City Council Concerns Delay DWP Bond Issue

A dispute over the selection of underwriting firms led to a Los Angeles City Council vote Tuesday to stop the Department of Water and Power from issuing $1.8 billion in bonds for infrastructure repairs.

“There was no reason today for driving a $2-billion bond off the cliff without any justification,” Councilman Jack Weiss said.

“You don’t want to make a decision without knowing all the information,” countered Councilwoman Wendy Greuel.

DWP General Manager Ron Deaton left the council chambers unhappy, saying the delay could save or cost the city money depending on whether interest rates rise or fall.

Deaton said that the DWP would try to structure a deal more to the council’s liking, but the agency needed to act fast so that it wouldn’t have to dip into operating funds to make improvements to its power and water systems.

The issue for several members of the council was that they did not like that the DWP relied largely on a New York firm -- Goldman Sachs -- instead of local underwriters to issue the bonds.

Councilman Tony Cardenas said he didn’t expect the delay to cause financial problems.

Cardenas said that if the bond issue was critical to the DWP, the agency could demonstrate that by quickly having another bond before the council.

If nothing else, the debate illuminated how the council, back Tuesday from a two-week break, has been conducting business. In the morning, the council’s committee on commerce, energy and natural resources voted down the bonds by a 2-to-1 margin, with Cardenas and Councilman Bill Rosendahl against the bond and Councilwoman Janice Hahn for it.

The item went to the full council in the afternoon and almost slipped through with a package of other legislation until Weiss and Councilman Tom LaBonge called it out for debate.

Then, several council members said they wanted a one-day delay so they could research the bonds.

But that was rejected on a 7-6 vote, a notable departure from the council’s practice of granting delays as both a form of horse-trading among members and public policy to promote informed votes.

Council President Alex Padilla said the vote was unusual but not unprecedented.

“Do we want to give local businesses more of our business?” Hahn said later. “Absolutely, but that’s not always a priority when we do a bond sale of this magnitude. I was uncomfortable the way this happened at the 11th hour.”