Judge Denies WeHo’s Petition for a Preliminary Halt to Short-Term Rentals at 8500 Sunset

The City of West Hollywood’s efforts to stop the owner of a building at 8500 Sunset Blvd. from using it for extended-stay corporate apartments has experienced a major setback.

L.A. Superior Court Judge Monica Bachner has denied the city’s request for a preliminary injunction that would have stopped such rentals until the final resolution of a lawsuit that the city brought against the property owner, BPREP 8500 Sunset LLC, in December 2018. Bachner issued her decision on May 17.

The lawsuit stems from the City Council’s affirmation in September 2018 of  Community Development Director 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 8500 Sunset is a company controlled by Korman Communities, which operates the AKA short term corporate rental business, and the Brookfield Property Group. BPREP claimed that the city’s decision to stop the corporate rentals would cost it $40 million.

In his ruling, Keho added specific definitions to terms such as “long-term basis,” which is the description of the rental period for an apartment, saying that an initial lease had to be of one year or more.

The city’s lawsuit against BPREP 8500 LLC claims that despite the City Council’s affirmation of Keho’s decision, AKA has continued to rent suites in its 110-unit West Tower for minimum stays of only 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. If the city were to lose, it would reimburse BPREP for its legal costs.

In her decision to deny the preliminary injunction, Judge Bachner said the city was unable to demonstrate that BPREP 8500 had breached the terms of a development agreement that the city entered into in 2005 with Sunset Millennium Associates LLC, the then-owner of the property. That continuing agreement allowed the owner of the property to construct two buildings – the East and West Towers  — with a total of 190 units that could be used as “residential condominiums” or “residential apartments.” The agreement also required that the owner of the property adhere to “current land use regulations.” At that time, the City of West Hollywood had not specifically defined the “long term basis” that the apartments had to be rented for. BPREP 8500 LLC bought the 8500 Sunset property in 2017.

Judge Bachner’s ruling is not a final decision on the validity of the City of West Hollywood’s argument that BPREP 8500 should be permanently blocked from renting units in its West Tower for periods of less than one year. The city has argued that BPREP, by allowing rentals of as few as 31 days in the West Tower, effectively is running a hotel without having gotten city permission to use the property in that way.

In her ruling on the preliminary  injunction, Bachner said that she had had to decide whether there was a reasonable probability that the City of West Hollywood would prevail at the trial and that she had to balance the “irreparable harm” that BPREP claims it will suffer if it isn’t allowed to offer short-term rentals for now versus the harm the city claims it will suffer if BPREP 8500 Sunset is allowed to continue offering apartments for rent for a minimum of 31 days until a final decision is made at the trial.

In her ruling, Bachner supported BPREP 8500 Sunset’s argument that the City of West Hollywood was improperly requiring it to adhere to standards that were not in place in 2005 when it was granted permission to use the two buildings as rental property.

“Plaintiff has not sufficiently established that Defendant’s conduct constitutes a breach of the original agreement itself, only that Defendant has not complied with subsequent interpretations and changes to the agreement’s terms,” Bachner ruled.

In an email to WEHOville, Eric George of Browne, George, Ross LLP, the law firm representing BPREP 8500 Sunset, said “we trust the City Council will honor the court’s ruling, and end its litigation efforts against a productive citizen of the West Hollywood community.  Doing otherwise will continue to cost the city additional hundreds of thousands of dollars that would be better spent on programs like those targeting drug addiction and chronic homelessness.”

City Attorney Mike Jenkins, responding to a question from WEHOville about the decision, said “… the ruling is not dispositive of the city’s case; we knew going in that preliminary injunctions are difficult to obtain absent irreparable harm.  While the city hoped to obtain preliminary relief in order that the housing units in question in the litigation be made immediately available for their intended purpose – actual housing – and is disappointed by the ruling, we are confident in the case we will make at trial.  The units were entitled and built to provide much needed permanent housing and instead have been converted to hotel use.   That’s just not right.”


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Constituent
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Constituent

The City of West Hollywood once again demonstrating its thuggish disregard for the rule of law that they themselves authored.

Jonathan Simmons
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Jonathan Simmons

So many articles here complain of such an inadequate supply of rental units in Weho, but now the City is trying to get rid of rental units within weho and spending big bucks on legal fees to do so.??

James Francis
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James Francis

The city found ways to give the developers leeway decades ago and short term rentals though known were not a major industry worth millions. Corporate rentals is what this market is about. The weathliest of wealthiest vacationers or industry moguls or international jet setters who want panoramic views that the developer knew all almong that was the intention without mentioning it to the city. You never hear of locals getting to live on sunset or affordable housing, and when there finally is one for us to qualify it’s held hostage in a corporate rental standoff and it becomes a quagmire… Read more »

Too Many & OverSupply
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Too Many & OverSupply

In todays WSJ LA Developers Have a Big Problem: Too Many New Megamansions It suggests that now “there are simply too many and not enough buyers to go around. It’s created it’s own monster”. Stephen Shapiro of Westside Estate Agency offers” We have an enormous oversupply of these white boxes. There’s years of inventory out there”. This picture could apply to West Hollywood’s frenzy as well. Various planning commissioners have remarked that developers have been “using every available trick”, “it’s greedy”, “pushing every available aspect space wise into an overly massive structure, “asking for everything you can”. The results of… Read more »

Cary
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Cary

Here is an idea Weho City Council. Quit building on Sunset Blvd. Build on Santa Monica Blvd instead. Traffic is already bad and we don’t need more people congesting up the Sunset Strip.

cody warlock
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cody warlock

traffic is just as bad on SM bl so that makes no sense

Eric Jon Schmidt
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I say put a five year moratorium on new construction in West Hollywood, except for affordable housing. Let’s let the dust settle to see what we have created and what the traffic impact is. Santa Monica and Sunset Blvds. may be a way for people to get from point A to B but, to the Residents of West Hollywood they are our “Main” streets. There needs to be more consideration of the Quality of life of Residents and the safety of Pedestrians. I wish the City would create more green space and less construction. The lot on SMB and Crescent… Read more »

Mike mccoy
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Mike mccoy

Kudos to the judge . I agree with his or her decision

Manny
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Manny

Damned if you do, damned if you don’t. The City is protecting the idea of long term housing. This minor and expected decision means nothing in regards to the validity of this suit. Some commentators here should take a breath and not be so defeatist so soon.

Legalese
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Legalese

Thanks for the legal opinion.

Alan Strasburg
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Alan Strasburg

Yeah, let it go. This David v. Goliath fight will cost the city millions in legal fees. Short-term rentals, or luxury long-term, neither is the type of housing we need to be building. Better to focus on addressing the real affordability issue. We’re stuck with buildings that look like battleships, or worse–prisons. This is yet another manifestation of development run amok by a policy-making apparatus that is still playing in the minor leagues in a world of of mega-developers hitting grand slams in World Series play. The party to win will be the one with the most money to pay… Read more »

Eric Jon Schmidt
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The Judge is correct in her interpretation of the laws and agreements. There were no laws in WEHO about short term rentals in 2005. There should have been, but the City waited too long to address the issue. In her decision to deny the preliminary injunction, Judge Bachner said the city was unable to demonstrate that BPREP 8500 had breached the terms of a development agreement that the city entered into in 2005 with Sunset Millennium Associates LLC, the then-owner of the property… The agreement also required that the owner of the property adhere to “current land use regulations.” At… Read more »

Craig
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Craig

It sounds like they’re abiding by the 2005 agreement. LET IT GO WEHO! You’re going to cost us fighting this silliness!

Constituent
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Constituent

What’s another $650k of someone else’s money to pursue a malicious, unethical, punitive, morally bankrupt litigation against a corporate citizen who was following the law to the exact letter that you, WeHo, authored? Weho does this all the time, they are the same type of insidious litigation bullies that Donald Trump practiced in private business for years. “I may be legally wrong but I will outspend you so that you lose” When you compare it to the examples set at the top, namely a $500k settlement that the City paid to cover it’s “hypersexual” ex-mayor AND CURRENT COUNCIL MEMBER who… Read more »