By Jim Butler and the Global Hospitality Group®
Hotel Lawyers | Authors of www.HotelLawBlog.com
22 January 2014
Hotel Developer Forum in Los Angeles
With hotel development beginning to blossom in many national markets where the cost to buy a hotel substantially exceeds the cost to build one, JMBM's hotel lawyers recently held a Hotel Developer Forum focused on the City of Los Angeles. The program was moderated by Jim Butler, Ben Reznik and Guy Maisnik. Bud Ovrom and Michael Santana were guest speakers.
Bud Ovrom is the General Manager of the LA Convention Center and is charged with figuring out how to get 4,000 more hotel rooms to support the Convention Center, which is at the heart of the remaking of Downtown Los Angeles. Santana was appointed as the Chief Administrative Officer for the City by former Mayor Antonio Villaraigosa in 2009, and recently agreed to continue in that position at the request of newly elected Mayor Eric Garcetti. Santana is the Budget Chief for Los Angeles and has negotiated all the development incentive deals made by the City since he took office.
There were a number of interesting take aways for the developers attending this gathering. One is that the City of Los Angeles wants to see 4,000 new hotel rooms developed in the downtown area serving the Los Angeles Convention Center -- and the City is willing to provide economic incentives to make it happen (up to 50% of the property specific revenues from transient occupancy taxes, sales takes, property taxes and the like).
But these City incentives come with strings attached, which developers will have to weigh against the benefits of the incentives. Read on for the details.