I am all for increasing the population and livability of downtown L.A. I just hope that this won't aim to be too much like Times Square and focus solely on tourists and conventioneers. I think the park near City Hall should be the next thing on planners' minds, it is a huge unused space with lots of potential...
From L.A. Downtown News (Dec 13, 2004):
Council to Review Staples Center Expansion
$1 Billion Entertainment District Could Break Ground in May
by Kathryn Maese
Construction could begin as early as May on a $1 billion entertainment district and Convention Center hotel next to Staples Center. The move is part of a tentative funding agreement announced last week between the developers and city leaders.
A City Council ad hoc committee this Tuesday will review the proposed financing plan, which includes about $150 million in city loans, tax breaks and concessions. The proposal, floated by developers Anschutz Entertainment Group (AEG), Wolff Urban Development and Apollo Real Estate, would limit the use of taxpayer dollars, particularly in constructing the centerpiece 55-story, 1,200-room hotel.
While AEG secured entitlements and completed an environmental impact study several years ago, momentum for the project, dubbed L.A. Live, stalled while a financing plan for the $350 million hotel was being hammered out. Previous versions were rejected because they relied too heavily on public subsidies.
"We've advocated for the development of a hotel in proximity to the Convention Center for years," said Ayahlushim Hammond, CRA project manager for the area. "We're thrilled we've got a proposal that looks doable and requires much less public financing than previous iterations."
The City Council committee will review four elements of the financing plan this week (it would ultimately need full Council approval). One would include a $20 million, secured loan from the city that would be repaid over 30 years at 5% interest. The loan would help pay for a ballroom near the hotel.
The developers would also be allowed to keep the hotel bed tax revenue (currently 14%), estimated at more than $5 million a year. Over a 20-year term, this could exceed $100 million.
The CRA has also agreed to pump $10 million into infrastructure improvements such as freeway access ramps, streets, lighting, parking and utilities.
Finally, the city would waive fees for permits and planning for up to five years, a sum that could reach $6 million.
Beverly Hills-based Hilton Hotels Corp. has agreed to provide a $30 million loan to help build the project, and will operate the hotel once it is completed. Hilton will get naming rights, though it will not have an ownership stake in the hotel, AEG spokesman Michael Roth said.
L.A. Live would convert the six-block parking lot north of Staples Center along Figueroa Street and Olympic Boulevard into a retail and entertainment center supported by thousands of new housing units, 20% of which will be affordable. A 7,300-seat theater would be the first component to break ground in May, along with infrastructure improvements, while the hotel would follow a year later. The entire project would not be completed until 2014.
The hotel is considered by many city and business leaders as the linchpin in the plan to revitalize the lackluster Convention Center, which has suffered from low bookings due largely to the absence of a central facility to house conventioneers.
Still, many council members are moving cautiously, particularly in light of a lawsuit filed by Peter Zen, owner of the Westin Bonaventure hotel. The suit sought to prevent developers from using city funds for the hotel without providing incentives to competing hotels. In this latest funding plan, however, AEG was able to skirt litigation because the city has no direct involvement or ownership.
"I'm in full support of the overall plan, although I have not had a chance to look over the nuances of the funding," said Eighth District Councilman Bernard Parks, who sits on the ad hoc committee. "I'm looking forward to taking a closer look at the funding package."
For his part, Zen said allowing the developers to keep the bed tax revenue for 20 years, even after the hotel becomes profitable, would be unfair to other hoteliers.
"If the city wants to give them a loan, that's the city's issue," Zen said. "But when it's giving away tax money it's not fair. I'm concerned with a level playing field and they're not creating that."