Councilmember wants to give tax breaks to giant Pico-Union hotel

A major hotel project planned just west of the Los Angeles Convention Center in Pico-Union could be the latest hotel development to receive financial help from the city.

Los Angeles City Councilmember Gil Cedillo, whose district includes the site where the 37-story project is expected to rise, officially asked the city Wednesday to consider giving “economic incentives” to the developer, Sandstone Properties.

Developers usually ask for public assistance when their projects have a funding “gap.” When offered, the incentives usually allow developers to keep a portion of the taxes they collect once the hotel opens—money that would normally go entirely to the city.

Called The Albany, the project “is expected to create 2,000 full-time equivalent construction jobs, 700 permanent jobs, and generate $11 million in annual tax revenue to the City,” Cedillo said in his motion. Additionally, “the Pico-Union neighborhood has historically been separated from the rest of the City and under-served by private investment,” Cedillo says.

Cedillo wants approval for the city to hire consultants to study whether incentives would work for the project and, if so, how much would be required to get it built.

The Albany would rise at 1330 West Pico Boulevard. It would hold 730 rooms and 63,000 square feet of meeting and banquet space—all just a five-minute walk away from the convention center, the project’s website notes.

The development is envisioned as “providing a ‘tourism gateway’ to LA from both sides of Harbor Freeway,” the website says. The project would replace a vacant, one-story office building. The Albany’s architect is HOK, with Los Angeles-based Studio-MLA doing the landscape design.

In 2017, Sandstone and two of its executives donated a total of $2,100 to a campaign fund for Cedillo.

The city’s practice of giving tax incentives to hotel developers has been called into question over the years, most recently by City Controller Ron Galperin, who last year said the city needed to do a better job ensuring that they were needed. The system in place now, Galperin said, approves agreements with developers “without a comprehensive strategy.”

In the past, the city has offered incentives as a way to build up the number of hotel rooms around the convention center in an effort to attract more events to the city. As the city closes in on meeting its stated goal of 8,000 hotel rooms near the convention center, the city’s chief legislative analyst is looking into whether or not city officials should still be giving economic help to hotel projects. A report on the program from legislative analyst’s office is expected sometime after the fall.

Cedillo’s motion has been referred to the City Council’s economic development committee, and needs the approval of the full council.