The lawsuit filed by the City of West Hollywood against the owners of 8500 Sunset is slowly moving forward, with the plaintiff trying to force the three City Council members who voted against the project to sit for questioning by its lawyers.
Documents filed in L.A.
A request to Judge Bachner from Nancy Morgan, a member of Browne George Ross, the law firm representing the owner of 8500 Sunset, says that “between January 23 and February 5, 2019, we took the depositions of Rachel Dimond, David DeGrazia, John Keho and Paul Arevalo. The second session of Ms. Diamond’s deposition took place on February 13 and lasted about 45 minutes. I reviewed the transcript of the session; she answered “I don’t recall’ or words to that effect thirty times … Given the testimony of these deponents, we concluded that we would need the testimony of Councilmembers Horvath and Meister, as well as Councilmember Heilman.”
The city has opposed the deposition request, arguing that it will cause the city and the Council members “to suffer unwarranted annoyance, embarrassment, oppression, or undue burden and expense if the deposition is allowed to proceed… In a filing by to Baker & Hostetler LLP, the city’s attorney in the lawsuit, argues that “heads of agencies and other top governmental executives are generally not subject to depositions … The only exception to this rule is if ‘the official has direct personal factual information pertaining to material issues in the action and the deposing party shows the information to be gained from the deposition is not available through any other source’.”
The lawsuit stems from the City Council’s affirmation in September 2018 of John Keho’s ruling that BPREP 8500 LLC, the owner of the property, was violating city law by offering what it describes as “luxury serviced residences” for periods as short as 31 days. In effect, Keho had ruled, BPREP was operating a hotel. BPREP is a company controlled by Korman Communities, which operates the AKA short term corporate rental business, and the Brookfield Property Group. It claimed the city’s decision will cost it $40 million.
The city’s lawsuit against BPREP 8500 LLC claims that despite the City Council’s decision, AKA continues to rent suites in its 110-unit West Tower for stays of at least 31 days. AKA has agreed to rent the 80 units in its East Tower as conventional apartments (with eight of them set aside as affordable housing.) In addition to asking the judge to affirm its decision in the AKA matter, the city is asking that BPREP be ordered to reimburse it for the costs of the lawsuit, which include attorney’s fees and the cost of monitoring BPREP’s use of the apartments.
The lawsuit is expensive. At a meeting in October, the City Council approved increasing by $425,000 the $75,000 already allocated to Baker & Hostetler, one of the nation’s leading law firms, to deal with the BPREP issue. At its May 6 meeting, the City Council agreed to appropriate an additional $150,000 and capped its spending on the lawsuit at $650,000. Councilmember John D’Amico opposed the increase.
The AKA project has drawn opposition from owners and managers of local hotels, who see the short-term corporate rentals as competition. The city and several Council members have objected to it, arguing that the project was brought forward under the idea that it would be providing additional housing in a city with a housing shortage. “Nobody said that those units were going to be luxury units,” Councilmember Meister said during a City Council meeting at which BPREP appealed Keho’s decision. “The whole point of building that housing was supposed to be because the more you build, the cheaper housing becomes, and that was the deal.”
Councilmember D’Amico has argued that the project is luxury housing and that the city doesn’t need more of that. Councilmember Heilman, however, has that “allowing new upper-end units to be built does allow people who are currently living in luxury housing to buy new, or to rent new (housing), while people then can move up in the housing chain. Allowing no new development or allowing new developments to essentially be commercialized for quasi or hotel use not consistent with solving the housing problem.”
The lawsuit isn’t likely to go to trial until next year.