Over the last dozen years, L.A.’s civic leaders have pursued a painstaking makeover of Grand Avenue, the downtown corridor adorned by an array of cultural venues.
Real estate developer Related Cos. put $50 million into the construction of Grand Park, a collection of open spaces and walkways that opened in 2012. The company opened the Emerson, a luxury apartment building, two years later. And last fall saw the debut of the Broad, the boulevard’s newest contemporary art museum.
Yet one piece has stubbornly gone unfinished: a pair of hotel and residential towers, planned across from Walt Disney Concert Hall and designed by world-renowned architect Frank O. Gehry.
Under the proposal, Related would keep nearly half of the $396.9 million in taxes that would be generated by the Grand Avenue project for the city over a 25-year period. That money would normally go to the general fund, which pays for police, firefighters and other city employees.
Councilman Curren Price, who heads the committee, acknowledged that downtown has become an economic powerhouse in recent years. But he argued that help is still needed for key developments.
“I want to keep [downtown] doing well, and I think subsidies do that,” he said.
City officials said the plan closely resembles a financial aid arrangement first approved in 2008. They estimated the present-day value of the financial aid package at up to $66.6 million, because the value of a dollar declines steadily over time.
That amount represents about half of the funding gap faced by the Grand Avenue project, according to John Wickham, the analyst who prepared the city’s proposal.
Wickham attributed part of the funding gap to the decision to bring on Gehry, the architect responsible for the iconic Disney Hall.
“Frankly, there’s a Gehry factor in the design,” he said. “It changes the costs of the project.”
A Related representative declined to answer questions from The Times about design costs. Instead, the company issued a statement from Kenneth A. Himmel, president and chief executive of Related Urban, saying that Tuesday’s vote “sends a positive message for the future of Grand Avenue.”
The company’s project is expected to create 1,914 full-time jobs and 3,597 temporary construction jobs. In addition to the 305-room hotel, the project would offer 301 apartments, 128 condominiums and assorted restaurants and stores.
When completed, one tower would rise 38 stories, while the other would be 16 stories, a city report said.
Related has been working on its hotel and apartment project since 2004, when it was selected by a city-county agency devoted to transforming Grand Avenue. The project stalled a few years later amid a global economic downturn. Since then, Related has repeatedly reworked the project, changing hotel operators and offering new designs in response to demands from local elected officials.
Under the city’s latest financing proposal, Related would retain more than $185 million in tax revenue generated from the project over a 25-year period, said Chief Legislative Analyst Sharon Tso, who advises the council. The company would also be required to pay back $12.7 million in parking tax revenue loaned by the city, she said.
The city has provided similar assistance to several other downtown hotel projects.
The council is expected to vote on the Grand Avenue financing proposal next week. Construction is expected to start next year.