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Ex-Cudahy manager's second job raises conflict-of-interest issues

While working as the town's top administrator, George Perez also served as a director of a private utility that sold water to the small Los Angeles County city.

November 13, 2011|By Jeff Gottlieb, Los Angeles Times
  • Perez was fired from his more than $200,000-a-year job as city manager in March with little explanation, but he remains president of Tract 180 Water Co.
Perez was fired from his more than $200,000-a-year job as city manager in… (Gina Ferazzi / Los Angeles…)

While working as the town's top administrator, Cudahy's then-city manager also served as a director of a private utility that sold water to the small Los Angeles County city, boosting his income by as much as $23,580 a year and raising conflict-of-interest questions.

In the dual roles, George Perez was both seller and buyer — setting rates for the water that was sold to the city, and then advising the city on buying the water.

Perez was fired from his more than $200,000-a-year job as city manager in March with little explanation, but he remains president of Tract 180 Water Co. Cudahy's former city attorney, who was terminated along with Perez, serves as the water company's lawyer.

Municipal government experts expressed surprise that Perez served in both positions simultaneously.

"I can say I've never heard of this kind of arrangement," said Kevin Duggan, West Coast regional director of the International City/County Management Assn. and former city manager of Mountain View, a small Bay Area city.

"It would be very unusual if a city manager is an employee of another company that happens to provide services to their city," Duggan said.

As a board member, Perez approves rate hikes and capital improvements, including pipeline replacement and well improvements. The company draws its water from local wells.

Although several municipal government experts thought Perez's dual positions constituted a conflict of interest, David Demerjian, head of the L.A. County district attorney's Public Integrity Division, said it does not appear that Perez committed any crimes.

Since Perez was appointed to the water company board in 2003, salaries of panel members have more than doubled and water rates for residential customers have climbed 63%. The company provides water to residents and the city itself.

Hector Rodriguez, who replaced Perez as Cudahy's administrator, said he is drawing up a policy that would limit the outside work Cudahy management employees can take. Such a policy would have prevented Perez from sitting on the water company board.

Tract 180 is one of three private water firms serving Cudahy. The small water company has 1,100 residential and commercial connections, all in the eastern section of the city, except for a few in neighboring Bell.

As a not-for-profit mutual water company, Tract 180 is owned by ratepayers who elect board members in annual elections. As with other corporations, shareholders may pledge their proxies to others.

Perez has long been a controversial figure in Cudahy. He was a city janitor before he was elected to the council and had no administrative experience or college degrees when his colleagues appointed him city manager in 2000.

An investigation by the Los Angeles County district attorney's office into Perez's hiring lasted two years but did not lead to any charges.

Under Perez's watch, Cudahy bungled an opportunity to expand one of its few parks by failing to account for the upfront portion of a $2.5-million state park grant. After several years, the state demanded that the money be returned. Assemblyman Ricardo Lara (D-Bell Gardens) has since saved the project by getting an extension.

Perez has been reelected to the water company board each year since his appointment and became president in 2008. "He saw it as a service to the community given his experience as city manager," said Stanley Friedman, an attorney representing Perez in his dispute over severance pay that he contends Cudahy owes him.

When Perez joined in 2004, board members' salaries were $9,106, according to Tract 180's tax returns. Water company attorney David J. Olivas said that in addition to their salaries, board members vote themselves a bonus each year, which has pushed their pay as high as $23,580. Last year, board members received $19,314.

"It's always a spirited conversation," Olivas said.

Board members are offered health insurance, Tract 180 General Manager Jesse Barreras said, but Perez didn't accept it. His city manager contract provided him with health insurance for life.

Meetings take place once a month, and few members of the public attend, Barreras said. He couldn't recall Perez ever recusing himself from a vote.

Cudahy Mayor Josue Barrios said he knew Perez sat on the water company board. Other council members didn't return phone calls or respond to emails, but Friedman said all were aware his client sat on the board and "were favorable to it."

Olivas said Perez received an outside opinion regarding potential conflict of interest before taking his water company position. He said the opinion was written by Rick Olivarez, Cudahy's current city attorney.

Olivarez, however, said he never was asked to provide an opinion on Perez. A public record request by The Times for city documents about Perez's relationship with Tract 180, including legal opinions about him serving on the board, turned up no records.

Board member Lenora Winger defended Perez. "Why is everybody after George all the time?"

Winger said the water company rates are raised only when the Metropolitan Water District increases its charges.

Metropolitan Water District spokesman Bob Muir said he wasn't sure what Winger was talking about. Tract 180, he said, has never received water from the agency.

jeff.gottlieb@latimes.com

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