City OKs Subsidies for Downtown Hotel
The City Council agreed Friday to provide up to $290 million in subsidies and loans for construction of a 55-story hotel next to the Los Angeles Convention Center despite the vow of a competing hotelier to take the issue to the ballot.
Eight years in the making, the deal was approved unanimously, with backers saying it was critical to attracting enough business to the Convention Center to end a flow of red ink at the city-owned venue.
"When we talk about this kind of investment by the developers and the city, it's kind of a leap of faith," said Councilwoman Janice Hahn. But "I think it will absolutely revitalize downtown."
Consultants hired by the city said the loans and subsidies were necessary to allow the new 1,100-room hotel to succeed. It will also increase the demand for downtown hotel bookings as more conventions come to Los Angeles, consultants said. The building will also include 110 luxury condominiums.
But the general manager of the Westin Bonaventure Hotel said the subsidy would allow the new hotel to charge lower rates and attract guests from existing establishments.
"We raise the alarm of the impending collapse of the entire downtown hotel market if the consultants are wrong again," Brian Fitzgerald told the council. "The proposed tax subsidy is a gamble we cannot afford to make."
The Bonaventure's owners plan to pursue an existing lawsuit against the city challenging the deal as well as take the matter to the ballot, said Christopher Sutton, an attorney for the hotel.
"There is going to be a referendum or an initiative on this, one way or the other," Sutton said. "The voters aren't going to approve this."
A referendum to overturn the council's action would give opponents 30 days from when the ordinance is published to collect about 49,300 signatures. The subsidy deal would be put on hold during that time, and longer if the referendum qualified for the ballot.
Because an initiative seeks to create a law rather than repeal one, opponents could start collecting signatures anytime and then would have 120 days to collect 73,900 signatures.
A fierce fight would be waged against any ballot measure, said Tim Leiweke, president of AEG, a development firm that is providing land for the hotel project and building a massive entertainment district nearby.
Leiweke said any campaign would not hesitate to take on Peter Zen, an executive with the Bonaventure who has led the opposition.
