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Santa Monica’s Shore Hotel Controversy Returns to Coastal Commission

Santa Monica Real Estate Company, Roque and Mark

Pacific Park, Santa Monica Pier

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

Convention and Visitors Bureau Santa Monica

By Jonathan Friedman
Associate Editor

February 8, 2016 -- A battle over Santa Monica hotel pricing and the extent of the people’s right to low-cost beachside accommodations (and if it’s even possible) continues this week at a session of the California Coastal Commission.

The powerful state agency’s voting panel is expected on Friday during its meeting in Morro Bay to finalize a decision from September that the Shore Hotel was undeserving of an after-the-fact permit.

At that September meeting, the commissioners said hotel visits were too expensive, violating a key component of the Coastal Act (the document guiding Coastal Commission decisions) that lower-cost visitor accommodations be protected.

“This is not remotely in compliance [with the section of the Coastal Act regarding low-cost accommodations],” Commissioner Erik Howell said.

The Farzam family, which owns the hotel, has filed two lawsuits against the Coastal Commission.

One suit alleged the family did not have to file the permit application, believing it was already approved for a permit, and another was against the commission’s September decision.

This situation’s “long tortured history,” as Coastal Commission deputy director Jack Ainsworth called it at the September meeting, goes back to 2009.

That year the commission approved coastal development permits to demolish two existing hotels on the property and replace them with a new one. The City of Santa Monica later issued municipal permits, and construction began in 2011.

But the Coastal Commission says the hotel that was built is not the one that was approved because it considers it high-priced and contains a restaurant and other amenities, while it was supposed to be moderately priced with “no frills.”

In the Coastal Commission’s opinion, the coastal development permits were never acted on and expired in 2011, and what was built was done without permits. The commission sent a violation notice to the hotel in 2014.

The Farzam family says the approved hotel was built and the room prices only went up higher than planned because of market conditions. The family sued the commission in 2014 about having to ask for an after-the-fact permit, but still filed the permit request.

Coastal staff recommended the commission approve an after-the-fact permit, but with conditions. Had the commission accepted this recommendation, it could have potentially ended the saga.

But there was another problem that the Farzam family objected to several of the conditions, including regulation of parking rates and that the family pay nearly $3 million “to mitigate” for the loss of low-cost visitor accommodations due to the demolition of the previous hotels.

So even if the commission had agreed with staff and approved the permit with conditions, the family would have probably sued, which it did following the commission’s vote to reject the application.

Whether it was proper for the City to issue municipal permits is another dispute.

The City Council voted in October for Santa Monica staff to look into the matter. City Attorney Marsha Moutrie said an information item would be issued after the review. This has not happened as of February 5.

Although the Shore Hotel dispute will be the most important item on the Coastal Commission agenda this week with a Santa Monica connection, it will be far from the most important item overall.

Two days before the Shore Hotel item will be heard, the commission will hold an open hearing on whether to dismiss its executive director, Charles Lester.

Some people, including County Supervisor Sheila Kuehl, have alleged this is an attempt by a pro-development contingent to take over the powerful state agency.

Several people and agencies have come to the side of Lester, who took the helm in 2011.

The Santa Monica City Council on Tuesday will consider a proposal from Mayor Pro Tem Ted Winterer and Councilmember Sue Himmelrich that the council send a letter to Gov. Jerry Brown supporting Lester.

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