Privately Negotiated Pact May Bring End to Hotel Controversy

When negotiators added the finishing touches to a proposed settlement last month--designed to end a long and bitter dispute between the city of West Hollywood and hotelier Severyn Ashkenazy--officials on both sides breathed a sigh of relief.

Since its incorporation in 1984, West Hollywood has opposed Ashkenazy’s attempts to convert several apartment buildings into small luxury hotels, claiming the conversions are illegal. Often a lawsuit seemed likely from each camp.

Now the City Council must decide whether to approve the settlement, which came as a surprise to all but a few city officials and company representatives involved in the negotiations. As the council prepares for a public hearing on the matter Monday, it appears that the long-simmering dispute may be about to end in a way that few anticipated.

After more than a year of private talks, Ashkenazy Enterprises Inc. has agreed to pay West Hollywood $4.9 million over the next 20 years if the city will drop its challenge to the hotel conversions.

Along with three dozen remaining tenants who stand to be evicted from their apartments, the proposal has enraged others who see it as a surrender to the notion of allowing hotels in residential neighborhoods.

Fervent Opponents

“It’s a complete sellout as far as I’m concerned,” said attorney Ira Stein, an outspoken opponent of the proposal. “Just because some people at City Hall may be in favor of the city’s whoring for money, it doesn’t give them the right to override zoning and create public nuisances.”

City officials involved in the negotiations have sought to pitch the settlement as the best possible deal for tenants, those living near the would-be hotels and the city as a whole.

“The alternative is to proceed with costly, time-consuming litigation (against Ashkenazy) and there’s no guarantee that we would prevail,” City Manager Paul Brotzman said. “We could end up living with a much worse situation.”

A spokesman for the financially troubled Ashkenazy organization expressed a similar view.

“Any litigation is likely to be highly expensive. We think it’s a good thing not to do,” said Gary Nielsen, the company’s executive vice president.

Under the agreement, the city would sanction full-fledged hotel status for Le Parc, 733 West Knoll Drive; Le Dufy, 1000 Westmount Drive; Le Reve, 8822 Cynthia St., and Valadon, 900 Hammond St., all of which are in residential areas.

Payment Schedule Set

The money would be paid in 19 annual installments of $250,000, and a final $180,000 payment. It would include the more than $1.2 million that the company, which also operates the Bel Age and Mondrian hotels in West Hollywood, owes the city in unpaid hotel occupancy taxes.

City officials have said that most of the $4.9 million would be earmarked to provide affordable housing.

Under the agreement, the company would not use the Ellis Act to evict remaining tenants in three of the properties until at least 1991. It would also provide hefty relocation fees if tenants are later forced to leave. There have been no residential tenants at Le Parc for several years.

Meanwhile, about a dozen tenants of a fifth property, 949 Larrabee St., would be allowed to remain permanently in their apartments under the agreement. The building would operate as a hotel exclusively for guests who stay for at least 30 days.

Provisions for Bel Age

The pact also grants Ashkenazy permission to go ahead with a long-stalled effort to convert the unfinished ninth floor of his swank Bel Age Hotel to luxury suites and to construct two “presidential suites” in the hotel’s rooftop penthouse.

The ninth floor has been used as storage space since the 198-suite hotel opened shortly before West Hollywood became a city. The county accused Ashkenazy of exceeding the height limit of the original plan and prevented him from developing the floor for occupancy.

As part of the settlement, the city would agree to “expeditiously” process and consider a conditional use permit to accommodate the work at the Bel Age. Should the permit not be approved or the company find any of the conditions unacceptable, Ashkenazy could cancel the settlement.

“He’s essentially getting away with murder,” said E. Bud Kops, who manages an apartment building near one of Ashkenazy’s properties. “The Bel Age thing is ridiculous. Why should the city give someone who should have never been allowed to build something in the first place, that owes (the city) taxes, and hasn’t been a good neighbor preferential treatment? It doesn’t make sense.”

If approved, the settlement would bring to more than 1,000 the number of hotel units operated by Ashkenazy in West Hollywood, in addition to several other hotels of his--including L’Ermitage in Beverly Hills, often listed among the 10 best hotels in the United States.

Revenues From Hotels

City officials say that the company’s West Hollywood hotels add $2 million a year to the city’s coffers through occupancy, sales and property taxes. They estimate that amount could increase to between $3 million and $6 million a year by the end of the century.

With L’Ermitage already established as the flagship of his luxury hotel group, Ashkenazy turned his attention to then-unincorporated West Hollywood in the mid-1970s as a prime spot for expansion.

The five properties included in the conversion plan were built between 1974 and 1978 with approval of the county as so-called mixed-use buildings: each containing a specified number of units designated for hotel use, with other units designated as apartments.

The company contends that the county’s approval simply prohibited additional apartment units due to parking deficiencies and did not preclude conversion of additional hotel units. The city, however, claims the conversions constitute an “illegal nonconforming use.”

Zoning Allegations

Some of Ashkenazy’s critics say that the company was attracted to West Hollywood because of the area’s loose zoning. The properties, they insist, were built to take advantage of more lenient parking requirements for hotels than for apartments.

Critics point to the Valadon as an example.

Until 1983, Le Valadon--the “Le” was recently dropped from the name--was considered by many neighbors and tenants as an apartment house like other complexes in the densely populated area south of the Sunset Strip.

The building did not seem to operate as a hotel, a longtime resident said. There was no front desk, no maid or message service--none of the usual hotel amenities.

According to the building permit, the building could be operated as an apartment or a hotel. When Ashkenazy built the complex, he was allowed a maximum of 35 apartment units. He built another 110 rooms as hotel rooms. Because they did not have kitchen stoves, they could be classified as hotel accommodations.

The company used similar situations to its advantage in some of its other properties, including Le Dufy and Le Reve.

Resident’s Views

“When I moved here you could get a room with a stove that was technically an apartment unit or another kind of room that had a wine rack where the stove went that was considered a hotel unit, and then rent your own stove,” said real estate broker Scott Keesling, who moved to the Valadon 10 years ago.

After nearly four years of reconstruction--and the sale of the building to a couple of Chicago-area savings and loans after Ashkenazy Enterprise filed for bankruptcy in 1986--the building is scheduled to open as a full-fledged hotel, perhaps as early as Labor Day, Nielsen said.

The Ashkenazy organization still manages the building, along with the 949 Larrabee property, which it was also forced to sell as part of the company’s reorganization.

Keesling and other tenants who have remained in the building since reconstruction began in 1983 are angry that they only recently learned of the city’s private negotiation with the company.

“We’ve lived through nightmarish conditions over the last four years. I mean, construction workers just showed up one day, no notice given. None of us knew what was happening,” Keesling said.

‘Stab Us in the Back’

“We’ve asked the city for help in alleviating the inconveniences for years now to no avail, and we relied all along on the city’s representations that we could remain after reconstruction (as tenants) with full rights under rent control. Now we find out they’ve been negotiating something that would in essence stab us in the back if it means we’ll be evicted.”

Others are upset that city officials would consider legitimizing what they insist amounts to “commercial intrusion” into their residential neighborhoods.

“One of the primary objectives of the city’s (recently approved) general plan was to make sure that residential areas be protected,” community activist Joyce Hundal said. “Letting hotels come in (to the neighborhoods) doesn’t show much regard for that strategy.”

She and others have complained that the so-called “apartment hotels” have created an intolerable source of noise and traffic congestion in once-quiet residential neighborhoods.

“There are deliveries at all hours of the day and night, wild parties with (hotel) guests screaming and yelling and sometimes throwing things. It’s impossible to sleep a lot of times,” said Peter Metone, a paralegal whose third-floor apartment at 700 West Knoll is directly across the street from Le Parc.

“I know hotels mean revenue for the city, but to allow them to swallow up apartment houses is an outrage,” he said.

Liquor License Battles

Meanwhile, Stein and other community activists have fought successfully to prevent Le Dufy from acquiring a liquor license after it opened as a hotel in 1983. Two weeks ago they claimed a second victory after an administrative law judge turned down a liquor license request for the Valadon.

“Just having the hotels in the neighborhoods is intrusive enough. Their being granted liquor licenses will only make worse an already bad situation, which is why we will continue to oppose the applications every chance we get,” Stein said.

City officials have attempted to emphasize what they believe are some of the proposal’s more positive aspects.

“It provides protection to tenants, who, without the settlement, could be subject to evictions under the Ellis Act immediately,” Brotzman said. “It allows us to mitigate the impact on the neighborhoods through the use of CUPs (conditional use permits) for each of the projects, and it provides us a source of sorely needed funds to provide affordable housing.

Need for Control

“The other thing you have to consider is that whether or not these become full-fledged hotels, we’re already stuck with them as buildings with mixed apartment and hotel uses. So in order to best address the concerns of residents living near them, we need some mechanism to give us greater control as to how they are operated.”