DWP has been slow to spend millions in federal stimulus funds, L.A. audit finds

Los Angeles City Controller Wendy Greuel found that the city’s utility has been slow to spend its $112.7-million share of federal stimulus dollars and that the department’s initial estimates of jobs created in the program may not have been accurate and lacked documentation.

The city has received about $625 million in stimulus grants and loans, but officials have struggled to spend the money quickly because of extensive employee furloughs and the city’s lengthy processes for awarding grants and contracts.

Though President Obama signed the American Recovery and Reinvestment Act launching the program in February 2009, Los Angeles had spent only about 35% of its stimulus money by the end of 2010. The city’s spending rate has lagged behind those of other big cities, such as New York, Chicago and Minneapolis, according to its own analysis.

The city’s Department of Water and Power, which is the largest publicly owned water and power utility in the nation, received about 18% of the city’s share for water quality upgrades of major pipelines and the Santa Ynez Reservoir, energy efficiency programs, and a demonstration project to help modernize the city’s electrical grid. The department had spent more than one-third of its money by the end of January, city officials said.

In her audit, Greuel found that delays in starting some of the energy efficiency and conservation block grant projects have created a risk that the department will not be able to meet the guidelines set by the federal government for spending the money.

DWP officials have launched three of the five energy efficiency programs — one for utility rebates, another for retrofits for nonprofit groups, and an outreach program. The utility is trying to accelerate spending for the remaining two programs — one of which would provide energy efficiency retrofits for single-family homes — to meet the grant deadlines. The fifth program would study the feasibility of allowing customers to pay for energy efficiency upgrades over time on their bills. Two of the five programs were transferred to the DWP in June from another city department because of budget cutbacks, department spokesman Joe Ramallo said.

“We have corrected the deficiencies noted in the audit, and we have made significant progress since the review period in spending additional funds,” said Ramallo, who added that the audit had helped the department streamline its procedures for handling federal grants.

The controller’s audit also found inconsistencies with stimulus job counts. There was considerable confusion citywide about how jobs should be counted early in the program. After the program began, federal officials changed the guidelines for tallying those jobs, which now are based on the number of hours employees work on a stimulus project.

Greuel’s report said DWP officials initially counted the jobs created on the city’s smart grid demonstration project, which will be a joint effort with several universities through 2015, based on estimates instead of hours worked. Utility officials told Greuel they had addressed that problem by the second quarter of 2010.

The report was Greuel’s fourth tracking progress on stimulus spending, “and unfortunately all of the audits bring up similar problems,” she said.

“While I am hopeful that the new [stimulus] coordinator brought on by the mayor’s office will help expedite this money being spent, actions speak louder than words,” said Greuel, who is a potential mayoral candidate in 2013.

maeve.reston@latimes.com