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Architect of Riordan’s Blueprint for Streamlining L.A.

As senior managing director of the Wall Street firm of Bear, Stearns & Co., Michael E. Tennenbaum has put together some complicated deals.

From Bear, Stearns’ Los Angeles office, on the 32nd floor of a Century City high-rise, Tennenbaum was pivotal in financing the MGM Grand Hotel and folding Pacific Southwest Airlines into USAir.

But none of these or Tennenbaum’s other deals were as risky and tenuous as the long-shot enterprise that has taken up much of his time recently--heading the committee of business leaders that conceived Mayor Richard Riordan’s plan to reduce the size of Los Angeles city government. The savings would be used to enlarge the Police Department.

The committee is based on the old American notion that politicians and bureaucrats are incompetent. If a hardheaded business person were in charge, government would run smoothly and economically.

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This notion has been tested many times, most notably in Ronald Reagan’s state and national administrations. Invariably, the business executives, accustomed to a corporate world where people jump at their command, end up frustrated and confused by the compromise, consensus and many votes required in a democracy.

But the idea will not die. It helped elect Riordan in June, and is now firmly entrenched in his Administration.

The committee faces an especially difficult task because its members are challenging some of City Hall’s most entrenched interests.

The interests are varied. Powerful municipal unions will fight any attempt to reduce pension funds or turn over some city work to private companies. The Department of Water and Power, a semi-independent agency with great political clout, will battle efforts to reduce its operating expenses. The airline industry and municipal unions will oppose leasing the airport to a private company.

The vast scope of these proposals poses a political risk for Riordan. For their fate will help determine whether his Administration is a success or failure.

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I visited Tennenbaum in his office recently so I could ask him about what he’s done.

He’s a graying, tennis-playing grandfather who on that day was dressed in a sport coat, slacks, dress shirt and a Georgia Tech necktie. He’s a trustee of the university, his alma mater, and later in the day was to fly to Atlanta for a board meeting.

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“I was in New York from 1962 to 1977 so I watched the decline of one of the world’s great cities,” he said. But because he was a young newcomer from Georgia, Tennenbaum couldn’t crack the power structure. “I disagreed with a great number of policies,” he said, “but I was never in a position to influence events there.”

“I decided that living in New York had too many limits,” he said. “I moved from a hotel suite to Malibu beach and adjusted in about 12 hours. . . . My financial and professional success has been considerable, in terms of meeting my goals. Los Angeles has given me just about everything I want. It is a wonderful lifestyle.

“At the same time, for the past 3 1/2 years, I have had a sense of foreboding.”

Los Angeles, like New York, was going downhill, with decaying streets, failing schools and sewers and inadequate police protection, he said. Unlike New York, newcomers can break into the power structure here. Maybe that’s why we’re still rooted in the frontier notion of the stranger walking into town and being elected sheriff.

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“I had known Dick Riordan for 20 years,” Tennenbaum said. “We never did business, but we discussed business opportunities. We became friends. He’s just a really smart fellow and you can’t know too many smart fellows. . . . So after he was elected, I said I’d like to be helpful.”

A top Riordan adviser, UCLA professor Bill Ouchi, asked Tennenbaum to conduct a study of how the city could save money through improved leasing and debt financing practices. Tennenbaum quickly became convinced that a study of the entire city government was needed.

Now that the report is finished, Tennenbaum has this advice for the mayor: “We are talking about the welfare of the great mass of people of Los Angeles. We are saying this is the truth. . . . It is doable. Don’t let people tell you how difficult or impossible it is to do it. Just tell them to do it.”

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It’s one thing for Riordan to fire off such orders. But as Reagan found with his business task forces in Sacramento and Washington, it’s something else to get people to obey them.

Much of the program will be contained in the budget Riordan will soon submit to the City Council.

Riordan needs eight votes on the 15-member council to pass his budget. By the same token, his opponents require eight votes to remove the business leaders’ program from the budget.

Let’s say that the council wipes out the Riordan program and passes a budget that is unacceptable to the mayor. Riordan can veto it. His opponents would have to muster 10 votes to override the veto.

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Riordan’s game now is to gather enough votes to prevent the council from overriding his veto. That would put him in a strong position for mayoral-council negotiations that could produce a compromise.

Whether Riordan can do this will be determined by the political mathematics of City Hall, a much more complicated version of the art than corporate math. In the corporate world, the bottom line rules. Political mathematics are governed by votes, and by the people who cast them.


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