The city is on track to surpass its goal of building 8,000 hotel rooms within walking distance of the Los Angeles Convention Center by 2020.
Since Mayor Eric Garcetti announced the target six years ago, the city has signed off on plans for at least 7,239 hotel rooms, according to the city’s Chief Legislative Analyst. That figure is as of January. With more four more projects in the pipeline, the city could sail past the mark and end up with a whopping 9,120 hotel rooms in the area.
Garcetti and tourism department officials have said the hotels are “integral” to keeping LA competitive with other “convention destinations” in Southern California, including Anaheim and San Diego.
To meet the goal, the City Council has doled out subsidies totaling more than $600 million to the developers of six of eight hotels that have opened in the area since 2010, according to a 2018 report for the City Controller’s office.
Since then, it has granted at least $100 million more. In December, the council awarded $97 million in tax breaks to AEG or an 850-room expansion of the Marriott by AEG and the simultaneous upgrade of the convention center. Earlier this month, it approved a deal to give $17.3 million to AECOM for a 258-room, 16-story hotel at 1155 South Olive Street.
The deals might not end there. Even as the city moves to surpass the 8,000-room goal, developers proposing a 300-room hotel at Venice Boulevard and Hope Street have a requested financial assistance.
Chief Legislative Analyst Sharon Tso says that incentives are still on the table, because it’s possible that any of the hotels that haven’t started construction won’t end up being built.
“In the interest of ensuring we meet the goal, additional incentive projects are being put forward,” she says.
The Los Angeles Tenants Union has argued that amid the region’s housing crisis, city money would be better spent preserving existing affordable housing.
“$17 MILLION of public $$$ for a fancy hotel,” it tweeted this month. “But when the Hillside Villa tenants ask the city to buy their building for $9 million to keep hundreds of people in their homes, they’ll surely be told we don’t have enough money. There’s always money for hotels and the police.”
The City Controller has criticized the council for handing out incentives in a 2018 report, Galperin says officials are approving agreements with developers to get hotels and other commercial projects built “without a comprehensive strategy” to ensure the deals are “transparent and advantageous to taxpayers.”
In 2017, the Los Angeles Times editorial board called into question whether the incentives were still necessary at a time when construction in Downtown and South Park is booming.
“Some tax breaks may be wise investments that spur redevelopment, boost economic activity and generate revenue that the city would not have collected otherwise,” the board wrote. “But if a tax break goes to a project that would have happened without a subsidy, then taxpayers trade away money that could have been spent on streets, parks and other public services.”
In December, with the 8,000-room goal so close to being achieved, the City Council directed the legislative analyst’s office to assess whether any “policy adjustments” need to be made to the incentives program.
Tso said options could range from increasing the hotel room goal to ending the program altogether. The report is due out no earlier than late fall.