"We will aggressively defend the honor of this project and its developers with a strong campaign," Leiweke said. "We invite them to have a public debate about the character and claims of Peter Zen."
Leiweke noted that when the Bonaventure was built it received city subsidies in the form of discounts on land purchased by the Community Redevelopment Agency and then sold to developers.
Zen, former president of the city's Convention Center Commission, was fined $7,600 last year by the city Ethics Commission for violating campaign finance rules while raising money for then-Mayor James K. Hahn.
Sutton said opponents of the deal may focus on Philip Anschutz, the Denver billionaire who owns Staples Center and heads AEG.
"If it's such a great deal, why doesn't Mr. Anschutz build it on his own?" Sutton asked. "Why do the taxpayers have to spend millions to help a billionaire?"
Leiweke told the council that AEG was only selling the land for the hotel, at cost, to developers Wolff Urban Management and Apollo Real Estate Advisors, who will build the $400-million project for Hilton Hotels.
"We don't get one dime in subsidies. This isn't about underwriting billionaires," Leiweke told the council Friday.
The deal calls for the hotel to receive a rebate of at least $246 million in the hotel bed taxes it is expected to generate during the first 25 years.
If the hotel is more successful than expected and the $246 million is reached before 25 years, the hotel and the city will evenly split any hotel bed tax until the hotel receives $270 million.
In addition, the project is being given a below-market-rate loan of $16 million from the city redevelopment agency and a rebate of $4 million in building permit fees.
Some council members say the city investment is warranted to help make the Convention Center more competitive with those in other cities. The number of major conventions in Los Angeles dropped from 35 in 2001 to 15 last year.
Michael Collins, an executive of the city convention bureau, said the biggest problem cited by convention organizers who declined to come to Los Angeles was the dearth of hotel rooms within walking distance of the venue.
Without sufficient business, the city's general fund has been tapped to subsidize the debt payment on the expanded Convention Center for up to $20 million per year.
Councilman Eric Garcetti noted that subsidized hotels have had problems in other cities but said this project was different because it was part of a planned $1.7-billion entertainment district called L.A. Live that AEG is building.
It will have restaurants, theaters and other attractions to make the hotel more viable, Garcetti said.
The project was also backed by the Hotel Assn. of Los Angeles, union leaders who have been promised good pay and benefits for the hotel jobs and the Los Angeles Area Chamber of Commerce, which sees the development as key to revitalizing downtown.
"The Chamber of Commerce rarely supports government subsidies, but what we do support is smart investment in our city's economic future," said Sam Garrison, a chamber spokesman.
