WEHOville

Proposed Use of 8500 Sunset Buildings for Corporate ‘Extended Stays’ Would Violate WeHo Law

Wed, Jul 05, 2017   By Staff    18 Comments
Korman, aka, cim group

Illustration of 8500 Sunset Blvd.

If you’re looking for a place for a luxurious extended stay in West Hollywood that you or your employer can write off on your taxes, you might want to take 8500 Sunset Blvd. off your list for now.

The two condo buildings at that location, which contain a total of 190 units, were sold recently by CIM Group to Korman Communities and the Brookfield Property Group. Korman says it plans to turn the buildings into a corporate extended-stay hotel.

However, West Hollywood City Attorney Mike Jenkins confirmed to WEHOville today that such a use would be a violation of a city ordinance prohibiting the use of apartments, condos and houses as corporate housing. Corporate housing typically involves a company entering into a long-term lease for a residential property and then letting various employees or clients use that property for short term stays for work.

Rental of a residential unit for fewer than 31 days is a violation of the city’s ban on short-term rentals such as those booked through Airbnb. The City Council clarified last year that that ban includes corporate short-term rentals.

Korman currently operates 11 “extended stay” hotels, including five in New York City (one of which is the AKA United Nations), the AKA White House in Washington, D.C., three hotels in Philadelphia, one in London and one in Beverly Hills. Rooms are available at the Beverly Hills AKA for a minimum one-week stay at a rate of $4,500 a week.

Jenkins said that Korman had not reached out to the City of West Hollywood before the acquisition. The Real Deal, a real estate and development industry website, quotes sources who have said that the mixed-use building was valued at $250 million. According to the Real Deal, CIM Group will maintain ownership of the first-floor retail space, which will house a 22,000 square foot Fred Segal store.

To make good on its investment, Korman Communities would have to convince the City Council to reverse its ordinance banning corporate rentals. As of publication, WEHOville has been unable to get a comment from Korman Communities about this issue.

“The project has a development agreement,” said City Councilmember Lauren Meister, referring to a contractual agreement between the developer and the city that governs use of the property. “Aside from the fact that extended stay, short-term rentals and corporate housing are not legal in our city (residential rentals must be 31+ days), any changes to the project must go before Council.

“This project continues to evolve into something different than what was originally presented to the public. The design changed, we lost 380 parking spaces, an underground tunnel connecting the East parcel with the West parcel was eliminated as was a pedestrian bridge across La Cienega. And we lost a theater.

“If the new owner is looking to change the Residential component to Hotel, based on my experience with the hotel item I brought forward, it will certainly be an interesting conversation.”

Meister was referring to her proposal to declare a short-term moratorium on new hotels until the city could do a further study on their impact on the local economy. The conversion of the 8500 Sunset buildings from condos to hotel rooms, along with completion of other hotel projects that are under construction, already permitted or are under review, would increase the number of hotel rooms in West Hollywood by 83%

Mayor John Heilman proposed a ban on short-term rentals in 2015, saying such rentals would have a negative impact on the availability of housing in WeHo, where rents have grown sharply in recent years. In 2016 the City Council agreed in a three-to-two vote to make clear that the ban included short-term corporate rentals. Heilman and Councilmembers Meister and Lindsey Horvath voted yes on that, and council members John Duran and John D’Amico opposed it.

“Although turnover in such circumstances is typically less frequent than that involved in short-term vacation rentals, the high turnover remains disruptive to the stability of residential communities,” Heilman said in his proposal of the ordinance to the City Council. “Further, when residential units are used for commercial activity such as vacation and corporate rentals rather than the purpose for which they were constructed, the supply of affordable and market-rate housing in the city is diminished and the ability of the city to achieve its housing goals is compromised.”

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18 Comments

  1. KayceeSun, Jul 16, 2017 at 1:48 pm

    Jo-we had the exact same horrible experiences, and the corporate visitors were no different from the ones here to party and sight see. Same loud, obnoxious behavior, squealing out of the driveway without yielding to pedestrians or pets, repetitive door slamming and loud music. Mess everywhere.

    Some of us work from home, too, and this just disrupted everything. Unless the whole building is for corporate rentals only, it’s not fair to force anyone else to feel like they are living in a hotel during spring break. In a small, older building with thin walls, it will drive you crazy around the clock.

    The City needs to stick to their ban on short-term rentals, and try to enforce it.

  2. JoSat, Jul 15, 2017 at 5:24 pm

    Randy–as someone who lived in a WeHo building that had many corporate housing units, your thinking is actually incorrect. There were tons of parties, unsupervised kids at the pool, smoking despite it being a non-smoking building…it was nerve wracking to us residents , because we wouldn’t know our neighbors–there would be strangers coming and going in the building units all the time…didn’t help that there were break ins and home invasions and no one from property management did anything, so residents simply broke their leases to move out which simply added more instability…and regarding potential residents spending money in WeHo—families always ate around their tourist visits or grabbed food at the Ralph’s (not what one would consider a mom and pop business) and actual corporate visitors had their meals near work which was outside of WeHo.

  3. JoSat, Jul 15, 2017 at 5:11 pm

    Rob, yes–there was indeed an affordable housing component, which undoubtedly will disappear with this change and I assume the company will try to get away with avoiding any fines and simply move forward and I hope the company gets their karma (just like the SunsetGordon).
    City government needs to fight this–WeHo is already the city with the most hotel rooms in Los Angeles area and needs to fight for their actual residents who call the area home.

  4. Shawn ThompsonTue, Jul 11, 2017 at 3:00 am

    This will get approved. Who do you think go Duran And Hellman re-elected?

  5. RandyMon, Jul 10, 2017 at 1:37 pm

    I know I’m in the minority, but I see no problem with the city allowing a limited number of corporate housing rentals, as long as TOT can be charged. As Jonathan Simmons posted, “… the renter is by definition here for work, so wouldn’t be home often, have very little desire or opportunity to throw parties, especially large/loud ones, and would eat out or have delivered most of their meals when actually at home, bringing more business to local restaurants and local shops…” Not to mention that they are here working for a business that is supporting the local economy, in most cases.

    With a complete AirBnB ban, and the ban on corporate rentals, the city has once again created a barrier for doing business in the City of West Hollywood. Not every person who visits the city is a tourist, a short-term visitor (a few days), or someone who is here long enough to sign a lease. We should have options for different circumstances, and balance it so that it has minimal impact on overall housing costs and vacancy rates.

    On a side note, weren’t the units behind the Ramada on SMB corporate rentals? Did they get shut down when the AirBnB ban went into place?

  6. Jonathan SimmonsFri, Jul 07, 2017 at 3:20 pm

    WOW … I actually agree with the city making this decision. I don’t care or wonder what’s wrong with this type of proposed short term executive housing.

    BUT bat least it is CONSISTENT with their previous refusal to allow executive short term rentals of other weho apartment units.

    Personally, I think corporate short term renting is (for landlords & the City) the most desirable type of rental. Rents are significantly higher on (usually) Furnished Corporate Apartments, the renter is by definition here for work, so wouldn’t be home often, have very little desire or opportunity to throw parties, especially large/loud ones, and would eat out or have delivered most of their meals when actually at home, bringing more business to local restaurants and local shops… Which is that much more tax revenue for the City on top of the foregoing mentioned benefits of corporate rentals.

    AGAIN, THE CITY HAS DENIED ALL PREVIOUS CORPORATE HOUSING (denied, or tries to deny) SO THEIR CONSISTENCY IS IN THIS ARTICLE TO THIS PROJECT IS WHAT I TOTALLY AGREE WITH.

  7. Lynn Russell'Fri, Jul 07, 2017 at 1:14 pm

    Thank you Josh for hitting the nail on the head. Hopefully for the conscious folks out there this will put a period to the term limits issue. Institutional knowledge and the openness to new ideas is a mark FOR John Heilman and John Duran. One can always plead their fact and logic based case to them. You may not always get what you want but they will give your argument serious consideration.

  8. Josh KurpiesFri, Jul 07, 2017 at 8:52 am

    @stvrsnbrgr – I don’t understand your logic. Only two of the five members of the Council currently serving were on the Council when the original plan for this site was approved (Heilman & Duran) One of those two original councilmembers (Heilman) is the councilmember that introduced the ordinance to clarify that the ban on short term rentals included corporate housing.

    Regardless of one’s like/dislike of term limits, if you’re position is that the developers are trying to get away with something or pull one over on the Council or City residents, how could this possibly be an example of how term limits are needed? If anything, it show’s the value of institutional knowledge, experience and holding one’s ground.

  9. MannyFri, Jul 07, 2017 at 8:03 am

    @stvrsnbrgr—Your profile says you “loathe republicans”, but term limits is a very republican thing….and since this project was originally approved the city council has changed many times without the need of term limits

  10. Rob BergsteinThu, Jul 06, 2017 at 3:46 pm

    Was there an affordable housing component in this project? If so, will the affordable units remain? Or was an in lieu fee paid? This project has been going on since I was….much younger, and I don’t recall the details.

  11. Development WoesThu, Jul 06, 2017 at 10:12 am

    Agree with Todd, City Council definitively needs to set an example of a prime offender that is intending to manipulate the system. Time for setting a” red line”. Our development ventures will benefit in future required exceptional” design and fair business practices towards the community. Playing two ends against the middle will not be acceptable.

  12. jeffery wardThu, Jul 06, 2017 at 9:40 am

    I would suggest that no Occupancy Permit be given until the units are replaced.

  13. stvrsnbrgrThu, Jul 06, 2017 at 9:39 am

    West Hollywood is a great example of the value of term limits.

  14. Todd BiancoThu, Jul 06, 2017 at 6:50 am

    Unfortunately, I think @DonaldEAzars is correct. What would shock me would be the City saying a firm “no” to the conversion of these condos to extended stay hotel rooms. Here’s how it will be spun: IF the City permits the hotel use, it can collect TOT on any stay less than 31 days. IF the City insists that the units be rented for at least 1 month at a time, Korman may agree and the City would receive zero revenue. The logic will be that it’s better to get tax revenue to fund city services than get nothing. Presto! Another development agreement is signed along with the appropriate “fee.”

    Here’s a fresh idea: How about sticking to the original (amended many times) plan and try selling these apartments as condos. Let’s see how that goes for the developer.

  15. Donald E AzarsThu, Jul 06, 2017 at 6:11 am

    OH I’m sure our city will find a way to allow this. Just change the rules, ignore them, charge the property developer a fee (call it a penalty, gift, bribe, whatever) and let them continue to damage our city because of our ongoing pro-property developer activities while ignoring the people who live here…which are those who petitioned to form this city just so we would NOT be ruled by big city types. This has soured me and many on “our town” over recent years.

  16. WeHoMikeyWed, Jul 05, 2017 at 11:28 pm

    Gehry has proven he knows “sh-t architecture”. Have you seen that POS he designed for 8150 Sunset – just barely outside WeHo’s boundaries??

  17. Michael G.Wed, Jul 05, 2017 at 8:27 pm

    Frank Gehry said that 98 percent of modern architecture is “sh-t” and it’s located in West Hollywood.

  18. Todd BiancoWed, Jul 05, 2017 at 8:00 pm

    It’s disturbing to know how much this project has changed since its inception. All the changes were in favor of the developer and saved them a ton of money. The deleted “amenities” would have helped with pedestrian safety and traffic flow. Their reward? A mega-profit on dumping the finished product. Just once, I’d like to see changes in big projects that benefited the general public.

    I don’t think the apartments were marketable as condos. Small, fixed windows, large interior support tubes that sucked interior space, no outdoor space unless you have the penthouse unit, north facing units stare into two large vertical triangular billboards, polarizing exterior design (most hate it), etc.

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