After spending approximately four hours on the issue Wednesday, the Los Angeles City Council voted against the preliminary approval of Live Nation as the operator of the Greek Theatre.

The debate over who will operate the Greek Theatre for possibly the next 20 years remains unresolved under the council’s decision. (photo by Robert Mora)

Live Nation and the current operator of the Greek Theatre, Nederlander, are competing for the bid. Nederlander has paired with AEG for its bid.

The motion, which was put forth by City Councilman Tom LaBonge, 4th District, passed 11-3. The motion supported the city council’s arts, parks, health, aging and river committee’s vote from Jan. 26. There was also an amendment to the motion that requests that the Los Angeles Recreation and Parks (RAP) Commission redo the request for proposal (RFP) process, this time involving the community and the city council to a greater extent than during the prior RFP process.

“I think it was really important that the Los Feliz associations and residents, and other local organizations, voiced their concerns,” LaBonge said. “As their representative and someone who passes the Greek Theatre every day, it is important to me that their voices be heard.”

The amendment can only be a request, not an order, as stated in the city charter.

The city council had two options to consider. Last fall, the RAP commission voted in favor of the Live Nation bid. On Jan. 26, the committee voted to “not concur” with the RAP commission’s recommendation.

Several days before the meeting, Live Nation’s attorneys filed a letter with the city, warning the Los Angeles City Attorney’s Office and the city council that a lawsuit could be forthcoming due to how the process has been handled.

“When the full council meets this week to consider the committee’s recommendation, it has an opportunity to correct the record and demonstrate to the public that the city is committed to the integrity of the public bidding process for city concessions such as the operation of the Greek Theatre,” the letter read. “Because it is plainly unlawful to allow new criteria to be introduced after the fact which are outside the bidding process, and which clearly favor only the incumbent, the full council needs to act to protect the city from exposure to legal action for injunctive and monetary relief. Such exposure would result from rejection of the highest-ranking bidder (Live Nation) for reasons completely outside of the competitive bidding process mandated by law, and wholly unjustified by the results of that process.”

The Greek Theatre is located at 2700 N. Vermont Ave. It was built in 1929 and is owned by the city. The venue was RAP’s highest revenue-producing, non-golf-concession property, generating $22.8 million in gross receipts in 2013.

The bids were for management of the Greek Theatre for potentially 20 years — 10 years upfront with the possibility of two 5-year renewals.

According to the RAP staff recommendation, Live Nation received a higher score from third-party consultant Strategic Advisory Group, which prepared the RFP for the Greek Theatre. There was a point system with the maximum score possible being 500. Live Nation received 455 and Nederlander-AEG received 396. The criteria for scoring was based on financial performance, an asset management and concession improvement plan and an event activity and community partnership plan.

RAP officials noted that Live Nation’s full monetary offer is approximately $106 million, versus Nederlander-AEG’s $96.25 million. The main difference between the two figures is money being put forth for renovations — Live Nation is proposing approximately $40 million in major renovations, versus less than $20 million from Nederlander-AEG.

Proponents of the Nederlander-AEG offer said the city should more heavily consider the guaranteed revenue paid to the city from rent, which could be as much as $875,000 a year that goes directly into RAP’s budget.

“I like both entities,” said Chris Laib, president of the Los Feliz Improvement Association. “We’ve now met and vetted both of them. Both groups seem to be nice guys and professionals. The issues for us are simply the deal’s points.”

The association and neighbors, Laib said, are particularly skeptical of the major renovations Live Nation has proposed.

“The part of Live Nation bid that is troublesome to us is the modernized, and I think overbuilt, renovation of the Greek Theatre,” he said. “We feel their renderings and budget is never going to happen.”

Laib added that he felt it was unlikely the renovations would pass before an historic preservation entity.

The association voted in favor of Nederlander-AEG because it has the history with Nederlander, and it wants more guaranteed money for the city.

“The reason that is an advantage, from the standpoint of the residents, is that’s money that could re-man the ranger department; it’s money that could keep the recreation centers open all over the city; and it’s also money that would keep the observatory open on Tuesdays,” Laib said. “These are all very important issues for us as residents.”

City Councilman Joe Buscaino, District 15, argued that the city should vote for the Live Nation bid.

“If we don’t uphold this process and we fail to support the recommendation by recreation and parks, we are confirming the worst stereotypes about Los Angeles being a difficult place to do business,” he said.

Councilman Mitch O’Farrell, 13th District — who chairs the arts committee — implored the city council to support the committee’s recommendation over the RAP commission’s recommendation.

“I see this as a statement of values,” he said. “What do we as legislators value?”