lot of people make. Parts of it can be run more like a business and parts of it can’t.

Trying to run DWP, I felt like an Indy car driver with a 16-member pit crew that calls me in every other lap and tinkers with the engine and curses because I’m not winning.

Giving people the tools to do the job, getting out of their way and periodically checking on them rather than micro-managing is a key thing . . . .

Police and fire and some of the public-safety functions, you treat it one way. You look at the human-resources issues, you look at libraries and Rec and Parks, aging--those things are very sensitive. You don’t apply business techniques to them--they require something else.

But then you take DWP, Harbor and Airports--they ought to, in my mind, be treated just like a business. Pay the equivalent of business taxes, pay your help the same, demand certain outcomes and give the flexibility.

Defining those different things and then limiting the ability to let it degenerate into gamesmanship.

Q: You’ve sat at all sides of the table. Now we’re talking about rewriting the blueprint, with charter reform. Does it need to be rewritten? What’s wrong with it?

A: The charter does need to be rewritten. It’s 70-some years old now, and L.A. is a completely different place.

It’s deeply ingrained in our folklore that governments are inefficient, taxes are too high, it’s unresponsive . . . . Because people are frustrated. You can vote on this--you can’t vote on the price of gas or groceries or something else. Part of that is endemic to the process.

The current situation, everyone is talking about the shape of the table and who gets to sit where--the more critical thing is what needs to get done.

Understanding the difference between legislative and executive is important, but more important is understanding who is accountable for what and who has the power to do what.

One of the things that happened when I was CLA was we put the council on television. Was that good or bad? Well, it was certainly good because people ought to see what they do. But it’s led to a lot of demagoguery, puffery and performance.

It’s not just the council. It’s just the way it’s all set up. I’ve long thought the Controller should be appointed and should have some professional qualifications. If the City Attorney has to be a member of the bar, why shouldn’t the controller be a CPA? And why should the City Attorney be elected? He or she should be appointed, with a longer term . . . and extraordinary protections.

Q: Some people think it’s simply a struggle between the mayor and the council. What’s going on with the mayor and the council? Is it this mayor and this council? Is it endemic to the system?

A: They don’t like each other. I am a very big believer that good people can make any organization work. And the best organization can’t work if it’s dysfunctional because of its relationships.

The president said, “We don’t need a balanced-budget amendment, we just need somebody to recommend a budget and somebody to adopt it.” Well, the charter is very much the same thing. What you’re saying is, “I can’t do it myself, therefore I have to pass a law.”

The mayor is well intended. He’s a very successful businessman. [But] he does not know how to relate to the council. The council does not to how to relate to him.

Government is a place where different people with different ideas come together and work on problems that are damn near unsolvable, and divide up scarce resources without killing each other. It’s seldom efficient, always frustrating, nobody ever gets everything they want--but it beats the hell out of killing each other.

You’ve got a clash of ideologies and philosophies. I guess I would say, in all candor, pox on both of them--although a lot of them are my friends.

Those relationships are extremely important, and there’s a crisis in the city because those relationships are so bad now. If you start off approaching something by thinking, “You really don’t agree with me, you don’t know what’s going on, I don’t like you”--whether you say it or not--you’re not likely to make the kind of progress that needs to be made.

Q: What does the mayor need to do to be successful in the next four years, if he’s reelected?

A: The mayor confuses leadership with goal fixation, and stubbornness with strength. He wants to do better, but walking down the hall and really partnering with somebody is different than saying it or sending an emissary.

One of my concerns is that people will be opposed to things just because it’s his idea . . .

When I agreed to be Dick Riordan’s chief of staff, I and a lot of people thought we’d make a great combination. Here’s the old, successful, multimillionaire, Irish businessman and the middle-aged Irish bureaucrat.

Setting some realistic goals and not always pursuing unrealistic expectations. Fighting the belief that everyone can have everything they want and we can cut taxes, that everyone’s going to always get along--that’s not going to happen. I have a lot of respect for the system, or an understanding of what it takes to govern.

Let’s talk about what’s real. Is public safety a problem? Yes. Are community relations a problem? Yes. Are the answers in the budget? No. Should you pay for what you get? Yes. What does it cost and why does it cost that? Instead of jerry-rigging the thing and fixing blame and taking credit and all of those things . . . it’s leadership.

Q: What’s going to happen to downtown L.A. How does the city keep downtown vital--or revitalize it?

A: I don’t think that I’ve ever really felt that Downtown L.A. would ever become what some people thought it would: a thriving throng like Old Town Pasadena or whatever. I just don’t think it’s built that way. But it makes sense to invest in public facilities that have both an economic impact and a symbolic impact.

There are probably unrealistic expectations on both sides of the issue. Does that mean we shouldn’t invest in it, it shouldn’t be a nice place to work? No. The level of expectation is what I disagree with for some people.

That’s not L.A.--and what’s wrong with being L.A.? L.A. is L.A. Not the traditional Downtown for some people, but it has it’s own charm.

Q: Talk a bit about the DWP headquarters itself, one of the jewels of Downtown, What was it like to work there?

A: It’s a great symbol up at the top of the hill. One of the things I did as general manager was I turned the fountains back on. I don’t care how much the press or somebody else will criticize, it’s an important symbol. It’s the water department, it’s the power department . . . and it’s beautiful.

I don’t know if you were ever in the general manager’s office--magnificent place. I never held an interview in there with the electronic media because it’s big, it has an enormous view and it would have been misinterpreted.

The cafeteria downstairs is the favorite place for a lot of people, the auditorium . . . is made available to community groups. It’s a building that’s kind of timeless, survived a lot of earthquakes. It’s survived me.