A local development firm with plans for a new hotel next to San Pedro's Warner Grand Theatre is seeking a financial incentive package from the City of Los Angeles.
In a motion introduced on June 9, 15th District Councilmember Joe Buscaino has proposed that the City's Chief Legislative Analyst be authorized to hire a consultant to evaluate the hotel project, which is slated for an empty lot at the northeast corner of 6th Street and Grand Avenue. Under the proposed arrangement, the project's developer A.J. Khair would supply $150,000 to cover the cost of the study.
The proposed development, which was approved last year, is imagined as a contemporary seven-story structure. AXIS/GFA is designing the mixed-use building, which would include 80 guest rooms in addition to commercial uses and a 62-car garage.
The motion introduced by Buscaino cites a lack of hotel rooms as a reason for visitors to San Pedro to stay in other nearby cities, such as Long Beach, or to make use of short-term rental platforms. Buscaino writes that recent developments near the Port of Los Angeles, including the AltaSea complex, the Battleship U.S.S. Iowa, and the San Pedro Public Marketplace, will draw additional tourism to the neighborhood.
Similar financial incentive packages have been granted to other developers of hotels, primarily those with projects in the Downtown area. Lightstone Group and AEG are among the real estate firms which have been allowed to retain portions of the Transient Occupancy Tax funds which would have otherwise been paid to the City of Los Angeles.
However, the City's increasingly frequent practice of granting financial assistance to hotel developers has come under scrutiny in recent years. According to the Los Angeles Times, a report issued in 2018 by City Controller Ron Galperin found that more than $1 billion in incentives have been approved for hotel developers since 2005. However, Galperin also argued that the City lacked any means of determining whether the assistance packages were an effective tool for economic development or necessary for spurring hotel construction.
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