A Los Angeles City Council committee Tuesday raised alarm and questioned LA28 over its procurement plans, which they worry will dish out billions of dollars — but not for city businesses.
The 2028 Summer Olympic and Paralympic Games are expected to generate billions of dollars for the economy through sales, sponsorship, and other business opportunities. City officials want to make sure a significant portion of that revenue benefits local businesses.
Last week, LA28 Olympic organizers unveiled a plan to ensure 75% of contracts go to businesses located in Southern California, including the counties of Los Angeles, Orange, Riverside, San Bernardino and Ventura. Another 2% of contracts would be dedicated to “small businesses.”
But city officials argue the plan is too broad and makes no true commitment to benefiting businesses in Los Angeles.
During Tuesday’s Ad Hoc Committee on the 2028 Olympic and Paralympic Games, tensions rose as a panel of five City Council members criticized LA28’s plan and called for more commitments for local businesses.
“You could have a scenario where no L.A. business does any business with LA28,” Council President Marqueece Harris-Dawson said.
Inspector of Public Works John Reamer, who oversees the city’s contracting, noted the city did not provide input into the procurement plan despite making several requests to do so. Reamer added LA28’s plan emphasized partnerships, but in reality that element was lacking.
He recommended changes to the plan, and said LA28 should prioritize small businesses in Los Angeles.
“The plan does mention small businesses, but the plan does not necessarily mean a small business is going to be a local small businesses,” Reamer said. “The small business can come from anywhere in the country, anywhere in the world.”
Strategies should be aimed at maximizing participation of hyper-local businesses in the city and “micro” businesses with 10 or fewer employees, Reamer added.
City Councilwoman Monica Rodriguez thanked Reamer for his analysis. She further criticized LA28 for not being clear on its commitments.
“This is a whole new Olympiad around trying to end run our own procedures in the city of Los Angeles,” Rodriguez said. “Doesn’t feel like much of a partnership, and it’s disappointing.”
LA28 CEO Reynold Hoover told the committee the organization would give LA businesses preferential treatment. However, he warned that LA28 could not support a plan that limits their ability to get the best contract for their dollars.
Council President Harris-Dawson challenged Hoover’s comments, adding, “We’d rather you pay nominally more to a business in the city, than to save $25.”
Councilman Hugo Soto-Martinez noted that doing business in Los Angeles is more expensive, pointing to the high cost of living and minimum wage.
“The city of L.A. is the financial back-stop to everything that you are doing,” Soto-Martinez said.
“We have to go to our constituents and say that we are fighting for them to make sure that they’re doing to get as much business as they can out of this event,” Soto-Martinez added.
During the meeting, Hoover took a moment to tout the “success” of last week’s opening of ticket sales.
While LA28 said the first ticket sale drop showed high interest in the Games, local residents criticized the fees.
There were some tickets on sale as low as $28, but those went quickly, and those that were left cost up to $5,500. Additionally, each ticket had a 24% service fee.
Councilwoman Katy Yaroslavsky asked Hoover how much of the fee would be going to LA28. Hoover said he was uncertain.
City officials contemplated imposing a tax on Games tickets, but Yaroslavsky said it was decided against after talks with LA28.
“The tickets are not affordable,” Yaroslavsky said. “A dollar, which would have actually helped us do some of the things that we know we need to do to get ourselves ready as a city for the Olympics, feels like a drop in the bucket compared to a 24% surcharge.”
She noted the city has time to approve a tax on tickets for the next drop.
Meanwhile, the city and LA28 have yet to finalize an agreement that would codify which services would be provided and how the costs would be reimbursed. The agreement is more than six months late.
On Tuesday, Rodriguez introduced a motion to protect Los Angeles taxpayers by establishing a so-called “Zero-Cost Principle” for the Games. She said it’s necessary to ensure LA is fully reimbursed for all costs of hosting the mega event.
“With major financial questions still unresolved, we must put enforceable safeguards in place to ensure the city is fully reimbursed for every enhanced resource cost before any surplus funds are declared and used elsewhere, including the establishment of a Legacy Fund. By codifying a Zero-Cost Principle into the City Charter, we are making clear that protecting taxpayers and preserving core City services must come first,” Rodriguez said in a statement.
Rodriguez wrote a public letter Monday, warning Hoover that the Games could leave the city owing millions even if LA28 makes a profit.