WeHo City Council Rejects Korman’s Appeal of Ban on Its Short-Term Corporate Rentals


In a three-to-two vote, the West Hollywood City Council tonight rejected an appeal by the owner of two residential towers at 8500 Sunset Blvd. of a decision that bars the use of one of the buildings for luxury short-term rentals.
The owner is BPREP 8500 Sunset LLC, a company established by the Brookfield Property Group and Korman Communities, whose business is renting high-end luxury suites for short-term stays.

BPREP purchased the 8500 Sunset property from CIM Group last summer, and Korman announced that it planned to turn the buildings into one of its AKA hotels. Korman operates 11 such hotels, which offer extended stays to corporate executives and other affluent guests in locations such as Beverly Hills, where rooms rent for a minimum of one week for as much as $1,000 a night, and in other locations in New York, London, Philadelphia where one can rent a room for only a one-night stay.

The City of West Hollywood quickly notified Korman that such short term corporate rentals have been banned in WeHo, part of a move by the City Council to prevent housing for residents from being taken off the market. Korman responded by announcing that the 80 units in its East Tower would be rented as conventional apartments (with eight of them set aside as affordable housing.) The 110-unit West Tower would be used for short-term stays (with nine affordable units). Korman said it would require guests to stay for at least 31 days to comply with the city ban on short-term rentals.

John Keho, West Hollywood’s interim director of planning and development services, ruled last November that Korman was using the West Tower units for “temporary lodging,” effectively making it a hotel. Korman appealed his decision to the West Hollywood Planning Commission, which upheld it, leaving the next option an appeal to the City Council.

Korman’s argument turned largely on the definition of short-term rentals and its contention that the City of West Hollywood had not formally established a requirement for a one-year initial lease, which it now was demanding. Ted Green, the lobbyist representing Korman, and one of its lawyer, Eric George, also argued that the city was being unfair to young newcomers to West Hollywood, who might not want to commit initially to a one-year lease. They and other speakers on Korman’s behalf also said that banning short-term rentals such as those offered by AKA would inhibit creative people such as actors from staying in West Hollywood while making a film or engaging in other creative projects.

Korman, aka, cim group
Illustration of 8500 Sunset Blvd.

Councilmember John D’Amico and Mayor John Duran supported Korman’s appeal. D’Amico acknowledged the shortage of affordable housing in West Hollywood but said that restricting AKA’s rental terms was an effort to address a “luxury housing crisis” that the city does not have. D’Amico noted that other new and expensive apartment buildings such as the Domain, the Huxley and the Dylan also have been renting out units on a short-term basis to corporate clients, which he said was evidence that there wasn’t sufficient demand for such expensive units. Duran argued that Korman’s extended-stay corporate rental approach was another example of the “disruptive” business models such as that of Uber and Lyft that society will have to adapt to.

Councilmember John Heilman strongly disagreed with D’Amico, saying that the long history of the project, which was first proposed in 1999, included many changes authorized by the City of West Hollywood that were all about making what initially was a retail and office project into a residential one. Councilmember Lauren Meister argued that Korman was breaching a development agreement reached in the early days of the project when the developer sought permission to use the buildings as apartments or condominiums. She also noted that the units in both of the buildings are counted by the state in its calculation of the size of the city’s permanent housing stock, another sign that the project was intended to provide permanent residences.

Councilmember Lindsey Horvath called out Korman for renting some of its affordable units in the West Tower at market rates. She and Heilman also cited a similar move by Korman in Beverly Hills, where it bought an apartment building and began using it for short-term corporate stays without that city’s permission. It eventually negotiated a deal with the City of Beverly Hills to permit it to continue.

Horvath and Rachel Dimond, the city’s senior planner, cited evidence that Korman wasn’t being honest in its claim that it was using the West Tower solely for rentals of 31 days or more. Dimond noted several examples where those who rented apartments in the building were given refunds after ending their stays in less than 31 days. Horvath also noted that a petition supporting Korman that was presented to the Planning Commission contained a forged signature of a recently born child.

D’Amico argued that even if the city barred Korman from using the building for extended corporate stays, it was unclear how it could effectively enforce the ban.

It is unclear what the next steps are for Brookfield and Korman, although those familiar with the situation say it is likely that it will bring a lawsuit against the city.


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AM
Guest
AM

You mean the John “I’ll never run for more than 2 terms” D’Amico”? Or the “I’ll never take money from developers “D’Amico? Oh yes, that one. LOL LOL LOL Then there are other D’Amico too

Randy
Guest
Randy

I wish one of the CouncilMembers who opposed this had made this point: if this developer can’t rent their luxury units at the rate they want, then they should drop the rent, even if they take a loss. They made an agreement with the City, which changed over time, and it isn’t the City’s responsibility to start allowing them to do short-term rentals, simply because their business plan didn’t work out. I doubt the developer is going to go under, as a result. And maybe this would show them, and other developers (such as the Dylan and Huxley, who are… Read more »

AM
Guest
AM

@Steve Martin, “professor”? That’s for the classroom. Councilmember is for the dais. Suck up much?

AM
Guest
AM

Well, D’Amico, you know, can’t bite the hand that feeds him. Wink,wink!

Principles & Facts Prevail
Guest
Principles & Facts Prevail

One of John Heilman’s finest moments with a thoughtful analysis of the facts and clear arguments.

Principles & Facts Prevail
Guest
Principles & Facts Prevail

Neglected to mention the astute analysis and comments from Council Members Horvath and Meister. It’s a blessing to have at least three critical thinkers on board.

The remaining council members should view and study video of the meeting several times as their proper introduction to municipal law and contracts…..then follow up periodically until they understand it and can explain it in a cogent manner.

Randy
Guest
Randy

I agree that all three were great, but Heilman really stood out, like I haven’t seen him, in awhile. This was carefully thought out, and covered every argument; the complete history of all of the situation. And his rebuttal to Duran was also good. As “pro-developer” as he is often accused to be, this was a shining moment, and he did the right thing.

Steve Martin
Guest
Steve Martin

Having attended the meeting I was proud of the coherent and intelligent analysis of the facts and City policies by Council member Lauren Meister and the cogent arguments of Lindsay Horvath . But it was professor John Heilman who provided a formidable defense of the City’s codes and community values and exposed the intellectual duplicity of the developer point by bloody point. I highly recommend you watch his presentation just to see a masterful analysis. Mayor Duran was predictably pandering to the developer with fictional facts, phony premises and specious sophistry. John D’Amico’s thought process can charitably described as muddled… Read more »

James Francis
Guest
James Francis

I concur Steve Martin! Everyone wants to have luxury boutique hotels when it’s duppose to be long term rentals. Then the developers want to revoke or sue to overturn decades of protects so not to ensure those units are maintained or remain affordable units but luxury and expensive for only reasons of profiteering not protecting city and state codes. They benefited by agreeing to terms and now want to sue just to dictate to the city that these units and apartments were never part of the agreement! FYI developer we voted on a city referendum to make sure affordable units… Read more »

Rick Watts
Guest
Rick Watts

Hear, Hear, Steve. (And we’ll done, Council members Meister, Horvath—and especially Heilman. VERY disappointed in Councilmember D’Amico & Mayor Duran in their willingness to turn a blind eye to yet another developer AGAIN violating their own agreements, the duly passed laws & codes, and running roughshod over the CITIZENS WHO LIVE AND VOTE HERE.

Manny
Guest
Manny

Brilliant argument by John Heilman against this appeal.

Excellent example how his vast institutional knowledge and clear, sharp analysis on issues like this can serve West Hollywood well.

Andrea Reider
Guest

This vote should have been unanimous. The building is clearly in violation. I don’t understand how the two council members could vote for this without some external reason that has not been expressed to date.

Alison
Guest
Alison

Is John D’Amico TRYING to lose the next election? His actions and words lately seem to be on the side of the developers and not on the residents of WeHo. He sure has changed. We don’t have a luxury housing crisis. That is the most ridiculous thing I’ve ever heard. He used to partner up with Lauren Meister but now, more and more, he is teaming up with Duran. That is never a good thing. And why are they permitting the Dylan, Huxley and Domain to rent short-term (even if it is 31-days or more). Make them lower their rates… Read more »

Rick Watts
Guest
Rick Watts

Excellent point, Alison re the short-term rental violations at the Dylan, Huxley etc. What is needed is better and more vigorous enforcement of the codes under which these projects were built and the competing interests of the city and the CITIZENS WHO LIVE AND VOTE HERE in ensuring the protection of our long-term rental housing stock—NOT caving to strong-arming by developers illegally acting to make their violations a fair accompli to be ratified by weak knees on the Council.

Alan Strasburg
Guest
Alan Strasburg

Those were the two most predictable votes, as always. As to the one who suggests that it’s unclear how the city would effectively enforce a ban on short-term rentals, I submit that there are people willing to serve in public office who might figure out a way to do just that.

James Francis
Guest
James Francis

Wonder how long this is going to persist with affordable rentals not even being rented to local residents on the affordable housing list never mind section those on section 8 vouchers. Now these companies are dictating that the cities ordinances can’t be enforced or get 1 extra vote from a council to throw decades worth of ordinances our the window. How upsetting this has become of developers lying and eventually taking away housing ensured through the affordable housing trust! When is this going to stop or when will the city sue or take legal action against them not the other… Read more »