Questioning Hotel Tax Subsidies in Los Angeles

David Zahniser reports on Los Angeles’ ongoing practice of granting tax breaks to developers of hotels. The city, which first started granting tax breaks for hotel developers in 2005, has granted as much as $508 million in tax benefits over the coming decades.

In question is Greenland US Holding Inc, the developers of Metropolis, a proposed 350-room hotel development adjacent to L.A. Live and the Los Angeles Convention Center. The developers are asking for $92 million in tax subsidies to make the deal pencil out.

“Convention Center Executive Director Robert ‘Bud’ Ovrom, although a longtime champion of city subsidies, questioned whether L.A. should provide the taxpayer support in this case. Greenland is planning only 350 hotel rooms, even though the city has granted permission to develop nearly five times that amount, he said,” writes Zahniser.

“Financial help might make sense, Ovrom said, if Metropolis offered 900 rooms, a number that would help the city attract more national conventions and mean more local jobs.”

The hotel tax issues, especially with reference to the Metropolis development, speaks to Los Angeles' current, difficult situation in the downtown neighborhood of South Park. The city is desperate for hotel room capacity and density near the convention center and L.A. Live, but is also concerned that the once-in-a-generation opportunity to build on the neighborhood of South Park’s current surface parking lots should be built to the maximum allowance of the zoning code.