Developers behind the Breakers Hotel project could receive millions in tax relief

The Breakers Hotel project, an entire renovation of the historic building by development firm Pacific6, is likely to receive some $13 million in tax relief once the hotel opens, should the City Council approve recommendations from staff at Tuesday’s meeting.

The Transient Occupancy Tax, commonly called TOT, is the tax all hotels pay for each room that is occupied at any given time in the city; in Long Beach, the tax is 12% for hotel rooms, motel rooms, and short-term rentals.

The reason for the potential tax relief for the Breakers Project? To fill an “economic gap” of about $37.7 million between the estimated cost of construction and the value of the future development.

Councilmembers who back the recommendation say that the relief given to the developers will eventually find its way back into helping grow Long Beach’s economy. Councilmember Jeannine Pearce, the district which the project sits within, noted that the Breakers is “an asset to the community” that will deliver “good jobs for hotel workers.”

Councilman Rex Richardson, who also chairs the City Council’s Economic Development Committee, noted that the loss of Redevelopment has forced cities to “become more creative in identifying tools to make smart economic development investments.”

Redevelopment was a statewide oversight agency that provided millions of dollars annually to cities to revitalize blight and empty lots owned by municipalities. During the recession, then-Gov. Jerry Brown eliminated the agency as an austerity measure and then, after the agency’s dissolution, required that every city sell off its empty redevelopment properties. Since then, cities have had to forgo millions of dollars that would have otherwise been given to projects and organizations—including the Breakers project.

“The approach to the Breakers project makes a lot of sense,” Richardson said. “It leverages future growth and directs it into a project that not only adds value to our city’s bottom line, but maintains a commitment to worker safety and quality local jobs through its [memorandum of understanding] with our local hotel workers. I look forward to supporting it.”

It is not uncommon for the city to give a break to hotel developers. The massive American Life Hotel, a 30-story hotel being proposed at the southeast corner of Ocean Boulevard and Pine Avenue, will be receiving 50% of its TOT over the course of 20 years, or what amounts to some $27 million that would have otherwise gone to the city. This would help fill the economic feasibility gap of $47 million, officials said. Should the city disagree with the hotel brand chosen to represent the space, the contract can be terminated.

“At completion, the Breakers Hotel will support over 200 local jobs, will become a gateway for thousands to experience our city’s continued renaissance, and will create a vibrant hub in Downtown for residents and visitors alike,” said Brandon Dowling, spokesman for Pacific6 Enterprises. “We’re proud of our work with the City of Long Beach to ensure this historic building is returned to its former purpose and glory and can be enjoyed by many for years to come.”

The Breakers Hotel project is part of Pacific6, the company that owns the Long Beach Post.

Editor’s note: This piece originally excluded Pearce’s comment; it has been added.

The Breakers Hotel is located at 210 E. Ocean Blvd.

Brian Addison is a columnist and editor for the Long Beach Post. Reach him at [email protected] or on social media at FacebookTwitterInstagram and LinkedIn.

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