Water district gives millions in contracts to politically connected recipients

A water district that serves southeast Los Angeles County has awarded millions of dollars in contracts to politically connected individuals and organizations, which have helped the district fight critics and avoid outside scrutiny, public records and interviews show.

The Central Basin Municipal Water District’s relationships with state legislators, a former mayor of Bell and other political insiders have enabled the obscure utility to accumulate clout in Sacramento and in the industrial corridor along the 710 Freeway.

At the heart of the district’s political ties is the Oldtimers Foundation, a nonprofit organization that was run for many years by George Cole, a former Bell mayor and councilman who has served on the water district’s elected board of directors.

In the last five years, Oldtimers has received more than $2.5 million from Central Basin. Oldtimers provides low-cost housing, dial-a-ride programs and other services to municipalities. The water district has paid it to install water-saving toilets and promote water conservation, among other services.

Central Basin has also paid Oldtimers’ board president, former Assemblyman Tom Calderon, more than $750,000 in consulting fees since 2004 for political and legislative advice.

Calderon’s two brothers, both state legislators, have defended the water district’s interests in Sacramento. In 2009, Sen. Ron Calderon (D-Montebello) helped thwart an audit of Central Basin’s books. This year, Assemblyman Charles Calderon (D-Whittier) proposed legislation that could reduce the fees Central Basin’s customers pay for groundwater.

Tom and Ron Calderon, as well as Central Basin officials and contractors, helped finance a recall effort in 2008 against two council members in the City of Commerce who were critics of the water district, records show.

Tina Baca Del Rio, one of the targeted council members, said she had opposed Central Basin’s proposal to build a pipeline through her city. Baca Del Rio was recalled but won her seat back in 2009. The other council member, Robert Fierro, avoided recall by a narrow margin.

Central Basin is a wholesaler that sells imported water to dozens of communities and water companies in southeast L.A. County. The district has about 20 employees and hires contractors to provide most of its services. The five board members each represent a portion of its service area.

The district has come under criticism from customers, elected officials and the state auditor for a surcharge it imposed to help pay for a pipeline that distributes recycled water for industrial uses and irrigation.

Critics say the pipeline will never pay for itself and has become a costly burden on water customers.

Rep. Grace Napolitano (D-Norwalk), whose congressional district overlaps with Central Basin’s service area, said the utility has refused to share information about its finances and rate structure.

She also said it was a conflict of interest for Ron and Charles Calderon to sponsor legislation affecting an agency for which their brother is a paid consultant.

“I’m concerned about this water district and about who may be behind it for a power grab,” Napolitano said in an interview. “What is the end that they are seeking? That to me is the question.”

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Key Players

Click for a description of each person’s role.

George Cole

• Former executive at the Oldtimers Foundation, where he started in the early 1980s
• Former Bell city councilman charged with misappropriation of funds
• Former Central Basin board member
• Along with Ron and Tom Calderon, helped finance a 2008 recall effort against two council members in the City of Commerce who were opposed to a Central Basin project

Tom Calderon

• Current board president of Oldtimers
• A former assemblyman from Montebello
• His consulting firm, the Calderon Group, has earned about $750,000 in consulting fees from Central Basin over the last seven years. The Central Basin board has increased Calderon’s pay rate from $2,500 a month in 2004 to $11,666 a month this year
• Director of governmental affairs at Water 2 Save, a water conservation firm that has received $150,000 from Central Basin since 2009
• Middle of the three brothers — Charles, Tom and Ron

Ron Calderon

• Brother of Charles and Tom Calderon, current assemblyman and former assemblyman, respectively
• A state senator from Montebello
• Helped Central Basin avoid an audit
• Recently introduced a bill that would give Central Basin greater authority over another water district. The bill has yet to move out of the Senate
• Along with Cole and his brother Tom, helped finance a 2008 recall effort against two council members in the City of Commerce who were opposed to a Central Basin project

Charles Calderon

• Brother of Tom and Ron Calderon, former assemblyman and current state senator, respectively
• An assemblyman from Whittier
• Calderon has proposed a bill that would benefit Central Basin by reducing the fees its customers pay for groundwater. For now the bill has been shelved.
• Last month, one of his former staff members was hired as a public affairs representative at the water district

Rudy Montalvo

• Close friend of George Cole
• Appointed to Central Basin board of directors in 2007 after Cole stepped down
• Used to work out of Oldtimers’ headquarters
• Voted to give an $827,000 contract to Oldtimers despite water district staff recommendation of another firm

Robert Apodaca

• Current Central Basin board member
• Worked for Tom Calderon when he served in the Assembly

Ron and Charles Calderon said there was no conflict of interest because their brother does not influence their legislative agendas.

“I don’t think it really matters whether he is a consultant to the board or not,” said Ron Calderon. “What I am supporting is a water program that makes sense, whether he is there or not.”

Charles Calderon said he had nothing to do with his brother’s contract with the district, and added: “He hasn’t lobbied me.” He said Napolitano was criticizing him in anticipation that he might run against her some day.

Regarding the district’s association with the Oldtimers Foundation, Art Aguilar, Central Basin’s general manager, said Oldtimers had submitted the lowest bid on each of its contracts and did high-quality work.

Aguilar also said Central Basin played no role in Baca Del Rio’s recall. He said the district’s relationship with Charles and Ron Calderon was simply part of the legislative process.

“You go to the places where you know you can get some action. That’s how things get done,” he said. “There’s no other way.”

Political influence

For years, Cole’s positions on the Central Basin board; on the Bell City Council, where he served for nearly two decades; and at the Oldtimers Foundation conferred a rare level of influence in regional politics.

Cole worked at Bethlehem Steel in Huntington Park until the plant closed in the early 1980s. Then he went to work for Oldtimers and held a variety of leadership positions. At first, the foundation helped former steelworkers find jobs and social services. Over the years, Cole transformed the organization into a major contractor for municipal governments.

As chief executive, Cole earned a salary as high as $120,000 in some years, but most recently received about $95,000, the tax filings show.

He resigned his seat on the Central Basin board in 2006, after the Los Angeles County district attorney’s office began looking into a complaint that his roles at the water district and in Bell created a conflict of interest. Bell is one of more than 20 cities served by Central Basin.

In early 2007, the board of directors appointed Rudy Montalvo, a close friend of Cole’s who used to work out of Oldtimers’ headquarters, to fill a board vacancy. Montalvo was reelected the following year.

Central Basin has hired Oldtimers for services that include community outreach and installing environmentally friendly clothes washers and toilets, according to records obtained through the California Public Records Act.

Two of the three largest non-construction contracts awarded by Central Basin over the last five years have gone to Oldtimers.

One of them was to install 3,000 high-efficiency toilets in homes in Maywood and was worth up to $1 million.

Oldtimers got the contract even though district staff had recommended another firm.

Oldtimers offered to do the work for about $827,000, compared with $916,000 for EcoGreen, records show. The board was not required to award the contract based solely on price.

Central Basin staff identified Oldtimers and San Diego County-based EcoGreen Services as “front-runners” among four competing firms, according to a staff report.

Maywood’s city manager was allowed to review the proposals, with the contractors’ names redacted, and endorsed EcoGreen based on its experience and capabilities, the report said.

District staff also recommended EcoGreen because it had “excellent” references, had more experience installing large numbers of toilets and offered the “highest quality product.”

Michael Franchek, a co-owner of EcoGreen, said he was excited to get the news. But later, he said, a district project manager, Sally Flowers, called to ask if he’d be willing to give a portion of the work to Oldtimers.

“She said, ‘There’s a local guy, he’s done some work for the district, and some of the board members want to give this guy some work,’” Franchek recalled. “She mentioned the Oldtimers Foundation and that the principal of the firm was a former board member of Central Basin.”

Flowers declined to comment.

On the day of the board vote, Franchek said Flowers called and told him he wouldn’t be getting the contract.

He said he went to the board meeting anyway. Montalvo urged that the contract go to Oldtimers, Franchek said. He said Cole also addressed the board.

The board voted unanimously to give the business to Oldtimers. In the end, the foundation was paid $970,640 for the work.

In an interview, Montalvo said his relationship with Cole and Oldtimers played no role in his vote.

“I’m a labor man. I came out of organized labor, and that company was out of San Diego,” Montalvo said of Franchek’s firm. “And that played an important part. I was [saying], ‘Hey, you keep jobs here in our county, our people, our union brothers and sisters.’”

An attorney for Oldtimers said the toilet installation work was not done by union workers.

Aguilar said that Oldtimers presented the “lowest responsible” bid and that it was not unusual for the board to act contrary to staff advice.

“My own personal recommendation would have been Oldtimers,” he said.

Late last year, the state attorney general’s office issued a subpoena asking the Oldtimers Foundation for documents detailing its government contracts, including those with Central Basin. Shortly after, Cole took a medical leave from his position as chief executive of Oldtimers.

In October, Cole was one of eight current and former Bell officials charged with misappropriation of city funds. He did not return calls or emails seeking comment for this article.

Calderon links

Tom Calderon is board president of Oldtimers. The organization’s attorney said Calderon does not draw a salary.

But his consulting firm, the Calderon Group, has been under contract with Central Basin since 2004 for a variety of services, including coordinating meetings with elected officials and advising the district on dealings with state government.

The Central Basin board has increased Calderon’s pay rate from $2,500 a month in 2004 to $11,666 a month this year, and given him additional duties.

Calderon, who declined to be interviewed, also works for Water2Save, a Solana Beach firm that has been paid $150,000 by Central Basin since 2009 for water conservation services. The company’s website lists Calderon as its director of governmental affairs.

Campaign finance records show that four of the five current Central Basin board members have received donations from Calderon; his wife, Marcella; or his brother Ron. One of the four, Robert Apodaca, worked for Tom Calderon when he served in the Assembly between 1998 and 2002.

Tom and Ron Calderon were also among individuals and contractors affiliated with Central Basin who supported the recall of the two Commerce council members in 2008.

The targets of the campaign, Baca Del Rio and Fierro, had raised objections to a power plant in the neighboring city of Vernon and a proposed Central Basin water line that would have supplied it.

Ron and Tom Calderon donated a total of $2,500 to California Citizens for Good Government, a committee that supported the Commerce recall and several similar campaigns. Cole contributed $5,000, records show.

C2 Group, the water district’s Washington, D.C., lobbyist, gave $3,000. Other donors included a Central Basin attorney and one of the district’s main contractors, Del Terra Real Estate.

The district’s political connections have helped it defend its centerpiece project, the recycled-water pipeline.

In 2001, the state auditor found that ratepayers were paying millions of dollars a year through a “standby charge” to support the project even though there were serious doubts whether it would succeed. The report, by state auditor Elaine Howle, said Central Basin had “drastically exaggerated” the customer base for recycled water.

The standby charge affects owners of more than 300,000 properties, adding $10 a year to their property taxes. It generates $3 million a year for the district.

Despite the criticism, Central Basin has continued to expand the pipeline. About $16.5 million has been spent on the latest addition, a district spokeswoman said, bringing total construction costs to roughly $64 million.

In 2009, officials in cities served by Central Basin called for another review of the district’s finances. The group won the support of state Sen. Curren Price (D-Los Angeles), and momentum appeared to be building for another audit.

Then Price’s Senate colleague, Ron Calderon, intervened, calling for a meeting between Central Basin leaders, water companies and officials from nearby cities. In a letter to the district in August 2009, Price and Calderon wrote: “Senator Price has agreed to hold his request for the audit in order to give Central Basin the opportunity to answer its critics.”

Calderon later canceled the meeting.

“I am very disappointed that the meeting didn’t take place,” Price said. “I don’t know why it didn’t.”

Assemblyman Tony Mendoza (D-Artesia) said Ron Calderon discouraged him from getting involved in discussions about an audit. Mendoza said it seemed other legislators were reluctant to take on the issue.

“A lot of legislators work with both brothers, in the Assembly and the Senate, and they’d rather leave that alone than create hostility,” Mendoza said.

Ron and Charles Calderon have proposed separate bills that could benefit Central Basin and give it greater authority over the Water Replenishment District, which monitors the region’s groundwater usage. The two agencies have been competing for rights to manage groundwater storage.

Ron Calderon’s bill, SB 701, would give Central Basin “primary oversight” over groundwater in its service area.

For the last two years, the Calderons have also pushed legislation to create a new groundwater fee structure, which could lower the rates Central Basin customers pay to the Water Replenishment District while raising costs for some cities in Southwest L.A. County.

Charles Calderon said he’s shelved the bill for now.

sam.allen@latimes.com

hector.becerra@latimes.com

patrick.mcgreevy@latimes.com