The Pasadena City Council unanimously voted Monday night to overhaul the management of its scandalized Underground Utility Program.
A former public works employee and two accomplices face criminal charges for allegedly embezzling $6.4 million from the program for 11 years without notice until 2014. In light of the embezzlement scandal, the City Council approved a 13-point plan that will allow for more oversight of the UUP by improving documentation processes, internal controls and financial systems in the program.
Two councilmembers did not take part in the vote, as Tyron Hampton was absent and Victor Gordo recused himself because he lives on a street scheduled to receive undergrounding services.
Mayor Terry Tornek and Councilmember Margaret McAustin made sure to point out that the public should not confuse Monday’s vote with a vote to eliminate the UUP program altogether.
“I think we are having a completely separate discussion about the undergrounding program itself and whether it should continue or be altered,” McAustin said. “We have discussed that twice at Municipal Services and will be continuing that discussion. This item will come to the City Council, so we will be sure to give it a lot of publicity when we do have that public meeting.”
As for how the UUP is run, consulting firm Management Partners devised a list of recommendations to improve the program that Pasadena’s departments of Finance, Public Works, and Water and Power presented to the Municipal Services Committee in August. The MSC supported the improvement plan, passing it along to the City Council for approval.
The new guidelines for running the UUP include giving one department, Pasadena Water and Power, responsibility for the program.
“There was some concern that not one department was ultimately the authority on the program,” said Steve Toler, senior manager of Management Partners. Pasadena Water and Power “were the ones that mostly controlled the schedule of the program, and they were well suited to be able to handle that.”
Management Partners also recommended regular W-9 compliance audits for vendors in the accounts payable system, more staff to increase the level of financial analysis conducted for capital improvement projects and a review of policies and ordinances.
The consulting firm compiled the improvement recommendations after interviewing 11 staff members in the City Manger’s Office, Finance Department, Public Works and Pasadena Water and Power. It noted in its report that the city had already implemented several changes since last year’s embezzlement scandal broke but failed to adequately document them.
The scandal is widely considered among the most notable in the history of the city in recent times. The UUP was launched in 1968 with the aim of undergrounding all power and phone lines citywide, with cable lines added in the 1970s. The Underground Utility Special Revenue Fund bankrolls the UUP program. Money from this revenue fund derives from a surtax of roughly $30 annually paid by residents based on their electricity usage. Pasadena generates about $5.4 million a year in revenues for this fund, with $34.4 million in reserves for the fund at the start of the 2014-15 fiscal year.
The surtax’s future is uncertain, however. Management Partners recommends that the city examine how much of Pasadena’s utilities should be undergrounded and based on that finding, deciding if and when to discontinue the surtax in the coming years. At present, it could take several decades to underground utilities on all of Pasadena’s roads, so the consulting firm recommends prioritizing key undergrounding projects and potentially phasing out work beyond that.
The city of Pasadena is suing Danny Wooten, the former public works employee accused of stealing from the UUP, and his alleged accomplices, Melody Jenkins and Tyrone Collins, to recoup the $6.4 million embezzled from the program. The trio is expected to have a preliminary hearing related to the criminal charges against them in December.
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