June 14, 2012--Responding to appeals from an array of construction unions, the Los Angeles City Council on Wednesday approved a $67.3-million subsidy for a new downtown hotel across from L.A. Live.

The council voted 10 to 1 to provide developers of a 23-story Marriott complex on Olympic Boulevard a tax rebate equal to half of the revenue -- from sales taxes, property taxes, parking taxes, business taxes, utility taxes and room taxes -- generated by the project over 25 years.

That money will flow to the developers, Williams/Dame & Associates and American Life Inc., in the form of a hotel tax rebate, said Chief Legislative Analyst Gerry Miller. Those taxes normally go to the general fund budget, which pays for basic services such as police officers and firefighters, said Assistant City Administrative Officer Ray Ciranna.

The deal drew criticism from representatives of the Westin Bonaventure, six blocks north of Olympic Boulevard, who said the subsidy would put existing downtown hotels at a competitive disadvantage.

"This subsidy is simply a way to move jobs from one hotel to another and put some hotels out of business," said Christopher Sutton, the Bonaventure's lawyer.

Backers of the 25-year deal, including representatives of organized labor, argued that it would create hundreds of construction jobs in the middle of a weak economy. "What we're doing in the downtown region is putting people back to work," said Councilman Joe Buscaino, a supporter of the agreement.

Councilman Bill Rosendahl voted no, saying the economic situation in the area around L.A. Live has already been improving.

Miller said the subsidy, adjusted for future inflation, has a present-day value of $21.9 million. Williams/Dame threatened to reevaluate the $172-million project if the city failed to provide financial help.

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