COUNCIL OKS OSCAR HOME.

Byline: Rick Orlov Daily News Staff Writer

Despite critics who labeled it ``welfare for Oscar,'' the Los Angeles City Council on Friday approved a $385 million project - including $90 million in city funding - for a massive development designed to revitalize Hollywood.

With their 10-2 vote, council members approved the proposal from TrizecHahn Centers that includes the construction of a 3,300-seat theater that would provide a permanent home for the Academy Awards show when construction is completed in 2001.

The project at Hollywood Boulevard and Highland Avenue would be some 1.7 million square feet, including a 14-screen multiplex, live entertainment venues, expansion of the Hollywood Holiday Inn and shops and restaurants.

While all council members said they supported the project, Councilmen Joel Wachs and Nate Holden questioned the need for city money.

``This is just like the sports arena proposal,'' said Wachs, who led a campaign against using any city money for the Staples Center project. ``There is no need for the city to advance these wealthy developers any money.''

Councilwoman Jackie Goldberg, in whose district the project is located, argued that the money - to be used to construct the Academy Awards theater and a parking garage - is well spent because the city will end up owning both structures.

And she said the project was important to the city.

``When people think of Los Angeles they think of Hollywood,'' Goldberg said. ``The bottom line is this is a good deal for the image of Los Angeles as well as Hollywood.''

But Wachs countered the measure also was setting a precedent in what the city does with taxes.

All sales, utility and hotel bed taxes generated in the area will be applied to the debt under the plan.

``We have never done anything like this before, where taxes from businesses in an area stay in that area,'' Wachs said. ``When we collect taxes from a business it goes into the general fund and then we spend it for parks, libraries and public safety.

``What do we say to other areas of the city who want the same advantage?''

Goldberg acknowledged the program is new to Los Angeles, but has been used successfully in other cities such as Santa Monica and Pasadena, to revitalize their business districts.

Also, she said, TrizecHahn has said it would make up any losses to cover the city's annual debt service of $5.5 million.

In addition, city officials said TrizecHahn will be paying $38 million for street improvements and other mitigation costs.

Developers have said they need the city involvement to cover part of the development costs - and to obtain financing at lower rates available on municipal bonds. And, they said, they will come up with the remaining $295 million needed for the project.

Several residents from the adjacent Hollywood Heights area protested plans to shut off one street as well as the increased traffic to be expected from the project.

And one, John Walsh, a frequent critic of the Metropolitan Transportation Authority, joined in objecting to using any public funds.

``This is nothing more than welfare for Oscar,'' Walsh said.

``These developers don't need the money. If they want to build it, let them do it without any city money.''