The issue before the Department of Water and Power amounted to a simple question: Why settle for one exorbitantly paid top executive when the department could effectively employ two at the same time, at double the expense?
Apparently, that was too much to resist. So as H. David Nahai voluntarily quit after only nine months as general manager — he’s becoming an adviser for Bill Clinton’s climate-control initiative — the nation’s largest public utility decided to keep paying him anyway, in a deal that costs $6,282 a week. That’s the equivalent of $326,664 a year, exactly what Nahai was earning before he quit.
Then the DWP board voted 3-0 (with members Jonathan Parfrey and Thomas S. Sayles joining board President Lee Kanon Alpert) to put Stetson-wearing, swashbuckling S. David Freeman — a polarizing figure who held the general manager’s job eight years ago — into his old seat at $6,250 per week, or $325,000 a year.
So DWP will be paying the equivalent of $651,000 a year on one GM position, ostensibly so that the very short-lived Nahai can share his vast “institutional knowledge.”
Critics points out that, beyond the waste, Nahai has decades less experience than Freeman, who headed the DWP from 1997 to 2001 and was chairman of the Tennessee Valley Authority, a vast, multistate power entity. Many people find it absurd to imagine Nahai sitting at Freeman’s elbow, telling him things he already knows.
“There’s a lot of questions,” says a grumpy Los Angeles City Councilman Dennis Zine, who introduced a motion demanding that the DWP explain itself. But the City Council will soon be peppered with angry questions, too, about whether it has the authority — or the moxie — to override Nahai’s sweetheart deal.
“Why would you have two general managers at the same salary?” Zine asks, when municipal services are being cut — including rolling fire-station closures, thanks to a budget crisis the City Council has yet to resolve. “How do you justify that?”
The DWP is a gargantuan profit machine for city coffers. It has attracted an increasingly sophisticated, angry team of citizen-critics. Its far-flung power plants, high-voltage wires, pumps and aqueducts seem almost to function on cruise control — until a disaster like the Sherman Oaks sinkhole that tried to eat a fire truck. With 1.4 million customers, 8,500 employees and a budget of $4.1 billion, it’s the kind of bureaucracy where a fat salary or two could easily slip down the nearest rat hole.
Maybe the DWP insiders do not grasp the fact that these days, citizens are watching. The Los Angeles Daily News caused an embarrassing splash in 2007 by publishing every DWP employee’s name, job and salary in a fascinating, searchable database that shows a lot of routine DWP jobs paying $100,000 and up, far more than industry salaries for such jobs.
DWP union boss Brian D’Arcy, of the International Brotherhood of Electrical Workers, tried to muzzle the newspaper in court, seeking to have the database banned. But twice, the Los Angeles Superior Court judge shut D’Arcy down, ruling, not surprisingly, that taxpayer-financed salaries are public information. And the peeved court made D’Arcy’s union cough up $17,213 to pay the Daily News’ legal bills.
Nahai’s deal was also shrouded in secrecy — so much so that, for at least a week after blogger Ron Kaye spotted the payout on a list of DWP board agenda items, nobody could figure out who had authorized it.
In fact, the five-member board of commissioners appointed by Villaraigosa never voted to approve it. Neither would anyone in DWP’s management confess to such a bold act. It seems as if the contract simply materialized — until DWP spokesman Joe Ramallo fingered Raman Raj, chief operating officer at DWP, who is now known to have given Nahai the rich deal after temporarily being named acting general manager when Nahai quit.
It’s not illegal, just bizarre. In Los Angeles, a city general manager can approve a hiring contract for less than $150,000. Nahai’s consulting stint ends December 31, so his contract tops out at $82,000.
Many people believe Nahai wore out his welcome with Villaraigosa by antagonizing D’Arcy, the leader of the electricians union that tried to silence the Daily News. According to this popular City Hall theory, the mayor engineered the golden handshake to apologize to his friend Nahai for buckling to the bombastic D’Arcy.
No one is admitting anything. Neither Villaraigosa nor any of his appointees returned phone calls to L.A. Weekly. The only key player to talk was Freeman, who evaded questions about Nahai — right after Freeman touted to the Weekly a new spirit of openness.
In this information vacuum, the outcry from bloggers and activists can be heard from here to the Owens Valley. “Nahai got the job because he was Villaraigosa’s pal,” says Douglas Epperhart, president of the Coastal San Pedro Neighborhood Council. But because Villaraigosa has a reputation for being disloyal to friends, Epperhart notes, “There’s a point where you become more a liability than an asset. For a guy like Villaraigosa, loyalty is a one-way street.”
Epperhart reacted to Nahai’s deal with blithe cynicism. “You get eased out, you get a consulting contract. It’s like everything else they do — it’s so far removed from normal life that you just sort of roll your eyes and say, ‘Here we go again.’ It’s how it’s done on Planet L.A.”
Reseda resident Michael Cohen, a member of the DWP Oversight Panel, a citizens watchdog panel, was more vehement, calling the situation “another flagrant abuse of ratepayers’ money, especially at a time when every dime is precious. Here’s a guy [Nahai] who, even when he was officially there, wasn’t on the job. He’s been disliked by everybody. ... He gets the golden parachute just because everyone else gets the same thing. On one hand, we’re so cynical we kind of expect it. On the other hand, what the f*** are they doing?”
In the aftermath of the Nahai controversy, City Councilman Greig Smith introduced a motion to create a special inspector general to keep tabs on DWP, who “would have complete and unfettered access to all records” and would operate “without interference from the DWP’s board ... the Office of the Mayor” or others.
So for six months, DWP will be run by the irascible Freeman, an often politically naive bureaucrat who was mystified when L.A. voters opposed solar power Measure B, cooked up in secret by Villaraigosa and D’Arcy and rushed onto the ballot in March, and widely seen as a full-employment act for D’Arcy’s IBEW union — at the expense of L.A.’s burgeoning private solar industry.
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Already, Freeman is struggling to avoid City Hall political messes. Tin-ear DWP bureaucrats put him on the spot last week, seeking a water-rate hike — in a region whose business sector and working families are suffering the highest unemployment in California (the figure for L.A. County is now at 12.7 percent). Proving he could be judicious, Freeman bowed to City Council pressure and decided instead to look into whether a rate hike is such a great idea.
Freeman was less nimble in handling the Sherman Oaks Neighborhood Council, agreeing to speak to residents furious over utility bills as high as $1,000 for a two-month period but failing to show up, and then sending an e-mail after the event began. According to one resident, Freeman stated he’d been “told” not to attend. Not true, says Freeman; somebody told him the meeting was postponed. “I would have cheerfully gone,” he says. “It was just a screwup.”
Either way, it illustrates the growing anger as Villaraigosa, the City Council and its various departments boost fees, surcharges, utility rates, sewer rates, trash fees and charges for other municipal services residents often feel they are already more than paying for.
Epperhart, who observed Freeman in action when the latter was president of the Los Angeles Harbor Commission, recalls how he liked to shout orders without displaying full awareness of what they entailed. Epperhart invokes an old rancher’s expression to sum up Freeman: “All hat, no cattle.”