GM Sues Over Emissions Mandate
Following the state air resource board’s rejection of General Motors’ bid to delay implementation of the new rules, the automaker filed suit to overturn California’s zero-emission vehicle mandate.
The so-called ZEV mandate would require major automakers to begin offering a limited number of zero-emission vehicles for sale or lease in the state in 2003. The numbers would increase each year, but initially as few at 4,600 would be required of all the major automakers combined.
The auto industry has opposed the mandate, but GM is alone in suing to overturn the air board’s Jan. 25 unanimous approval of the rules.
GM officials said the company filed suit because it has no other options under state law. GM is particularly concerned because New York, Massachusetts and Vermont automatically adopt California’s emission standards. The four states account for about 18 percent of the U.S. auto market, including California’s 9 percent share.
The mandate would double the number of vehicles GM would have to produce and would cost the company hundreds of millions of dollars a year, officials said.
The suit, filed in Contra Costa Superior Court, alleges that the air board ignored the financial impact of the mandate on the affected businesses and refused to consider what GM claims is a better alternative to substitute a five-year test of public acceptance of electric vehicles in which the auto industry would attempt to market them competitively in a single major urban area, such as Los Angeles.
Barreto Nominated For SBA Post
Hector V. Barreto, a Los Angeles entrepreneur and former chairman of the Latin Business Association, has been nominated by President Bush to head the U.S. Small Business Administration.
If elected, Barreto, who has no formal government experience, is expected to be a strong advocate for small businesses.
In 1986, Barreto founded Barreto Insurance & Financial Services Inc., a Los Angeles-based employee benefits firm that generates an estimated $3 million in annual revenue. His other business is a securities broker-dealer specializing in retirement planning called Telacu/Barreto Financial Services Inc.
Barreto was co-chairman of the Bush campaign in California and in October was named vice chairman of the U.S. Hispanic Chamber of Commerce, which, with 1.5 million member businesses, is the largest Latino business organization in the country.
Grocery Chain Offers Stock Deal
Grocery warehouse chain Smart & Final Inc. is offering its employees a way to gain value from stock options that have been worthless for more than two years.
The company’s board adopted a voluntary exchange program in which directors and employees can trade in their stock options for restricted stock through March 9, the company said in a Securities and Exchange Commission filing.
The stock options eligible for exchange have an exercise price of $14 a share or more. The company’s shares fell below $14 in July 1998 in a plunge that saw the stock price sink to $5.50 on Feb. 18, 2000, before struggling back to above the $10 mark.
Smart & Final’s options-exchange program comes as several companies have made similar moves to lower the price that employees must pay to exercise options or to replace underwater options with new grants. Some firms have bowed to investor demands that shareholders first approve such changes.
Smart & Final operates 221 stores in seven states and Mexico.
EToys to File for Bankruptcy
With its stock trading at less than 10 cents per share, online retailer eToys announced that it has decided to file for bankruptcy.
The once-promising toy seller said in February that it is laying off all its employees after disappointing holiday sales crippled its operations. EToys said it would shutter its Web site around March 8 and that it would file for protection from creditors under Chapter 11 of the Bankruptcy Code within 10 days.
EToys decided to file for bankruptcy after failing to find a buyer for the whole company, a company official said.
The company’s stock fell 3 cents to 9 cents a share before trading was halted on the Nasdaq Stock Market. EToys closed at a peak price of $84.25 a share in October 1999.
Disney Buys Magazine Stake
Walt Disney Internet Group, whose Web sites include Disney.com and ESPN.com, said it is firing 135 workers as part of its drive to turn a profit.
Most of the cuts will come from Disney Internet’s technology organization and its ABCNews.com and ABC.com Web sites.
The latest round of job cuts is in addition to 400 firings that Disney Internet announced in January, when it said it would shut down its Go.com Internet search site. Disney Internet will be left with about 1,500 employees after the latest cuts, a company official said.
Meanwhile, Disney, which dumped the majority of its magazine business 17 months ago, has taken a step back into publishing by purchasing a half-stake in entertainment magazine US Weekly.
As part of the deal, the unprofitable title will be spun off from Wenner Media Inc., which also owns Rolling Stone and Men’s Journal. US Weekly will be folded into a new company co-owned by Disney.
Burbank-based Disney says it will promote the magazine’s content and its writers in US Weekly-branded segments on television shows on the ABC network, which it also owns.
Wenner will continue to control the magazine’s editorial content, and a spokesman said it would retain its independence and not display favoritism toward Disney films or programs. Terms of the deal were not disclosed.
In purchasing a stake in US, Disney is agreeing to underwrite a steep uphill fight. US claims a circulation of 828,000 for the six months ended Dec. 31, down 17 percent from a year earlier. Newsstand sales were down 38 percent.
Foundation Eyeing Station Location
Seeking a central location close to the low-income neighborhoods it serves, one of the nation’s largest health-care foundations is exploring the construction of a new 100,000-square-foot headquarters complex in downtown Los Angeles near historic Union Station.
The Woodland Hills-based California Endowment, which is backed with $3.7 billion in assets, said it is also considering leasing existing downtown office space as an alternative to building a new, $30-million structure on the grounds of Union Station. A decision is expected by late spring or early summer, officials said.
Officials said the endowment is currently negotiating with the owners of Union Station San Francisco-based Catellus Development Corp. about building a low-rise headquarters on the property.
The California Endowment was formed in 1996 when the former nonprofit Blue Cross of California became part of for-profit WellPoint Health Networks Inc. The foundation, which has 140 employees, is currently located in 45,000 square feet of space near the former Blue Cross headquarters in Thousand Oaks.
Tenants Due Refunds
Local property manager R.W. Selby & Co. must pay $450,000 in refunds to apartment tenants who lost their security deposits because of improper charges by the company, according to a court-approved settlement announced by state Atty. Gen. Bill Lockyer.
The settlement, approved by the Los Angeles County Superior Court, requires Selby to reimburse tenants living in complexes it operates in Los Angeles, Orange and Riverside counties who were charged unreasonable rates for repairs and cleaning costs. Selby was found to have charged tenants the entire amount of their security deposit, regardless of the condition. Tenants do not need to apply for refunds, which will be prorated.
Under the settlement, the company also will pay $138,000 in civil penalties and legal costs. Selby denied the state’s claims and said it agreed to the settlement to avoid the time and expense of further negotiations.
Selby manages 1,600 units in 17 complexes in Marina del Rey, West Los Angeles, Whittier, Long Beach and Dana Point.
Encore Ends Tech Funding
Santa Monica-based Encore Venture Partners, which raised $150 million and invested in nine fast-growing technology companies, has closed its local office and abandoned its focus on tech firms.
Encore, formed in 1999, decided to give up its tech focus after its primary limited partner, Dallas-based homebuilder D.R. Horton, said it wanted to limit future investments to residential real estate because the stock market’s volatility has worsened.
Encore still will operate out of a Dallas office, where it will monitor stakes already taken in tech companies. But the firm won’t seek other tech investing opportunities.
Of the $150 million that Horton committed to the fund, about $25 million was invested. The money went to such companies as San Francisco-based Pulse Entertainment, which develops 3-D animation tools; Media.net Communications, a Los Angeles firm that offers broadband services to the entertainment industry; and Westlake Village-based Nomadix, which develops and markets equipment for Internet service providers.
