Conventional wisdom
PROMISING TO BUILD A WEST COAST version of New York’s Times Square, AEG broke ground last week on a $1.7-billion hotel and entertainment complex next to Staples Center. From the reaction in some quarters, you would think Times Square still meant peep shows and prostitutes.
The development -- which will include a 55-story hotel and condominium complex, a broadcast center for ESPN, restaurants and nightspots -- offends some critics because it will be a playground for tourists. It will cater mainly to people with money to burn and an evening to kill, not to the daily needs of downtown’s growing residential population.
But for that particular stretch of downtown, the towering hotel and L.A. Live entertainment project are probably the best option available to the city. That’s because they have the potential to convert downtown’s biggest money pit, the embarrassingly vacant Convention Center, into something that acts more like an asset.
The city pours $10 million to $20 million into the Convention Center each year because the facility does not attract enough customers to cover its bond payments. Last year, the center booked a feeble 15 conventions, less than half the number it hosted in 2001.
AEG executives and the city’s convention and visitors bureau argue that the center’s main shortcoming is that there is no hotel on the grounds, let alone one big enough to handle thousands of conventioneers. Without a hotel, it cannot win the competition for midsized conventions and trade shows, they say. The hotel, in turn, will help bring people to L.A. Live’s restaurants, nightclubs, cinemas, museum and plaza.
One other benefit of the project is the prospect of live TV being beamed around the globe from downtown Los Angeles. ESPN’s new studio, scheduled to be completed in 2009, won’t close the gap between Los Angeles and New York on that front, but it’s a start.
Although the developers are supplying 95% of the money for the projects, they have asked the city to pony up about $82 million worth of subsidies for the hotel in the form of loans, fee waivers and occupancy-tax revenue plowed back into the hotel. Although none of that money is coming from the city’s general fund, it still represents revenue that the city might keep if someone else built a similar hotel on the site without the aid. The odds of that happening, though, seem infinitesimally small.
There are many things that downtown Los Angeles needs, and another CityWalk-style festival of neon and chrome might not be most residents’ first choice. But turning around the Convention Center is a top priority, and if AEG and its partners are willing to put up more than $1 billion to accomplish that, they should get the chance.
