Development Plans for Staples Center Area OKd

The Los Angeles City Council on Wednesday gave final approval to developers’ plans to build a $1-billion shopping, dining and entertainment district around Staples Center, while putting off the tougher question of whether to spend millions of dollars in public funds to help underwrite a high-rise hotel on the site.

Voting 11 to 0, the council cleared the way for a development group--led by billionaires Rupert Murdoch and Philip Anschutz--to begin construction on a massive project that includes a 7,000-seat theater, shops, restaurants and nightclubs on 27 acres of privately owned land around the downtown arena.

Officials for the development company, L.A. Arena Land Co., said they hope to break ground next year in their effort to turn a somewhat desolate part of the city into a neon-lit entertainment mecca.

Some council members wanted to hold up the project to force developers to first build the hotel--which is needed to bolster the struggling Convention Center. But city staff, led by Chief Legislative Analyst Ron Deaton, told the council that it would be better off in the long run if the project moved forward.

“The right thing to do is to proceed with the development,” Deaton said. “Working with the arena company, we will in fact get a hotel there in the next couple of years.”

The council for years has wanted a four-star hotel in the area to support the Convention Center. When plans to build the Staples arena were finalized several years ago, council members made it clear they wanted the second phase of development to include such a hotel and even used redevelopment funds to help the arena company buy the land.

The L.A. Arena Land Co., which owns Staples Center, has warned the city that it will need a subsidy to make the 1,200-room high-rise hotel feasible. That matter is expected to be addressed later this year.

In an effort to send a message to Staples officials that the city wants a hotel on the site--with or without a public subsidy--council members Tuesday passed a resolution asking that the developer work in good faith to get the hotel running.

“We recognize without it our Convention Center can never reach its full economic potential,” Councilman Jan Perry told colleagues.

City lawmakers now are asking that Staples officials look for ways to repay that $12 million handed over to the arena company by the city’s Community Redevelopment Agency in 1998 for the acquisition of a 2.7-acre parcel that could be used for the hotel.

“This should help reduce the level of subsidy required to make the convention hotel financially feasible and should also help accelerate its approval and construction,” argued Perry, whose district includes the area.

But Councilman Nate Holden said he wanted to put a hold on the entire project until he could receive more assurances.

“We need a hotel,” he said. “We need it now, not 20 years from now. . . . They’ll just go ahead and build what they want to build. There is nothing in the contract that says that they can’t move forward unless we get our hotel.”

He called the proposal a “bum deal” for the city.

“We have been negotiating from the point of weakness, not the point of strength,” Holden said. “And whether you like it or not, you are going to have to subsidize it. That must be done or you’ll have no hotel, and then we’ll be facing additional losses.”

But other council members were more optimistic, saying the development provides the city with an exciting opportunity. Under the plan, the developers have agreed to pay a “living wage”--$7.99 an hour with health benefits or $9.24 an hour without--for at least 70% of the 5,500 permanent jobs the project is expected to create.

“It will provide a very, very important link with the revitalization of the downtown community,” said Councilman Hal Bernson. “It’s a very, very good plan.”

The development agreement approved Wednesday by the council also calls for the construction of two apartment towers, office buildings, parks and a second, smaller hotel.