Deal to get financial records from DWP trusts goes to utility board

Union leader Brian D'Arcy warned at a June 17 rally that Los Angeles was asking for "trouble" if money was withheld from two Department of Water and Power-affiliated nonprofits.
(Christina House / For The Times)

Los Angeles lawmakers are pressing ahead with a plan that could end the legal battles over two controversial trusts affiliated with the Department of Water and Power.

The City Council voted in August to seek a long list of conditions before ending lawsuits over the trusts and sending a disputed $4 million payment to the nonprofits.

The litigation was triggered when trust executives declined to open their financial records to city auditors. On Tuesday, the council met behind closed doors to talk about the settlement negotiations.


Afterward, Council President Herb Wesson said city lawmakers were sending the proposed settlement on to the Board of Water and Power. The utility board, which would need to approve the plan, is scheduled to meet Oct. 7.

“There’s light at the end of the tunnel,” Wesson said of the settlement talks.

City officials said the exact details of the plan would not be released publicly until after the final settlement was approved. Under California law, a public agency does not need to report a legal settlement until it is final, according to Rob Wilcox, a spokesman for City Atty. Mike Feuer.

City leaders have repeatedly raised concerns about transparency at the DWP-affiliated nonprofits, which are run jointly by labor- and management-appointed trustees.

More than $40 million in ratepayer money has been directed to the nonprofits for employee training and safety over the years, but utility executives say that they have little information about how that money has been spent.

Under the rough plan that the council approved in August, the trusts would need to give city auditors “unfettered access” to their records, allow the city controller and budget officials to perform audits covering the past five years, and agree to annual audits in the future, among other conditions. Both sides would also have to drop lawsuits against each other.

For months, the International Brotherhood of Electrical Workers Local 18 had refused access to financial details for the two nonprofits. Union officials have argued that the trusts are “independent of city government.”

Nonetheless, union leader Brian D’Arcy said in August that he supported “the lawful principles” behind the settlement proposal. The plan would also settle a dispute over who represents management on the nonprofit boards, allowing DWP managers and supervisors to serve on the boards instead of two appointees allied with Mayor Eric Garcetti that the union objected to.

In August, city leaders praised the settlement plan as a blueprint for ending the longstanding disputes over the trusts. In addition to the audit requirements, the proposal said any trust payments would go into an escrow account and remain unspent for 120 days — a lag time meant to ensure the city could stop money from being spent if it found “any indication of illegality.”

“The agreement protects ratepayer money by requiring the trusts to cooperate fully with my office’s audit before any money is released to them,” City Controller Ron Galperin said in a statement Tuesday. “I believe these actions will make the operations of the trusts transparent and guarantee that the trustees are accountable to DWP ratepayers.”

He added that if the plan is approved, he would “welcome the opportunity to audit the trusts.”

City ratepayer advocate Fred Pickel said Tuesday that based on what he had learned about the plan, he supported it, but declined to share any details because the settlement was not final.

“It’s a way for them to move forward,” Pickel said.

The plan emerged after Galperin announced he wouldn’t make an anticipated $4 million annual payment to the nonprofits. Galperin sent a letter to the council Tuesday affirming that he would withhold that money because he had been denied access to trust records, saying the charter allowed him to withhold payments if they might be “improper, illegal or unauthorized.”

The union filed a claim with a city board earlier this year, arguing that Galperin’s refusal to pay had run afoul of labor law. Last month, several lawmakers said they feared withholding the payment could jeopardize concessions the city achieved in a labor pact reached with workers last year.

In a statement Tuesday, D’Arcy said that the step would ensure that the nonprofit trusts continue to serve the utility and its employees, and would also “preserve the collective bargaining agreement reached last year that will save the city billions of dollars.”

“Local 18 thanks the City Council for their leadership in resolving this dispute and looks forward to moving ahead and working with DWP’s management to now tackle its toughest challenges ahead, including replacing its aging infrastructure,” D’Arcy said in the statement.

“Today’s action protects the ratepayers with audits of the trusts, restores the mission of training and safety all while avoiding litigation that could have jeopardized the salary savings and pension reform outlined by the memorandum of understanding negotiated last fall with the union,” said Councilman Felipe Fuentes, who heads a committee on energy and the environment.

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