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

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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Kaycee
Kaycee
3 years ago

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… Read more »

Jo
Jo
3 years ago

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… Read more »

Jo
Jo
3 years ago

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.

Shawn Thompson
Shawn Thompson
3 years ago

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

Randy
Randy
3 years ago

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,… Read more »

Jonathan Simmons
Jonathan Simmons
3 years ago

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… Read more »

Lynn Russell'
Lynn Russell'
3 years ago

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.

Josh Kurpies
Josh Kurpies
3 years ago

@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… Read more »

Manny
Manny
3 years ago

@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

Rob Bergstein
Rob Bergstein
3 years ago

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.

Development Woes
Development Woes
3 years ago

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.

jeffery ward
jeffery ward
3 years ago

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