L.A.’s Effort to Tap Towing Revenue Stalls : Franchises: State law sponsored by tow truck industry blocks plan to recover percentage of income from official garages.

Los Angeles officials have hit an obstacle in their efforts to recoup money from lucrative city towing operations that currently pay the city nothing: a little-noticed state law sponsored by the tow truck industry.

The legislation, carried several years ago by state Sen. Alan Robbins (D-Tarzana) for the California Tow Truck Assn., stripped cities of authority to recover a percentage of the income earned by police-sanctioned tow garages, Los Angeles officials said.

A towing industry spokesman who helped write the legislation confirmed that was one purpose of the bill.

But Robbins, who has received several thousand dollars in political contributions from towing interests in recent years, said he understood the legislation would crack down on kickbacks being paid by towing firms, rather than curb cities’ franchising rights. “I don’t recall discussing that aspect of it with anyone,” he said.

The Robbins measure was adopted at a time that Los Angeles was threatening to introduce competitive bidding for its official police garages. The law now has become an issue as the City Council launches a major review of police garages with an eye toward increasing city income. Officials want to foster more competition for the exclusive rights to tow more than 200,000 wrecked, abandoned and illegally parked vehicles annually.

The Times reported Sunday that Los Angeles’ 17 “Official Police Garages,” the nation’s largest municipal towing program, have operated for 50 years as virtual lifetime monopolies. The garages reap up to $20 million per year in city business without formal contracts, regular competitive bidding or independent auditing.

City officials said the obstacles created by the Robbins 1983 bill were only discovered last year, despite Los Angeles’ extensive efforts to monitor legislation that affects the city’s interests.

Former City Legislative Analyst Ken Spiker, the executive responsible for overseeing the monitoring, became the lobbyist for the Official Police Garage Assn. of Los Angeles a year after the Robbins measure passed.

He said there was no connection between the city’s apparent failure to fight the legislation and his own hiring by tow operators who were among the backers.

“I didn’t even know the (police garage) system existed in 1983,” he said.

Under the 1983 law, cities may only charge towing firms a flat administrative fee tied directly to the costs of regulating their municipal towing program, Los Angeles officials say.

“It limits what we can recover,” said James Sobject, a city fiscal analyst. “Our original idea had been to put (the police garage business) out to bid and see who was willing to pay us the most.”

But last year, the Robbins legislation helped kill a proposal by Councilwoman Ruth Galanter that would have levied a 10% franchise fee on police garage receipts and raised an estimated $1.85 million per year for the city.

As an alternative, city analysts are now recommending imposing annual fees permitted by the Robbins legislation, but they say those fees are likely to be hundreds of thousands dollars less than franchise fees based on a percentage of gross receipts.

“That’s a much more limited option, in terms of money,” said Assistant City Atty. Pete Echeverria.

Spiker agreed, arguing that any new fees would have to be held to far less than $1 million per year.

Officials who monitor legislation for Los Angeles and other cities said they did not realize the potential impact of the non-controversial law when it moved through the Legislature.

The legislation was described, legislative records show, as a towing industry effort to crack down on kickbacks. Some tow truck operators had been paying private property owners for rights to haul illegally parked cars from their lots.

The measure’s broad language, however, also precluded “public entities” from receiving any commission or compensation for arranging tow services.

Richard Chappell, executive director of the California Tow Truck Assn., said he helped draft the law and part of his intent was to head off cities which were moving toward competitive bidding and collecting a percentage of the receipts from their towing contractors.

“I don’t think this should be a revenue source,” said Chappell. “I’m against competitive bidding . . . I think you get the worst operators.”

Chappell said he believed he mentioned the “twofold” purpose of the bill to Robbins. Robbins said he could not recall any such conversations. “It’s been eight years . . . if he did, I don’t recall it,” the senator said.

Dwight Stenbakken, a lobbyist for the California League of Cities, said his organization initially was concerned by the bill’s language, but ultimately took a neutral position after it was amended to allow collection of some types of fees. He said his organization would have fought the bill if the potential for restricting city franchising rights had been clear.

Records and interviews show Robbins has received more than $6,000 in contributions since 1984 from police garage operators, their lobbyists and political committees related to towing interests.

Chappell said his association has purchased tickets to Robbins’ fund-raisers. The group only contributes to “those who have carried a bill for us,” he said. “We’re just repaying them by going to a dinner.”

Robbins said he has carried only a few bills for the tow industry and they were not related to contributions. “The only bills I’ve carried were bills I felt were in the best interest of everyone,” he said.

Robbins’ legislation surfaced in a period when Los Angeles’ police garage owners were being threatened by competitive contracting and an overhaul of the system.

In 1981, the city administrative officer audited the city Police Department and called for competitive bidding and fixed-term contracts in the towing business. That led in 1983 and 1984 to an attempt by the city Police Commission to replace police garages through competitive bidding, but it was later abandoned because officials said the old system worked well and bidding was too time-consuming.

Chappell said the 1983 legislation was not prompted by the proposed changes in the city towing program.

Sobject, the city analyst, said he should have been sent the Robbins bill for comment while it was pending in the Legislature. “I never saw it,” he said. “I would have remembered it for sure.”

Other officials agreed the legislation should have been flagged for attention, but apparently it slipped through without being assessed by Los Angeles officials. “I just don’t have any record of it at this point,” said Michael Karsch, a city analyst who now tracks legislation.

Stenbakken, of the League of Cities, said his organization may seek corrective legislation based on the problem faced by Los Angeles.