Villaraigosa Defeated on LAX Firms

Supporters of Mayor James K. Hahn and City Hall lobbyists on Friday defeated an effort by rival Antonio Villaraigosa and his allies to force the City Council to review two lucrative concession contracts at Los Angeles International Airport.

The Airport Commission, whose members are appointed by Hahn, voted unanimously last week without a word of debate to extend the two contracts. Neither would have expired until May 31, two weeks after the mayoral runoff election.

Villaraigosa and three other councilmen demanded that the council assert its authority to vote on the contracts that DFS Group has to run duty-free shops and Airport Management Services has to run newsstands and gift stores at the world’s fifth-busiest airport.

“There was no discussion,” Villaraigosa said at the council hearing Friday. “They were passed through even though it was clear there was not a sense of urgency.”

Travelers consistently rank LAX concessions far below those of other major airports in quality.

One of the airport contractors has donated to Hahn, and both have hired lobbyists with considerable influence. A Times review found that the mayor’s office intervened in 2003 to help negotiate a more favorable contract for one of the companies.

On Friday, after a 10-minute debate, the council rejected Villaraigosa’s motion to take control of the contracts on a 6-5 vote, four short of the required 10-vote supermajority.

The mayor’s supporters argued that it was not necessary to wrest control of the issue from the Airport Commission. Councilwoman Cindy Miscikowski, who has endorsed Hahn and whose district includes the airport, lectured Villaraigosa, telling him it was “inappropriate” to take control of the contracts.

“Let’s use the rules of the council the way the rules of the council are meant to be used,” she said.

Villaraigosa retorted: “I love getting lectured on propriety.”

In a letter to the council a week ago, Kim Day, executive director of Los Angeles World Airports, the agency that runs the airports, offered to voluntarily bring the two retail contracts before a council committee this month for a public discussion.

Councilman Tony Cardenas, chairman of the committee that oversees airport issues, said the quality of concessions at LAX is not impressive. But he praised the airport agency’s plan to extend current contracts until a study of how to improve the concessions is finished.

The council debate on Villaraigosa’s motion to consider the retail contracts had political overtones. On the campaign trail, he has frequently brought up the investigations into city contracting and possible links to campaign contributions.

In the spring of 2003, two Hahn officials -- Troy Edwards, a deputy mayor, and Leland Wong, an airport commissioner -- pushed for changes in the airport’s contract with DFS Group, which runs the duty-free shops.

Edwards, a Hahn fundraiser, resigned last year amid investigations into city contracting. Wong also quit last year, after his employer found that he had misused funds for political purposes.

At an April 2003 Airport Commission meeting, Wong made a motion to eliminate the $37-million annual minimum rent that DFS paid to the city and substitute a sliding scale based on sales. The airport’s duty-free shops were hit hard by a steep decline in international passenger traffic after the Sept. 11, 2001, terrorist attacks and the outbreak of SARS in Asia.

Duty-free sales at LAX plunged from $120 million in 2000 to $73 million in 2002.

In making the motion, Wong called it “very prudent for the airport.”

But Airport Commission President Ted Stein objected, noting that DFS had already received a $5.6-million rent reduction because of the loss of business after the terrorist attacks.

At the meeting, Stein said the issue had been elevated to the mayor’s office. And he pointed out that Edwards was on hand for the commission’s vote.

The commission voted 4 to 2 to approve the changes, which also gave the panel sole authority to extend the five-year contract for an additional 2 1/2 years. Typically, such extensions must be voted on by the City Council.

Tim McOsker, Hahn’s chief of staff, said Friday that the mayor’s office became involved because of “the significance of 9/11, the importance of the concessions at the airport, and a lot of people very worried about the loss of jobs potentially.”

“The dip in [passenger] traffic affected all of our concessions at the airport,” he said, “and had an extreme effect on the duty-free shops and the economics of keeping those businesses open.”

Hahn was concerned that “if those concessions were to close, we might be boarding up” the shops, McOsker said.

“It was important to the mayor,” he said. “He wanted to make sure we protected the jobs and protected the experience as best we could at the airport, which includes the concessions.”

After Friday’s council debate, DFS Vice President Joseph Lyons said the negotiations in 2003 produced “an equitable agreement that would protect the airport and allow DFS to continue to operate.”

Lyons contributed $2,000 to Hahn’s first campaign for mayor. He also gave $4,500 in 2002 to support the mayor’s campaign against San Fernando Valley secession.

DFS has paid two Los Angeles firms more than $250,000 in recent years to lobby on its behalf.