Deal May Be Near to Settle Downtown Hotel Dispute and Avoid Election Costs

Attempting to avoid a costly election battle, Mayor Antonio Villaraigosa is seeking to settle a dispute with the owners of the Bonaventure Hotel, who are threatening a referendum on city subsidies for a new hotel next to the Los Angeles Convention Center.

One idea being discussed would allow the Bonaventure to convert at least a quarter of its rooms into condominiums if its occupancy rate fell below 50% after the proposed Hilton Hotel opens for business, according to sources familiar with the talks.

The recent occupancy rate for downtown hotels has been about 68%, experts told city officials.

Villaraigosa’s office had said early Friday morning that it would announce a deal later in the day to keep the Bonaventure Hotel’s referendum off the ballot -- but then canceled the news conference about an hour later, saying a deal had not been reached.

Spokesman Joe Ramallo said the mayor still hoped to find a solution. “The mayor has been working hard to avoid a divisive ballot referendum.”

City Councilwoman Jan Perry, whose district includes downtown, said it appeared that the two sides were close. “I think they are working it out. They are down to the nitty gritty.”

Bonaventure executive Peter Zen has protested the City Council’s vote last month to provide $16 million in loans and up to $274 million in subsidies to the developers of the 55-story hotel to be built next to the Convention Center. Zen charged that it was unfair for the city to subsidize the 1,100-room Hilton because that would allow the hotel to take customers away from the Bonaventure and other competitors.

City officials say the subsidy is justified because the lack of a hotel has cost the Convention Center business, forcing the city to spend millions of dollars each year to cover debt on the center.

Zen has filed a lawsuit to block the deal and has threatened to launch a petition drive to qualify a referendum for the ballot.

Fred Woocher, an attorney for Zen, confirmed that talks were held with the city, but he declined to elaborate.

The idea of converting some of the Bonaventure’s 1,354 rooms into condos is not surprising because there has been a burst of conversion projects at downtown buildings. The proposed Convention Center hotel also is seeking to take advantage of the boom by including 110 luxury condominiums on the upper floors.

Because the city redevelopment agency provided land at a discount to the original developers of the Bonaventure, agency approval is needed to change the use to condominiums, officials said.

However, union leaders and city officials, including Perry, are concerned about converting existing hotels into condominiums, in part because it might lead to the loss of hotel jobs.

Times staff writer Richard Fausset contributed to this report.