L.A. to Subsidize Hotel Project

city officials have announced an agreement for the city to heavily subsidize construction of the long-sought 55-story, 1,200-room Convention Center hotel-condominium complex in downtown Los Angeles across from StaplesCenter. Hilton Hotels Corp. will lend its name to the hotel and manage it, said Tim Leiweke of Anschutz Entertainment Group and Lew Wolff of Wolff Urban Partners. The hotel, being developed by Wolff Urban Partners working with Apollo Real Estate, is expected to include a range of luxury suites on the top floors as well as 100 condominiums.Planned as part of a $1 billion entertainment complex on what is now a parking lot, the project also will involve a limited - but costly - role for the city. "We have minimizedthe city responsibilityin this," Leiweke said."We felt it was importantto move ahead and notdeal with the complicationsof potential lawsuitswith any level of directpublic funding."However, the memorandumof understanding, scheduledto get its firsthearing next week, willinvolve significant coststo the city, which alreadyis losing millions ofdollars a year on the Convention Center. Among these: Reinvestall hotel bed taxes - estimated at $6 million year - back into theproject for a 20-year period. Makeavailable a $22 million loan,at a 5 percent interestIrate to be paid backin 30 years. Invest$10 million ofpublic funds for infrastructure improvements. UWaive all feesfor building permits forfive years. "This is a small investment,comparatively, to whatthe city will get inreturn," said Jack Kyser,chief economist of the EconomicDevelopment Corp."A conventioncenter hotel is whathas been needed to make the Convention Center a success.This is a time tofish or cut bait. Withoutthe hotel, you might aswell close down the Convention Center." IAnd, Leiweke said,without the hotel, the plansfor "Times Square West,”the entertainment-retailcomplex being plannedfor around the area, willbe abandoned. E"If there's no hotelthere, we might as well keepparking cars there."  Wolff saidthe city share was minimizedcompared with other  projects he has been involvedwith to develop similarproperties."We are asking all thepartners to make an investment.”Wolff said. "AEGis putting up their land,Hilton is making a lean-to the project, Apollois putting in $50 millionto $60 million. U"We think what we areasking from the city isreasonable and a lot lessthan most other communitiesput up." Mayor James Hahn had placeda high priority on theagreement, said DeputyMayor Renata Simril."Given the circumstancesof how most suchhotel deals are beingfinanced across the country,the mayor feels this limitedthe city's liability."We aremaking a loan and a modestinvestment for a $1 billion project that willcreate thousands of jobs.And we believe it willhelp us with a $20-million-a-yearEproblem in payingoff the Convention Centerbond and make Los Angelescompetitive again in the convention business." However,Peter Zen, general managerof the Bonaventure Hoteland an outspoken criticof the plans, said he wasunconvinced about the proposal. "Ihave the same concerns Ialways have and that is whyshould these peoplebe able to have a $6-million-a-yearIadvantage. I could use that money for myhotel. The city could usethat to hire more policeofficers." Jon Coupal of the Howard Jarvis Taxpayers Association questioned why such City Ok's Subsidy for Hotel Project"It justsounds like a boondogglewith special treatment givento a developer," Coupalsaid. "This is moneythat should be used formunicipal services. If thisproject is commerciallyviable, then privateindustry should pay all ofit." Withthe Times Square West project,AEG - which owns andruns StaplesCenter – istaking a major step as partof its downtown investment.Theplans call for a 4-million-square-footAentertainment districtencompassinga 7,000-seat concert theater,a multiplex theateroperation of possibly 16screens with seating for4,000 people, a ballroom-meetingfacility for 3,000Upeople along with bars, restaurants and otherfacilities around a 40,000-square-footIopen- airplaza. (C) 2004 Los Angeles Daily News. via ProQuest Information and Learning Company; All Rights Reserved