Cash-strapped water program puts small businesses at risk

David Duel didn’t think he’d have to lay off 45 of his 52 employees.

But that’s what the 23-year-old and his two partners, Sean Neman, 23, and Kevin Refoud, 25, did in April after their company, ReGreen, didn’t receive $900,000 for water efficiency work from an incentive program run by the Metropolitan Water District of Southern California.

“In every sense, we’ve had to downsize our company,” said Duel in a barren office so new that fresh paint scent was still in the air.

The incentive program provides rebates to customers and vendors such as ReGreen, which installs water-efficient devices, including toilets and washing machines, for clients.

Though the program has been highly successful -- the demand has increased threefold in the last two fiscal years -- it was suspended in May because of the overwhelming number of requests, said Bob Muir, a spokesman for the MWD. The district sells water to 26 public agencies in Southern California.

“We weren’t able to keep up with the demand that was coming in,” he said this week.

By the time officials did catch up -- after adding $20 million in funds to the program, suspending it, then auditing it -- they found they still had $14.2 million in outstanding payments to customers and vendors.

Through the audit, the agency found that there had been a breakdown in financial controls and that the organization “failed to stop further rebate application processing once management was aware that the program was oversubscribed,” according to audit documents.

Debra Man, chief operating officer for the district, said the organization’s intent is to pay outstanding debts within the next 30 days.

“We will make every effort to make sure they will be reimbursed,” she said. “We recognize that it is important for us to pay the validated pending payments as soon as possible.”

But it might be too late for some.

Marie Ager, director of California Toilet Replacements, said her family’s business is owed $282,165 for installing high-efficiency toilets in multifamily apartments in Los Angeles, San Diego and Burbank.

“We pay for all the toilets. We paid the plumbers. We did the work,” Ager said.

Ager said she’s not doing business anymore because she can’t afford to pay plumbers or buy the toilets from vendors.

“Our credit’s been cut off,” she said.

She has mortgaged her house and so has her father.

“I’m going to lose my house, and my father is going to lose his house if they don’t pay us,” she said.

As for ReGreen, the company’s 7,000-square-foot building in downtown Los Angeles is almost empty except for some energy-efficient lightbulbs and remnants of empty cubicles. The company has restructured to focus less on rebates from government agencies and more on green consulting for businesses, and it is starting to bustle again, like it did before this spring.

“We’re just trying to survive,” Duel said.

-- Nicole Santa Cruz

Comments

[m.b. seiko]

Only in California would business build a plan that would rely on government rebates to remain in business and profitable!

[FreeRepublican]

So what? They should have tried to earn money with a real business. There's no "water shortage" it's made up by the eco-commies. They were probably looking for a hand out from Obama to save them. A tax wasting program runs out of money and a greedy "small business" runs out of handouts? Good. Cut off ALL welfare and stop taxing us!

[Eric W.]

@FreeRepublican, there's no water shortage? What is your evidence for this seemingly baseless claim? And why berate a business as "greedy" when clearly you're a Libertarian who presumably believes self-interest is the best societal motivator? Something about your indignant criticism doesn't add up.

[So Cal Hydrologist]

FreeRepublican, you're doing a great job of making the Republican Party look like ignorant blowhards. Here's the current status on California's largest reservoirs: Trinity Lake, 49% full; Shasta, 56%; Oroville, 50%; New Melones, 52%; Don Pedro, 84%; McClure, 61%; San Luis, 19%; Pine Flat, 48%. These are real numbers, not fantasies like you hear from Rush. Paying a private party to install water-conserving devices makes expensive new dams less likely, saving the ratepayers, including you, tons of money. It might even prevent water rationing from being imposed on those same ratepayers, including you. You're welcome.

[Concerned citizen]

To Ms. Ager,

While the MWD owes you money and are cutting back on conservation efforts, they have a plan which will be presented to the MWD Board of DIrectors the second week in August for enhanced retirement for Management and employees. While I do not begrude employees asking for raises, MWD Board members should be accountable for cutting back on things that benefit the state rate payers, while spending money for enhanced benefits for employees and managmeent, as well as swank all day seminars for managers.