Since 2016, Vella Group has sought approvals to bring a Bjarke Ingels-designed tower to an Arts District site just west of the Los Angeles River. The project, slated for a property at 670 Mesquit Street, would include four buildings on a site stretching between 6th and 7th Streets creating more than 800,000 square feet of offices, 420 homes, ground-floor commercial uses, and a 236-room hotel. That last component of the project is the subject of a new motion introduced on August 16 by 14th District City Councilmember Kevin de Leon.
De Leon's motion, referred to the Council's Trade Travel and Tourism Committee for consideration, states that Vella Group has "indicated that the proposed hotel development requires financial assistance in order to be completed and has requested development incentives consistent with those extended to other large hotel projects." The developer would provide a payment of $150,000 to cover the cost of an economic feasibility study regarding the hotel, which would serve as justification for granting incentives, should the city choose to do so.
The proposed mixed-use complex is billed as a key connective point for the Arts District, sitting just south of the new Sixth Street Viaduct and accompanying park space, as well as a proposed Metro station which would serve the B and D subway lines. Additionally, De Leon's motion notes that the project would include an outdoor deck extending over the rail lines which flank the property to the east, which could be activated through farmer's markets, movie nights, and other public events.
When the City of Los Angeles has provided financial incentives to hotel projects in the past, it has often come in the form of a rebate on transient occupancy tax revenue which would normally be paid into city coffers. Lightstone Group, which received incentives for its Fig + Pico development near the Convention Center, is expected to retain an additional $100 million in revenue through the first 25 years of the hotel's operations.
While such incentives have previously been tied to a longstanding effort to increase the number of hotel rooms within walking distance of the Convention Center, some developers have sought assistance for projects located miles away from the facility - even as far as San Pedro. However, seen such deals recently come under closer scrutiny. In 2018, then City Controller Ron Galperin argued that the city lacked any process for determining the necessity or efficacy of such incentive packages for hotel projects.
Likewise, not all who have sought incentives have had success. In 2020, a developer who planned to build a Hyatt Centric hotel tower on what is currently a vacant lot in Koreatown saw support for an incentive package evaporate after reports emerged that he had previously been forced to pay back more than $2.6 million in back taxes to the city through a legal settlement.
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- 670 Mesquit (Urbanize LA)