Actions taken today by the Los Angeles City Council have advanced plans for two hotels in the Downtown area.

The City Council voted to authorize the execution of a memorandum of understanding with AECOM Capital and Mack Real Estate Development to provide approximately $17.3 million in financial assistance for a proposed hotel at the corner of 12th and Olive Streets, approximately four blocks east of the Los Angeles Convention Center.  The proposed 16-story hotel, designed by the architecture firm Cuningham Group, would include 243 guest rooms in addition to 4,618 square feet of ground-floor retail space and parking for 38 vehicles.

A feasibility study commissioned by the City of Los Angeles found the proposed hotel has an approximately $50.6 million financing gap, due in part to the need for concrete-frame construction.  This figure is based on an estimated construction budget of $112 million, versus an estimated $61.6 million value for the completed project.

The $17.3 million incentive package was calculated based on an estimated $34.6 million in net new reveues that the hotel would create for the City through construction and the first 25 years of operation.

The report indicates that a groundbreaking for the hotel is expected in December 2019, and completion expected in May 2022.  Similar incentive packages have been provided for other hotel developmetns near the Convention Center, driven in part by a longstanding goal of creating at least 8,000 hotel rooms within walking distance of the facility.

The Los Angeles Times reported last year that the City of Los Angeles has approved $1-billion in incentives for developments since 2005.  The practice has come under criticism from City Controller Ron Galperin, who argued that there is no process for evaluating when and how incentives should be granted to developers.

In a separate vote, the City Council concurred an earlier decision by the Central Area Planning Commission and denied an appeal of a proposed hotel at 124 E. Olympic Boulevard in the Fashion District.

The Mart South Hotel, planned by Jamison Services, Inc., would convert a six-story edifice from the 1950s into a 149-room hotel featuring ground-floor retail space and a rooftop pool deck.  It is being designed by KFA Architecture.

The appeal filed by the hotel labor union UNITE HERE Local 11 argued that the project should not be deemed exempt from the California Environmental Quality Act.