The Los Angeles City Council tentatively agreed Tuesday to set up a trust fund that will be used to temporarily hold up to $13.5 million in tax subsidies for a 19-story hotel being built near L.A. Live in downtown Los Angeles.
The tax breaks were part of an incentive agreement between Greenland L.A., developers of the Metropolis Hotel project, and the city, and are part of an effort to encourage more hotels to be built in the downtown area, according to Rick Coca, spokesman for downtown-area City Councilman Jose Huizar.
Greenland will pay the full tax each year, out of which the subsidy amount will be kept in the trust fund before being distributed to the developer, Coca said.
The incentive payments will be spread out over at most 25 years and cannot exceed 50 percent of the net new revenue received by the city, according to the agreement.
City officials approved the incentives last year as a way of covering the hotel developer’s estimated financing gap for the project.
The city’s Economic and Workforce Development Department will handle the trust fund and is required to keep records, produce reports and hold public hearings about the subsidies.
A second council vote — scheduled for next week — is required to finalize setting up the fund.
— City News Service