Los Angeles officials are moving to keep developer
A City Council committee recommended last week that lawmakers rewrite an agreement that would have allowed downtown stadium developer AEG to work closely with high-level city officials weighing proposals for putting a new 1,000-room hotel next to the center if stadium plans fall apart.
The agreement sparked concerns last month from at least one civic watchdog, who questioned whether AEG's involvement in the design process amounted to a financial conflict of interest. The company already owns a 54-story hotel nearby — one that could face competition from a new convention center hotel — and has an alternative hotel site of its own two blocks away.
"I think that the city has made the right decision to allow a design process to move forward that is not influenced by a business interest that has an interest in the final decision," said Kathay Feng, executive director of the nonprofit California Common Cause, which looks at election campaigns and government decision-making. "It's good not to allow the fox to rule that henhouse."
The council is scheduled to vote Tuesday to rewrite its agreement with AEG, which signed off on the changes. Ted Fikre, AEG's vice chairman and chief legal and development officer, said the changes would preserve his company's ability to compete for development work on city-owned land around the convention center in the future.
"In an abundance of caution and to avoid even the appearance of a potential conflict, we have agreed to give up our contractual right to participate in the design process to ensure that AEG can be considered for any future convention center-related development opportunities," he said in a statement.
AEG has been trying for roughly three years to develop a 72,000-seat football stadium that would also result in construction of a new wing of the convention center. But city officials also have begun preparing a backup plan, saying lingering questions about the stadium project are making it difficult to book major events.
"We've seen that the tourism board is having a tough time bringing in business to the city because there's so much uncertainty about our facility — will there be a team or won't there? We will expand or won't we?" said policy analyst John Wickham, during a presentation to the city's convention center board earlier this year.
In October, Mayor Eric Garcetti and the council gave AEG until April to find a team. As part of that extension, the council set up a design committee to look at options for upgrading the convention center, including the possibility of developing a new hotel directly attached to the facility.
Robert "Bud" Ovrom, executive director of the city's convention and tourism agency, supports the hotel idea. But AEG, which has two hotels at the nearby L.A. Live entertainment complex, has questioned the move. The company, which also has a contract with the city to run the convention center, has suggested that a hotel be built on land owned by AEG on Olympic Boulevard instead.
For now, city officials are splitting the difference. They decided to solicit two sets of design proposals for upgrading the convention center — three with a hotel next to the facility and three without. AEG has agreed to provide $750,000 to cover the cost of architectural designs and economic analyses.
City officials had originally called for AEG to serve on the design review committee with representatives of key city agencies, such as the Bureau of Engineering. Two weeks ago, they said the city's agreement should be amended to ensure that AEG does not have a formal role in the architectural competition or developing the design criteria.
City Administrative Officer Miguel Santana, a high-level budget official, would not say whether he or anyone else at the city had determined that AEG faced a potential conflict. But he suggested the changes would ensure that AEG has the same status as any other member of the public weighing in on the process.
"This will clarify their role. There will be no conflict," he said.