California Land Use Blog
At the recent Hotel Developers Forum hosted in JMBM’s Los Angeles office, LA City Administrative Officer Miguel Santana emphasized the City’s commitment to development, particularly of hotels in the downtown area. Santana is the chief financial advisor to the mayor, and his office has direct oversight over the city’s budget, labor negotiations, and development incentives for the City.
“We’re big advocates for hotel expansion in the City,” he said, adding that the City of Los Angeles is willing to work with property owners in a variety of ways to create projects that balance profitability with revenue for the city.
According to Santana, hotel tax revenues are the highest they’ve ever been and occupancy rates are growing, making hotels a key part of the City’s economic strategy. Certain tax incentives, including site-specific revenue and rebates on sales and property tax, are important tools available on a case-by case basis to help property owners and the city create projects that are connected to the broader vision of development in Los Angeles.
The City is especially interested in promoting hotel development around the Los Angeles Convention Center (LACC). “The LA Convention Center has not been the economic engine for the City that it could be,” said Bud Ovrom, LACC Interim Executive Director.
One of the Convention Center’s biggest problems is the lack of hotel rooms within walking distance. Without an available supply of rooms, the LACC is unable to attract events that would bring in attendees from all over the country–attendees that would spend money on hotel rooms, restaurants, and entertainment downtown.
Currently, there are just fewer than 2,000 available hotel rooms located within a half-mile of the Convention Center. Another 1,500 are located in hotels now under construction. Other popular convention destinations across the country have several times as many rooms–San Diego has over 8,000, Anaheim has 7,000 and Las Vegas has nearly 17,000.
To draw more national conventions to Los Angeles, the City plans to add 5,000 hotel rooms citywide–with 4,000 located within walking distance of the LACC–by the year 2020. While securing financing for potential developers remains a large challenge, the land is available, according to Ovrom.
Overall, hotels remain a vital part of economic growth in Los Angeles as the city recovers from the recession. Property owners may be able to secure financing or other incentives for hotel projects that complement the City’s strategy to encourage development and increase revenues.
Ben Reznik is the Chair of JMBM’s Government, Land Use, Environment and Energy Department. His practice emphasizes real estate development entitlements, zoning and environment issues, including frequent appearances before city planning commissions, city councils and other governmental boards and agencies on behalf of real estate development firms and various industries. Reach him at BMR@JMBM.com or 310. 201.3572.