Deal to win City Council support for Olympics could hinder L.A.'s chances

Mayor Eric Garcetti, right, talks with Olympic gold medalist Greg Louganis, left, after a news conference to announce the council's approval of a bid for the 2024 Olympic Games.

Sept. 4, 2015 5:53 PM PT

Los Angeles Mayor Eric Garcetti squinted in the afternoon sun at the throng of reporters gathered Tuesday at the edge of Santa Monica State Beach, a breeze sweeping the sand that stretched behind him toward the Pacific Ocean.

“Breathe this moment in,” he said from a small stage erected for the occasion at the Annenberg Community Beach House. “There are few moments like this in our lifetime.”

The mayor’s pride seemed justified. Los Angeles’ bid to host the 2024 Summer Olympics, which had ended in unexpected failure when the U.S. Olympic Committee chose Boston eight months earlier, was now officially revived. Hours earlier, the City Council had unanimously given Garcetti its approval to pursue the games after Boston’s bid collapsed. At the news conference, the U.S. Olympic Committee was introducing Los Angeles as the new American bid city.

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But Garcetti’s celebratory remarks, made shortly before he boarded a plane to begin lobbying International Olympic Committee officials in Switzerland, masked a behind-the-scenes political setback. Council members had given the mayor their blessing, but only in exchange for concessions that Garcetti had resisted — and that some predict could hinder the Olympic bid’s odds of success.

Lawmakers rewrote several provisions of Los Angeles’ agreement with the U.S. Olympic Committee, ensuring that the City Council will be able to closely manage key aspects of financial planning for the games. Council members feared that those decisions could have otherwise been left largely to Garcetti and his chief private-sector partner, sports executive Casey Wasserman.

Most important, the council established its authority to veto any taxpayer guarantee to pay for potential financial losses resulting from the games. That sets the stage for potential discord with Garcetti, who insists that the guarantee is necessary to compete with other prospective host cities wooing the International Olympic Committee, including Paris, Rome, Budapest and Hamburg, Germany.

Sources familiar with the process said the council’s action capped protracted backroom disputes between mayoral counsel Richard Llewellyn, who argued in public and private that changes to an earlier version of the agreement with the U.S. Olympic Committee were unnecessary, and the offices of City Atty. Mike Feuer, City Administrative Officer Miguel Santana and Chief Legislative Analyst Sharon Tso.

The latter contingent — which ultimately prevailed — maintained that the mayor had negotiated a deal putting the city at financial risk and failing to give the City Council adequate oversight of the bid process, according to the sources who spoke on condition of anonymity because they were not authorized to discuss internal deliberations. City analysts and attorneys also worried that the language of a preliminary agreement might allow the International Olympic Committee to unilaterally impose conditions on the city down the road.

Garcetti and Olympic officials have been careful to avoid publicly disparaging the council’s expanded influence. U.S. Olympic Committee Chairman Larry Probst said this week that he didn’t see the involvement of Los Angeles’ 15-member legislative body as a hindrance to building International Olympic Committee support for the city’s bid.

Garcetti has said he welcomes the council’s input, while Wesson said at Tuesday’s news conference that the council “will do whatever is necessary to move this bid forward.”

On Friday, mayoral spokeswoman Connie Llanos said in a statement that the initial agreement with the U.S. Olympic Committee is “the first step in a long process” and that Garcetti “always intended for careful review of the proposed bid by the City Council, stakeholders and residents.”

But the council’s involvement does introduce an unpredictable element in the bidding process for a city that some say already faces an uphill battle to secure the 2024 Games. And the current spirit of cooperation between council members and the mayor and bid officials could fray if the International Olympic Committee refuses to relent on its standard demand for a city-backed financial guarantee, which some on the council have signaled they will be reluctant to provide.

“As far as I know, that’s a document that the IOC won’t budge on. It’s set in stone,” said Robert Livingstone, editor of the Olympic bid handicapping site gamesbids.com. “If they’re not willing to sign it, then the bid’s done.”

Whether to accept liability for Olympic budget overruns is a perennial issue in the U.S. In other countries, the national government typically provides such a financial backstop.

“The problem of the guarantee is always a special American problem,” said John MacAloon, a professor at the University of Chicago who studies the modern Olympic Games.

But several factors have put special focus on the taxpayer pledge as Los Angeles’ 2024 bid advances. Boston Mayor Marty Walsh balked at it shortly before his city withdrew its Olympic bid. And the idea of taxpayer subsidies for a global sports event could prove unpalatable for Angelenos still coping with city services that were cut during the Great Recession.

In 1984, when Los Angeles last hosted the Games, the city refused to provide the taxpayer guarantee, provoking a standoff with international Olympic officials. City officials were ultimately vindicated when they held the games successfully on their own terms, generating a profit.

It remains to be seen whether the current City Council will prove similarly resistant to taxpayer liability for the event. Councilman Mitch O’Farrell said he considers the city’s rejection of the demand for a financial guarantee a nonnegotiable element of any final deal. Garcetti, by contrast, has said Los Angeles’ bid will be “dead on arrival” without the guarantee.

Documents submitted to Olympic officials last year by Los Angeles bid leaders would have established greater autonomy for Garcetti and Wasserman to control the bidding process.

The first draft of the city’s legal agreement with the U.S. Olympic Committee, reviewed by The Times, mentions no role for the City Council in bid negotiations and pledged the city to accept a contract to host the games “as the IOC shall require.” The December agreement also contained other controversial provisions that have since been deleted, including a prohibition on city employees making statements that denigrate or disparage the Olympics.

Garcetti signed that agreement, called a joinder, but it became moot when the U.S. Olympic Committee picked Boston to host the Games. City Council President Herb Wesson also signed, although the agreement was never brought to the full council for approval.

Erwin Chemerinsky, a UC Irvine School of Law professor who helped write Los Angeles’ City Charter, said the decision to bypass the council appears to violate the Charter, which requires the mayor to seek council approval before entering legally binding agreements on behalf of the city. The city attorney’s office never signed off on the early agreement, office spokesman Rob Wilcox said.

Wesson declined to discuss his signing of the December agreement in detail, or explain why he did not submit the document to a vote by his colleagues. “Let me just say this: You live and you learn,” he said.

A new U.S. Olympic Committee agreement submitted to the council last month after Boston withdrew its bid no longer constrained public employees’ free speech. It also contained a new reference to a separate document establishing the council’s right to vote on any final contract bid officials negotiate with the International Olympic Committee.

In an interview with public radio station KPCC, Llewellyn, Garcetti’s lead in-house attorney, defended the new agreement. He said it was “just incorrect” to suggest that the document did not sufficiently protect the city’s interests.

But by the beginning of this week, few in City Hall outside the mayor’s office shared that point of view. Officials in the city attorney’s office, city administrator’s office and chief legislative analyst’s office were all pushing for changes that they said would put the city in a better negotiating position with the International Olympic Committee.

Chief Deputy City Atty. Jim Clark ultimately bypassed Llewellyn to draft revisions to the document directly with the LA24 bid committee. On Tuesday, he presented yet another revised agreement to the council that explicitly stated future contracts with the International Olympic Committee would require council members’ approval.

Clark said the agreement had been “critically improved” in the last few days.

“This one protects the city,” he said. “The other one, in my view, did not.”