Rent Cut Questioned for Equestrian Center : Finances: Two City Council members balk at a proposal to slash payments to the city in the hopes of bolstering the operator’s profitability.

A Los Angeles City Council panel Monday balked at slashing the rent a Burbank company pays to operate the often-troubled equestrian center at Griffith Park.

Councilman Joel Wachs and Councilwoman Rita Walters said they were “decidedly uncomfortable” with a proposal to revise the contract with LAEC Inc. recommended by the city’s Recreation and Park Commission. The revised contract would save the firm $1.2 million over the first five years.

“It may be that it’s a great deal for the city, but I don’t see that from this,” said Wachs, chairman of the council’s Arts, Health and Humanities Committee.

Wachs and Walters, the committee’s other member, said that before reaching a decision, they want to meet with the two parks commissioners who negotiated the contract, attorney-developer Richard Riordan and attorney J. Stanley Sanders.

Kenneth Mowry, general manager of LAEC, refused to comment on the panel’s delay. “We don’t want any controversy,” he said.

The Los Angeles Equestrian Center, located on 72 acres of city-owned land, includes a domed riding arena seating 4,000 people and stables for 700 horses.

The city contract to operate the center was acquired in February, 1990, by LAEC for $3.6 million as part of the sale of assets held by financially troubled Gibraltar Savings & Loan.

LAEC’s present contract requires the firm to pay 5.5% of its gross receipts annually, yielding an estimated $1,512,000 in rent for the first five years of the contract.

Under the proposed contract, LAEC would pay a flat rate of $50,000 for each of the first two years, $75,000 per year for the second two years and $100,000 the fifth year--yielding an estimated $350,000 in the first five years. In years six through 35 of the contract, LAEC would pay 4% of its gross receipts to the city.

The plan also calls for terms of the rewritten contract to be retroactive to May, 1990, requiring the city to refund about $142,500 to the Burbank firm.

Wachs repeatedly challenged the idea that the center should reduce contract payments to the city. “It’s hard for me to understand why the city should give up this money,” he said.

LAEC is seeking the change, contending that it cannot make a profit under the existing contract. Part of the problem, officials say, is the recession.

Sheldon Jensen, assistant general manager of the parks department, told the committee that under the existing contract, “it would be many years before they made a profit and then only a nominal profit.”

Jensen said the city’s calculations of how much rent to charge were based on LAEC’s making a 17% profit. Wachs and Walters said they viewed that rate of return as too high, while Mowry told the committee that the company was hoping to make a 12% profit.

Jensen also noted that LAEC has invested $1 million to renovate and upgrade the facilities at the center.

The council committee’s third position is vacant.