As I have watched the events surrounding the City of West Hollywood’s court battle over the AKA 8500 Sunset Boulevard buildings unfold recently, I am reminded of that old Kenny Rodgers song “The Gambler.” There are a few lines in particular that seem to apply to the West Hollywood City Council: “every gambler knows that the secret to survivin’ is knowin’ what to throw away and knowin’ what to keep. You’ve got to know when to hold ’em. Know when to fold ’em. Know when to walk away. And know when to run.”
Well, following the latest setback for the city in the courts, it sure seems like it’s a good time to fold’em and walk away – or perhaps even run. The problem here is that the City Council is not playing with its own money.
The city’s hand is weak and its lawsuit expensive.
At a meeting in October of last year, the City Council approved a measure that would increase by $425,000 the $75,000 already allocated to legal action against AKA 8500 Sunset. At a subsequent meeting on May 6 of this year, the City Council agreed to appropriate an additional $150,000 and capped its spending on the lawsuit at $650,000. Truthfully, the city cannot cap the spending at $650,000, because if the city loses, and it appears the city may be headed in that direction, it could be on the hook for 8500 Sunset’s costs and attorney’s fees.
If the City of West Hollywood’s administrators want to be transparent and honest, they need to tell the public that it appears the outside law firm hired by the city has already blown through most or all of the money allocated to date. The law firm will not work for free and will have to come back to the city for more money. Add in the legal fees and costs of experts expended to date by both sides, and I’m fairly certain costs are currently well north of $1 million. Who can honestly say how much more money the city may be on the hook for when this is all concluded?
In addition to the expensive litigation, 8500 Sunset is seeking $40 million in damages. I personally do not see how 8500 Sunset can calculate $40 million in damages, but if the city loses and 8500 Sunset was awarded just half that amount, that’s tens of millions of dollars spent on lawyers and litigation. Those are millions of dollars not being spent on West Hollywood’s growing homeless problem, drug and alcohol treatment programs, or other worthy public services.
So why am I so gloom and doom about the prospect of West Hollywood facing millions of dollars in costs? Well, if we take a look at the court’s orders in two 8500 Sunset v. West Hollywood cases, the findings are very problematic for the city and very encouraging for property owners and supportive of their rights. In a May 17 hearing, the city was denied a request for a preliminary injunction, and the court held that the City did not establish that it was likely to prevail on the merits of its breach of contract claim and stated that the city cannot re-write its own contracts to add in new terms post hoc – meaning that the city cannot change the deal agreed to with the developer(s) when the development agreement was signed.
The court also found that the city’s proposed definition of the term “long-term” as meaning 365 days or longer was contradicted by a city staff report and short term rental ordinance showing that rentals of 31 days were permissible. The Development Agreement prohibited the city from applying any new ordinance, regulation, etc. that would prevent or adversely affect any contractually-permitted use of the property.
Further, in a June 19 order, the judge overseeing the case overruled the city’s demurrer and held that 8500 Sunset’s case should go forward and be heard on the merits:
- 8500 Sunset claims that the city’s tactics violated a federal law preventing government entities from committing civil rights violations; the city’s issuance of the zoning interpretation and proposed zone text amendment potentially deprived 8500 Sunset of a federally-protected right, and the city’s act of singling out 8500 Sunset may have violated the constitutional right to equal protection.
- The city’s attempt to adopt an ordinance that severely restricts a landowner’s use of its property may result in a violation of the constitutional protection against takings.
- 8500 Sunset’s allegations suggest that the city breached its contractual obligation to not pass rules interfering with 8500 Sunset’s use of the property.
- 8500 Sunset claims that the city violated the covenant of good faith and fair dealing inherent in every contract by interfering with 8500 Sunset’s contractual rights.
The City Council is gambling with more than the taxpayer’s money—they are also gambling with the rights of property owners and renters. If they get their way, tenants will no longer have the right to rent on a month-to-month basis in West Hollywood and property owners here will have their hands tied by a law that would be more restrictive than any other city in the state. That’s bad for property values. And for renters who are looking to call West Hollywood home for any period less than a year, our Council will be putting out a big “Not Welcome” sign. This certainly does not seem to fulfill the promises of inclusivity, creativity, and compassion that are among the core values that were to set West Hollywood apart.
West Hollywood is world-renowned as a mecca for actors, writers, producers and directors and the arts world. Why do we want to shut out so many interesting and vibrant individuals who need flexible leases in West Hollywood during pilot season, music and film award times, during film production, and for extended gallery presentations? Having flexible leases allows West Hollywood to be a home away from home for the creative community. I know that our businesses benefit by making our city available for flexible leases and so too do our residents. And what about the need for housing for visiting doctors at Cedars-Sinai? Or families who want to be near Cedars-Sinai while loved ones are here for long-term treatment. In the wake of the recent fires let’s not forget members of our own community and neighboring cities who may need a temporary home while their home is being remodeled or repaired from flood or fire damage. What happened to our compassion?
While I have largely focused on the cost to the city and taxpayers and the issues facing property owners and renters, I hope readers take a moment to think about where all of the money the city is wasting on these legal costs could go. These dollars could be used to address the serious problems plaguing West Hollywood. I put the duel scourge of drug dependency and the associated condition of homelessness at the top of my list. Money not wasted could go towards providing solutions for these issues that would benefit the poor folks who are suffering and the small businesses and residents that are also suffering.
The city’s actions in regards to the 8500 Sunset matter are ill-conceived and contradictory to the very core values on which our cityhood was founded. With so many problematic issues being raised by the court in the 8500 Sunset matter and costs that could soar into the millions perhaps the wisest course is to know that now is the time to “fold ‘em” and settle this case to avoid the loss of significant funds to the city and its residents.