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Joint venture that includes Magic Johnson picked for 3 LAX concession contracts

September 13, 2010 |  7:28 pm

The push to overhaul restaurants, beverage stands and gift stores at Los Angeles International Airport took a major step forward Monday when a special City Council panel awarded three retail contracts to a joint venture that features former Lakers star Magic Johnson and the widow of attorney Johnnie Cochran.

The five-member Board of Referred Powers voted 4 to 1 to give the contacts to a partnership involving the Hudson Group, Magic Johnson Enterprises and Concourse Ventures, which is headed by Dale Mason Cochran.

In one of the contracts, board members picked the joint venture over Miami-based Areas USA, which had been recommended by LAX officials.

Council members Janice Hahn, Bernard C. Parks, Ed Reyes and Bill Rosendahl voted for the contracts. Councilman Tony Cardenas, the board's chairman, voted no, saying he believed the panel had rushed into a decision.

Parks, who was endorsed by Johnson during his unsuccessful 2008 campaign for county supervisor, made the motion to substitute the joint venture for Areas USA.

He said after the vote that he favored Hudson’s bid because it had included two local businesses -- Magic Johnson Enterprises and Concourse Ventures -- as equity partners. Giving the contract to the Hudson team is in line with the city’s efforts to put greater weight on contracts with local companies, Parks said.

“They didn’t just bring in a minority female to apply for their 10%” share of the bid package, he said. “They made them equity partners.”

Benjamin Reznik, an attorney and lobbyist who represents the joint venture, declined to comment. He said it was Hudson’s policy not to comment on contracts until the full City Council approves them.

Eduardo Uribe, an Areas USA vice president, said company officials were disappointed that the Board of Referred Powers chose “to ignore the airport staff’s recommendation after a lengthy and thorough process.” The move allowed a single bidder to receive all three retail contracts, he said.

“We look forward to being awarded the food and beverage packages for which we were also recommended in a fair competition,” he said.

The three retail contracts must go to the City Council for final approval. Five other food and beverage contracts will be considered by the Board of Referred Powers on Sept. 20.

The approval of the three contracts broke the logjam over new contracts for shops and restaurants at LAX, which had been recommended by airport officials five months ago and are worth hundreds of millions of dollars.

The effort slowed considerably after bidders and their lobbyists filed challenges to the process, including a handful of conflict-of-interest complaints.

After reviewing those complaints, City Atty. Carmen Trutanich issued a legal opinion saying that the city could award six of the eight proposed contracts -- three for food, three for gift shops -- with little to no risk of the decisions being thrown out by a judge on conflict-of-interest grounds. But he warned that two other winning bidders carried varying degrees of legal risk, according to the opinion, a copy of which was obtained by The Times.

Trutanich’s lawyers said conflict-of-interest concerns would probably cause a judge to void a contract with SSP America, which was recommended as an operator of three food courts and four coffee shops -- the largest of five food and beverage contracts. SSP America had financial ties to an LAX consultant involved in the bid process, the city’s lawyers said.

The opinion also said there was some legal risk associated with striking an agreement with Delaware North, which was recommended to run two “casual dining” restaurant-bars at LAX.

SSP America disputed Trutanich’s findings, saying the city attorney had not done his research and had applied state conflict-of-interest law too broadly. Delaware North contends there was no conflict involving the company because it had completed its business with an LAX contractor before the competitive bid process began.

Monday’s decisions were greeted favorably by Gina Marie Lindsey, executive director of Los Angeles World Airports, the agency that operates LAX, Ontario International Airport and Van Nuys Airport. Lindsey said two other gift shop contracts might be approved in coming weeks by the Board of Airport Commissioners, whose members are appointed by Los Angeles Mayor Antonio Villaraigosa.

“I am delighted to have made this much progress,” she said.

Throughout Monday’s meeting, Cardenas voiced dismay upon learning that some of the airport’s evaluators had discarded their notes or failed to make comments on bid forms about their reasoning for scoring a company the way the did.

He called the loss of those notes “extremely terrible and odd” and grilled airport officials about the lack of backup documents.

Cardenas also said he was concerned that airport evaluators did not check bidders’ references until after scoring a company. Lindsey told the panel that references were eventually checked and that evaluators decided that what was found would not affect any company’s score.

-- Dan Weikel and David Zahniser at Los Angeles City Hall