New Plan to Make Hotels of Apartments Being Studied

Hotelier Severyn Ashkenazy and West Hollywood officials have agreed on a revised plan to allow Ashkenazy’s financially troubled company to convert four apartment buildings to hotels.

If approved by the City Council and a federal Bankruptcy Court, the settlement could end a long, bitter dispute between the city and Ashkenazy Enterprises Inc. over whether the hotels should be allowed to operate in residential neighborhoods.

The plan, circulated among city officials last week, provides permanent protection against eviction for three dozen remaining tenants and imposes restrictions aimed at reducing noise and traffic congestion around the hotels.

It leaves intact Ashkenazy’s promise to pay the city $4.9 million over the next 20 years as the price for the city sanctioning the buildings’ use as hotels.

Hearing Scheduled

The City Council insisted on the new provisions after rejecting in September a proposed settlement negotiated over 18 months that met with widespread public opposition.

Now, with a public hearing on the matter scheduled for Dec. 19, city officials are scurrying to head off potential opposition to the latest proposal.

Tonight, officials are to meet separately with tenants and residents who live near the apartment buildings to explain the latest round of negotiations, City Manager Paul Brotzman said. The meeting will be at West Hollywood Park Auditorium.

“The council made its intentions clear about wanting to see the tenants protected and the neighborhoods not to be adversely affected, and that is what the negotiations have sought to achieve,” he said.

However, the new proposal is almost certain to displease residents who have said that any settlement would be a “sellout” and who accused city officials of surrendering to business by allowing hotels in their residential neighborhoods.

“It’s the same old wolf in sheep’s clothing,” said Jeanne Dobrin, a community activist who has been among the plan’s most vocal critics. “What they’ve come up with may look good on paper to some people, but it in essence says the city doesn’t care much for the people who will have to live next to these places.”

30-Day Stay

Since it became a city in 1984, West Hollywood has opposed Ashkenazy’s attempts to convert the apartment buildings into small luxury hotels, claiming the conversions are illegal.

But in recent months, as the often rancorous dispute has dragged on, both sides have indicated a desire to settle to avoid the expense of a lengthy legal battle.

In an interview, Ashkenazy said he is “cautiously optimistic” that the latest proposal will win the council’s approval.

“They’ve pressed us to the wall, and rather than fight, we had rather give in and go on,” he said.

The proposed agreement sanctions 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.

A fifth property, at 949 Larrabee St., would be operated as a hotel exclusively for guests who stay for at least 30 days.

The $4.9 million would be paid in 19 annual installments of $250,000 plus a final payment of $180,000, with most of the money earmarked to provide affordable housing. It includes $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, the pact also allows Ashkenazy permission to go ahead with a long-stalled effort to convert the unfinished ninth floor of the Bel Age 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 and after the county accused Ashkenazy of exceeding the height limit of the hotel’s original plan. The city prevented Ashkenazy from developing the floor for occupancy.

The issue of tenant protection represents a sharp turn-around by Ashkenazy since September, when he angrily accused the City Council of acting in bad faith in rejecting the earlier proposal and threatened to evict tenants “in short order.”

Under the previous proposal, he agreed not to use the Ellis Act to evict remaining tenants until 1991, but rejected the idea of allowing tenants to remain indefinitely in any of the hotels once the conversions took place.

“Now,” said a person familiar with the negotiations, “about the only way he can get rid of tenants in the future is for him to buy them out.”

However, Ashkenazy said that “there are no plans to buy anyone out,” adding, “If that is anyone’s dream, all I can say is, life is made of dreams.”

The other new elements of the pact are aimed at soothing residents’ concerns about noise and traffic congestion.

The pact would prohibit truck deliveries and garbage collection at the hotels between 10 p.m. and 7 a.m. It requires Ashkenazy to prohibit hotel employees from parking on city streets. It also requires that the hotels’ exterior kitchen doors and windows be closed at all times.

It would also restrict any future sale of alcoholic beverages to guests and would place yet-to-be-determined limits on the size of parties and other hotel events that may be scheduled without obtaining special permits.

To assure compliance with the conditions, the company has agreed to post a $25,000 bond with the city to cover any fines and enforcement costs. The company would be required to maintain the $25,000 bond by replenishing any amount drawn down by the city for either purpose.

But some critics of the plan say such provisions aren’t good enough.

“It’s still a sellout,” said attorney Ira Stein. “It ignores the whole issue of the illegality of the hotels and the quality of life in the neighborhoods.”

Stein accused city negotiators of preferring “to take the ($4.9) million and run, rather than listen to the majority of residents who don’t want the city to cave in without a legal challenge.”

City officials say the company’s West Hollywood hotels add $2 million a year to city 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.

The five properties included in the settlement were built in the 1970s under county approval as so-called mixed-use buildings, each with a certain number of units designated for hotel use, and a smaller number of units designated as apartments.

The company contends that the county’s approval simply prohibited additional apartment units because of parking deficiencies and did not preclude conversion of apartments to hotel units. The city has claimed that the conversions are illegal.

Ashkenazy Enterprises filed for bankruptcy in 1986.

Since then, it sold the Valadon to two Illinois savings and loan firms, which were among its creditors, although the company continues to manage it. The company also manages the property at 949 Larrabee St., owned by entrepreneur Nathan Kates.