Agency Under Review

Alarmed by a criminal probe of the quasi-public agency that provides city and county film permits, the Los Angeles City Council took emergency action Tuesday to review possible reforms of the Entertainment Industry Development Corp., including whether council members should continue to automatically serve on the agency’s board.

At the same time, the county Board of Supervisors--whose five members also sit on the EIDC board--directed staff members to look into its relationship with the agency. Some supervisors expressed alarm at reports of political contributions and big spending by an organization they helped create.

The EIDC collects permit fees for the two government entities and derives its budget by keeping a portion of the fees. Its board includes entertainment executives as well as City Council members, county supervisors and the mayor of Los Angeles.

“If the agency wants to spend money lavishly, and if that’s how it’s done in Hollywood, they ought to do it with Hollywood dollars,” Supervisor Zev Yaroslavsky said. “These are public funds, and they shouldn’t be paying for it.”

In court papers filed to support search warrants served last week on the corporation’s Hollywood headquarters and the home of its president, county prosecutors cited apparent misuse of public funds on political contributions and opulent meals and trips to locales such as resorts in France and Utah--the sites of major film festivals.

But it remains unclear whether the EIDC is a private corporation or a public entity that must follow government restrictions against political contributions and wasteful spending.

Legal filings by city and county attorneys, some of which came to public attention Tuesday, argue that the EIDC is in fact a private corporation.

That contention came in court papers responding to a federal lawsuit filed by a photographer who alleged the EIDC did not properly compensate him for using his location photos. That photographer, Benjamin Pezzillo, has been in touch with county prosecutors since last year, his lawyers say.

When he filed his lawsuit on March 1, Pezzillo sought compensation from the EIDC as well as the city and county. But the city attorney’s office and county counsel’s office both contended that they were not liable because the EIDC is “a privately operated, independent contractor.”

That closely matches the description of the agency by its own attorneys, who argue that the EIDC must be free to imitate the opulent spending and political contributions of the Hollywood studios it services and woos.

“I’m shocked, shocked that different arms of the county government would be taking inconsistent legal positions,” said EIDC attorney George Newhouse, adding that the money the corporation spends on parties at film festivals and posh Westside dinners does not constitute public funds.

Assistant County Counsel John Krattli said Tuesday that the filing in federal court does not represent the county’s opinion on the overall legal status of the EIDC. Instead, he said, it merely argues that the corporation is not an administrative unit of the county and therefore the county is not liable for its actions.

“That document did not address the issues that are confronting us now,” Krattli contended.

At the EIDC’s inception, the Los Angeles city attorney’s office, then headed by the current mayor, James K. Hahn, was informed by the state Fair Political Practices Commission that the corporation was a “local government agency.” But the assistant city attorney who received that letter, Anthony Alperin, in an e-mail to a cultural commissioner earlier this year, said the EIDC was not a “government agency.”

And the city attorney’s office also filed papers in the federal court suit arguing that the EIDC is a private contractor rather than a government entity.

“We need to sort out what exactly this organization is,” Josh Perttula, special assistant city attorney, said Tuesday.

The City Council called for such a review Tuesday morning on a 10-1 vote. Reacting to a call from Dist. Atty. Steve Cooley to reconsider the city’s relationship to the film agency, Councilman Nick Pacheco said a review is necessary to address allegations that the EIDC may have improperly made political contributions to elected officials on its board, such as himself.

“If the district attorney’s office concludes that there is a conflict, one solution is to remove us from the board,” said Pacheco, who has received $1,000 from the agency and is due to be feted at an EIDC fund-raiser next week.

The motion adopted by the City Council said recent reports about EIDC operations “raise legitimate concerns over the city’s continued participation in this joint city-county-industry effort.”

Several council members said the corporation has done a good job of expediting film permits and keeping the movie business in Los Angeles.

“Hopefully we don’t get onto this bandwagon of ‘Let’s crucify them and throw a lot of dirt at them’ when we really don’t know what is happening,” Councilman Ed Reyes cautioned.

At the Hall of Administration, county supervisors were befuddled to find themselves on the board of an agency that they had paid little attention to.

“What exactly is our relationship to this thing?” asked Supervisor Gloria Molina, who laughed when she was told that she sits on the executive board of the $3-million agency. She said she has never attended a meeting.

The agency was formed in 1995 during a push to privatize city services headed by former Mayor Richard Riordan. At the time, Los Angeles was losing film jobs to cheaper locations such as Canada.

The city and county passed motions forming the EIDC as a nonprofit public benefit agency and signed contracts with the corporation to handle film permits. Permits to shut down city streets can still be acquired through the city or county, but almost all crews go through the EIDC.

In 1998, Pezzillo entered into a contract with the EIDC to photograph more than 200 film locations in Los Angeles for the agency’s “location library,” according to court papers.

He contends the EIDC kept his photographic negatives, insisted that it held the copyrights and used them illegally in its literature. The EIDC has denied the allegations.

Pezzillo checked the Internet and discovered the EIDC’s odd status, according to his attorney, Rhonda Fossbinder.

In July 2001, Pezzillo began writing to prosecutors and city and county officials alleging that the EIDC was violating the law, she said. He soon got a call back from the district attorney’s office.

Prosecutors would not say whether Pezzillo’s complaints sparked their inquiry.