Don’t Scuttle

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Though it hasn’t made many headlines yet, a fight is brewing that could make or break the candidates for L.A.’s next mayor. And the consequences of that fight could prove troublesome, turning what should be a straightforward business deal into a political minefield.

The latest development in L.A.’s long quest to turn its central city into a cultural magnet is a proposal by the owners of Staples Center to build a massive hotel/retail/residential complex surrounding the new arena. Such a proposal would be met with open arms if not for the fact that the developers are looking for a public subsidy the size of which has yet to be determined, or at least publicly announced.

The political battle lines for and against the subsidy are already being drawn. On one side is mayoral candidate and City Councilman Joel Wachs, who gained considerable political clout after almost single-handedly limiting the city’s exposure on its subsidies of Staples Center. On the other are downtown property owners and the powerful Staples developers and their partners.

The other mayoral candidates have yet to take a position on a subsidy for the Staples Center-adjacent project, but it is certain to be a central element in Wachs’ campaign. Though his stand on behalf of taxpayers was an admirable one the last time around, this time he could find himself opposing a project that promises major benefits for the city as a whole.

There’s no question but that the city has a lot to gain from the proposed Staples-adjacent project. Taxes from the development alone are expected to pump millions into city coffers, and there are a host of other indirect benefits, both financial and psychological. The project might, for example, create the kind of central, Times Square-like focal point that could provide a sense of identity for a city that sorely lacks one. The embarrassing millennium celebration, when New York and Washington, D.C. launched world-class spectacles while the entertainment capital of the world could only string Christmas-tree lights on the Hollywood sign, points up just why such a focal point is so badly needed.

Developers and the city have already invested hundreds of millions in an effort to revive downtown. So far, there is little evidence that the money has done anything to reverse an out-migration of business from the central city; in fact, with every passing year downtown seems like less of a business hub, its empty offices largely turning into shells for storing telecommunications equipment.

It’s highly unlikely that the proposed Staples-adjacent project would be able to reverse that trend. It would, however, be a central element in creating a new kind of downtown, one that is as much a convention, residential and entertainment destination as a business center. To cut off that development now would be an enormous waste of resources already spent.

It’s far too early to make any recommendations about whether or not the city should approve any subsidies to the project, because the numbers have not yet been presented. But as the political grandstanding gets underway, it is critical that the city officials involved in the negotiations act more like business people than politicians.

That is, the most important factor in the negotiations should be whether the concrete future financial benefits for the city, both direct and indirect, outweigh the project’s immediate costs.

Last time around, Wachs prevented the City Council from giving the store away. Hopefully, he will once again be there to protect the taxpayers and make the best possible deal for the city without scuttling a valuable project for the sake of gaining political clout.

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