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Wolff Urban Development Co. and Apollo Real Estate Advisors Receive City
Support for $ 1 billion 1,200 room Hilton Hotel and Entertainment Center
 at the Staples Center;
$160 million Public Subsidy Questioned by Downtown LA Hoteliers
By Rick Orlov, Daily News, Los Angeles
Knight Ridder/Tribune Business News

Dec. 15, 2004 - A massive plan for a $1 billion downtown hotel-entertainment complex next to Staples Center received wide support on Tuesday but also faced tough questions over requests for at least $160 million in public funding.

A special City Council committee studying the Convention Center hotel project, proposed by the owners of Staples Center, called for more reports in one month.

The plan calls for a 55-story hotel with 1,200 rooms and 100 luxury condominiums, coupled with a retail-entertainment complex. The Hilton Hotel would be built by Wolff Urban Development Co. and Apollo Real Estate Advisors.

"I'm for the project, but I'm also for a level playing field," said Peter Zen, general manager of the Westin Bonaventure Hotel, a 1,300-room landmark facility.

Zen, representatives of other hotels and city employee unions questioned plans to divert money or waive fees for the project.

For Zen, the main point of contention is a proposal to return the 14 percent "bed tax" generated by the new hotel back into its operation for 20 years -- an estimated $120 million.

The developer and city officials are negotiating an agreement, known as a memorandum of understanding, that also calls for a $22 million loan over 30 years at an interest rate to be determined, a $10 million investment in streets and other public-works improvements, and the waiver of an undetermined amount of city fees for inspections and permits.

Councilwoman Jan Perry, whose district includes the planned 4 million-square-foot development and who has been involved in the talks, said it will affect the entire region.

"We are talking about creating jobs from the San Fernando Valley to the Harbor area."

At the same time, Perry said she wanted to see more information on steps the city could take to lift a cap on the use of funds from the Community Redevelopment Agency for downtown projects. The Central Business District redevelopment project area is under a $750 million cap enforced by the courts.

Zen and others said their concern lies with the help being proposed for the new hotel and whether that help would be unfair to other hotels trying to compete.

"We would like to see some limits," Zen said. "What if this hotel is wildly successful? Why should it continue to get benefits?"

Larry Kosmont of the Kosmont Group, which studies local government tax policies, said some degree of help is probably necessary.

"The hotel is definitely needed, but what I don't know is if a full rebate of the bed tax is," Kosmont said. "These transactions usually require some level of public subsidy because it's a risky venture."

Michael Collins of L.A. Inc., the tourism agency that works to bring in conventions, said the hotel has been the missing piece of the effort to make the Convention Center a success.

"We have a first-class, user-friendly facility that we can't get people to use," Collins said. "It is all related to the lack of hotel rooms."

Downtown Los Angeles has 650 hotel rooms within immediate walking distance, compared with 10,000 in Las Vegas and some 5,000 in San Francisco, Collins said.

Angel Calvo of the Engineers and Architects Association, a union representing city employees, said his group supported the plan but questioned the waiving of inspection fees and permits.

"The city has been telling us they have no money; yet this could mean the loss of tens of millions of dollars," Calvo said. "We understand the need for some subsidy, but who will really be paying for it?"

Councilman Ed Reyes said he wanted more details on the likely impact if teams of inspectors are tied up on the project and unavailable for other work in the city.

The project has been dubbed "Times Square West" with its plan for a 7,000-seat concert theater, a multiplex theater with seating for 4,000 people, a ballroom-meeting facility, bars and restaurants around a plaza.

Here are the main features of the memorandum of understanding proposed for a 55-story hotel near the Convention Center:

--Reinvest all hotel bed taxes -- estimated at $6 million annually -- back into the project for 20 years.

--Make available a $22 million loan, at an undetermined interest rate, to be repaid in 30 years.

--Invest $10 million for infrastructure improvements.

--Waive all fees for five years for building permits.

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(c) 2004, Daily News, Los Angeles. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail

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