Council Is Urged to OK Hotel Deal
The Los Angeles City Council's top two advisors have recommended that it approve $266 million in public subsidies and loans for the developers of a 55-story hotel next to the city's Convention Center, a much higher amount than previously disclosed. The proposal from City Administrative Officer Bill Fujioka and Chief Legislative Analyst Gerry Miller sets the stage for the council to adopt a financial package that includes allowing the hotel to keep $246 million in hotel bed taxes that it is expected to generate in its first 25 years.
The two city officials, however, characterized the bed-tax rebate as a $62-million subsidy because that is the amount the developers can raise immediately for construction by borrowing against the 25-year flow of tax receipts. Although that is the "present value" of the subsidy, the city would actually forgo $246 million.
Jon Coupal, president of the Howard Jarvis Taxpayers Assn., criticized the city for trying to present the deal in a way that might be more palatable to the public.
"It's misleading," he said.
Councilman Bernard C. Parks, however, said he was not put off by the final deal, saying the bed tax being returned is new revenue the city would not get if a hotel were not built.
"It basically pays for itself," said Parks, who is chairman of the council's Budget and Finance Committee.
The city is also proposing $20 million in loans and building fee waivers.
Building a 1,100-room hotel would help the city attract more business to the Convention Center, which is not earning enough to cover $32 million in annual debt payments incurred for a $500-million expansion, Fujioka and Miller argued in a report released Wednesday.
The city's general fund is subsidizing the Convention Center debt payments by more than $10 million annually, officials said.
"The Los Angeles Convention Center has not been able to attract the large-scale conventions and events that its competitors have been able to attract because of the lack of a convention center headquarters hotel that provides ample hotel rooms within close proximity to the Convention Center," Fujioka and Miller wrote.
City officials said a development team that includes the L.A. Arena Land Co., a firm owned by Denver billionaire Phillip Anschutz, is obtaining $180 million in private loans for the project, but that the city financing is needed for the project to go forward.
