City politics hamper efforts to update LAX concession contracts
It seemed an obvious idea: Bring in new concessionaires to improve the food and shopping at Los Angeles International Airport, giving a distinctive L.A. flair to a drab facility that receives often-dismal ratings from passengers.
Five months after the contract was supposed to be approved, however, another distinctive L.A. feature has taken over — the tangled politics of City Hall. Like past plans to modernize the airport, the effort to overhaul the concessions has slowed to a crawl.
With hundreds of millions of dollars in airport business at stake, the dueling parties have hired an array of well-connected lobbyists. The ensuing flurry of protest letters and conflict-of-interest charges have combined to show that even retooling the food at LAX is no easy task.
For many of the restaurant and store owners who had hoped to move into the airport, the delay has been frustrating. “We are mostly small, locally run businesses, and it’s just impossible to plan because this thing is just in limbo,” said Richard Karno, owner of Groundwork Coffee Co., which is part of one winning bid package. “It seems like it’s coming down to who has the bigger, badder lobbyist.”
In April, the city’s Board of Airport Commissioners, appointed by Mayor Antonio Villaraigosa, was nearing a vote on proposed new food and retail contracts for LAX. But then, City Atty. Carmen Trutanich disqualified the entire board after learning that one member, board President Alan Rothenberg, held stock in a restaurant that was engaged in the bidding.
Following city rules, Trutanich sent the vote on the contracts to a special City Council panel, the Board of Referred Powers, designed to be a neutral arbiter whenever potential conflicts arise. HMS Host, the longtime LAX concessionaire, has filed challenges to the bidding process and is trying to persuade at least three of the five council members to throw out the bids and start over. HMS, which has operated concessions on and off at LAX since 1962, finished last in each of the categories considered in the bidding.
Instead of removing suspicion from the process, Trutanich’s legal opinion spawned fresh questions about the relationships between L.A.'s elected officials and the special interests who seek to influence them. Each member of the council panel, as well as Trutanich, has at least some connection to one or more of the contending parties in the airport fight.
Some of the most prominent relationships involve Councilwoman Janice Hahn, who has close ties to a lobbying firm that is representing HMS Host.
The firm, Ek & Ek is based in San Pedro, where Hahn lives, and its principals are close friends of the councilwoman. Hahn raised $36,750 from Ek & Ek and its clients during her recent unsuccessful campaign for lieutenant governor. She has gone on vacation at least four times with the firm’s vice president, Esther Ek, traveling to such destinations as Hawaii and New Mexico.
Ek’s husband, John Ek, also knows Trutanich, having gone to him in 2003 for informal legal advice after Ek received a subpoena from a grand jury investigating airport contracting practices. Ek said he did not pay Trutanich, who was elected in 2009, but turned to him as a lawyer, friend and fellow San Pedro resident.
Ek & Ek has raised $7,500 for Trutanich and another member of the panel, Councilman Ed Reyes, according to city records. And clients of Ek & Ek, and employees of those clients, have donated at least $13,000 to Councilman Tony Cardenas, the panel’s chairman, since 2007.
Hahn, for her part, has amassed nearly $55,000 in donations over the last year from companies involved in the LAX concession fight, more than any other politician at City Hall.
Neither the contributions nor her friendships with the Eks would influence her decisions, Hahn said. The councilwoman said she has already taken positions adverse to Ek & Ek clients.
“If I don’t know by now that the public depends on me to review all of the information before me and make the best decision for the city of Los Angeles, then I shouldn’t be in this job,” she said.
In addition to the Eks and other members of the HMS Host team:
Lobbyists with Areas USA, which airport executives recommended for three food and beverage contracts, have raised $24,700 for Reyes since 2007, according to reports filed with the city Ethics Commission.
One of the lobbyists with Berghoff Englander Associates, which represents Areas USA, ran a campaign committee that spent nearly $43,000 on behalf of panelist and Councilman Bernard C. Parks’ bid for county supervisor in 2008.
LAX Retail Magic, which was recommended for three airport shopping concessions, belongs to a bidding team whose members have contributed nearly $26,000 to Hahn’s lieutenant governor campaign.
Cerrell Associates, which represents apparent losing bidder HDS Retail North America, participated in a fundraiser last year that generated $49,700 for Trutanich, contribution reports show. The firm also co-hosted an event with the Eks and eight others that raised nearly $63,000 for Hahn’s personal “office-holder” account.
Panelist Bill Rosendahl, whose council district includes LAX, has done little fundraising over the last year. But his former advisor on aviation issues, Phil Tate, is now a lobbyist representing HMS Host.
The sheer scale of political contributions and connections like these at City Hall has prompted at least one group, California Common Cause, to begin work on a 2011 municipal ballot measure that would bar city contractors, and companies seeking city business, from giving to elected officials.
Kathay Feng, the group’s executive director, said the city’s politicians should also disclose their personal interactions with special interests, even those that occur on their private time.
“We’re not saying somebody can’t have a vacation with a friend,” she said. “But if you have that vacation, you should report how many hours you spent with a lobbyist or a contractor — and then let the people decide.”
Even some of the restaurants and beverage chains in the LAX concession fight have a history of giving. Coffee Bean & Tea Leaf, which is part of the bid proposal submitted by Delaware North, made three contributions totaling $75,000 to Villaraigosa’s 2007 campaign on behalf of three school board candidates.
Rosemead-based fast-food chain Panda Express also donated $50,000 to Villaraigosa’s school board campaign. The company is part of two successful proposals at LAX: one with Delaware North and another with SSP America.
SSP America has a lobbying team that includes former Assemblyman Mike Roos and former City Councilman Richard Alatorre, who has been an informal advisor to Villaraigosa.
Trutanich, for his part, has been contacted about the concession fight by attorney Robert H. Philibosian, a former Los Angeles County district attorney who served as co-chairman of Trutanich’s 2009 transition team. Philibosian works for Sheppard Mullin, which represents HMS Host.
Trutanich said Philibosian is one of many people who have called him about the process. “I’m willing to listen to anyone,” the city attorney said. “But that doesn’t mean it’s going to change what I’m going to do.”
As the process grinds along, HMS Host has continued as an incumbent airport concessionaire, despite its low standing in the bidding. “Every month that goes by, HMS Host is making a lot of money,” said lobbyist Arnie Berghoff, who represents Miami-based Areas USA, one of the successful bidders. “It’s to their distinct business advantage that this process go on as long as possible until they are no longer the concession.”
Jerold Neuman, a lawyer representing HMS Host, said the focus on contributions and personal relationships only distracts from airport contracting problems identified by his firm.
“No matter how much people want to talk about lobbying and donations, that doesn’t take away from the fact that this process was a bad process,” he said.