Developer of 30-story Downtown hotel seeks extension to keep project alive

The 30-story American Life hotel project that was slated in 2016 to take over a vacant lot in the heart of Downtown is headed back to the city’s Planning Commission next month as developers renew their push to get the project started.

The project by Seattle-based American Life would replace the empty lot on the corner of Pine Avenue and Ocean Boulevard where the Jergins Trust Building sat until 1988.

If approved, the lot would be transformed into a towering 429-room hotel that would connect to the Long Beach Convention Center and activate a central intersection in Downtown. The hotel is expected to cost more than $200 million to construct.

However, an extended entitlement process, the coronavirus pandemic and uncertainties with one of American Life’s financing methods—the EB-5 visa program that trades investment in the American economy for green cards—have delayed the project.

On March 4, it could be revived—or killed—depending on whether the commission grants an extension for the project’s construction.

“Without it [the extension] the project would be dead and everyone’s hard work would be down the drain,” said Greg Steinhauer, president of American Life.

Steinhauer said the group is seeking a 24-month extension for the project’s start date, noting that the pandemic did not help the process of getting the project going.

“Currently the convention and the cruise business is at zero,” Steinhauer said. “We’re not going to start a hotel in that environment.”

But now, the group is finally at a point where it’s ready to move forward, with hope instilled by vaccine rollouts and the prospect of a healthier economy returning, including travel and conventions.

However, the delays mean financing the project will look different than originally imagined. American Life, a firm that specializes in EB-5 investments, will instead move forward as a traditionally financed project, Steinhauer said.

Under the the EB-5 program, foreign investors could pour money into projects like the proposed hotel that create jobs in exchange for citizenship opportunities.

But a boom of Chinese investors at the end of last decade has created a logjam that could take up to 10 years for investors to receive their American visas. There are a maximum of 10,000 EB-5 visas available each year.

In addition, the federal government recently changed the EB-5 program to require a standard minimum investments of $900,000 per person—almost double what it was when the hotel project was proposed.

“It’s essentially killed the program,” Steinhauer said.

The backlog of applicants, an increase to the minimum investments and uncertainty that the program will survive past this year have left American Life with few options but to go forward without EB-5 investments, Steinhauer said.

Despite the changes to the EB-5 program Steinhauer said the pandemic ultimately played a bigger role in the timeline of the project, but now the group is ready to move forward.

If the project does go forward, Steinhauer said it will do so with some labor benefits tied-in. The group has entered into a card-check agreement with local hotel workers’ unions and will enter into a private project labor agreement with area construction trades, he said.

The City Council approved the sale of the corner lot in 2016. American Life bought it for $7 million and entered into an agreement with the city to share the taxes generated by hotel stays.

Under that agreement, the city and American Life will split hotel taxes for 20 years, after which the city would collect 100% of the taxes. It was estimated that it would cost the city about $27 million in lost tax revenue at the time of approval, but since then voters approved a one percent increase to the city’s hotel tax rates.

If the project and its extension are approved by the Planning Commission next month, it will have to clear a vote by the full City Council before any construction happens. Completion of the project could take about two years.

Editors note: The original version of this story said that American Life is Chinese-owned, it is not. The story has been updated.

Support our journalism.

Hyperlocal news is an essential force in our democracy, but it costs money to keep an organization like this one alive, and we can’t rely on advertiser support alone. That’s why we’re asking readers like you to support our independent, fact-based journalism. We know you like it—that’s why you’re here. Help us keep hyperlocal news alive in Long Beach.

Jason Ruiz covers City Hall and politics for the Long Beach Post.
- ADVERTISEMENT -

More