DWP Will Appeal Tax Penalties : Finances: Department official says there was no ‘willful intent’ to delay payment of property levies. Agency faces $339,000 in late fees.

Los Angeles Department of Water and Power officials Friday said they will appeal penalties of $339,000 being assessed by three California counties for late property tax payments resulting from a mail room snafu.

Eldon A. Cotton, DWP assistant general manager, said there is “ample justification” for appeals “since there was no willful intent in delaying the tax payments.”

“The tax checks were prepared and there was an effort to mail the payments,” said Cotton. “Therefore, we intend to take all steps available to seek waivers of the penalties.”

Based upon DWP’s $3.22-million payment to Inyo County, a late penalty of $333,407 has been assessed. For Kern and San Bernardino counties, additional penalties are about $5,300.

Inyo County Treasurer and Tax Collector John Treacy was not available Friday, but has said he saw no reason to grant a waiver to the DWP. “I’ve got to treat them like everybody else,” he said, even though the DWP owns about 30% of the taxable land in Inyo County.

The tax payments were three days late because of a series of errors by clerical and supervisory staff at the DWP.

Just how the multimillion-dollar payments were left lying about for three days was explained in greater detail Friday at a special meeting of the City Council’s Commerce, Energy and Natural Resources Committee.

Cotton told the committee that the checks were written and forms filled out in plenty of time to be mailed April 9--one day before the postmark deadline.

But a student trainee filling in for the “regular guy” in the mail room put the wrong amount of postage on the envelopes. “He didn’t know the difference between ‘registered mail’ and ‘certified mail,’ ” Cotton said.

A DWP messenger took the envelopes to the post office, but was told they lacked the proper amount of postage. The messenger returned to the DWP with the envelopes and left them on “the regular guy’s desk,” where they sat until the next morning, Cotton said.

Returning to work the next morning, the messenger spotted the envelopes sitting on the desk, took them to the student worker and explained the problem. The student worker, unsure what to do, returned the envelopes to the regular mail clerk’s desk and left for the weekend, Cotton said.

The error was not discovered until Monday morning when the regular mail clerk returned. By then, the payments were late.

“There were a number of flaws in the process,” Cotton said. He added that in the future, the DWP’s chief financial officer will personally oversee mailing of tax payments. The DWP makes 53 property tax payments to 19 counties in five states, Cotton said.

“I believe what this shows is that training needs to be better for the various people who follow through on the process,” said Councilwoman Joan Milke Flores, head of the committee. “I believe (the responsibility) goes to the supervisors who train these people.”