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County Pays Off Unisys

A reluctant L.A. County Board of Supervisors agreed to pay Unisys $20 million to make up for losses the company incurred while revamping the county welfare office’s computer system.

Unisys had initially asked the county for $25 million to cover losses, and $27 million on top of that to make necessary software changes caused by new welfare laws. The request would have been a 60 percent increase in the original contract the company was awarded in 1995. Without the extra infusion of funding, Unisys was positioning to resign from the project.

Unisys eventually reached a compromise with the county and agreed to a lower fee, because company officials said they wanted to show good faith. Supervisors were outraged at county administrators for not bringing the problem to them earlier and not negotiating a better deal in the first place.

Davis Appointments

Gov.-elect Gray Davis appointed a former labor activist to head the state’s Department of Industrial Relations, and the first Latina in state history to hold the position of secretary of business, transportation and housing.

The appointment of Steve Smith to run the Industrial Relations Department was seen by labor proponents as a step in the right direction. The labor movement strongly supported Davis’ bid for the statehouse and has recently become concerned that he may be too soft on issues vital to unions.

Davis also named Maria Contreras-Sweet to lead the Department of Business, Transportation and Housing. Sweet was the first female vice president at Westinghouse and is currently president of Contreras-Sweet Co., an international consulting form to Fortune 500 companies.

The Mayor’s Agenda

Mayor Richard Riordan said he plans to devote the majority of his administration’s efforts next year to reforming city government, the business tax system and public schools. Riordan also announced during a press conference that he that he will seek $10 million to protect city computers from the Y2K bug.

In addition to looking forward, the mayor reviewed some of the city’s accomplishments in the past year as well. Crime continued to drop in 1998, riding on a five-year decline in crime rates locally and nationally, he said.

Court Victory for Amgen

Amgen Inc. shares soared last week after the company won exclusive rights to its anemia treatment EPO in a new once-a-week form.

The new drug rights were won when an arbitration panel ruled that Amgen’s 1985 licensing agreement with Johnson & Johnson covered only the version of the drug that is taken three times a week. It gave Johnson & Johnson no rights to a new weekly version.

The weekly drug is expected to reach nearly $1 billion in annual sales.

Supervisors Support Carpool Lanes

The Los Angeles County Board of Supervisors voted unanimously to oppose legislation that would open freeway carpool lanes to all motorists.

The move was a response to plans by Assemblyman Tom McClintock, R-Granada Hills, to introduce legislation that would eliminate diamond lanes. McClintock is responding to a study done in New Jersey that found diamond lanes did not boost carpooling, but instead worsened traffic conditions. It also found that only 7 percent of motorists used the lanes, and they were plagued by cheaters who endangered others by darting in and out of designated lanes. Additionally, air quality did not improve as expected.

The debate comes at a key time, as Caltrans plans to double the number of carpool lanes from 305 to 680 miles by 2015 in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties.

Courts Closed Over Anthrax Threat

Both the Van Nuys Superior and Municipal courthouses closed last week while the Los Angeles Police Department and the FBI investigated the region’s most recent anthrax threat.

The closure caused the evacuation of 2,200 people and postponed cases and hearings until this week. Law enforcement officials believed the threat was a hoax, but were unwilling to take chances.

As a precaution, evacuees were told to take showers once they arrived home and to put their clothes in sealed bags. Health officials also advised them to wipe off pocketbooks and other objects with a solution one part bleach and 10 parts water.

The Van Nuys threat was the third anthrax scare in Los Angeles in only a week. Exposure to anthrax can cause cough, fever, muscle aches and chest pain.

Cash for Aames

Capital Z Financial Services, a private equity fund, has agreed to pay $100 million to take a controlling interest in Los Angeles-based Aames Financial Corp., a home equity lender.

Aames, which packages loans together to high-risk borrowers and sells them to investors, was hurt by falling currencies in foreign markets and the Russian default, which caused investors to flee high-risk bonds for safer U.S. Treasury bonds. The Capital Z investment will give Aames much-needed capital, according to company officials.

Capital Z said it will pay $75 million for newly issued convertible preferred stock, giving the company a 57.2 percent stake in Aames. The company may invest as much as $25 million more for a total stake of 76.3 percent, depending on how many preferred shares current stockholders buy in an offering tied to the agreement. The fund agreed to buy any unsold shares.

The fund’s stake will give it the right to elect four of Aames’ nine directors and to nominate a fifth.

Metrolink Improvements

Metrolink, which had replaced its top executive and put two key managers on leave, is now reducing costs and improving on-time performance, according to a state audit released last week.

Metrolink, which services six Southern California counties, has reduced hourly operating costs by 13 percent and per-passenger costs by 10 percent over three years. At the same time, the commuter rail service has increased on-time performance from 87 percent to 94 percent.

As one of the fastest growing railroads in the nation, Metrolink has an annual budget of $80 million and runs 128 trains a day, stopping at 46 stations for 27,000 passengers.

Sanwa to Charge ATM Fees

The last holdout on non-depositor automated teller machine fees has finally caved.

Sanwa Bank California announced that it will charge $1.50 next spring for use of its automated teller machines by non-Sanwa customers. The company had originally promised not to impose such fees, but when Union Bank of California, Glendale Federal Bank and California Federal Bank all dropped out of a “no surcharge” alliance with L.A.-based Sanwa, the bank was forced to change its policy.

The banks created the alliance 18 months ago, promising not to charge ATM fees on non-depositors like those imposed by Bank of America and Wells Fargo. Sanwa said it was not feasible anymore to be the only major bank in the state subsidizing ATM users.

Compiled by Jessica Toledano