Mayor’s Man at the Airport Quits Amid Contract Probes

Los Angeles Airport Commission President Ted Stein resigned Tuesday, the fourth member of Mayor James K. Hahn’s administration to quit in the last two weeks as local and federal prosecutors pursue allegations that city contracts have been traded for campaign contributions.

Stein, one of Hahn’s chief political fundraisers, had been under growing pressure to step down in recent weeks after his name surfaced in connection with the probes.

The attorney and Encino-based housing developer said Tuesday that he had done nothing improper but was resigning because he did not believe he could continue to champion Hahn’s controversial $9-billion LAX modernization plan.

“I’ve lost my effectiveness on the commission,” Stein said in an interview. He also released a two-page statement attacking his critics.

“For the past six months, I have been subjected to an array of false, defamatory and unsubstantiated accusations,” he wrote. “ ... I have not spoken until now in the hopes that these false and mean-spirited rumors would die of their own politically motivated weight.”

In accepting Stein’s resignation, Hahn continued to express faith in the man he had chosen to spearhead the city’s most ambitious public works project.

“No evidence had been presented to me of any wrongdoing by anybody,” said Hahn, who plans to move forward with the plan to dramatically reconfigure LAX. “Everything is on track.”

Stein’s resignation came two weeks after three deputy mayors announced plans to leave City Hall. They included Troy Edwards, a former Hahn fundraiser who had become the mayor’s liaison with the airport.

The departures were seen as signs, both of problems in the Hahn administration and of an overdue shake-up.

“The issue for me has never been about Mr. Stein,” said City Councilman Jack Weiss. “The one thing that has become clear to me ... is that there is a crisis of confidence in this mayoral administration, and today’s actions do not boost the level of confidence. We’re the second-largest city in the country, and the perception is growing that this administration is lurching from one piece of bad news to the next.”

City Councilman Antonio Villaraigosa and others said Stein’s departure would help dispel the cloud of impropriety at City Hall, where Hahn is trying rally support for his LAX plan and close a $250-million shortfall in the city’s budget.

“The only thing that surprises me about Mr. Stein’s decision to resign is that he didn’t do it sooner,” Villaraigosa said. “The federal and state investigations that have targeted him have implicated the entire city.”

Stein, a hard-charging negotiator, had been active in city politics and sat on numerous commissions for more than a decade. He first headed the Airport Commission in the mid-1990s when Mayor Richard Riordan tried to spend airport revenue on city police.

Stein unsuccessfully challenged Hahn for city attorney in 1997 then became an ally when Hahn ran for mayor in 2001, helping to raise a portion of the campaign’s more than $5-million treasury.

After Hahn’s election, Stein was appointed to head the Airport Commission and spearhead Hahn’s LAX modernization plan. The proposed reconfiguration would create a passenger check-in terminal near the San Diego Freeway and move one of the south runways closer to El Segundo.

With his confrontational style, Stein became a target of criticism by neighbors and airlines angered by the plan when it was introduced in 2001.

In December, City Controller Laura Chick said she had uncovered evidence of “potential illegal acts” during an audit of contracting practices at the airport.

Dist. Atty. Steve Cooley said last month that he was probing the possibility that contractors had been forced to “pay to play” at the city’s so-called proprietary departments. Federal authorities have subpoenaed thousands of pages of city records, including some from Stein. Harbor officials also received subpoenas last month to appear before county and federal grand juries.

The widening criminal probes prompted calls for Stein to resign. Pressure mounted after a story last week in The Times outlined an alleged “pay-to-play” scheme at the airport.

The executives of engineering company URS Corp. told authorities that their lobbyist had told them the firm needed to contribute $100,000 to the campaign against San Fernando Valley secession that was led by Hahn in 2002. When URS did not donate, one of its executives told law enforcement authorities, Stein said that the San Francisco-based company would never see another dollar of airport work.

The firm is the project manager for Hahn’s LAX plan.

Both Stein and the former lobbyist, John Ek, have denied the account.

In an interview Tuesday, Stein said there had been “absolutely not one scintilla of truth to any of the allegations that have been made by URS.” He said the allegations were diverting attention from improving the airport.

“It is now apparent to me that the distractions associated with the totally unfounded and malicious ‘pay-to-play’ allegations against me are interfering with the important work at Los Angeles World Airports and complicating speedy approval of the LAX master plan,” Stein wrote in a one-page resignation letter to Hahn.

Final environmental studies for the mayor’s airport plan are to be released later this month. The plan is expected to go before various city agencies, including the City Council, later this year.

Hahn said Tuesday that he had been talking with Stein for some time about the “aggravation” that Stein has endured since the scandal over city contracting erupted four months ago. Stepping down, Hahn said, “was Ted’s decision.”

The mayor acknowledged that Stein could be difficult to get along with, but he said that he had been happy with Stein’s leadership on the Airport Commission, which also oversees operations at Ontario International Airport and Van Nuys and Palmdale airports.

“Sometimes you rub people the wrong way when you focus on a mission,” Hahn said. “He was someone who was interested in moving forward and not listening to all the reasons why you couldn’t do something.”

The mayor refused to discuss any potential successors to Stein, but said he would “move very quickly” to name a replacement. The commission’s current vice president, Cheryl Petersen, will take over in the interim. Petersen is said to be among Hahn’s top choices for the job.

In addition, the mayor’s office approached Police Commissioner Rick Caruso several weeks ago about replacing Stein, according to a source close to the discussions. Caruso, who sat on the commission overseeing the Department of Water and Power under former mayor Riordan, was out of town.

Stein’s colleagues on the Airport Commission praised his leadership and cited several highlights during his tenure, including the awarding to LAX of the highest possible bond rating and the airport’s ability to meet stringent federal security deadlines.

Stein’s friends said he had become increasingly concerned about the allegations of wrongdoing. “He was very upset, as any person would be if they were falsely accused,” said Bill Ward law, a political advisor and fundraiser for Hahn and a business partner of Stein. “It’s been very hurtful to him.”

Stein said Tuesday that he was not finished with public service. “I still plan to be involved -- not today or tomorrow,” he said. “But I love this city and always have.”

Times staff writer Patrick McGreevy contributed to this report.