Chinese developer Wanda Group is poised to pay mega-bucks to the City of Beverly Hills in an unprecedented development deal for the construction of its elite condo-hotel project, One Beverly Hills.
The agreement, which awaits City Council approval, would require Wanda to pay the city an extra tax on top of the standard transit occupancy tax for its 134 hotel rooms. Wanda would also pay a percentage of sales on its 193 condos, plus $60 million in upfront fees.
“I’ve never seen anything like this,” said Alan Reay, Atlas Hospitality Group president. “It is diametrically opposed to what’s going on in almost every other city in California… In downtown, they’re giving away huge tax rebates to entice hotel developers.”
Not so in posh Beverly Hills, where a war is raging between two rival condo-hotel developments – One Beverly Hills from Wanda, and Waldorf Astoria from Beny Alagem’s Oasis West Realty. Beverly Hills Mayor John Mirisch has said he supports Wanda for taking the painstaking planning steps through city council. The Beijing-based company purchased the site, a former Robinsons-May department store, in 2014.
The development agreement, described in a statement released by the city on Friday, hikes up the rates drafted in an earlier version of the agreement. It would require Wanda to pay a new “municipal surcharge” of 5 percent of gross room revenue in addition to the 14 percent transit occupancy tax. It would increase the “Environmental Mitigation and Sustainability” fee as well, requiring Wanda to pay 1.25 percent of the first sale of any part of the property, and 2 percent of any sales to follow. Finally, it would double the upfront fees, bringing that cost to $60 million.
Beverly Hills officials estimate that the project will garner the city roughly $820 million over the next three decades.
“Without any doubt this is by far the best development agreement ever negotiated for Beverly Hills, and possibly the richest development agreement per square foot negotiated anywhere by a municipality,” Mirisch said in the prepared statement.
City Council will consider the matter on Nov. 7.
Real estate reporter Daina Beth Solomon can be reached at email@example.com. Follow her on Twitter @dainabethcita for the latest in L.A. real estate news.