(Dec. 12, 2017, 12:55 p.m.) -- City management will ask the City Council at its Dec. 12 meeting to let a corporate entity ("American Life, Inc.") keep 80% of LB's hotel room tax ("transient occupancy tax") for nine years (that LB taxpayers would otherwise receive) to facilitate the company's conceptual plan to build a 416 room hotel on the site of the former historic (demolished) Jergins Trust Building (100 E. Ocean Blvd., SE corner of Pine Ave.)
In an agendizing memo at this link, Director of Economic Development John Keisler indicates the proposed tax giveback percentage has been increased from 50% that the Council voted to approve on May 17, 2016 as part of a transaction that stalled as a result of a litigation challenge. [LBREPORT.com has learned that the litigation was brought under CEQA by LB Citizens for Fair Development (Exec. Dir. is Warren Blesofsky); the City prevailed in the litigation's initial stage and Mr. Blesofsky's group is pursuing a judicial appeal.] The Council vote on the original tax giveback transaction (in which the Council also declared the site "surplus" and sold it to American Life for $7 million) was 8-0 (Yes: Suja Lowenthal, Price, Supernaw, Mungo, Andrews, Uranga, Austin and Richardson; Absent: Gonzales) As part of the previous deal, city staff estimated the Buyer/Developer and the City would each receive roughly $27 million over 20 years. Under the now-proposed deal, the Buyer/Developer would receive $27 million upfront in the first nine years. |
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An agendizing memo states in pertinent part: Delays caused by the lawsuit have resulted in increased costs for labor, construction materials, and financing for the Proposed Use. To accommodate for these new costs, the Buyer/Developer has increased the number of proposed hotel rooms from 350 to 416, and added revenue generating amenities. Total projected development costs submitted by the Buyer/Developer have increased from $165 million to $262 million or approximately $629,600 per room. This cost, when compared to the estimated present value, reflects an economic gap of approximately $61 million for the modified Proposed Use.
The developer American Life, Inc. says on its website home page: "We specialize in real estate development and EB-5 investments."
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