A developer seeking to build 1,130 hotel rooms across from the Los Angeles Convention Center could receive $103.3 million in public financial assistance over 25 years under a proposal heading to the City Council.
New York City-based Lightstone Group could secure an amount equal to 100% of the hotel tax revenues generated by its downtown hotel project during its first eight years of operation, according to projections prepared for city lawmakers on the proposal.
Backers contend the Lightstone project — two towers offering three hotels — will not pencil out unless the city steps in. The development, planned at Figueroa Street and Pico Boulevard, would provide much-needed rooms for nearby convention-goers, said Doane Liu, executive director of the city's Department of Convention and Tourism Development.
"The biggest complaint we get from people who want to bring conventions to Los Angeles are the number of hotels within walking distance of the convention center and the variety of price points for rooms," Liu said. "This project helps solve both of those problems."
The proposal heads to the council for a vote on Friday. Under a 25-year agreement with the city, the project — formally known as Fig+Pico — would have blocks of rooms reserved for future conventions and the 2028 Olympics.
The financial aid package was endorsed unanimously Tuesday by the council's three-member Economic Development Committee. But it drew criticism from Jonny Coleman, a lead organizer with NOlympics LA, which is part of the Los Angeles chapter of the Democratic Socialists of America.
Coleman, whose group opposes the plan for staging the Olympics in Los Angeles, said the city should spend its money on "projects for the actual people who live here."
"We don't think real estate developers need any more help aggressively remaking neighborhoods," he said.
The Lightstone project faces a $67.4-million financial gap, in part because of its higher construction costs as a concrete and steel high-rise, according to a report prepared for the council. The city's financial aid package would cover that same amount, when calculated in present-day dollars — a figure that factors in inflation and the diminishing value of a dollar over longer periods of time.
The proposed hotel subsidy has drawn support from downtown business organizations and construction trade groups, who contend the development will stimulate the economy and create solid union jobs.
The project is expected to generate $488 million in local sales, property, utility, business, parking and hotel taxes during its first 25 years of operation. It would create 3,190 construction jobs and 804 permanent jobs on site, according to a city analysis.
As planned, the development would have a 42-story tower facing Figueroa housing, a 410-room Moxy Hotel and a 410-room AC Hotel. The other 25-story tower would face Pico and have a 310-room Hilton Garden Inn, the city's report said.
"This project can finally deliver the type of density that's warranted right across from the convention center," said Jim Pugh, an attorney for Lightstone, during Tuesday's hearing.
The development will also be "in heart of the downtown area where the Olympics will be held," he added.
Supporters say it would also provide hotel rooms at a more affordable price than others nearby.
The Lightstone project would be only the latest hotel development to receive financial help from City Hall. Over the last 12 years, the city's elected officials have provided public money for the Wilshire Grand, L.A. Live, Metropolis and other downtown hotel projects.
To help with the latest hotel project, city officials also plan to sell the developer a piece of property on Figueroa currently being used for parking. Under the proposal, that site would be purchased by Lightstone for $9.6 million.