Former commissioner seeks BWL reforms in city charter

A former Lansing Board of Water & Light commissioner has proposed the city charter be changed to require the City Council to pick the BWL’s internal auditor instead of the public utility’s Board of Commissioners.

Dusty Horwitt, who served on the board for two years ending in 2023, said the process used to select the internal auditor can lead to decisions not in the public’s interest.

In a letter to the Lansing Charter Commission and interviews, Horwitt pointed out that board members are all unpaid volunteers. Consequently, while they often make decisions about complex issues, they are unlikely to have the time or expertise to understand them in detail. These decisions include installing new electrical generators, expanding services to a new service area or raising rates. Even though the general manager runs the BWL’s operations, ultimately these decisions rest with the commissioners.

In cases like these, the internal auditor will often do research for them, outlining the probable effects of different decisions.

Under the charter, the board hires and supervises the internal auditor, who works on a one-year contract.

“If the finding of an audit is critical of the board or the general manager, that might threaten the renewal of their contract,” Horwitt said.

Horwitt recommended to the charter commission that the City Council should hold the oversight authority, by hiring and supervising the internal auditor, just as it does in city government. “The BWL should be governed with a similar separation of administrative and oversight power.”

Horwitt also expressed concerns about the way BWL commissioners are appointed, though he did not propose any charter change. Horwitt said that the general manager has played a role in hiring at least some board members.

“Compounding the conflicts at the BWL is the fact that the general manager was significantly involved in my appointment and mentioned that he was involved in the appointments of at least some other commissioners,” Horwitt told the charter commission. “After I applied to become a commissioner, but before the mayor nominated me to serve on the board, the mayor asked me to interview with the general manager.

“I proceeded with the interview, but felt uncomfortable knowing that the general manager was involved in selecting at least one of his own supervisors. While serving on the board, the general manager once commented to me and other commissioners that he had helped win reappointment for some of the other commissioners.

“The general manager’s influence in selecting commissioners may be especially strong because only one person, the mayor, appoints commissioners, and it is often unknown to the public which candidates are being considered for appointment until an appointment is made.”

Peffley and Lansing Mayor Andy Schor disagreed.

“The general manager has zero input into the selection of the internal auditor,” Peffley said. “I don’t even meet the applicants until after they are hired, that is the first interaction I have with them,” he said.

Peffley said the internal auditor is selected appropriately. “It’s ridiculous that the board would not ask the internal auditor to do tough audits,” he said.

“If the audit comes back and exposes some deficiencies, that doesn’t make the board look bad, it makes the general manager look bad, but it shows that the board is actually doing its job,” he said. “I welcome those kinds of audits, because they help me do what the board has asked me to do.”

Peffley pointed out that the board has fired the last three general managers, so it is clearly firmly in charge of the organization.

“Mr. Horwitt never brought any of this up during his tenure,” Peffley said. “He voted for every audit.”

 Schor appointed Horwitt, an environmental consultant, to fill out an unexpired term.

“I certainly ask Peffley to chat with any potential nominees about the board,” Schor said, “just as I do with every other department director and appointee for those boards.”

He said city department heads routinely meet with applicants for city boards and commissions. “That’s fairly standard so people know what goes on at those boards,” he said. “And I value the opinions of my directors regarding nominees. But I make the final decision.”

The board has had its own internal auditor going back to at least former Mayor David Hollister two decades ago, he explained.

“As do several other city agencies such as the Lansing Entertainment and Public Facilities Authority and Downtown Lansing Inc.,” he said. “As do both our retirement boards. The city finance team and city external auditor get to review any of that information as well, including the audits that are done by these boards.”

Horwitt said that while he was on the board, he found that there was a general lack of information shared by management with commissioners, particularly on the major electrical expansion that was announced in July 2023, a project that was estimated to cost $750 million over 10 years. 

“We were provided with just a one-page data sheet and a 10-minute oral summary,” he said. “I have never seen this level of secrecy before.”

This pattern of low information continued across his entire tenure, he said.

For example, he learned about contamination occurring in private water wells from a nearby coal ash storage facility from an article in City Pulse. In another case, he claimed that he only found out that the EPA had cited the BWL for failing to conduct water testing over a three-year period from sources outside of BWL management. Finally, he didn’t feel that the board commissioners received enough information from management before several rate increases.

“There needs to be better communication from management to the board and the public,” he said. “It would have been very helpful to have the auditor look at these issues ahead of time because of the impact and complexity.”

“The solution is to have the City Council appoint the internal auditor, which is the approach taken for every other city agency,” he said.

“It’s important to have a good independent auditor who does not feel constrained in coming to conclusions that could upset the people who hired them,” Horwitt said.

 — VICTOR WOODDELL