By Jorge Casuso

December 13, 2019 -- The Shore Hotel in Santa Monica must pay an additional $2.3 million in fees and set aside 72 moderately priced rooms in order to continue operating after opening the luxury hotel without the proper permit.

In a 7 to 5 vote, the California Coastal Commission on Thursday granted the after-the-fact approval to demolish 87 low-cost overnight accommodations in two separate motels and replace them with a 164-room luxury boutique hotel near the Pier.

The vote comes some seven months after the Commission unanimously voted to fine the hotel's owners, Sunshine Enterprises, a record $15.5 million for what it called a "bait-and-switch" ("Santa Monica Hotel Hit with Biggest Fine in Coastal Commission History," May 8, 2019).

While the original permit to replace and expand the moderately priced Travelodge and Pacific Sands Motel said the rooms would cost $164 per night, the new 164-room hotel near the Pier currently charges between $300 to $800 per night, Commission staff said.

Before Thursday's meeting, Sunshine, which is owned by the Farzam family, offered to pay an in-lieu fee of nearly $8.3 million and build a 14-bed low-cost hostel on site with nightly rates of no more than $52 per bed.

It also proposed an overnight youth lodging program offering 12 free overnight stays a year to "underserved youth groups" and 14 rooms for $127 per night to public service employees until the hostel opens.

But after hearing lengthy testimony from angry opponents, the Commission rejected the offer.

It countered with its own proposal that the hotel replace on site the 72 affordable rooms that were demolished in 2011 to pave the way for the development.

After expressing concerns the proposal was not economically feasible, the hotel's owner agreed with the compromise, which also included retaining the 14-room hostel.

The final conditions were narrowly approved by the split Commission and left some environmentalists dissatisfied, saying it doesn't send a strong enough message to developers.

The hotel workers union, however, called the Commission's decision "an historic result."

“We are very happy with the decision made today to hold bad actors who try to defy the people of California accountable," said Anna Evans-Goldstein, research analyst with UNITE HERE Local 11.

Local 11, which has been trying to unionize the hotel, was part of a coalition of politicians and environmentalists who challenged the proposed permit.

They included Congressmen Ted Lieu and Alan Lowenthal, State Senator Ben Allen, Assemblymember Richard Bloom, the Sierra Club and Surfrider Foundation.

On Tuesday, the Santa Monica City Council unanimously voted to express its concern about the loss of affordable lodgings.

"We hope that our original intent for the on-site replacement of affordable coastal accommodations will at least be taken under consideration on Thursday by the Coastal Commission,” Mayor Kevin McKeown said.