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Grand, and good

The Grand Avenue project won't turn downtown L.A. into Manhattan, but it's worth a few tax breaks.

February 12, 2007

DOWNTOWN'S GRAND AVENUE project isn't expected to break ground until later this year, but the $2-billion mixed-use development, featuring a Frank Gehry high-rise, has already built a formidable tower of political consensus.

Downtown enthusiasts pine for a catalyst to ignite more development near Disney Hall. Community groups like the park that the private developer agreed to underwrite. Labor groups like the "living wage" conditions imposed on the development. Housing advocates like the affordable units that will be offered alongside the high-end condos. And neighboring editorial writers like the prospect of some decent retail next door. (How about a bookstore and a decent smoothie joint?)

Rarely does a commercial enterprise, this one backed by Eli Broad and a city-county public authority, garner -- or co-opt -- so much grass-roots support. It's almost enough to make us suspicious, especially in light of escalating costs for the project's tax breaks.

Almost enough. In fact, the project makes a great deal of sense, and the county Board of Supervisors and City Council should give the Grand Avenue project a green light this week when they take up the matter. A modest amount of public resources are being leveraged to create an anchor for downtown's northern end. A well-regarded developer, the Related Cos., is making a substantial bet on the future of downtown Los Angeles, and it has assembled an impressive team of architects and commercial partners. Last month's announcement that Mandarin Oriental, one of the world's most respected hotel chains, will be a part of the project only increased its stature and credibility.

It also may have accounted for the increase in the estimates for the tax breaks at issue. That's because the largest tax break would be the 14% tax on hotel stays, and a five-star Mandarin Oriental charges considerably more per night than most other downtown hotels. It's now believed that the project's rebates on hotel and parking taxes could add up to $66 million over 20 years. That's a significant number for a project initially advertised as requiring no public help, but it is a modest sum in the context of the development's overall cost, and it pales in comparison with the likely benefits for the city and county (including rent, public improvements and other tax revenue).

Some of the past hype for this project has certainly been overblown -- much like the hype for downtown needing to serve as more of a Manhattan-like core for the region has been overblown for decades -- and used to justify projects that never did (or never should have) seen the light of day. But on its own merits, this development should proceed as an important contributor to the continued vibrancy of downtown Los Angeles.

That said, it will be important for public officials to avoid being trapped in a "too large to fail" mentality to justify further tax breaks or subsidies down the road. And it will be important for the rest of us to make sure that the county government (whose Hall of Administration might need to eventually move to make way for the project's future stages) not treat the development, with its adjacent park, merely as a means to upgrade -- at someone else's expense -- its own office space.

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