Council Delays Equestrian Center Contract Decision : Finances: Lawmakers seek more information on the concessionaire’s fiscal status to rule on a proposal to cut fees at the city-owned facility.

Members of a Los Angeles City Council panel balked Monday at approving a more generous contract with the concessionaire who runs the city’s Griffith Park equestrian center, expressing doubts they know enough about the firm’s finances, even after an audit.

After more than two hours of debate, the council’s Arts, Health and Humanities Committee delayed for 30 days a decision on a proposal to slash the fees the concessionaire--Los Angeles Equestrian Center Inc.--pays the city for the privilege of operating the city-owned facility.

The LAEC corporation’s executives have said they cannot afford to run the center unless the existing contract is sharply modified. There is a long history of center operators having financial problems.

But Councilman Joel Wachs, the committee’s chairman, said he could not vote to grant the corporation the concessions it seeks unless he could verify that the existing contract imposed a financial hardship on it.

“A financial hardship is not documented,� Wachs said, referring to the recently completed audit of the company, whose sole business is operating the 72-acre center. “I’m not so mad at LAEC, as I am that we still don’t have all the facts and figures.

“We don’t want to be taken for patsies by a for-profit developer,� Wachs said.

“We don’t want to approve a sweetheart deal,� quickly added Councilwoman Joy Picus, also a member of the committee.

Of particular concern to the committee were statements by the auditor that not all the revenue received by LAEC or its sub-licensees could be verified. The audit was not available for public review Monday because the company contends it contains proprietary information--business secrets that are legally confidential--said a city attorney’s office representative.

Meanwhile, Ken Mowry, the corporation’s general manager, told the committee that the audit verified 98% of LAEC’s income. “We’re only talking about 2% of the total dollars,� Mowry said.

“But that’s your estimate,� interjected Rick Sessinghaus, a top budget official of the city’s Recreation and Parks Department.

Information about LAEC’s income is important to the city because under its existing contract the firm is supposed to pay the city a percentage of its gross receipts. LAEC contends, however, that the current contract imposes an economic hardship, although no evidence has been offered on how much money it may be making or losing.

In the next 30 days, the committee members said they wanted to meet privately with corporation executives and city parks officials to learn more about the center’s financial situation.

The same committee first expressed concerns about the proposed new contract more than a year ago and ordered that LAEC’s books be audited.

The existing contract requires the corporation to pay the city a franchise fee equal to 5.5% of its gross receipts. Under the proposed agreement, it would pay $50,000 for the first two years of its new contract, $75,000 in the next two years and $100,000 in the fifth year.

Additionally, in the remaining 30 years of the 35-year contract, the corporation would pay 4% of its gross receipts to the city.

A city analysis projected that the equestrian center would gross $27.5 million over the first five years of its operation, thus generating $1.5 million in revenue at the 5.5% rate--or about $900,000 more than the city would get if it accepted the flat-rate scheme.

The flat-rate scheme with the reduced percentage of gross in the last 30 years of the contract was negotiated by a two-member team of recreation and parks commissioners and was subsequently endorsed by the city’s budget office.

The debate over the concession also has the potential for developing a new political twist.

One of the principal architects of the proposed new contract was attorney and businessman Richard Riordan, a former parks commissioner who filed papers last week to raise campaign money to run for mayor.

Wachs is also a mayoral candidate and has been positioning himself as a tough taxpayer watchdog on the issue of the equestrian center concession. At Monday’s meeting, Wachs mentioned Riordan by name as one of the two parks commissioners who negotiated the proposed new agreement.

But Greg Nelson, Wachs’ chief deputy, denied that Wachs is attacking the concession as a way of building a case against a political rival. “We’re not doing anything differently,� Nelson said, noting that Wachs’ qualms about the contract were evident a year ago, long before the councilman or Riordan had shown an interest in running for mayor.