L.A. Now|William Nottingham: Downtown L.A. hotel builder seeking $67.3 million tax break

A Portland-based company planning a new 392-room hotel across from downtown s bustling L.A. Live entertainment complex would receive $67.3 million in taxpayer funds over the next 25 years, under a plan heading to the Los Angeles City Council.

The council s top policy analyst has recommended that Williams/Dame & Associates and its partner, American Life Inc., keep up to half of the sales taxes, business taxes, hotel room taxes, utility taxes, property taxes and parking taxes generated by their proposed project on Olympic Boulevard, which would house Courtyard by Marriott and Residence Inn hotels. That money would normally go to the city s budget, which pays for police, parks and other basic services.

The hotel subsidy agreement, which will be reviewed Tuesday by a council committee devoted to tourism-related issues, is only the latest to be offered downtown. Last year, the council agreed to provide up to $249 million over 25 years for the reconstruction of the Wilshire Grand Hotel five blocks north of Olympic. L.A. Live s hotel tower is eligible to keep up to $270 million in taxes over a similar period.

The council s policy advisers have repeatedly argued that downtown needs thousands of additional hotel rooms to keep its convention center competitive on a national scale. Even with the subsidy, the Olympic Boulevard project would generate $67.3 million over 25 years for the city s general fund budget, which has been buffeted by a series of shortfalls, they said.

That pitch has not persuaded attorney Ron Galperin, a candidate for city controller in the March election, who said hotels around Staples Center and L.A. Live are already doing booming business.

Yes we want more hotel rooms, and yes we want more development around the convention center, Galperin said. But that does not necessarily mean you give away half the revenues that are going to be generated by this project and essentially sell out the next generation.

Representatives of Williams/Dame have warned that they would reevaluate their commitment to their hotel project if the city fails to come through with the help. While there is great demand for more hotel rooms in downtown, developers are nevertheless struggling to put together the financing, said Williams/Dame chairman Homer Williams.

The money out there is not adequate in the financial markets and so without some kind of help, these things just don t get built, he said.

The Grand Avenue project proposed for downtown across from Walt Disney Concert Hall by the Related Cos. has stalled even after the council agreed to let the project s hotel component keep up to $120 million of the taxes it generates.

The council s policy advisers have concluded that the Olympic Boulevard project has a financing gap of $35.8 million. Once inflation and the decreasing value of a dollar over 25 years is factored in, the city subsidy would have a present-day value of $21.9 million, Chief Legislative Analyst Gerry Miller said.

The Olympic Boulevard project is scheduled to open in 2014.

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