City Panel OKs Subsidy for New Downtown Hotel

Plans for a $1-billion entertainment district in downtown Los Angeles gained ground Thursday when a city panel agreed to subsidize construction of a 55-story hotel, and developers announced they would break ground in two weeks on a 7,100-seat theater.

Pitched by developers as the “Times Square of the West,” the 27-acre project is expected to begin construction Sept. 15, when the first dirt is turned for the Nokia Theatre Los Angeles.

Ted Tanner, a vice president with developer L.A. Arena Land Co., told the Community Redevelopment Agency board on Thursday that the theater complex would include restaurants, stores and broadcast facilities as part of an entertainment district called L.A. Live.

L.A. Arena is a subsidiary of Anschutz Entertainment Group, the company headed by billionaire Phillip Anschutz that built and owns Staples Center adjacent to the proposed entertainment district.

Another key element of the project is a 1,100-room hotel topped by 110 luxury condominiums. The hotel project will feature a conference center for 4,000 people and a 15-screen movie theater that will include a 750-seat facility capable of holding film premieres, Tanner told the redevelopment board Thursday.

“This project will be a catalyst for future development and redevelopment in South Park,” said Councilwoman Jan Perry, who testified to the board in favor of the hotel financing proposal.

After an hour of sometimes lively debate, board members voted unanimously to approve $16 million in below-market loans to pay for street improvements for the $400-million hotel project, which could also receive $66 million in other city subsidies, including a waiver of building fees and a rebate of the hotel bed tax generated by the hotel for 25 years.

“This is incredibly exciting,” said board member Madeline Janis-Aparicio. “It will be so important for downtown.”

However, Chris Sutton, an attorney for the Westin Bonaventure Hotel, said a for-profit hotel should be paid for by the private sector, not taxpayers.

“This is a gift of public funds to AEG and the developer,” said Sutton, who vowed to pursue a lawsuit filed recently to challenge the hotel subsidy proposal.

Sutton also complained that money for the loan was being drawn from the Bunker Hill Project Area, which does not include the hotel site, and an affordable-housing fund, even though the condos will be high-priced.

The loan will provide an interest rate below market levels, and payments will be deferred for the first five years.

Victor Franco Jr. of the Central City Assn. says the city investment is worthwhile because it makes possible an entertainment district that will “create a live and vibrant environment for bringing people to downtown Los Angeles.”

Board Vice Chairman Shu Kwan Woo said he was satisfied that the city’s involvement was justified to make the project pencil out. Private developers had failed to come forward in the past to build the project.

“I can relate to the worries and concerns about unknowns,” Woo said, but added the hotel should be considered in the context of the whole L.A. Live project. He said the additional theaters, restaurants and shops would help make the hotel a success.

Woo said a study by a consultant hired by the city indicated that the new hotel would benefit other downtown hotels because it would attract more visitors to the Los Angeles Convention Center than it could house.

“There will be overflow,” he said.

In approving the master plan for the entertainment district, city officials insisted that the developers include a hotel next to the convention center, which has lost money for years because it does not attract enough conventions.

Michael Collins, executive vice president of the city convention bureau, said the hotel was critical to making Los Angeles competitive with other cities for convention business.

The convention center has fewer than 500 hotel rooms within easy walking distance, while San Diego has 5,474, Anaheim has more than 7,100 and San Francisco more than 13,000, officials told the board.

“You can’t explain away the absence of hotel rooms near the convention center when all of our competitors have them,” Collins said.

If the subsidies for the hotel are approved by the City Council in the next few months, the developers hope to begin construction in the summer or fall of 2006 and complete the hotel within four years.

The Nokia theater complex is expected to be finished by fall 2007, said Michael Roth, a spokesman for AEG.

That project is privately financed. The entire sports and entertainment district is expected to include 4 million square feet of residential, retail, entertainment, restaurant and office space.