Nearly $100 million in public subsidies related to an expansion of the Los Angeles Convention Center and an adjacent JW Marriott at L.A. Live was recommended Tuesday by a City Council committee.
Anschutz Entertainment Group, which operates the convention center and owns L.A. Live, has a finance gap of $119.4 million on a $1 billion-plus plan to renovate the LACC and expand the hotel, according a report from the Office of the Chief Legislative Analyst, which recommended $97.7 million in public assistance to get the project rolling.
Both of the City Council members who were present at the Economic Development Committee meeting gave the proposal enthusiastic support.
“I’m just saying, let’s move. Let’s move some dirt, break ground and cut the ribbon as soon as we can, because this is so needed,” Councilman Joe Buscaino said.
The public finance help would be specifically for the hotel project, according to the CLA report, which it said would be paid through 50 percent of the city’s revenue from the project over 25 years that would be generated primarily by transient occupancy taxes paid by hotel visitors.
According to the CLA report, which included an independent analysis by Keyser Marston Associates, the project will generate $195.5 million in net present value to the city over 25 years and would be developed through a public-private partnership with AEG and its partners.
The project would add at least 190,000 square feet of additional contiguous exhibit space; 55,000 square feet of additional meeting room space; and at least 95,000 square feet of multi-purpose space to the LACC, bringing it to 1.2 billion square feet of space.
John Wickam, a division head with the CLA, told the committee the expansion would make the LACC competitive enough to be a contender for “at least 95 percent of the conventions out there nationally.”
The City Council in 2015 approved recommendations to initiate a design competition for the LACC and authorized a $470 million budget for such a project, while the total cost of the JW Marriott addition would be around $693 million, according to the CLA report.
The hotel project would add a new tower with 850 rooms, and help the city reach a stated goal of 8,000 hotel rooms within walking distance of the convention center. The city estimates there will be a total of 7,239 hotel rooms in operation within walking distance in the next few years without the project.
The move by the committee comes after City Controller Ron Galperin said in August that the city needs more transparency and accountability when issuing tax incentives for large-scale real estate developments, in a report that looked at almost $1 billion in incentives granted since 2005.
Galperin recommended that the city revise the scope of evaluations and consultant studies to require a more thorough evaluation of claimed “feasibility gaps,” encourage development with fewer public dollars, and require more rigorous analysis of future economic and fiscal benefits.
“Tax incentives can be a useful tool to help spur worthy projects and jobs. But when the city provides financial assistance to any business, it is vital that we ensure total accountability for every cent of taxpayer funds,” Galperin said. “It’s essential that every deal be maximally transparent and advantageous to taxpayers. That is why we need a clear roadmap to ensure consistency, fairness and value for those we serve.”
Neither Buscaino not Councilmen Curren Price, who are both on the committee, expressed any hesitation about the plan before moving it forward. Councilman Jose Huizar, the third member of the committee, was not present during the meeting.
“I think we can all agree, Councilman Buscaino, when I say the plan is fully cooked, and there is no reason for delaying it any longer,” Price said.