No Business Like Tow Business

By JOE MOZINGO

June 12, 1998 12 AM PT

SPECIAL TO THE TIMES

In the cutthroat towing business, survival often depends on political clout at City Hall, where the lucrative contracts to tow for the Los Angeles Police Department are handed out.

Although the towing industry hardly is unique in this respect, its ubiquity and visibility make it a particularly clear, street-level window on how making the right political contributions and hiring well-connected lobbyists help Los Angeles’ private businessmen enrich themselves by grabbing a piece of the public’s business.

The garage owners are fighting for particularly high stakes: Most show annual gross revenues of more than $1 million, according to the city’s only audit of them, back in the early 1990s.

Their city contracts allow towing companies to be labeled official police garages. There are 20 of them, from the harbor area in San Pedro and Wilmington to the farthest reaches of the San Fernando Valley.

The tow trucks are emblazoned with shields that make them appear to be police vehicles. But they are driven by civilians employed by the towing companies.

The garages impound vehicles that are unregistered, wrecked, illegally parked or involved in a crime.

O.J. Simpson’s Ford Bronco was brought to one of these garages after the famous chase. Poor supervision of the vehicle by the police garage operator became a major issue in Simpson’s murder trial.

What most of these police garages have in common is that they give sizable campaign contributions to Los Angeles elected officials. They do this as individuals and as members of a trade association, the Official Police Garage Assn.

Every year, the association spends tens of thousands of dollars on political contributions and a lobbyist, who directs the group.

In the 1980s, the association hired one of City Hall’s most influential lobbyists, Ken Spiker, who had served for years as the chief legislative analyst, the principal policy and fiscal advisor to the City Council.

In that job, Spiker was acquainted with every aspect of the city bureaucracy and political structure. He knew everyone at City Hall, from the mayor to clerks at the desk of city regulatory agencies.

In addition to his familiarity with City Hall, Spiker eases his way with campaign contributions. In the last 10 years, his own firm has donated $26,970 to city campaigns--not a fortune, but enough to be noticed by the politicians.

The association pays Spiker well for his services. Last year, the Spiker firm received more than $102,000 for its work on behalf of the towing industry. Individual companies paid the firm an additional $8,900.

The cozy aura of these interlocking relationships is underscored by the fact that Spiker’s son acts as a spokesman for the firm.

“What my company does is, I put breakfasts on . . . where for an hour every four years, the council members and my clients sit down and get to meet each other,” said Ken Spiker Jr., who heads the garage association as part of his lobbying duties.

He said he advises his clients to make their own contributions. For example, last year, the association and two individual companies gave $4,000 to the William H. Parker Foundation to participate in a police golf tournament. The foundation accepts private contributions to help finance specialized police training and seminars.

Keystone Towing donated $5,500 to the Los Angeles Police Memorial Foundation and the association donated at least $3,500 to the same fund, which provides grants to officers and their families in the event of death, sickness or injury.

“It’s part of life in the big city,” he said. “If you want to get your story told, you’ve got to be involved politically.”

Or, as Edwin Guthman, president of the City Ethics Commission, put it: “It’s part of the American political system. If someone was bidding on a city contract and didn’t know that campaign contributions would help them, they would have to be from another country.”

Guthman said the $500 contribution limit for City Council members and $1,000 for citywide elected officials makes it difficult for contractors to wield too much influence.

City Councilwoman Laura Chick, who heads the Public Safety Committee, which reviews the contracts, insisted that contributors give money merely to stay in touch with decision-makers who might affect them.

“For many entities that do business with the city, it’s part of the traditional protocol,” she said. “The fact that these companies have made campaign contributions has absolutely no effect on who is awarded the contract.”

But the towing business has been the subject of controversy since the police garages were set up in the late 1930s.

Eight years ago, an investigation by The Times revealed that the garages were virtual lifetime monopolies, passed on by families from generation to generation without competitive bidding.

They had collected millions of dollars from motorists without returning much of it to the city and had never been independently audited, the investigation showed.

At first, there was no change. Then, two towing companies won a lawsuit against the city, forcing competitive bidding on a contract in 1995. Subsequently, the City Council passed an ordinance in May 1996 to open all 20 contracts to bidding with a five-year limit on each.

This month, the first new company under the ordinance, Absolute Transporting and Towing, is scheduled to become the official police garage on the Eastside after beating out 10 competitors, including Hollenbeck Tow, which had held the contract exclusively since 1939.

The owner of Hollenbeck, Alan Shepard, who began working for his father at the garage when he was 9 years old, said his business depended on police towing for survival.

“Without this contract, this place isn’t worth a thing,” he said.

Shepard lost his contract despite paying $872 a month in dues to the Official Police Garage Assn., of which he once was president.

“I would think that with paying that kind of money we would be a shoo-in,” he said. “But obviously, that’s not how it works.”

He and some of the other losers in the Hollenbeck bidding are crying foul, saying that the new contract was awarded to a company that has little towing experience and that failed inspections by the California Highway Patrol.

They said the process was marred by cronyism and politics, despite the reforms.

Officials who oversaw the bidding stand by the decision and say that such allegations are inevitable in such a fractious industry.

“The politics were in favor of Alan Shepard,” said Dan Carson, the LAPD detective who sorts through the bids. “Everyone but the guy who wins is going to be sour about it.”

The Police Commission, which issues permits for a list of businesses from taxicabs and antique dealers to topless bars and bowling alleys, is aiming to put four garages a year up to bid. West Los Angeles is next, while Hollenbeck could still face appeals.

The new operators still haven’t started up with the Hollenbeck contract because of zoning problems. Shepard’s company is continuing to do the work.

“We keep extending the period that the old contractor [at Hollenbeck] has,” Chick said. “I’m not impressed at this point that the new system is better than the old system.”

Still, with all the delays, the new system promises the city a bigger cut of towing company revenues.

The business has always had its rough edges.

Officials say some tow truck drivers overcharge. Some pay kickbacks to parking lot attendants to tip them off to towing jobs. Others receive kickbacks from body shops when they bring in damaged cars.

So-called bandit tow truck drivers listening to police scanners arrive at accident scenes and take unknowing victims to distant garages for exorbitant rates. Legitimate companies are licensed by the CHP and the MTA to patrol the freeways.

“These bandits have better radio equipment than we do,” Carson said. “Their bread and butter are accidents in L.A.”

The power of the police garages has grown over the decades along with the sprawling city.

But their influence grew when they hired lobbyist Spiker and became major players in the campaign contribution game.

Before that, Shepard said, it was tough shaping the myriad pieces of legislation that regulate the industry. Even though he lost the Hollenbeck contract, Shepard still says he thinks the association’s political activity increased the operators’ power at City Hall.

Recalling the pre-lobbyist days, he said, “Good old President Alan went down to try to work the system,” he said. “And believe me, that was a waste of time.”

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Contributions by Towing Companies

Towing companies that contract with the city of Los Angeles are major players at City Hall. Lobbyist Ken Spiker’s firm, which also represents other clients, donated $26,970 to elected officials in the last 10 years. These contributions help him have influence on behalf of all his clients, including the garages. The garage trade association, Official Police Garage Assn. of Los Angeles, contributed $21,400. Here are political contributions by individual garages:

Official Police Garage: Archer’s Vineland Service

Contributions to Elected City Officials, 1986-1996: $500

Official Police Garage: ATS Northeast Tow

Contributions to Elected City Officials, 1986-1996: $3,900

Official Police Garage: Black & White Garage

Contributions to Elected City Officials, 1986-1996: $9,375

Official Police Garage: Bruffy’s Del Rey Tow

Contributions to Elected City Officials, 1986-1996: $2,500

Official Police Garage: Hank’s Wilshire Towing

Contributions to Elected City Officials, 1986-1996: $4,050

Official Police Garage: Hollenbeck Automotive

Contributions to Elected City Officials, 1986-1996: $4,200