The billion-dollar project proposed by developers Ed Roski Jr. and billionaire Philip Anschutz next to their Staples Center could generate $12 million to $16 million in annual revenue for city coffers and several million dollars more in spillover taxes, according to a Business Journal analysis.
But that may not be enough to satisfy critics like City Councilman Joel Wachs when the developers come seeking city subsidies for the project. Such critics contend the project could make money for Roski and Anschutz, even without city dollars.
How much the city stands to reap from the project will be a critical focus of the fierce debate that's expected over whether taxpayer subsidies should be approved. Along with generating revenue, the project is being billed as a cornerstone of downtown revitalization.
"When looking at subsidies, there are questions the city must ask: Is this the type of project we want? Is there really a financing gap and, if so, how big is it? And what does the city get in return?" said Cal Hollis, a principal in the L.A. real estate consulting firm of Keyser Marsten Associates.
The possibility of city subsidies for the project already came under fire from Councilman Joel Wachs, a candidate for mayor, when it was first announced earlier this month. Such opposition is not new for Wachs. When the city agreed to provide $70 million for the Staples Center arena several years ago, he fought successfully to ensure the city would not be on the hook if the project didn't generate sufficient revenues to repay those funds.
Wachs and Councilwoman Jackie Goldberg did not respond to requests for comment last week, but staff members and other City Hall insiders expressed many reservations about providing subsidies for the latest project even if it were to generate the estimated $12 million to $16 million a year.
As with Staples Center itself, a key issue will be protecting the city from any debt repayment shortfalls.
"If there is no personal guarantee, then the city itself is the party of last resort to cover any debt payments if the revenues fall short of projections," said Roxana Tynan, economic development aide to Councilwoman Jackie Goldberg.
The 3.6 million-square-foot L.A. Sports and Entertainment District, as the proposed project is dubbed, has been designed to include a 1,200-room Convention Center headquarters hotel and another 600-room hotel. Also planned are a 5,000- to 6,000-seat live theater, a 300,000-square-foot office/sports medicine complex, 800 residential units and a parking structure with 4,700 spaces.
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