The Los Angeles City Council has rescinded an ordinance extending the “living wage” law to Los Angeles International Airport (LAX)-area hotels in an effort to avoid what officials say could have been a costly ballot referendum on the ordinance.

Under an agreement with business groups that called for a voter referendum to overturn the living wage law, the City Council voted 14-0 Wednesday, January 31st, to repeal the ordinance and called for new legislation that preserves a living wage for airport-area hotel workers.

In rescinding the ordinance, the City Council requested that the city attorney draft a new ordinance with several provisions, including that LAX-area hotels be required to pay their service workers a living wage, and that the city explore expanded investments in the Century Boulevard Corridor, where many airport-area hotels are located.

“This is a fair agreement that values hard work and preserves the core principle that if you work hard and play by the rules, you should not live in poverty,” Los Angeles Mayor Antonio Villaraigosa said.

The vote came on the day that was the deadline for the City Council to respond to a referendum petition, which was submitted in late December by several business groups, including the Los Angeles Area Chamber of Commerce, that collected over 100,000 signatures.

The City Council had the decision to either rescind the living wage ordinance or place the referendum on the ballot in the election scheduled for Tuesday, May 15th.

Business groups in opposition to the legislation say that it improperly extends the city’s living wage law to private sector employers that don’t have contracts with the city.

The legislation, which was approved by the City Council in November, required hotels along the Century Boulevard Corridor in Westchester to pay service workers $9.39 per hour with health benefits or $10.64 per hour without.

By coming to an agreement with the business community, city officials said they were able to avoid a costly and divisive ballot battle on the living wage law.

The city clerk estimated the potential election cost to the city at about $3 million, while Los Angeles Area Chamber of Commerce officials said businesses expected to spend about $5 million.

“After the original living wage ordinance for LAX-area hotel workers was adopted and signed, and then challenged with a referendum, we had a decision to make,” Villaraigosa said. “Do we engage in a costly, divisive ballot fight which would tear our communities apart or do we come together and work for the common good?

“I can say, unequivocally, we made the right decision.”

City officials said the agreement will lead to a substantially different living wage ordinance with several new elements, but will preserve the wage increase for the airport-area hotel workers.

As part of the agreement proposal, the living wage for hotel workers would be “phased in” under three steps, with the first phase taking effect when the new ordinance is passed. Workers would receive a full living wage by July 1st, according to the proposal.

The agreement came after weeks of negotiations involving Villaraigosa, some City Council members, including Councilman Bill Rosendahl, the LAX-area hotels, Los Angeles Area Chamber of Commerce leaders, the Los Angeles Alliance for a New Economy and the Los Angeles County Federation of Labor.

Supporters of the living wage law praised the agreement, saying it would allow for improvements to the Century Corridor in addition to improving the working conditions for hotel employees in the area.

“I think there was a lot of discussion and negotiation that resulted in what will be a vastly improved approach to the subject,” said James Elmendorf of the Los Angeles Alliance for a New Economy, a group that has helped spearhead the living wage effort.

Vivian Rothstein, deputy director of the Alliance for a New Economy, said the new law would “help lift thousands of hotel workers out of poverty while also addressing the concerns of business leaders.”

Rosendahl, who represents the Century Corridor and the LAX area in the 11th Council District and who co-authored the motion for a new ordinance, said he, too, was pleased with the agreement, which will give workers a living wage and also help accomplish his goal of revitalizing the Century Corridor.

“All along, I said I believed all boats could rise together,” Rosendahl said. “I wanted a living wage for the workers, significant efforts to beautify the Century Corridor and significant economic investment in the area, such as a conference center. [This] action provides for all of that.”

Gary Toebben, chief executive of the Los Angeles Area Chamber of Commerce, called the agreement a “work in progress,” but added that the City Council made the right decision in repealing the original living wage ordinance and averting a divisive election.

“I think the City Council did the right thing in rescinding this ordinance, which created a great deal of controversy within the community, especially the business community,” Toebben said.

Business groups have expressed concern that the living wage legislation could be applied to industries other than LAX-area hotels, but Toebben said the agreement proposal provides the business community some assurances that the law will be limited to the airport hotels.

Among the proposed provisions of the new ordinance are that it should:

n create an “Airport Hospitality Enhancement Zone” covering the boundaries of the LAX Gateway Business Improvement District;

n require hotels within the district to pay a living wage to workers;

n commit the city to explore expanded investments in the airport hospitality zone, including infrastructure improvements and the creation of an LAX Area Conference and Business Center;

n mandate after one year a study of the living wage within the hospitality zone and its effect on the industry; and

n mandate a study of health insurance availability issues for employees being paid a living wage.