L.A. Council backs $39-million subsidy for downtown hotel project

The Los Angeles City Council moved forward Tuesday with plans to allow a real estate developer to keep $39.2 million in taxes expected over 25 years from a downtown hotel and residential project planned next to the 110 Freeway.

The council voted 11 to 0 to negotiate agreements that would let Greenland L.A. Metropolis Hotel Development retain one-fourth of the property, sales, hotel, parking, business, utility and other taxes that would normally flow to the city budget.

Greenland L.A., a company afiliated with Shanghai-based development firm Greenland Group, is seeking to build a 19-story hotel and a 38-story residential tower on a site just north of the L.A. Live entertainment complex. The taxpayer help was approved despite objections from Robert “Bud” Ovrom, top executive at the city’s Convention Center.

Ovrom has said Greenland officials knew what could be built on the property when they purchased the land for $150 million. He argued that the company probably would have constructed the project without taxpayer assistance.

Policy advisors to the council disagreed, saying Greenland proposed a hotel tower only because city officials had asked them to do so. “If no assistance is provided, the developer would construct a residential tower instead of hotel,” Chief Legislative Analyst Gerry Miller said in a report to the council.

Ovrom had no comment Tuesday. City officials say even with the subsidy, Metropolis will generate more than $117 million for city coffers over 25 years.

Miller has been recommending taxpayer subsidies as a way to lure hotel builders to downtown, saying the added rooms would help the convention center book more national events. Over the last decade, the council has agreed to let hotel builders retain more than $500 million in tax revenue -- projects that are all within three blocks of Metropolis. Yet another hotel developer, Related Cos., is looking to keep at least $138 million from a project through 2043.

The vote on Metropolis took place minutes before employees with the Coalition of L.A. City Unions showed up at the council to decry what they described as “predatory” fees charged to the city by Wall Street banks. Labor activists who packed the council chamber voiced similar concerns about the deal for Metropolis.

“To say that the city is having a hard time on the one hand, and then say here’s free money to a developer who’s going to make all this money back, is outrageous,” said Roy Stone, president of a union local representing city librarians. “Don’t give away the house to encourage them to build something.”

Victor Gordo, an attorney for the coalition, also questioned the proposal, saying lawmakers need to re-evaluate their strategy for improving the economy.

Representatives of Greenland did not provide responses to those comments.

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