Charter Debate a Dilemma for Business Leaders

The campaign to rewrite Los Angeles’ charter, which once seemed an opportunity for big business to recapture its place in city politics, increasingly seems to have left corporate leaders on the outs and facing a tough decision: Forge a compromise on a politically sensitive issue or fight to kill the most ambitious reform effort in years.

At the center of the debate is a relatively new and elite group of big-business representatives who call themselves the Los Angeles Business Advisors. They have called for a more centralized government in the name of efficiency--a system that also would allow business to more easily influence it.

But charter commissions have pursued a more decentralized government in the name of neighborhood empowerment.

The resulting standoff has left the business group with its awkward choice. If it compromises on centralization, it risks relinquishing the place it sought for itself in re-energizing civic affairs; if it holds out, it risks alienating itself from an effort touting grass-roots involvement and handing advocates of that effort a politically unpopular foe.

A spokesman for the big-business group has repeatedly implied that it is prepared to fund a campaign against charter reform.

But recent interviews with some of the business leaders and their aides, as well as with civic leaders who have had contact with them, suggest there is also a willingness to compromise.

The situation, clearly in flux, was outlined recently by one of the key aides.

“We’re heading for compromise,” said Mark Hazelwood, Arco senior vice president for external affairs. “But there’s not a lot that can be compromised before we’re in a real dilemma.

“If we don’t feel we are advancing the cause of more efficient government, then we’ll have to make a critical decision--whether to support charter reform at all.”

The key area of controversy is the role of neighborhood councils.

The business leaders do not want them in the charter. And if they have to accept them, they want the councils to have the least power possible.

They particularly do not want them to be elected, for fear that elected officials will inevitably try to carve out more substantial roles for themselves. If they are elected, they want safeguards that will make it as hard as possible for neighborhood council influence to expand.

Top Executives Make Up Group

The Los Angeles Business Advisors consists of 26 mostly multimillionaire white males who are top managers of mainly publicly traded companies in and around Los Angeles. Some of the companies have vast national and international holdings valued in the billions of dollars.

By some accounts, its most influential member is its chairman, Arco Chief Executive Officer Mike Bowlin, a relative newcomer from Texas who has lived on and off in Los Angeles for seven or eight years. Another key player is a relative newcomer from Minneapolis, Times Mirror Co. Chief Executive Officer Mark Willes, who also serves as publisher of The Times. Neither Bowlin nor Willes was available to comment for this article.

The group’s membership also includes representatives of big banks and utilities. But notably absent are representatives of the entertainment industry and the small and medium-size businesses that are driving the region’s current economic rebound.

Its newest member is former Secretary of State Warren Christopher, the city’s best-known lawyer and one of its most respected civic leaders. He headed a commission that rewrote a small portion of the charter in the aftermath of the Rodney G. King beating to give civilians more control over the Police Department.

Those local leaders came together just as the movement to rewrite the Los Angeles City Charter was taking hold and as response to disaffection in the San Fernando Valley that was showing itself with threats to secede. But the movement quickly became entangled in a dispute between Mayor Richard Riordan and the City Council over who would control the process.

Acting as individuals or through their companies, five members of the Los Angeles Business Advisors lined up with Riordan and contributed $225,000 to help fund his successful effort to create an elected commission that could bypass the City Council. An elected commission could put proposed reforms--which Riordan hoped would include a measure to strip the City Council of some powers--directly on the ballot.

Riordan’s initiative passed, but by then the City Council had countered by appointing a second commission answerable to it.

With charter reform getting under way in two venues, members of the Los Angeles Business Advisors spent $100,000 to educate themselves on key issues, contracting with the Rand Corp. to prepare what amounted to a survey course in local government structure.

City Council Size Becomes Key Theme

The report that Rand produced contained the seeds of what became the big business group’s central theme--a radical expansion of the City Council from its current 15 members to either 33 or 35.

Council expansion appealed to the executives because it seemed to satisfy several objectives:

* It would keep the government in one place, which would make it easier to monitor and lobby.

* It would complement the drive to shift more executive authority from the council to the mayor by reducing the power any individual council member would have to get in the mayor’s way.

* It would address the clamor for more neighborhood representation by reducing the number of constituents per council member from the nation’s highest, at 240,000, to an average figure for big American cities, 100,000.

The Times’ editorial page embraced such a dramatic council expansion. But no one else seemed to. The result: The business group had barely waded into the debate and already it found itself outside the mainstream.

There was wide agreement among debaters that the mayor needed more authority. Most also thought an increase in council size was a good idea. But they were worried that voters would reject charter reform if it meant creating too many new jobs for politicians.

Voters had recently signaled their disgust with politicians by approving term limits. Not long before, they had rejected an expansion of the county Board of Supervisors, where five elected officials represented 9 million constituents. Early this year, a private poll commissioned by Riordan suggested that voter sentiment had not changed. It found what Riordan described as opposition to City Council expansion, but he declined to provide details.

As the Los Angeles Business Advisors has attempted to carve a place for itself in that debate and in city politics generally, it has generated comparisons to a long-disbanded group with some similarities, the so-called Committee of 25--a group of executives who held profound influence over Los Angeles civic affairs in the 1950s and 1960s.

Even then, in the fragmented world of Los Angeles politics, domination was far from absolute. Maverick firebrand Sam Yorty defeated the Committee of 25’s candidate for mayor in 1961, and three years later, UC Riverside political scientist Francis Carney was able to write: “The old group of local businessmen . . . has lost influence to labor, to the organized minority groups and to the far-flung voters who have their own and often divergent local interests.”

Big business’ loss of sway continued into the modern era with a spate of mergers and acquisitions that led to out-of-town ownership for many of the department stores and banks that had been civic stalwarts.

Debate Over Power of Neighborhoods

The Los Angeles Business Advisors got its start as an attempt to stop this drift. Kenneth Dickerson, a recently retired Arco senior vice president who watched the group take shape, credited former Lockheed Chairman Roy Anderson with the idea of creating an organization that would encourage CEO involvement because only CEOs would be allowed to make its decisions. The Los Angeles Business Advisors was formally incorporated in late 1995 to promote “business . . . educational, cultural and charitable activities . . . by soliciting and providing financial support.” Each member anted up $40,000.

“The business community will always be criticized for coming together,” Dickerson said. “People will say, ‘Gee, they’re trying to run the city.’ My question is, ‘Would you rather they sit on the sidelines and make no contribution?’ ”

The Los Angeles Business Advisors’ full-time president, Sam Bell, the retired managing partner of the Ernst & Young consulting firm in Los Angeles, said the group’s non-charter activities have included lobbying to free federal funds for the Alameda Corridor high-speed rail project, raising money for a successful bond measure to fix dilapidated public schools and serving as a catalyst for an effort to build what amounts to a giant job bank for welfare reform. The job bank will seek to match the 200,000 people expected to be jettisoned from welfare rolls in Los Angeles County by 1999 with openings at firms too small to have their own personnel departments.

On the charter front, the business group has distinguished itself as the interest group willing to spend the most money. Some of its members individually helped fund the start-up of the reform effort. As a group, they have also paid for an academic study, a consultant to prepare a special report, a lobbyist to help them make their case and, most recently, a pollster to help them assess the popularity of their ideas with the majority of voters who are presumed not yet to have tuned in to charter debates.

And yet, the group continues to struggle to make its influence count. In order to counter the lack of enthusiasm for its proposed City Council expansion, the group commissioned a study with a preordained outcome: Council expansion would not cost any more money because council staffs could be slashed, the study found.

Meanwhile, most charter reform participants were focused elsewhere--on creating neighborhood councils as a way to blunt the still-threatened Valley secession, and satisfying demands by activists for more say.

In fact, the hotly debated question at both charter commissions quickly became not whether there should be neighborhood councils, but what shape they should take. At the outset, the Los Angeles Business Advisors’ position against the very existence of neighborhood councils in the charter effectively cut it off from this debate.

Sensing prevailing winds, other business groups have engaged in the neighborhood council debate. The Los Angeles Area Chamber of Commerce says it favors appointed, advisory neighborhood councils, along with a City Council expansion to 29 members. The Central City Assn. touts a similar-size City Council expansion and says that if there have to be neighborhood councils in the charter, they should be appointed and advisory.

The Los Angeles Business Advisors’ bolder resistance to any kind of neighborhood councils in the charter grows out of the fear that neighborhood councils would:

* Grow to be an additional, expensive layer of fragmented government that would make regional approaches to problem-solving more difficult.

* Be harder to monitor and influence. Neither charter commission has gotten down to the details of how many councils there would be, but talk has varied from 35 to more than 100.

* Be tempted to make their own own rules--creating more red tape for businesses with multiple operations in the city and providing a disincentive for other businesses to locate here.

As the debate shifted from whether to create the councils to what sorts of tasks these neighborhood councils should perform, the Los Angeles Business Advisors’ participation has been limited to veiled threats that, if the charter commissions went too far, it might fund a negative campaign.

The least controversial of the tasks under discussion was allowing each neighborhood to pick from a menu of service options. For example, would it want to use discretionary funds to trim trees, or to keep the local library branch open for longer hours?

Some of the business group’s members, such as Eli Broad, chairman of Sun America Inc., warned in an interview that entrusting neighborhood councils with even these kinds of decisions could be ruinous.

“If you end up with 75 or more neighborhood councils in the city and if everyone could determine their library hours versus what to spend on tree trimming, you’ve got a nightmare,” he said. “You’ve got chaos, anarchy . . . from an administrative and managerial point of view.”

Far more controversial is potential involvement of neighborhood councils in land use.

Both Broad and Robert Maguire, the only developers in the business group, said that, as individuals, they had no problem with requiring developers to appear before neighborhood councils as long as the councils had only advisory roles. “On a major project, you have that anyway,” said Maguire, whose own projects have included the Library Tower downtown and a current effort at Playa Vista. “People really interested are going to be all over you.”

Possible Paths to Compromise

But Los Angeles Business Advisors as a group is “definitely not there,” said its president, Bell. The group does not want to create additional obstacles for business and is particularly worried that if neighborhoods are given power to decide land use questions--or even to give advice in a formalized way--they will take not-in-my-backyard stances that will harm the city’s chances to grow.

A number of paths to compromise are possible. One being floated at the moment by some elected charter commissioners calls for elected neighborhood councils with the power to decide service options but with only an advisory role on land use matters.

Riordan, a venture capitalist in private life who knows many of the business group’s members personally, said he expects they will embrace some sort of compromise. “I don’t think they’re going to be that ideologue on this,” he said. “These are bright people who are going to be pragmatic.”

But some Los Angeles Business Advisors aides say that even talk of a compromise is premature. They say that before they loosen up, they want to give their City Council expansion idea another chance. So they are taking a poll of voters, most of whom, they figure, have probably not yet heard of it.

“Before we talk about compromise, we have to evaluate our chance of prevailing,” said one aide who spoke on condition of anonymity. “It’s premature and inappropriate for us to signal compromise because we still think we have a better way.”

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The Membership Roll

The Los Angeles Business Advisors, a group formed to promote business, educational, cultural and charitable activities, has also taken an interest in city charter reform. Here are the members and their firms. Names in boldface (**) are members of the group’s charter reform steering committee.

Mike Bowlin, Arco**

Stephen Bollenbach, Hilton Hotels

Alton Brann, UNOVA

Eli Broad, Sun America**

John Bryson, Edison International*

Ronald Burkle, the Yucaipa Companies

Warren Christopher, O’Melveny

& Myers

David Coulter, Bank of America

Martin Feinstein, Farmers Group

Richard Ferry, Korn/Ferry Intl.

Paul Hazen, Wells Fargo Bank

Yoshio Ishizaka, Toyota Motor

Sales U.S.A.

Bruce Karatz, Kaufman & Broad**

Robert Maguire, Maguire Partners

Tom McKernan, Auto Club

James McNulty, Parsons

Charles Miller, Avery Dennison

Peter Mullin, Mullin Consulting**

Ron Olson, Munger, Tolles & Olson**

Joan Payden, Payden & Rygel*

Charles Rinehart, H.F. Ahmanson

Steven Sample, USC

Charles Schetter, McKinsey & Co.

Michael Smith, Hughes Electronics

Mark Willes, Times Mirror* (**)

Willis Wood, Pacific Enterprises

* Members who are directors of the Times Mirror Co., which owns the Los Angeles Times. In addition to serving as Times Mirror’s chairman, Willes is publisher of the Los Angeles Times.