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City Council OKs Convention Rules

The new policy requires organizers to pay the difference between discounts and revenue.

October 04, 2003|Patrick McGreevy | Times Staff Writer

Responding to an audit that found groups using the Los Angeles Convention Center have been given excessive discounts on rental fees, the City Council approved new rules Friday to limit fee waivers and reductions.

The new policy provides more detailed procedures for approving discounts, including written approval from the city administrative officer. It also requires organizers of conventions to reimburse the city when discounts exceed the amount of hotel bed-tax revenue generated by the events.

Under the old policy, L.A. Inc., the agency that books conventions for the city, was required to make up the difference.

Council members said their aim is to balance their responsibility to protect the city treasury with the need to provide discounts and other incentives to attract business.

"Los Angeles needs to step up and make sure we look at what we are doing to make sure our Convention Center is as competitive as possible," said Councilman Martin Ludlow, chairman of the council's Conventions, Tourism, Entertainment Industry and Business Enterprise Committee.

L.A. Inc., also known as the Convention and Visitors Bureau, booked 16 major conventions for this year, down from 28 in 2002 and 35 the year before.

Ludlow said Los Angeles is at a disadvantage because it has far fewer hotel rooms within walking distance of its convention center than do San Diego, Anaheim and other competitors.

The City Council approved a discount policy in 1992 to draw events to the convention center, which had been expanded that year. That policy established the standard that discounts would not exceed the amount of hotel bed-tax an event generates.

A city controller audit in 2001 found that discounts during a four-year period exceeded the hotel tax revenue by $5.84 million. The Times last year identified $1.6 million more in excessive discounts.

The shortfall occurred because Convention Center officials offered the discounts based on projected attendance, but turnout for several events was lower than estimated, officials said. One change approved by the council seeks to improve and standardize how estimates are made.

City Administrative Officer Bill Fujioka said requiring L.A. Inc. to repay $5.8 million would be devastating to the agency, which is mostly funded by the city's bed tax.

Putting responsibility for reimbursing excessive discounts on convention organizers rather than the bureau was seen as a way to make sure they lived up to commitments for attendance at events.

Bureau officials welcomed the new policy, saying it set clear guidelines while also allowing the bureau leeway to provide incentives.

"This is one more step to help L.A. put more heads in beds," said Mark Liberman, president of L.A. Inc.

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