Greek Theatre: Right Note, at Last

As a rule, elected officials should not be allowed to repeatedly award government contract extensions without competitive bidding. That’s particularly the case when a firm enjoying exclusive renewals has close ties with the government panel that is awarding the extensions. But this is exactly what the Los Angeles City Council has done over a 25-year period in dealing with the politically connected Nederlander family, which runs the Greek Theatre in Los Feliz.

This pattern and practice made little sense from either a fiscal or public image standpoint. The council could argue as often as it liked about how it was making the best deal for the city, but how could it know or convince anyone else of that when it had finagled a way to extend the contract before the current one had expired, thereby eliminating any chance of competing bids?

Here’s what the council did and was subsequently forced to undo last week.

Late last year, Greek-Nederlander Inc. offered an unsolicited bid to extend its contract. Next, the council, pushed by President John Ferraro (a close friend of the Nederlanders and their attorney, Neil Papiano), voted 9 to 5 last month to extend the Greek Theatre contract for five years, until 2006. It was handled clumsily and without much notice to the public.

This time, however, it would not be business as usual. A would-be competitor, Universal House of Blues, attacked on three fronts. It argued that it would have given the city a better deal. Next, it sued Los Angeles on the ground that the city illegally awarded the contract, arguing that the process was tainted and that the contract should have been open to competitive bidding. Third, it organized a referendum drive seeking a ballot measure to overturn the contract, and that effort found a willing public: 41,000 signatures were needed to qualify for the ballot and more than 70,000 were collected.

Councilman Joel Wachs argued that the cost of a ballot measure and perhaps even a special city election was prohibitively high and that the contract should be rescinded. Last week, even Ferraro agreed, and the contract was revoked on a 15-1 vote.

There was all manner of grumbling about the failed deal. Ferraro said that the referendum process had been usurped for the wrong purposes. The Nederlander group argued that the signatures were gathered under false pretenses and went to court to block the council’s vote, but the council action and the referendum itself could be examined by the courts no earlier than next month.

For now, the contract will be open for competitive bidding, and that is as it should be. For its part, Greek-Nederlander, if it is so convinced that it has the strongest proposal, should be ready to prove it by competing with anyone willing to run for the money.