The dispute between top Los Angeles officials and one of the city's most powerful labor leaders intensified Tuesday when Department of Water and Power union boss Brian D'Arcy warned that the city was asking for "trouble" if money is withheld from two controversial nonprofits he co-manages.
City officials are considering holding back an estimated $4-million payment due in July to the DWP-affiliated nonprofits — which have already received more than $40 million from ratepayers to improve labor relations at the city-owned utility — because D'Arcy has declined to open their financial records.
D'Arcy, business manager of International Brotherhood of Electrical Workers Local 18, told hundreds of union members and their allies gathered outside the DWP headquarters Tuesday that if the city doesn't pay up, "they're looking for trouble and I know you can give it to them."
D'Arcy declined to elaborate on what kind of "trouble" he had in mind, but millions of ratepayers will be depending on his IBEW members to keep their lights on and their water flowing as the summer heats up. The vague threat ramps up the rhetoric in an increasingly bitter, months-long political and legal battle between city leaders and the union over access to the nonprofits' detailed spending records.
The nonprofits, the Joint Training Institute and the Joint Safety Institute, were created in the early 2000s when union revenue dropped after a contentious round of job cuts at the utility.
The nonprofits operated with little public scrutiny for years but drew new attention in September after The Times reported that DWP executives had only scant information about the groups' spending. Since then, neither DWP officials nor union leaders, who co-manage the nonprofits, have been able to explain to city leaders' satisfaction what the organizations have accomplished.
For months, Mayor Eric Garcetti, City Controller Ron Galperin and City Atty. Mike Feuer have been demanding a full public audit of the groups, but D'Arcy has used his position on the boards of the nonprofits to block access to the books. He claims the nonprofits are not city agencies and therefore are not subject to open records laws.
Annual payments to the nonprofits are, however, enshrined in the current labor contract between the city and the union, with the next payment due in a few weeks. That puts the city's elected leaders in the awkward position of potentially pouring more ratepayer money into what they've been characterizing for months as a kind of financial black hole.
At Tuesday's rally, D'Arcy argued that halting the payment would violate the contract. "Do what you said you were going to do," he warned city officials. "And quit playing politics. Because a deal is a deal."
But the Garcetti administration appears to be exploring a way out of paying.
The boards of the nonprofits are made up of an equal number of labor and management representatives. Months ago, two close allies of Garcetti's were appointed to those boards. Since then, D'Arcy has refused to hold board meetings, said Garcetti spokesman Jeff Millman.
"The union has put the trusts at risk by refusing to meet," he added.
Summary information released by D'Arcy in February shows that last year the trusts spent $1.7 million, or 44% of their revenue, on salaries, benefits and automobile expenses for their employees. DWP records show the trusts had eight employees in 2013.
The nonprofits also paid $207,202 for "meetings, conferences and travel" in the last two years, but the records do not indicate who traveled or where they went.
In January, Galperin subpoenaed the trusts' bank records and demanded that D'Arcy sit for an interview with city auditors. D'Arcy sued to quash the subpoenas in L.A. County Superior Court and lost, but the 2nd District Court of Appeal issued a stay while it reviews the lower court's order to turn over the records.
"Ratepayers and union members alike have the right to know if 40 million public dollars have, in fact, been spent to improve worker safety and training," Feuer said. "We should all be fighting for that kind of transparency, and I'm going to continue to do just that."
D'Arcy, whose union spent millions supporting Garcetti's chief rival in the 2013 mayoral election, has dismissed city leaders' demands for transparency as "political posturing." He argues that the nonprofits have made a significant contribution to improved safety at the DWP since their inception.
But DWP officials are quick to point out that the roughly $4 million that each year goes to the nonprofits is dwarfed by more than $117 million the department spends annually on its own safety and training programs for employees.
In a joint statement about Tuesday's demonstration, DWP General Manager Marcie Edwards and DWP Commission President Mel Levine said any suggestion that the department would not honor the current labor contract is "entirely false and merely an attempt to distract from the central issue at hand — transparency."
Levine, a former member of the U.S. House of Representatives and a Garcetti appointee, said no decision had been made on the July payment but that the board was seeking legal advice on its options to prod the union to hand over more information about the nonprofits' spending.
"Brian D'Arcy has stonewalled every effort to find out where $40 million went," Levine said. "We're looking for every possible means of obtaining this disclosure."
City Councilman Bernard C. Parks said withholding the money was "the logical next step" in the escalating battle over the records. "Why would we give you more money when we don't know what you're doing with the money and you refuse to tell us?" Parks asked.
But other union leaders, who so far haven't offered much public comment about the nonprofit imbroglio, stood with D'Arcy at Tuesday's rally.
"You have an agreement. It's been negotiated. The city signed it," said Maria Elena Durazo, executive secretary-treasurer of the County Federation of Labor. Once that happens, "you can't later come back and say, 'I want to use this piece to pressure you for something else.'"
Times staff writer Michael Finnegan and Alicia Banks contributed to this report.