IN STRIVING TO SHAPE LOS ANGELES into a great modern city, Mayor Antonio Villaraigosa has set high standards and surrounded himself with advisers and commissioners hailed as “the best and the brightest.”
Villaraigosa’s commissioners at the city’s three revenue-generating agencies — the airport, the harbor and the Department of Water and Power — have made it clear that the city’s stagnant ways of doing business cannot continue if they are to reach the lofty goals the mayor has set, such as a 20 percent renewable energy standard by 2010.
At the DWP, where dysfunction and scandal exposed the worst of Jim Hahn’s administration, Villaraigosa’s appointees face a top-heavy organization riddled with incompetence, cronyism and a compromised civil-service system, according to veteran employees, city managers and high-level DWP sources — hardly the foundation for a sweeping progressive agenda.
His DWP commissioners have acknowledged a creaky infrastructure nearing the breaking point, an erosion of talent and innovation, questionable contracting practices, not enough vision and too much secrecy. “There is no clarity, no fiscal discipline,” says Commissioner Nick Patsaouras. “There needs to be more responsiveness to the customer.”
The board has been aggressive in scrutinizing contracts, lobbying costs and executive perks, such as writing classes and health club memberships. The commissioners say they are curious about a pair of safety and training institutes kept afloat with millions of dollars of ratepayer money that meet in private with little oversight. They have stressed the need to find a way out of the money pit in the Owens Valley, where the city has poured hundreds of millions of dollars into projects borne out of water lust and intransigence.
Radical change is needed, the board insists.
“This board will no longer be in the rubberstamp position our predecessors allowed themselves to be in,” Commissioner David Nahai said before a December 20 board meeting. “Our goal is to be transparent and root out fraud, waste and inconsistency.”
Added Commissioner Mary Nichols, president of the board: “Too much downsizing in the 1990s left the DWP unable to do for itself. We’ll be looking for ways to flatten the organization’s structure and bring in more skilled people. We don’t need more middle management, but we do need more engineering, communications and environmental expertise.”
In announcing their intent to reform the DWP, Nichols, Nahai, Patsaouras and commissioners Edith Ramirez and Forescee Hogan-Rowles have sought help from all corners of the department. Their sometimes harsh questioning of managers about longstanding practices has sent shock waves through the department’s upper echelons. Board meetings have become a lengthy ordeal for some.
Feeling emboldened, employees have been voicing criticism in public, in private meetings with the board’s grievance committee and via written correspondence to the board. Some managers have thanked the board for its curiosity and leadership. Others, like those overseeing the Owens Lake Dust Mitigation Project, have sulked, argued or defended themselves in a way that shows they feel insulted and attacked. Many upper and mid-level managers are deciding to retire. The DWP would not comment for this story.
Now, with space opening up at the top and scores of baby boomers eyeing their pensions, a major reorganization is under way. The board is about to find out what the DWP is really made of. If they follow the path they have laid out — the path of openness, fairness, efficiency and professionalism — they might get more than they bargained for.
Critics of the DWP, including some who left out of frustration, say the managerial ranks are full of employees who leapfrogged over more qualified applicants via patronage and manipulation of civil-service rules, non–civil servants who are underqualified or beholden to political patrons, and managers who have allowed the International Brotherhood of Electrical Workers Local 18, whose members compose 95 percent of the department, to push them around. “It’s not the department I went to work for,” says one former employee who chose early retirement.
“The board is going to put an end to generations of nepotism and favoritism,” says an optimistic high-level source at the DWP. “The civil service was designed to avoid the spoils system, but instead we’ve got demoralized employees and undeserving managers who get insecure and lash out. It breeds resentment and affects performance.”
AT THE DECEMBER 20 BOARD MEETING, Nahai turned his attention briefly to an anonymous letter that breaks down the DWP’s problems into five categories: transparency in the conduct of business, unchecked influence by the IBEW, low morale and productivity, impending infrastructure failures, and improper contracting practices.
“The fact that this letter is anonymous robs us of the opportunity to assess the writer’s credibility,” said Nahai, who has scheduled hearings before the board’s Personnel Relations Committee on January 27 and 31 for employees to testify under protected status about personnel complaints, including allegations of bogus promotions. He and commissioner Edith Ramirez, both attorneys, will preside. “We want people to come forward and not have their careers threatened,” Nahai said. In a telephone interview, he later added, “I don’t know if we will see a trickle or a flood. But I will do everything in my power to see that no one who comes forward will be retaliated against. The journey will take us where it leads, and the chips will fall where they may.”
The Weekly obtained a copy of the letter, originally sent November 21 to Nichols, and was able to identify and contact the writer — an 18-year veteran of the water system with no current grievances and who has direct authority over more than a half dozen people in a unit of about 80 employees. The same employee, who agreed to be interviewed but asked to remain anonymous, wrote to City Controller Laura Chick and City Attorney Rocky Delgadillo on August 18, 2004, in a detailed memo previously obtained by the Weekly, regarding allegations of “false claims, abuse of authority, use of position for personal gain and conflict of interest, by one or more employees of the DWP.” Before that, the employee had written to the Ethics Commission about concerns over questionable multimillion-dollar contracts to repair corroded water mains. High-level managers in the water system had interceded in an internal investigation and terminated it, the employee wrote.
Recent history at the DWP shows that signing such letters and identifying oneself does not guarantee a protected status. Nor does it ensure follow-through by officials who have been put on notice. On September 16, 2004, Assistant General Manager Mahmud Chaudhry wrote a “for your eyes only” letter to then-Mayor Jim Hahn. In that letter, Chaudhry blamed managers for abdicating their duties and the IBEW for abusing strike threats and its leverage over weak managers to install its cronies and control the department. “The IBEW is in control and is steering the DWP toward total disaster,” Chaudhry wrote, urging a return to a true merit system.
HAHN TAPPED RON DEATON to be general manager. A former chief legislative analyst, he was known as an effective and occasionally as a Machiavellian administrator. After more than a year with Deaton at the helm of the DWP, the jury is still out. One issue is productivity, with DWP’s overtime costs roughly triple what they were in 1998, according to the department’s own figures, and double the next highest city department for non-sworn civilians. Deaton has presided over costly power outages, a dubious salary negotiation with the IBEW, contracts and the use of lobbyists deemed wasteful by the board and, recently, a flap over bottled water.
Board members admit they have wondered whether Deaton is suited to run the nation’s largest public utility. After surviving cancer last year he is eligible to retire, and sources say he has made informal inquiries in the retirement office. He is the highest-paid city official, with a salary of more than $300,000. “I give him 12 months,” says one commissioner. “I’m sure he’s asking himself every other day whether he wants or needs this job,” says another.
City and DWP employees who know Deaton say he loves a challenge, and that pride will not allow him to walk away so soon. “Logic and reason say he already would have left,” says one assistant city manager. Chaudhry is puzzled that Deaton never sought input after his letter to Hahn was obtained by the Weekly and published last March. “I feel someone should have sat down and talked to me, to agree with me or not,” says Chaudhry, who has been out on sick leave since late 2005.
Instead, Chaudhry was ostracized, according to colleagues who witnessed his decline in stature and health. With a new board in place, Chaudhry says he is interested in meeting with Deaton to discuss priorities at the DWP, and whether there is a place for him in the re-organization. High-level sources at the DWP, however, seem surprised that Chaudhry is considering a return to the DWP. More likely, some say, the DWP will encourage Chaudhry to retire with a generous benefits package, and hope that he will not become a hostile witness in any current or future legal proceedings.
ALL OF WHICH FOCUSES ATTENTION on personnel changes at the DWP and raises concerns about succession in the old-boy network. A key departure is the retirement of Assistant General Manager Thomas Hokinson, head of corporate services. Hokinson is a former chief of civil litigation in the City Attorney’s Office under Hahn, and a former chief assistant city attorney for the DWP.
By most accounts a skilled attorney and member of the Hahn-era old-boys club, Hokinson has been a magnet for criticism. Court records and reports to the board show he has been accused repeatedly throughout his career of condoning harassment, discrimination and retaliation, including police and private surveillance, while a manager in both the City Attorney’s Office and at the DWP. In the 1990s, he allowed the DWP to enter into confidential settlements with employees in violation of the California Public Records Act. According to deposition testimony in a discrimination lawsuit filed by a former assistant city attorney, Hokinson was having an affair with a legal secretary. (Photos and documents show the assistant city attorney was followed by police officers in her off-hours.) The Weekly has learned that the secretary, after taking on supervisory duties in the DWP’s legal offices, was the subject of a recent internal investigation and that, according to sources familiar with the matter, she no longer oversees other employees.
Hokinson also has supervised some of the department’s more disruptive managers, who kept their jobs or rose in stature after facing allegations of misconduct or ignoring them. Director of Security Services Gonzalo Cureton, who reports to Hokinson, approved two promotions of an employee despite internal findings that the employee sexually harassed a female security officer, according to documents obtained by the Weekly. Manager of Fleet Services Thomas Anderbery, who also reports to Hokinson, had been accused of retaliation and making false statements, according to reports to the board and public comments before the City Council. In 2004, Hokinson promoted Anderbery to general services manager, which includes a $36,000 per year raise. Last year, after Hokinson and Anderbery had approved the firing of a truck driver who testified to racially motivated discipline of a black supervisor, a Los Angeles judge overturned the decision as “arbitrary and capricious.”
High-level sources at the DWP say that Hokinson also has protected Manager of Facilities Maintenance Al Sosa, who has been targeted for possible disciplinary action. Arnold Netka, a materials manager who oversaw an inappropriate cleaning supplies contract that the DWP was forced to terminate, went before a City Council panel with Hokinson in 2004 and gave misleading statements, according to documents obtained by the Weekly. Instead of Netka being scrutinized or disciplined, a warehouse supervisor named Luciano Yi was fired after he protested the inappropriate contract. Yi is suing the DWP.
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THE DWP HAS A HISTORY of manipulating the civil-service system,according to findings of the Board of Civil Service Commissioners. Veteran employees and city managers say the promotion offavored sons and daughters and the hiring of well-connected non–civil servants have produced mixed results. Chief Operating Officer Henry Martinez was hired as a contractor in 1998 to provide strategic direction to the power system. He became acting general manager during the peak of IBEW dominance. In his letter to Hahn, Chaudhry wrote that Martinez is “beholden to the IBEW” and has a record of “questionable calls,” including the unilateral decision to allow the IBEW to control appointments to key management positions. In a July 23, 2004, exposé, the Weekly reported that Director of Human Resources Michele Nagin and Director of Labor Relations Peter Lakatos gained promotions after bypassing the civil-service process, raising questions about their credibility, according to DWP sources familiar with the promotions.
“The gene pool is certainly limited up there,” says one city manager, asking not to be identified by name. “They might as well be playing banjo on a porch. There’s no new blood, and when someone comes in from the outside, the people who feel insecure go after them.”
If Villaraigosa’s commissioners aim to clean up the DWP, a difficult overhaul could be in the works, including clashes with the IBEW. Sources familiar with the IBEW say the union is already chafing about the terms of the joint labor management agreement, which gives it a say in much of the DWP’s business.
Or, there could be a continuation — perhaps equally difficult — of what Commissioner Nahai recently called the “steady drumbeat” of employee discontent. Which could signal that the DWP is not ready or able to achieve the progressive goals of the mayor and his appointees.