First the stick, then the carrot.

Even as hotel owners and business groups are close to qualifying a ballot referendum that could overturn Los Angeles’ ordinance to force a dozen hotels near Los Angeles International Airport to pay higher wages, business leaders say they are open to a last-minute compromise.

Late last week, the hotel operators and business groups were poised to submit more than 100,000 signatures to the city clerk to place a referendum on a citywide ballot which would give voters an up-or-down vote on the so-called living wage ordinance.

That’s more than twice the 49,000 signatures necessary to qualify a referendum, virtually ensuring that the measure would be certified for the ballot. Then the issue goes back to the council, which can either vote to repeal the living wage ordinance or place the referendum on the May general election ballot. The ordinance, which was to take effect this week, is on hold pending the outcome of this process.

Having done their part to force the living wage issue back onto the city’s agenda, business leaders last week said they would gather this week to map out their campaign strategy. But they also indicated they were ready to negotiate with the city over a possible compromise.

“The mayor’s office has reached out to us and we intend to engage them on this issue starting next week,” Gary Toebben, president and chief executive of the Los Angeles Area Chamber of Commerce said late last week. “We are ready for a short-term effort to see whether there are any compromises available.”

In November, just before the City Council passed the ordinance extending the living wage, Mayor Antonio Villaraigosa had urged the council to insert language restricting its application only to hotels near Los Angeles International Airport. The council did incorporate language to restrict the measure’s scope, but it was not enough to assuage business opposition.

After heated debate, the council bowed to a well-orchestrated campaign from unions, clergy and living wage advocates and passed a package of three ordinances aimed at boosting pay and working conditions at 12 hotels along Century Boulevard near LAX.

The first ordinance – passed on an 11-3 vote – forces those hotels to pay their workers the living wage, which starts at $9.39 an hour for workers who get health benefits or $10.64 an hour for those who don’t. The second measure prohibits new hotel operators from firing existing employees for the first 90 days after assuming control of a hotel. The third requires hotel management to pass on all service charges collected for banquets and other events to servers and other line employees.

Hotel operators and business groups – chiefly the Los Angeles Area Chamber of Commerce, the Central City Association and the Valley Industry and Commerce Association – contend the living wage ordinance sets a precedent that the wage law can apply to any business, not just those that receive direct funds or have other contractual arrangements with the city. They claim the city broke its promise when the original living wage ordinance passed in 1997 to limit it to those businesses receiving city funds.

“The city shouldn’t tell private companies, that have no contractual relationship with the city, how to run their business,” Toebben said after the council gave initial approval to the ordinances.

But councilmembers Janice Hahn, Eric Garcetti and Bill Rosendahl argued that the hotels benefit from their proximity to the city-owned and operated airport. They cited legal opinions from the office of City Attorney Rocky Delgadillo indicating that courts had upheld similar measures in Berkeley and Emeryville and also had upheld citywide living wage laws in San Francisco; Albuquerque, N.M., and Washington D.C.