To help lure a $125-million Sheraton Hotel and office tower to the downtown area, the city Redevelopment Agency has tentatively agreed to pay $6.4 million of the $12.4 million it is expected to cost to buy and clear the hotel site.
The agreement, scheduled for joint public hearing by the agency board and City Council on July 16, is not unusual, said project manager David Biggs.
"With most redevelopment agencies, this is the standard," said Biggs, referring to the shared up-front costs.
"This is a mechanism by which we can cause the development to take place with the scope we would like," he said.
The Redevelopment Agency will reimburse the $6.4 million in initial costs because independent appraisers have valued the Sheraton block on Ocean Boulevard near the Convention Center at only $6 million as a location for a hotel and office tower, said Biggs. Development would not be feasible if the builders had to pay the full $12.4 million, he said.
The novel part of the Sheraton deal is that the developer, not the agency, will pay all $12.4 million of the initial costs, then wait up to 13 years for full reimbursement from the city, said Biggs.
The 500-room Sheraton and adjoining 24-story office tower are expected to bring the Redevelopment Agency a $1.3-million to $1.5-million annual share in property taxes by 1990, if completed as projected in 1989, said Biggs.
The project would be bounded by Ocean Boulevard, Long Beach Boulevard, First Street and Elm Avenue.