LAX's Contractor-Donor Connection

Staff Reporter

Nearly one in four companies with airport contracts exceeding $100,000 gave political contributions to Los Angeles Mayor James Hahn's mayoral campaigns or to the Hahn-led anti-secession effort in the San Fernando Valley, according to a Business Journal analysis.

Records from Los Angeles World Airports and the City Ethics Commission show that 97 of the 430 companies with airport contracts contributed directly or through their individual employees to either Hahn's 2001 election campaign, the upcoming 2005 campaign, or to LA United, the 2002 anti-secession drive. Some contributed to more than one.

Of the 97, 77 received new contracts, amendments to existing contracts or signed leases following their contributions, the Business Journal analysis concluded.

"That's a substantial number of contractors," said Bill Boyarsky, a member of the City Ethics Commission board. "That's almost a quarter of the contractors that have contributed. Five percent means we're barking up the wrong tree. But 25 percent is a substantial amount. It shows you need regulation."

The Ethics Commission, along with city officials and federal and county prosecutors, has been looking into the city's contracting policies and whether a "pay-to-play" environment exists in which companies feel obligated to make political contributions in order to do business with the city. Those inquiries began soon after City Controller Laura Chick issued an audit critical of airport contracts in November 2003.

Since then, federal prosecutors have subpoenaed records from the city's airport, harbor and water and power departments. Earlier this month, federal prosecutors also subpoenaed Hahn's e-mails, along with e-mails from Chief of Staff Tim McOsker and other current and former officials from his office.

In addition, several city officials have appeared before a grand jury, including former Deputy Mayor Troy Edwards, who served as Hahn's liaison to the airport and harbor departments. Edwards and Airport Commission President Ted Stein have resigned under pressure.

Misleading numbers

In response to a request for comment on the Business Journal findings, LAWA spokeswoman Nancy Castles provided an e-mail statement: "There is no provision in our contracting processes, procedures or practices for consideration of a company's political contributions.

"The Business Journal presents statistics if accurate in a misleading way because they are presented in a manner that suggests a cause and effect relationship that simply does not exist. (The data could just as easily be used to show that more than three-fourths of all contract awards went to companies not making political contributions.)"

The data excludes contracts awarded to non-profit organizations or government agencies, such as the Federal Aviation Administration. It also excludes subcontractors that may have given contributions and it does not take into account airport contractors' contributions to other city officials, including City Councilman Antonio Villaraigosa, who ran against Hahn in 2001.

Still, the analysis provides the first public examination of airport contractors and their participation in local political campaigns. In so doing, it reveals a number of businesses that have long had close ties to the political process, from engineering companies to law and public relations firms.

Five airport contractors gave significantly to LA United but did not receive additional work. Of those five, none received work after giving to Hahn's 2001 election campaign, either.

Of those who did not give to LA United but contributed to Hahn's election campaigns, 76 percent received work after the date on which they gave.

"The important thing is they wanted to maintain that relationship," said Bob Stern, director of the Center for the Study of Los Angeles. "There's always the fear of not giving. You see how all your competitors are giving. You should give, too."

Boyarsky said that having 75 percent of airport contractors receive their work without contributing to Hahn's campaigns or the LA United effort justifies a proposed ban on contractors from contributing because the ban won't affect the vast majority.

The Ethics Commission has been deliberating whether to approve an ordinance proposed by Hahn after he had maintained for months that current laws were adequate that would ban companies with city contracts of at least $50,000 and their senior executives from contributing to city elections.

"This is the way business has been done in L.A., and probably other cities, forever and ever," Boyarsky said. "But what's made it different now, and what warrants all this attention, is the sheer size of these projects and the sheer cost of political campaigning."

In particular, he said, contractors were making contributions to Hahn's campaign while the mayor was announcing ambitious plans for a $9 billion to $12 billion makeover of Los Angeles International Airport, which would be one of the largest public works projects in L.A. history. The plan has been further refined so that only portions of the overhaul would be up for a City Council vote this fall.

Anti-secession effort

While the maximum contribution allowed for a mayoral campaign in the city of Los Angeles is $1,000 from any single person or business, there was no cap in contributions during the LA United campaign. That fundraising effort began gathering momentum in the summer of 2002 after the San Fernando Valley secession proposal made it on the citywide ballot and early polls at the time showed sentiment for a breakup to be stronger than many at City Hall had anticipated.

The campaign gathered about $5.5 million and as the November vote neared, the secession effort began to fizzle. While Valley voters carried the breakup measure by a bare majority, the effort lost badly citywide. After the vote, pro-secession leaders cited the inability to compete with the fundraising efforts of LA United as a critical factor in the defeat.

Though Hahn had been in office for scarcely a year, the secession vote had become an early referendum on his administration. "It was a critical issue for him," said Stern.

"If he had lost that issue, he would probably have lost the (2005) campaign," Stern said. For LA United, facing one of the most expensive ballot measures in the history of L.A., "it was a question of where to get the money and the easy place to go was the contractor," he said.

Calls to Hahn's office were referred to the mayor's campaign strategist, Bill Carrick.

Carrick said LA United had nothing to do with Hahn's political ambitions.

"The truth is the campaign was about secession," he said. "For that reason, and many others, Jim Hahn as the mayor decided to lead the battle. But it wasn't about his personal ambitions. If it were, he wouldn't be involved. It's been damaging. There are people in the Valley who supported him before who are angry with him now. So he paid a price for it."

Among the hundreds of contributors to LA United are about 100 that gave more than $10,000 each, with the highest peaking at $250,000. Of those, 36 came from airport contractors.

'It's not a scandal'

More than half of the 38 airport contractors that gave to LA United received additional contracts, amendments to existing contracts, or leases from the Airport Commission.

"People are giving $25,000 and $50,000 not because they care about the issue but because they care about relationships," Stern said. "Even 5 percent would be troubling."

Among those that received work after giving to LA United:

- HNTB Corp., a Kansas City, Mo.-based engineering and architectural firm, received two amendments to an existing $2 million contract, as well as a new $9 million contract on Dec. 17, 2002, that has since been amended three times. Earlier that year, HNTB and its employees gave $101,000 to LA United.

In an e-mailed statement, Lynn Hartford, West Coast president of HNTB, defended the company's contributions.

"HNTB actively engaged in opposition to the Los Angeles secession initiative in 2002 because we believed that its passage would have been extremely damaging to the economic well-being of the city, and therefore, to HNTB and its employees," she wrote. "HNTB is awarded work based on our qualifications and proven ability to get the job done on time and to the client's satisfaction."

- Tutor-Saliba Corp., which gave $100,000 to LA United in 2002, received a $33.9 million contract on Jan. 21, 2003. "Nobody does us any favors," said Ron Tutor, its chief executive, who referred to the allegations of "pay-to-play" as a "witch hunt."

Asked why his firm gave $100,000 to LA United, Tutor said, "I felt like it. Who would support the Valley splitting off from L.A.? It was idiocy to contemplate splitting the Valley from the city."

- CH2MHill Cos. Ltd. received four amendments to an existing $6 million contract, plus a new contract, after giving $20,000 to LA United. Calls to a CH2MHill spokeswoman were not returned.

- AECOM Technology Group and its previously separate division, DMJM, received an amendment and a new contract for the advanced planning of the LAX Master Plan after giving $50,000 to LA United. Alexandra Spencer, spokeswoman for AECOM, declined comment.

- Two law firms, Nossaman Guthner Knox & Elliott LLP and Christensen Miller Fink Jacobs Glaser Weil & Shapiro LLP, each received a $500,000 contract for legal services after giving $10,250 and $25,000, respectively, to LA United.

Terry Christensen, a partner at Christensen Miller, disputed any connection between the firm's contributions and a contract that was awarded by the Airport Commission on July 6, 2004, to handle an insurance claim.

"A scandal would be if there were kickbacks, which you find in other cities," he said. "It's not a scandal for people to have participated in political campaigns or city campaigns and then to also be involved in providing services or goods to the city. That's appropriate and constructive behavior for the city and everyone involved."

He said his firm gave to LA United because splitting the city apart would have forced L.A. officials to raise taxes.

Howard Coleman, a partner at Nossaman Guthner, said his firm went through a competitive bidding process to receive a $500,000 contract on Oct. 20, 2003. The firm and its partners contributed $10,250 to LA United and $36,900 to Hahn before obtaining the contract.

"We probably had the best resume, the best records in this particular area and our hourly rates were competitive," he said.

As to his firm's contribution to LA United, he said, "We do the same thing with the United Way. People give as individuals and the firm gives. If it's a good cause, both the individuals and the firm will be behind it."

- Aerolease Associates, which provides 8.5 acres of hangar space to private aircraft operators at Van Nuys Airport, contributed $32,500 to LA United and $4,500 to Hahn before receiving a lease on July 6.

Milton Widelitz, the sole proprietor of Aerolease Associates, said the lease was part of a settlement between the City of L.A. and the firm in a litigation matter.

"We made some donations to LA United and got nothing for it," Widelitz said. "We did it because, at the time, and even now, we believed that the airport can be better run by people who understand the airport than by a new organization that would be developed should L.A. be disunited."

Politically Active - Airport contractors play funding role.

- Companies with airport contracts or leases: 430

- Airport contractors that contributed to LA United or Hahn mayoral campaigns: 97

- Contributors awarded contracts after making donations: 77

- LA United contributors of more than $1,000 with airport contracts: 38

CORRECTION: the airport contract received by Christensen Miller Fink Jacobs Glaser Weil & Shapiro LLP was awarded by the City Council's Board of Referred Powers, which acts when the City Attorney determines there may a conflict of interest.

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