Hotel Operation Near the Grove to Be Shut Down

For travelers seeking a convenient, well-priced Los Angeles hotel, it sounded like a real find.

“Stay in a gated community where residents are pampered with resort-style amenities including a full-service concierge, a world-class health spa, a state-of-the-art fitness center with personal trainers, a pool and sundeck,” one travel website advertised. “These neatly appointed one- and two-bedroom units feature spectacular views and spacious terraces.”

The only problem was that the rooms -- priced from $159, excluding taxes and fees -- were being offered illegally because the complex is zoned for apartment use, according to the city’s Department of Building and Safety.

Under city code, short-term “hotel” stays are not allowed at such properties.

On various websites, the units at 348 S. Hauser Blvd., just a short walk from the Grove shopping center, were advertised under the banners YourStay Wilshire Apartments-Beverly Hills or YourStay Wilshire Apartments-Los Angeles.

“We’re going to be citing the owner and the leasing agents,” David Keim, chief of Building and Safety’s code enforcement bureau, said Friday. “We know [YourStay] is advertising stays of less than 30 days and admitted that to us.” The websites that advertised the hotel rentals will not be cited by the city.

It is unclear whether the city received any hotel taxes, as required from properties leased for short stays.

The controversy underscores how popular this part of town has become. The Grove, with its faux European architecture and ambience, has become a big draw for tourists and locals alike. It is next door to the Farmers Market at 3rd Street and Fairfax Avenue, which has become more upscale while retaining much of its old-Los Angeles charm.

Visitors wanting to be near it will try anything that sounds even remotely like a ritzy hotel.

However, the unusual setup, with hotel rooms next to apartments, puzzled some users of travel websites.

One reviewer described his experience at the property, saying it was “a strange hybrid” of hotel and apartment complex. “Had to stop & ask all over trying to find it.... The ‘office’ is an apartment and the people who worked there seemed confused about the place being a hotel. Had to sign a million papers to check in.... Seemed sort of sketchy to me. The outside was nice.... Inside, there was no attempt at decorating -- nothing on the walls, very empty & plain.... There wasn’t even a box of Kleenex in the bathroom -- c’mon even Motel 6’s have Kleenex, don’t they!! Check out is at 10 a.m. -- never heard of a place where check-out is that early.”

The units advertised as hotel rooms are part of a 610-unit apartment complex known as Palazzo East at Park La Brea, across the street from Pan Pacific Regional Park. Palazzo East is one of three contiguous complexes running along 3rd Street between Fairfax and La Brea avenues. They feature luxury apartment and town-house units that lease for $2,300 to about $6,000 a month.

The three complexes were built by developer Alan Casden and are zoned for apartment use. Over the last few years, Casden has sold all three properties to Apartment Investment & Management Co., a real estate investment trust in Denver that operates nearly 1,500 properties nationwide.

Keim said this was a highly unusual case involving a section of the city’s zoning code that deals with “transient occupancy residential structures.” To operate as a hotel with stays of fewer than 30 days, Keim said, the property would need a conditional use permit. No such permit exists for this property.

A city citation, he said, would require that the hotel use be discontinued, Keim said.

Because of a recently settled legal dispute between Apartment Investment & Management and YourStay, that might be a moot point.

A spokeswoman for the Denver company said that, when it bought Palazzo East for $199 million earlier this year, it quickly began hearing complaints from tenants that “a lot of people were coming in and out,” said Patti Shwayder, a senior vice president.

To avoid such complaints, Shwayder said, the company usually does not allow leases for less than three months at any of its properties, and “we do not under any circumstances want people staying for less than 30 days.”

In May, she said, her company, also known as AIMCO, filed 81 eviction notices in Los Angeles Superior Court for the units being leased by YourStay, which she said by that time owed $600,000 in back rent. According to Shwayder, YourStay countersued and filed for bankruptcy protection. That action put eviction on hold.

Shwayder said that the settlement agreement had not yet been filed with the court and that therefore the company would not reveal it. But she said that the firm had agreed to accept 300,000, half of what it said it was owed, and that YourStay had agreed to vacate 40 units by the end of this month and the rest by the end of October.

Raz Ofer, an executive with YourStay, which recently began using the name WooGo, said in an e-mail Friday that he had an agreement with Casden and later with Apartment Investment & Management that allowed YourStay to lease some units for as little time as one night. Ofer said his company has similar lease arrangements in Times Square and other New York City locations.

A spokeswoman for Casden Properties denied that statement. Undercovertourist, Expedia, Ratestogo and other travel-related websites continue to advertise the YourStay hotel rooms.

A check Friday on Expedia revealed that a one-bedroom suite at the Hauser Boulevard property would be available for two nights in late August starting at $159 a night, excluding taxes and service fees. A two-bedroom unit would go for $209 a night. Some sites advertise parking at the property for $20 a day.

The sites tout the benefits of the property’s location and apartment amenities, noting that many units contain DVD players and washers and dryers. This “haven of peace and security,” one site said, is in the heart of Los Angeles, a short walk from the Grove and the Farmers Market.

What remained unclear Friday was whether YourStay ever paid transient occupancy taxes or parking taxes to the city of Los Angeles.

The city Office of Finance did not respond to a call Friday seeking information about taxes. But in July, Antoinette Christovale, director of finance, said there was no “transient occupancy tax certificate or parking occupancy tax certificate” on file.

The Department of Building and Safety began investigating the complex in June at the request of The Times, which was notified by Westside neighborhood activists that the location was being advertised on travel websites.

The activists said they suspected that the usage violated zoning codes and that the city was missing out on transient occupancy and parking taxes.

Shwayder said the two other Park La Brea properties her company bought from Casden Properties -- the Villas and Palazzo at Park La Brea -- have occupancy rates in the 90%-plus range. Palazzo East, she said, is “still in lease-up.” She said her company was disappointed that 81 units were tied up with the short-term leasing arrangement and unavailable for prospective tenants. In February, average market rents at Palazzo East were about $2,930 a month.

“We were very excited about having this new terrific property in Los Angeles, and the first thing we have to do is legal action,” she said.

Oakwood, a corporate housing leasing agent, also leases units at Palazzo East under agreements that run for six months to one year. Individual tenants might stay for shorter periods but, Shwayder said, “I’m told they’re at least 30 days.”

Times staff writer Roger Vincent contributed to this report.