L.A. Signs Up to Walk Into Suit : Litigation: The city seeks to intervene in state’s legal action over funds for maintenance of two landmarks to ‘protect interests.’

Concerned about the fate of the landmark Hollywood sign, the Walk of Fame and the royalty money the two landmarks generate, the city of Los Angeles is trying to intervene in a lawsuit filed by the state attorney general’s office against the Hollywood Chamber of Commerce.

City Atty. James K. Hahn has filed a civil complaint that would make the city an official party to the lawsuit, so that it can participate in the settlement negotiations currently under way between the state and the chamber. The state Justice Department last month sued the chamber in an effort to force it to pay as much as $700,000 in royalty money that the civic booster organization was supposed to have set aside for upkeep of the famous sign and walkway.

Hahn contends that, because the money would ultimately go toward maintaining and upgrading the two public landmarks, “it is necessary for (the city) to intervene in order to protect those interests.”

The chamber’s control of the sign and walkway have enabled it to make as much as $100,000 a year by charging companies for use of the landmarks in their advertisements and films or their likenesses in souvenirs and other products.

A judge must approve the city’s intervention in the suit, and a hearing is set for Jan. 13, Asst. City Atty. John F. Haggerty said this week.

Deputy Atty. Gen. Jim Schwartz, who is handling the case for the state Justice Department, said he supports the city’s involvement in the case.

“I think it’s appropriate that the city become a key player in this,” Schwartz said. “The purpose of these trusts is to maintain and preserve landmarks within the city of Los Angeles, so the city is a very important party.”

City Department of Recreation and Parks officials have been vocal about wanting to take over control of the Hollywood sign from the chamber. By doing so, the city would be able to use potentially hundreds of thousands of dollars in royalty money and user fees to maintain and preserve the sign and to pay for improvements that would allow tourists better access to the world-famous landmark. The chamber has been accused of misappropriating the royalty money for its own use, and allowing the sign and walkway to fall into disrepair.

“Our concern is that the sign is maintained properly and that the money goes for its upkeep and its preservation,” said Linda Barth, a Recreation and Parks management analyst who handles administrative matters regarding the sign. “Naturally, we have been enthusiastic about taking over the trust because we want to see those objectives met.”

The city has said it has no interest in controlling the Walk of Fame and its brass and terrazzo stars along Hollywood Boulevard.

Chamber officials, however, have made it clear that they want to keep at least partial control of the landmarks. Although the sign is on city property on the side of Mt. Lee in Griffith Park, the chamber has controlled the landmark through a nonprofit trust since raising money to refurbish it in 1978.

Schwartz and Haggerty both said they could not comment on the status of the case, including whether the city or the chamber will ultimately control the sign.

Under a proposed settlement earlier this year, the chamber was to relinquish control of the sign to the city, but that settlement was scuttled by chamber officials in a last-minute attempt to appeal their case directly to Atty. Gen. Dan Lungren.

Since then, some city officials have said that the city needed to intervene in the negotiations over the settlement of the case to protect its interests. Some officials have said privately that they fear that Lungren’s political and personal relationships with chamber leader Johnny Grant could give the chamber an unfair advantage in the settlement. Those city officials have said they especially fear that Lungren may be negotiating a settlement that would allow the chamber to continue to reap financial rewards from its control of the sign.

Haggerty said he is not insisting that the city assume control of the sign. The city is trying to intervene simply “to protect its interest and let all the parties know it has an interest in making sure the money is used to maintain both the Hollywood sign and the Walk of Fame.”