Massive $340-million turf rebate program plagued by poor planning and oversight, audit finds

The Metropolitan Water District’s massive $340-million turf rebate program — which helped thousands of Southern Californians rip out their lawns in favor of drought-tolerant landscaping — was plagued by poor planning and oversight by the agency, a new audit found.

The rebate program was a key element of California’s drought response, and officials say it helped residents conserve water. But the audit found that the MWD did a “less than satisfactory” job administrating the program due to “inadequate planning, execution, and follow-up.”

As a result, MWD auditors concluded that the agency may have overpaid a contractor tasked with inspecting turf replacements, and that the contractor also may have failed to perform some critical inspections it was required to carry out.

The findings represent perhaps the most scrupulous examination of the popular but costly lawn removal program, which was designed to help urban Californians sharply reduce their outdoor water use during the drought.

Residents began flocking to the program after MWD doubled the size of its rebate to $2 per square foot in 2014, and it grew exponentially after MWD poured an additional $350 million into the conservation program a year later.

Some watchdogs have long feared that the size of the program would lead to waste — and possibly fraud — without strong oversight.

During the period that auditors reviewed, MWD received more than 85,000 applications to remove about 270 million square feet of turf. More than 46,000 of those applications were approved for a payout of $239 million.

MWD spokesman Bob Muir estimated that the audit, which was performed at the direction of the agency’s board, covered the period from May 2014 to July 2015.

“It was extraordinary what [the program] was able to accomplish,” he said. “We were more than satisfied with how the program was managed. We know that we can do better and we need to do better.”

Auditors agreed that the program successfully drove water conservation.

But they also criticized MWD on a number of fronts.

A review of turf removal applications processed through Nov. 30, 2015, showed that the contractor, EGIA, was paid for completing aerial measurement testing for 212 applications for projects of a certain size. But only 121 such applications were reported as having been measured, the report found.

Five applications for turf removal of more than 50,000 square feet were not reported as having been inspected by EGIA at all, even though the firm was required under its contract to inspect all projects of that size. The auditors noted that the five applicants were collectively paid $4.4 million.

The auditors cited two cases in which an applicant got paid to remove significantly more turf than the applicant did.

Muir said he did not know if the examples cited by the auditors represented “actual fraud,” though he acknowledged that they were “obviously something that needed to be corrected.”

The auditors also assailed MWD for failing to “provide detailed instructions” on how the contractor should have checked the applications.

For example, auditors said MWD failed to provide step-by-step instructions on how to measure parcels manually, check customer information and inspect applications that proposed removing more than 50,000 square feet of lawn.

In a letter responding to the report, Deven Upadhyay, an MWD manager, said his team generally agreed with the findings.

Upadhyay wrote that his team has “made changes to the ongoing administration of remaining turf-removal wait-list applications and will incorporate the recommendations into the design of any potential turf removal programs … in the future.”

matt.stevens@latimes.com

Twitter: @ByMattStevens

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UPDATES:

10:05 a.m. Dec. 10: This article was updated to clarify that MWD added $350 million to its water-conservation program in 2015 and that the audit was performed at the direction of the agency’s board.

This article was originally published at 8:40 p.m. Dec. 9.