Hush-hush at the Los Angeles DWP
Until Tuesday, when he appeared before the City Council after some of its members suggested they might issue him a subpoena, Department of Water and Power interim chief Austin Beutner wasn't talking much about DWP Real Estate File J 84356 — which contains a recommendation by Chief Operating Officer Raman Raj to buy five costly properties on Hewitt Street and Colyton Street in downtown's Arts District as headquarters for a "Clean Tech Corridor" envisioned to bring high-tech jobs to L.A.
In fact, Beutner wasn't talking about much publicly at all since the DWP caused a political uproar for trying to hike rates stiffly last spring. The department finally wangled a more modest raise.
A recent audit by City Controller Wendy Greuel stopped just short of saying DWP's executives had lied during the April rate-hike fiasco, and some members of the Los Angeles City Council were furious after he blew off an initial public hearing slated to discuss Greuel's withering audit.
Greuel found that the DWP, which is owned by the citizens of Los Angeles, concealed its wealth from the council when it claimed it was in financial straits — an apparent ruse to avoid transferring $73 million to the city's general fund while it demanded a rate increase.
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"They had no reason to lie to council," Councilman Paul Koretz told the L.A. Weekly several days ago. "It could even border on criminal. Who made the decision [to claim the DWP couldn't transfer money to city coffers] is a real interesting question."
Koretz speculates that the mayor's office may have been involved in the DWP board's refusal to accept the council's recommendation of a smaller rate hike. "The decision only made sense from the mayor's point of view, because he didn't get funding for his environmental project," Koretz adds — referring to a vaguely envisioned green-energy initiative Antonio Villaraigosa wanted to fund with the steep rate increase sought by DWP. The mayor's office did not respond to the Weekly's request for comment.
On Tuesday, Beutner said he hadn't had time to come before the council some weeks back, having been occupied on cost-cutting measures within the DWP. He then let previous DWP chief S. David Freeman take over, and Freeman lashed out at Greuel's audit, eliciting groans when he declared, "If this were a football game, we'd give the controller a 15-yard penalty for piling on." Councilmember Janice Hahn responded, "I never remember a time in my time on council when I did feel so deceived, so held hostage by the department's refusal to transfer money." Villaraigosa's and Beutner's reluctance to engage publicly has left many inside and outside of City Hall suspecting that former corporate raider Beutner still has yet to get any real control of the operations of the vast utility department.
"I would have thought that having received a draft audit report accusing the department essentially of lying to council, that the DWP would have pulled out all the stops to open up and respond openly and transparently to the questions that the people have," City Councilman Paul Krekorian says. "That hasn't happened."
He adds, "It's offensive to the council but much more importantly, it should be offensive to the public. These are serious issues."
While nobody in city government can identify a specific need to buy the land at Hewitt Street, since taking control of the department, Beutner has only spoken of the possibility of selling off DWP real estate, and certainly not of buying new parcels for what some critics would call pie-in-the-sky projects.
Even Councilman Jose Huizar's office, in whose council district the site resides, remains uncertain about what is specifically planned there.
"At this point, we've been told the project is conceptual," Huizar says. "It could be a great project, but it needs to be thoroughly vetted publicly to ensure that I, along with the stakeholders in my district, know exactly what is being proposed."
Huizar has gathered together homeowners and DWP officials for initial discussion, and will broaden those meetings to look over the agency's "pre-design plans."
"It very well may be a good decision," Koretz says. "But the fact that we're buying property — at a time we say we might be selling property — is just indicative of the fact that the DWP doesn't really have a plan."
On April 20, the day before Beutner was named interim general manager, and a scant two weeks after the DWP insisted it did not have $73 million to transfer to the general fund, Villaraigosa's political appointees on the DWP board approved the purchase of 501 South Hewitt St., 537 South Hewitt St., and three adjacent properties on Colyton Street for $11.125 million.
The single-story, warehouselike brick buildings sprawling across three acres of land — roughly equivalent to three football fields — are in the heart of the Arts District northeast of Skid Row.
Residents of nearby Barker Block, a stylish live/work loft, tacked fliers to phone poles, declaring, "There goes the neighborhood," when the DWP expressed interest in the property earlier this year.
To satisfy public-disclosure rules, the DWP declared that the "Clean Technology Center and CRA Business incubator to be located at the campus are estimated to create approximately 350 new jobs, as well as develop and commercialize new energy and water technologies, and perform Smart Grid and electric-vehicle research and development."
In fact, the rudderless, disaster-prone, increasingly politicized DWP has no idea if any of these things will occur.
A Clean Tech Corridor was much discussed in the nascent days of the Villaraigosa administration: High-tech and low-tech green jobs would come to L.A., with local universites supplying the high-end positions and the labor union–friendly Los Angeles Alliance for a New Economy supplying the low-tech assembly, administrative and maintenance jobs. The DWP and its envisioned partner, the Community Redevelopment Agency, considered using one of the utility's existing pieces of land on San Fernando Road near Taylor Yard. But later, it chose to look for land that could be rehabbed to be glitzier, as a way to appeal to prospective high-tech workers.
But why the already property-rich DWP needed to acquire real estate to launch a project with no specific tenants in hand, and only a conceptual plan, at best, created a puzzle.
In his first week as chief of the DWP, Beutner conversely announced in the Los Angeles Times that he may consider selling off some of the city's Owens Valley acreage — a prospect that outraged former DWP chiefs and commissioners.
And a short time after the DWP board gave the green light to acquire the Hewitt property, Beutner told local media that he would even consider selling the department's widely recognized signature property — the John Ferraro Building on Hope Street, across from the Music Center — to raise $300 million.
Former DWP chief H. David Nahai recently told the L.A. Weekly that the Ferraro Building "is not just another corporate asset. It is the world-renowned headquarters of the largest municipal utility in the United States. It is a city landmark, an architectural gem, a student- and tourist attraction. It symbolizes the pride and dedication of the women and men of the DWP. It bears the name of one of the most revered leaders of our city. To even talk of its sale further depresses the already-low morale of the DWP workforce and tarnishes the image of the department."
Nahai added that "a sale is inadvisable even from a pure-business viewpoint. It makes no commercial sense to sell [the Ferraro Building] in this dismal real estate market."
Water-policy watchdog Emily Green worries that the erosion of trust between DWP and the City Council adversely affects the search for a long-term general manager who could take over from the clearly shaky and aggressively nontransparent Beutner.
Finding a new DWP general manager is Beutner's self-declared top priority, but now he is also slated to find a planning department chief following the sudden departure of Gail Goldberg, as shake-ups continue to roil the struggling Villaraigosa mayoralty.
"I have spoken to many urban water managers about the challenge of finding a successor to Nahai ... and they all say the same thing: Until the position is freed from such political wrangling and a professional water manager can get in there and start managing water, it would be folly to accept it," Green says in an e-mail.
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