City Help Asked for L.A. Hotel

A developer proposing to build a 55-story hotel near the Los Angeles Convention Center said Wednesday that the city must subsidize the $300-million project to make it feasible.

“It’s critical,” said Lewis N. Wolff of Wolff Urban Management.

Wolff submitted a formal request for financial help to City Hall on Wednesday, seeking a loan, fee waivers and all of the hotel bed-tax collected by the project during its first 20 years. The hotel would be part of a $1-billion multiuse development planned near Staples Center.

The city has been trying for more than a decade to find someone to build a hotel near the convention center, which has lost many events because groups say there is not sufficient hotel space within walking distance.

In a three-page letter to Mayor James K. Hahn and the City Council, Wolff and Richard Ackerman of Apollo Real Estate Advisors Inc. said they are prepared to construct a building that would include a 900-room convention center hotel, a separately operated 300-room upscale hotel and 100 condominiums.

The letter requests “favorable consideration” of a rebate of the bed tax generated by the 1,200 rooms “to support the financial structure” of the hotel. The letter does not say how much bed tax the hotel would generate, but officials with Anschutz Entertainment Group, which is providing the land for the hotel, estimated it might be $5.7 million annually.

Wolff’s letter asks for a waiver of processing and permit fees and certain construction requirements. AEG officials have said that might total $6 million.

The developers also asked for a loan for the development and operation of the hotel’s major ballroom and meeting area, which would be in a 100,000-square-foot building across the street from the hotel. Again, no dollar amount was included, but officials said a loan of approximately $20 million may be needed.

In addition, Wolff asked for permission to use more parking spaces than Staples Center currently is assigned in the city-run Cherry Street and West Hall parking garages.

Hahn and other officials did not have a chance to review the proposed terms Wednesday, but they said during a news conference announcing the project that they were open to considering a city role in the hotel development.

“There is no hotel tax being generated on that site right now,” Hahn said, arguing that a rebate of hotel taxes would not reduce tax revenue.

The proposal to subsidize the hotel drew criticism from North Hollywood attorney Glenn Hoiby, the former president of a citizens group that advised the Community Redevelopment Agency. “It’s just another subsidy of a big private business at the expense of taxpayers at a time when the city can’t provide basic city services,” he said.

Timothy Leiweke, president of AEG, said that without the financial assistance, “The whole project would fall apart.”

He predicted city officials would approve the financing.

“There is nothing unusual or controversial in this letter,” he said. “The city has no risk on this deal.”