MWD Fails to Document Deals

California’s largest water agency has paid community leaders and former elected officials millions of dollars in public relations contracts with sparse documentation of how the money was spent, a Times review of the contracts shows.

In the last five years, the Metropolitan Water District of Southern California, a wholesaler that provides water to half of California’s residents, spent $4.5 million on 44 public relations contracts. The contracts included little or no documentation explaining the qualifications of the contractors, why they were selected and what they accomplished, despite the public agency’s policies requiring that information.

The consulting contracts supplement the work of MWD’s own external affairs department, which has a staff of 60 and an annual budget of $15 million.

Of the 44 contracts -- most of which paid monthly retainers ranging from $5,000 to $40,000 -- 27 went to former elected officials, prominent community leaders and relatives of sitting politicians. Among the recipients were former state legislators, a sitting mayor, the son of one state senator and the husband of another.

Many contracts called on the recipients to lobby “opinion leaders” they knew on behalf of the agency. Other contracts focused on outreach to business owners or on public education about the MWD and water issues such as conservation.

Only five of the 44 contracts had competitive bids. MWD rules allow the contracting of professional services without competitive bidding but require that officials justify in writing why a contractor was chosen over others. No justification was provided in the majority of the public relations contracts.

MWD officials said use of politically connected consultants is an efficient way to publicize the agency. But Adan Ortega, MWD vice president for external affairs, acknowledged that the district has inadequately documented its choice of contractors and their accomplishments.

“In the business of lobbying, being too elaborate [in publicly available records] could hurt you more than help,” Ortega said. “It’s frankly awkward. You hire them for a very simple reason: who they know.”

Ortega said that the water district should have included the required information and that it has increased oversight of contracts to reduce such lapses.

A state audit released in June criticized district policies on consulting contracts, which it said leave the agency “vulnerable to allegations of favoritism” and “allegations of inappropriate use of district funds.”

“It seems like an awful lot of money to buy the relationships in the local community,” added Robert Stern, coauthor of the state Political Reform Act and president of the Center for Governmental Studies, a Los Angeles-based public policy research group.

While sole-source contracts sometimes make sense, Stern said, the potential for abuse requires that public agencies provide detailed documentation about how the contracts are awarded and what services the consultants provide.

That would help the MWD avoid the impression of conflicts of interest and give the public a clearer sense of how its money is being spent, Stern said.

“This is public money we’re talking about,” he said. “It’s a little too cozy.”

The Metropolitan Water District does not sell water directly to consumers. Rather, it transports water from Northern California and the Colorado River, stores it and sells it to local water districts that don’t have enough groundwater to supply their residents. Those districts, whose representatives sit on the MWD’s 37-member board of directors, resell the water to their customers.

The 75-year-old agency has long been at the center of California’s water wars. Last year, it completed a 75-year agreement among seven states on the allocation of Colorado River water. And it has fought off some customers’ efforts to get their water from private firms.

Educating decision-makers and the public about the sometimes invisible role the MWD plays in providing Southern Californians with water is central to its mission, agency officials said.

Anaheim Mayor Curt Pringle, a veteran Orange County Republican and former speaker of the state Assembly, received $139,000 for two contracts with his lobbying firm Pringle and Associates. The water district sells Orange County more than 17% of its water, and the Anaheim City Council appoints a representative to the MWD board.

Last year Pringle received $30,000 from the agency to “provide strategic advice” and get community input on the Colorado River agreement. The MWD has no documentation of his activities, but Pringle said he spoke with Orange County business leaders, activists, officials and people in the water industry.

As mayor he has the power to vote on MWD issues, including who represents Anaheim on the Board of Directors. He disclosed the contract in a statement of economic interest required by the state, and recused himself from two of the three votes involving the MWD that came before him while he was under contract. The third vote came days after the official start of the MWD contract, but three weeks before Pringle signed it.

Six months after the contract ended, Pringle and the City Council voted to replace Dale Stanton, who had represented Anaheim on the MWD board for six years and who has been described by some directors as a consistent challenger of MWD management. Stanton was replaced by Anaheim Councilman Tom Tait, an ally of Pringle.

Pringle said in an interview that Stanton’s stands on the MWD board had nothing to do with the City Council’s decision to replace him and that he had cleared his vote beforehand with the Anaheim city attorney.

In another contract, Tom Soto, the son of state Sen. Nell Soto (D-Pomona), received $360,000 through his public relations firm PS Enterprises to help present MWD positions to Gov. Gray Davis’ administration and environmental groups.

According to MWD records, Soto held at least two meetings with state Sen. Dean Florez (D-Shafter), whom he has known since they attended UCLA together. Soto briefed Florez on MWD negotiations with Cadiz Inc., a water company with a large subsidiary in Florez’s Riverside district, MWD officials said.

Leo Briones, the husband of Sen. Martha Escutia (D-Whittier), received $260,000 in no-bid public relations contracts in a two-year period ending last year. Escutia regularly votes on bills affecting the MWD.

Briones provided “strategic advice” about communicating with American Indian tribes, MWD officials said. Though Briones did not contact the tribes directly, Ortega said, he did arrange a meeting between Ortega and Congressman Joe Baca, a San Bernardino Democrat. Baca “listens to the San Manuel tribe,” which had raised concerns about a water tunneling project, Ortega said.

More than a third of MWD public relations money has been spent hiring San Diego County community leaders to educate the public and spread the MWD message.

The county is MWD’s largest customer, relying on the district for 85% of its water. San Diego County and the MWD have fought bitterly over the last decade on issues including the Colorado River agreement and replacing MWD water with desalinated sea water from private companies.

The MWD paid a former chief of staff for a San Diego city councilman $365,000 to undertake “community education projects” with groups such as the League of Women Voters. And it paid the former chief executive of the San Diego County Hispanic Chamber of Commerce $155,000 for “business outreach services.”

George Mitrovich, founder of the civic group San Diego City Club, received $145,000 for “business outreach services” through his consulting business Mitrovich and Associates. The contract required “timely written reports of updates and developments ... no less than monthly,” but a Times review of contracts found no record of such reports.

Mitrovich said he attended breakfast, lunch and dinner meetings, and participated in conference calls with MWD leadership as part of a team of public relations consultants.

Mitrovich’s brother Dan received more than $859,000 in contracts through two companies he owns with his wife, Linda, a former councilwoman in the San Diego suburb of Poway.

In 2001, Dan and Linda Mitrovich’s Solution Strategies Inc. was paid $240,000 over seven months to “create opportunities for constructive dialogue with business communities.” Linda Mitrovich said she and her staff set up meetings and made introductions to help educate the San Diego community about MWD’s positions on water issues.

During a four-month break from her MWD work, Linda Mitrovich established a limited liability corporation with Sherrill Ivey, the wife of MWD Executive Vice President Gilbert Ivey, according to corporation records filed with the California secretary of state’s office.

Three weeks later, Gilbert Ivey administered a contract with one of Mitrovich’s companies for $250 per hour to “provide assistance and advise” on water issues.

Mitrovich, who said she is social friends with Gilbert and Sherrill Ivey, said she did not recall becoming a partner of the LLC and had no financial relationship with it. Records filed with the secretary of state’s office list Linda Mitrovich as a manager, but show that only Sherrill Ivey and an attorney signed the corporation records.

In response to queries from The Times, both MWD’s general counsel and ethics officer reviewed the issue and found that Gilbert Ivey had not violated any law or district policy.

Deni Elliott, the ethics officer, did suggest a number of changes to MWD policies to avoid a future “perceptual perfect storm.”

Sacramento was another focus of MWD’s public relations efforts.

Mike Roos, a California assemblyman from 1977 to 1991, received $245,000 over a recent two-year period. Ortega said Roos, who runs a consulting firm, was hired in part because of his relationship with George Kieffer, chairman of the Los Angeles Chamber of Commerce and a member of Gov. Arnold Schwarzenegger’s transition team.

Former state Sen. Richard Polanco, who spent 16 years in the Legislature, was paid $65,000 in 2002 to “promote [MWD’s] corporate message.”

MWD officials said he introduced district officials to various Native American leaders, whom Polanco had met while negotiating gambling pacts between tribes and the Davis administration. For example, he advised the MWD on dealing with the Pechanga Band of Luiseno Indians in Riverside County, who were affected by an MWD pipeline project there.

He later received an additional $40,000 for “strategic counsel” on MWD’s negotiations with the union that represents its workers.

Polanco, who does some consulting work, declined to comment on his work for the agency. But more than a decade ago, he made headlines for harshly criticizing the MWD for its lobbying expenditures and accounting procedures.

In a speech before the board in 1991, the then-assemblyman began by saying: “I’m here to talk about sweetheart contracts, shadow lobbying -- and the general underhanded way this agency operates.”