City Hall's 2010 DWP Debacle 

How Beutner, Carr, Carson, D'Arcy, Freeman, Greuel, Raj, Santana, Szabo, Villaraigosa & Co. pushed L.A. to the cliff edge

Thursday, Apr 15 2010

Page 3 of 4

"When the mayor said he wanted to implement a city shutdown on April 12, and he set that as the effective date, he hadn't spoken to any of us," says Zine, who put aside time between a funeral and a workshop he hosts on coping with foreclosure to explain these antics.

"The mayor created a belief, a strong belief, that the right hand and left hand do not know what they are doing. That's not how the second largest city in the nation should be run."

Carr is a local minister whom Villaraigosa hired to run his still-unproven $20 million–a-year "antigang" program. Carr quickly won a promotion to become the mayor's chief of staff, "something he knows nothing about," Zine says. Yet Carr must now somehow wrangle powerful city department heads to move in the same direction.


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Former DWP commissioner Patsaouras is a fierce critic of the flashy four advisers and decries the loss of Santana, who was arrested just when the budget crisis and DWP brawl were approaching a crescendo.

"You have this piece of shit Jay Carson telling the L.A. Times that all the mayor wants is a $2.50-per-month utility charge, which was an outright lie" that dramatically understated the true hike, Patsaouras says of Carson, former spokesman for both Bill Clinton and Hillary Clinton. "Then the mayor comes back from Washington but cancels a press conference to explain himself. With the mayor and his aides giving a different reason and a different number each time, the public got outraged. The council was ready to go along with it, but then they got angry phone calls up the kazoo!"

The mayor's office calls it "ridiculous" that some question the depth of Villaraigosa's bench, noting that many among his broader team worked for Tom Bradley and Richard Riordan. Now, with the mayor's advisers looking something like a gang that can't shoot straight, Beutner's name has surfaced in speculation over Villaraigosa's possible choice to replace Freeman as chief of the DWP. If chosen, he would be the utility's fourth boss under Villaraigosa, who forced out his friend environmentalist David Nahai.

Nahai's controversial forced departure several months ago, in the wake of the mayor's major ballot-box failure on Measure B in 2009, set off widespread speculation that Nahai had displeased DWP union chief D'Arcy by failing to embrace the solar plan. That plan was a brainchild of D'Arcy's and Villaraigosa's. It would have greatly increased the size and power of D'Arcy's union.

During the current turmoil, D'Arcy actually tried to offer a compromise to end the quibbling but was ignored.

Nevertheless, "The truth is, the IBEW holds all the cards," says Parks, because its power is openly feared by elected leaders for the campaign cash it wields.

At the same time, the DWP's management team deftly uses secrecy to exert influence over L.A. ratepayers and the City Council. "The pattern for DWP management has been to come in at the very last minute and say they must have a rate increase, and withhold facts, such as hiding how much money they really have in all kinds of small pockets," says Parks.

He angrily cites findings by PA Consulting Group, whose recent report on the utility's finances shows, he says, that the DWP is sitting on a $450 million "cash-flow reserve," when for decades $150 million was considered sufficient. "The DWP is playing hide-the-ball" so it can demand rate increases, Parks says.

The prospect of mayoral insider Beutner running the DWP — and, like Nahai, lacking any experience running a public utility or big-city department — troubles some. Wall Street whiz Beutner is best known for his work advising the U.S. Treasury Department on ways to help Russian rabbit farmers find new loan sources. He co-founded Evercore Partners and served on the board of directors of the huge American Media firm, owner of the National Enquirer.

Says Patsaouras: "These people are getting the mayor into trouble. Beutner? Wall Street investment bankers go in a room, have martinis and steak and make a deal — and that is fine. But when you have public money and public agencies, there is a process, whether you like it or not."

But beyond the unease and rumors, serious economic issues remain that could imperil the city government and hurt core city services.

Economist John Husing, an expert on the recession and foreclosure crisis still gripping the Inland Empire, says Los Angeles elected leaders who are celebrating about "finding" $30 million in unexpected extra property and other taxes last week "clearly, fundamentally do not understand what this region is facing" for the next several years.

Parks agrees, saying, "That $30 million we 'found'? This is a blip. This is not a positive trend line of revenue coming to the city."

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