W. Hollywood Rejects Plan for 4 Hotel Conversions

Following widespread public opposition, the West Hollywood City Council on Tuesday rejected a plan for settling a long, bitter dispute between the city and hotelier Severyn Ashkenazy.

By a unanimous vote, the five-member council turned down a proposal that would have allowed financially troubled Ashkenazy Enterprises Inc. to convert four apartment buildings to hotels in exchange for a promise to pay the city $4.9 million over the next 20 years.

“We’re elated,” said Ira Stein, a vocal opponent of the proposal. “It says to me that (the council) has taken notice of the people out there who aren’t interested in selling out the community for a few million dollars.”

The proposal, hammered out during 18 months of private talks between city officials and Ashkenazy’s representatives, had been opposed by three dozen tenants who stand to be evicted from their apartments and others who accused the city of surrendering by allowing hotels in residential areas.

On Tuesday a dozen people demonstrated outside the West Hollywood Park Auditorium, where the council meets, holding up signs that read: “Save Our Neighborhoods” and “No Evictions, No Hotels.”

After listening to more than 70 residents speak against the plan during two public hearings, the council brushed aside the recommendation of the city staff. The council decided that the settlement did not sufficiently protect the interests of tenants and people living near the proposed hotels and that the financial terms of the settlement were inadequate.

Back to Drawing Board

The council directed the staff to return to the bargaining table to come up with a better package.

City officials had pitched the settlement as the best possible deal for tenants, residents living near the buildings and for the city. They said the proposal was preferable to risking a long, costly legal battle.

“In the end, we had many of the same concerns as those we listened to who opposed the settlement,” City Councilman Steve Schulte said. “We didn’t trust it.”

A spokesman for Ashkenazy who attended the lengthy session expressed disappointment with the decision but declined to comment when asked whether the company is willing to resume negotiations.

“I think the council’s decision speaks for itself. That’s about all I want to say right now,” Ashkenazy general counsel Stephen Weaver said.

Since it became a city in 1984, West Hollywood has opposed Ashkenazy’s attempts to convert the apartment buildings, located in residential neighborhoods, into small luxury hotels. The city has claimed the conversions would be illegal.

The agreement would have sanctioned hotel status for Le Parc, 733 W. Knoll Drive; Le Dufy, 1000 Westmount Drive; Le Reve, 8822 Cynthia St., and Valadon, 900 Hammond St. Le Parc has operated as a hotel since 1979, when the last of its residential tenants moved out, company officials said.

The $4.9 million would have been paid in 19 annual installments of $250,000 and a final payment of $180,000, with most of the money earmarked for affordable housing. It would have included the more than $1.2 million that the company--which also operates the Bel Age and Mondrian hotels in West Hollywood--is said to owe the city in unpaid hotel occupancy taxes and penalties.

As part of the deal, Ashkenazy Enterprises agreed not to use the Ellis Act to evict remaining tenants in three of the properties until 1991. The company would have provided hefty relocation fees for tenants who were then forced to leave. But it rejected the idea of allowing tenants to stay on indefinitely in any of the four hotels once the conversions take place.

About a dozen tenants of a fifth property, at 949 Larrabee St., would have been allowed to remain in their apartments indefinitely under the agreement, which would have allowed the building to operate as a hotel for guests who stay for at least 30 days.

The pact would have also allowed Ashkenazy 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, which governed the area at the time, accused Ashkenazy of exceeding the height limit of the original plan and prevented him from developing the floor for occupancy.

Additional Terms

As part of the settlement, the city was to “expeditiously” process and consider a conditional-use permit to accommodate the work at the Bel Age.The company could have canceled the settlement if the permit were not approved or if the company found any of its conditions unacceptable.

Had it been approved, the settlement would have brought to more than 1,000 the number of hotel units operated by Ashkenazy in West Hollywood, in addition to his several other hotels elsewhere, including L’Ermitage in Beverly Hills, often listed among the best hotels in the United States.

City officials say that Ashkenazy’s West Hollywood hotels add $2 million a year to the city’s coffers through occupancy, sales and property taxes, and estimate that the 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.

Ashkenazy Enterprises filed for bankruptcy in 1986. Since then it has sold the Valadon and 949 Larrabee buildings, although the company continues to manage them.

‘Mixed-Use’ Buildings

The five properties that had been proposed as part of the conversion plan were built between 1974 and 1978, with county approval, as so-called mixed-use buildings: Each contained 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 apartments into hotel units. The city, however, says the conversions constitute an “illegal nonconforming use.”

City Atty. Michael Jenkins, who, along with City Manager Paul Brotzman, received a cool reception from tenants and neighbors at a forum on the issue last week, sought to put the best face on the city’s negotiating efforts Tuesday.

“We’ve been as forthcoming as we can be, but it should be realized (by those opposed to the plan) that it’s impossible to respond in certain ways when you’re involved in matters dealing with potential litigation,” he said.

Jenkins said that early on the city attempted to work out a deal that would have turned over one of the apartment buildings to the city for use as housing for the elderly, only to find that “all of the properties were heavily encumbered by debt.”

“We quickly found that we couldn’t operate (any of the buildings) in the black without a generous subsidy from the city’s general fund, because of the encumbrances,” he said. “Certain things we would have liked to have negotiated for were simply not feasible.”