Opinion: AKA WeHo Deal Will Exacerbate the Housing Crisis

A studio apartment at AKA West Hollywood, for rent for $241 a night for a 31-day minimum stay

Sometimes you manage to close a door on one problem only to find you have opened the door to a host of others. 

At Monday’s City Council meeting, as part of a settlement of a lawsuit by the owner of AKA West Hollywood, the City of West Hollywood will approve a mandate that all rental units in apartment buildings, duplexes and accessory units have leases with a minimum one-year term.

However, while this represents the best way for the city to define what constitutes a “dwelling unit,” the settlement opens up yet another setback for preserving West Hollywood’s housing stock. That’s because Item 3 (a) on the Council’s agenda, which includes the one-year lease mandate, also would allow owners of single-family dwellings and “individual” condo units to lease them out for “extended stay” tenancies of just over 31 days.  (It does not appear that any provision was made to allow condo homeowners associations to prohibit this practice.)

So, rather than rent to long-term tenants, owners of condos and single-family homes will be able to engage in what is essentially a new form of Airbnb, which will take units off the market for people who actually need long-term housing. A City Hall memo says this is “encouraging a diverse housing stock to address the needs of all socioeconomic segments of the community.”

What City Hall is talking about in referring to “all socioeconomic segments of the community” is people who need housing for a couple of months such as folks in the movie and entertainment industry and, supposedly, medical experts visiting Cedar-Sinai Medical Center. The city is essentially defining people who are “visiting” West Hollywood as “residents” in order to maintain a fiction that we are not losing residential housing. So West Hollywood will be allowing a portion of our housing that is in high demand for long-term tenants to be used for people who should be staying in extended stay hotels. This opens up a whole barrel of issues.  As we experienced with Airbnb, loud parties and unruly behavior will disrupt the quality of life for those of us who make West Hollywood our actual home. 

This item arises out of the litigation filed by AKA West Hollywood after it began operating a hotel at the mixed-use project at 8500 Sunset Blvd. The city found out about the situation from the media when AKA was promoting its “extended stay” hotel in the project.

It should be noted that when this project was originally approved, the developer was required to build a number of affordable units on site. As it turned out, few if any of these units were occupied by those in need but were instead being rented out as hotel units. This situation revealed a rather shocking lack of enforcement and supervision over our historic “inclusionary housing” ordinance. It was a blatant flaunting of the city’s policies to create housing and provide affordable housing.

When the city opposed AKA’s rental of the units for extended stays, AKA argued that the city’s definition of a dwelling unit was deficient and that as long as it defined its extended stay guests as “residents,” it could essentially run a hotel on the site. The city’s response was to have the Community Development Department belatedly define “dwelling units” as units meant for long term housing, which the city viewed as being of a year or more. While we can quibble about the year requirement, I think we can agree that a “dwelling unit” is a place where a person intends to live for a substantial period of time over an extended period. It is home — the place from which you register to vote, where your kids go to school and where you pay property taxes, as compared to a place where you are “visiting” for a couple of months. But obviously the common sense understanding of a dwelling unit could be called into question, particularly when millions of dollars in benefits are involved.

What has developed from the costly litigation of the AKA case is a judge’s decision that the city’s definition of a dwelling unit was unclear and open to interpretation. Perhaps the city’s vague language in the General Plan that calls for “development of opportunities and mobility choices” and similar language came back to bite us.

Needless to say, our local hotels are outraged by any attempts to offer non-hotel options to visitors, effectively making them competitors. Expanding “extended stay” opportunities to include residential homes and condos threatens hotel jobs and diminishes income from transient occupancy taxes, (the hotel room tax). So the proposed policy will not only diminish our housing stock in a time the state is experiencing a housing crisis, it also hurts our local economy.

The AKA settlement represents a wealth of concessions that have become increasing common in an era when the City Council has been handing out development rights without meaningful return to the city, which amounts to corporate welfare.

Under this deal, AKA will be able to operate a hotel with 30% of its units, as a long as stays are over five days.  The rest of the units can be rented out for stays of at least 31 days. By my counting, five days is hardly an extended stay. I would also argue that if the developer had been required to include affordable units in the project for long term rentals, common sense would dictate that the other units would be of similar use but at market rate.  I don’t see hotels being forced to include affordable units.

Sadly, rather than concede this as a defeat, city staff is celebrating the settlement as a victory for creating “diverse” and innovative “housing opportunities.” The candy coating of the settlement and the other items contained in this proposed legislation is hard to stomach. They hardly reinforce the city’s commitment to create and maintain residential housing. While the city says this “flexibility” enhances our role in the global economy, the detrimental impacts are obvious.

The Planning Commission rubber stamped the proposal on a six to one vote, with Commissioner John Erickson as the only dissenting voice. While I understand that the city may believe it needs to make painful concessions to settle the AKA litigation, allowing extended stay in single family dwellings and condos is not necessary to resolve the litigation.

Settling the AKA West Hollywood litigation should not be an end in itself. Important land use issues are at stake, and perhaps we should take this matter to the Court of Appeals where we may have a venue that is more open to common sense approaches to land use. We would probably find allies from the League of Cities and other jurisdictions. So perhaps the City Council could opt to simply enact the portion of this item that mandates the one-year leases on rental units in order to protect our stock of rental housing and defer the AKA issue to the Court of Appeals. I see no reason to allow single family dwellings and condos to become “extended stay” hotels. I can’t see why we would undermine our commitment to creating and maintaining housing for real residents. By making concessions to AKA today we may find that we are setting the stage of other abuses in the future.

  1. The unfortunate thing and reality about the situation when it comes to the short term and long term housing which will finally established permanent language 35 years after incorporation, (what happened with previous city councils? (1985-2015), The city of West Hollywood is not willing to contend with reality another inevitable housing and economic crisis and not compelled to mention the facts that the proportion of wealthy residents are increasing compared to the number of fixed income and lower income residents all but decreasing from the city statistics and numbers due to the housing crisis and evictions already a decade in the making! Also? Let’s not ignore and forget the underreported homeless and mental health crisis on the city streets. This short term rental market will see no end in maneuvering or avoidance of affordable housing and elderly disabled or low income housing in favor of luxury housing will be caused by a short term housing boom that diminished any hope for affordable housing to be guaranteed in the future! As you may see many developers pay an in lieu fee just to avoid or get out of a requirement to build Affordable Units, if you want to call these affordable when they are to fair market value and median income individuals who’s earnings are 60,000-90,000 a year. However makes no mention of mandating section 8 rentals or low income rentals, and if there are, they are only 2-10 units out of 200 units. That will never address the housing crisis locally in this city where 40% of residents are on the brink of evictions, being priced out by increasing rents already, giving into circumstances of COVID related job loss or saving depleted only to capitulate and act of attrition to surrender the apartments and the landlords who will be able to jack of the rents to market rate. Anywhere in Weho near Gardner and west to Fairfax rents are 1,800-$3,000 and Sunset to Melrose and Crescent Heights and to LaCienega to Doheny rents are $3,500-5,000 a month!

  2. The need for short term (months) housing is a legitimate need just like long term housing. This can arise from temporary jobs or moving to an area with the intent to buy, but needing some place to live while looking.

    Likewise, owners of property may have reasons for renting for a number of months if they have to relocate temporarily but intend to return to their primary residence.

    I think equating month(s) long leases with AirBNB isn’t a fair one. The need for housing for a number of days is adequately addressed by hotels. The needs of both renters and owners for month(s) long leases isn’t currently addressed within our city.

    Intelligent regulations can protect our rent controlled and occupant owned housing stock while providing for needs for less than full year leases.

  3. AKA is the management company for BPREP Brookfield Properties, the largest real estate investment firm in the world and have very deep pockets via the government of Qatar. Heads above the legal talents of CIM Group, they apparently spotted possible ambiguous or carless documentation regarding the zoning interpretation and “dwelling units” electing to challenge the city.

    Without any personal legal expertise, it does seem logical to go the extra mile with the Court of Appeals as Steve Martin suggests in the last paragraph.

    Careless and or inaccurate documents always come back to haunt issues and then the results become exponential.

  4. Thank you Steve for laying this out in such straightforward and coherent terms. This is an important quality of life issue for those living here currently and important for those who will want to move here in the future.

  5. Haven’t we already spent over a million dollars on our losing case? Why spend another million or more with an appeal that will lose, especially with the current budget problems?

    I assume that the legal team has already advised the city that they would lose again because of the vagueness of the language.

    As a lawyer you should already know the legal advice of ‘when you find yourself in a hole, stop digging’.

    Also, HOA’s don’t need the city’s permission to block short term rentals. They are already allowed to and many including mine already do.

  6. Our housing crisis is wanting to add more.
    We’re already one of the most densely populated cities in the country at 19,000 residents per square mile. Traffic and resources are maxed out. Please stop leveling every single family home to put up more housing.
    Also the AKA provides a necessary service. When taking care of a sick friend I needed a furnished place nearby for a month and that’s what they provided.

    1. Regarding the need for diverse housing stock to satisfy short term needs seems a silly argument. Folks have always been able to find accommodations at least for the last 100 years for hospital stays and everything one could think of. Life was never intended to be an “endless concierge service” and its unrealistic to have the tail wagging the dog.

      1. The reason people have been able to find short term housing for hospital stays and everything else is that most cities do not have these incredibly restrictive rules like WeHo. Someone with the need for short term housing in this area fortunately can easily go right outside the WeHo borders. Unfortunately that does not help when there are situations where a WeHo homeowner might need to leave for some period of time, but can’t afford to have their home sit empty for months. I’m an owner that can foresee in the not too distant future needing to periodically relocate to help share the burden of care for an aging parent living in another state. Fortunately the other city where I may spend parts of my year does not have these types of restrictions. If all cities had WeHo’s current rules, I’d have to pay for two homes full time.

        I do not mind at all that WeHo doesn’t allow AirBNB. I didn’t buy my home to run a hotel. I might, however, have a need to lease it out for periods of time shorter than a full year.

        It does seem this AKA building did a bait and switch on the city, but allowing for less than year long leases is something that would be a benefit to many.

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