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Huffington Plan to Remake Houston Skyline Fell Flat : Business: He secretly bought up 11 downtown blocks for project. But collapse of oil market took dream with it.

October 29, 1994|ERIC LICHTBLAU | TIMES STAFF WRITER

HOUSTON — This was Mike Huffington's "baby," the chance to leave his own mark on a city that had long revered his oil-rich father as an entrepreneurial genius.

Huffington's vision for his hometown: To create an urban community of swank high-rise condominiums, theaters and restaurants out of a tired downtown neighborhood. Working in secret, he bought up properties piece by piece through the 1980s and amassed 11 city blocks, utilizing the family oil money that is now financing his campaign for the U.S. Senate.

Like his headlong rush into politics, it was a move so aggressive for the conservative businessman that even close associates were left shaking their heads.

But then the Texas oil market collapsed, taking with it any hopes for Huffington's dream development. And the property--now dotted with boarded-up shops, overgrown fields, and lots crammed with rusted-out trucks--sits instead as a remnant of his lucrative yet erratic two decades in business.

Jim Boyd, vice president of the company that bought out Huffington's family-owned operation in 1990 for a reported $600 million, laughs when asked what his firm hopes to do with the once-promising land acquired in the deal. "We'd like to sell it," he said.

The stalled development, representing one of the biggest land deals in Houston history, underscores central questions in the Republican congressman's bid to defeat Sen. Dianne Feinstein on Nov. 8: Just how good was Mike Huffington as a businessman? And what does his record as an oil company executive and entrepreneur say about his ability to help lead California through tough economic times?

For the 47-year-old Huffington, the link between profit margins and prudent public policy is inextricable. His main achievement as an oil executive and his primary mission as a U.S. senator, he said in an interview, are essentially one: "Trying to cut back the fat in the budget."

With a brief political record to run on, Huffington has made his business career a cornerstone of his Senate campaign, holding himself up as a man who built a fortune from modest beginnings before moving to Santa Barbara less than four years ago. "I am the American Dream," he declared as he unseated a longtime incumbent congressman in 1992.

In the powerful oil and banking cliques of Texas, Huffington still carries a reputation as a tough, in-your-face negotiator who brought his Harvard Business School organizational savvy to a family company that was rich in gas reserves but raw in modern business know-how.

But he is also remembered as a businessman who served largely as a high-ranking "caretaker" for his father's corporate empire and was often absent when trouble hit.

"It's very difficult to find specific things that Mike achieved. He didn't have any real track record," said John T. Brown III, a former vice president at Huffco, the oil conglomerate that Huffington's wildcatter father founded. "Mike's idea of managing the company was to preserve the family wealth. He did not take risks."

Many other associates describe Huffington as an industrious, hands-on executive. He even involved himself in corporate minutia, insisting that his 140 employees keep their desks clean and avoid smoking and caffeine in the office.

"It was his company," said Boyd, who worked as Huffco's controller.

Even his supporters, however, are slow to point to business successes that presaged Huffington's political career. Although he oversaw Huffco finances as chief financial officer, problems arose on several fronts:

Environmental: The company paid about $1 million in the mid-1980s to clean up coastal wetlands on the Gulf Coast that were damaged by its oil rigs, according to former general counsel John Patton. Huffington and other officials voluntarily paid even more to clean up decades-old oil contamination discovered at a 400-acre site that Huffco owned just outside Houston, former executives said. Federal records show the firm also is listed as a "potentially responsible party" at a polluted Superfund site in Louisiana.

In California, a Huffco subsidiary owned a 20% stake in a bankrupted Paramount refinery that left a trail of environmental damage, The Times reported earlier this month. Testing has found that hazardous pollutants have spread into ground water and soil surrounding the 60-acre site, and water quality officials say it may cost tens of millions of dollars to clean up. Officials said that the pollution probably started decades before the Huffington company held an interest for several years in the 1980s.

Legal: The U.S. Commerce Department fined Huffco $250,000 in 1986 because it had improperly made dozens of shipments of computers and police equipment--including shock batons, billy clubs and handcuffs--to Indonesia. The company ran one of the world's largest liquefied gas operations there, and former executives say the items were shipped, without required U.S. authorization, for use by Huffco's overseas employees.

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