CALL MADE FOR GRAND TAX BREAK DEVELOPER SAYS WAIVER `CRITICAL' FOR FIVE-STAR HOTEL.

Byline: Troy Anderson and Rick Orlov Staff Writers

As architect Frank Gehry unveiled his design for the first phase of the $1.8 billion Grand Avenue project, developers said Monday that the city will have to waive the bed tax on the 275-room luxury hotel that is the centerpiece of the redevelopment plan.

Developer William Witte of The Related Cos. and city officials said a development agreement will need to be worked out to include a waiver of the tax in order to entice an operator for the five-star hotel proposed for Second and Grand Avenue.

``Waiving of those taxes is a critical element of getting the hotel,'' Witte said. ``It's not for us; it's for the hotel operators.''

Set on a three-acre block across the street from the Walt Disney Concert Hall, the first phase would cost $750 million and would include a 50-story glass tower that would house the hotel, 250 condominiums, a rooftop pool, bar and spa. The project also would include open-terraced restaurants, a health club, a bookstore, a garden-like atmosphere and outdoor art.

City Councilman Dennis Zine said Witte's proposal for a tax break caught him unaware.

``This almost sounds like a bait and switch,'' Zine said. ``We keep hearing there is no public subsidy and then they want us to waive the hotel bed tax. Well, that amounts to a public subsidy.

``We aren't doing that for other businesses. The only hotel we did it for was for the Convention Center hotel, and I had questions over that.''

The Convention Center hotel project is much larger, with 1,200 rooms. The tax waiver on that is estimated at $160 million over a 20-year period. Under similar conditions, the tax waiver on the Grand Avenue hotel could be as much as $440 million.

``The question you have to ask is if it is such a valuable project, why use public money at all?'' asked Jon Coupal, president of the Howard Jarvis Taxpayers Association. ``This is such a large project, it's hard to believe it won't go ahead without this subsidy.''

The architectural designs were unveiled at a ceremony at the Walt Disney Concert Hall, also designed by Gehry. Mayor Antonio Villaraigosa, Supervisor Gloria Molina, Councilwoman Jan Perry and Eli Broad, chairman of the Grand Avenue Committee, also attended.

The designs were given exclusively for publication Monday to the Los Angeles Times, a major downtown property owner, by the Grand Avenue Committee headed by billionaire Eli Broad. Several city and county officials said they were powerless to overturn the committee's action.

The first phase is part of the larger project on city and county land, which when completed will include a large park between City Hall and the Music Center, five skyscrapers, 350,000 to 400,000 square feet of retail space, 2,100 to 2,600 condominiums and apartments, and 4,800 to 5,500 parking spaces.

Los Angeles County Supervisor Michael D. Antonovich expressed concerns that the Grand Avenue Authority had not yet complied with the board's request for an independent appraisal of the public parcels or an analysis estimating the worst-case scenario of potential cost overruns.

``The supervisor remains concerned about the ultimate costs to taxpayers and would like to see the government subsidy quantified,'' said Antonovich's planning deputy, Paul Novak. ``That has not been done.

``Additionally, the independent risk analysis and independent appraisal should have been completed months ago, and the authority and Chief Administrative Office have not moved forward to start the work.''

Novak said an appraisal made on behalf of the nonprofit Grand Avenue Committee placed the value of the two county-owned parcels at about $300 per square foot while similar properties downtown are selling at $400 to $500 a square foot.

``All these financial deals flow out of the assumed value of the property,'' Novak said. ``If the assumed value is underinflated, it means taxpayers are not getting a fair shake for the investment put into this.''

The Community Redevelopment Authority has estimated that the county will have to kick in $16.4 million and the CRA will contribute $26.8 million.

And Novak pointed out that nearly $25 million of Related's $50 million payment to pay for the park would be spent on converting the existing corkscrew parking ramps on Grand Avenue and Hill Street into slope ramps, significantly reducing the amount of money available for the 16-acre park.

A team of landscapers and architects is working on the designs for the civic park. Demolition of the parking garage ramps is expected by the end of the year with construction to start early next year.

Jamie Cordaro, president of the Van Nuys Neighborhood Council, questioned the use of public money for the project.

``I don't see where people in the Valley will come downtown for this,'' Cordaro said.

``I'm not sure we need to go downtown to go to a park or shop when we have the stores here and it's just as easy for us to go into the mountains or Griffith Park or the beach.''

But Mayor Antonio Villaraigosa said he is prepared to answer the critics.

``This is not just another project,'' Villaraigosa said.

``It is an homage to the city of America's hope and promise.

``All the critics and the naysayers who say this isn't possible, all the negative things you hear from the same naysayers all the time. This is a city of dreams. This is a city of hope. If not here, where?''

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