Among the property owners who have stubbornly flouted the requirements of the California Coastal Act, few have been as brazen as the developer of the Shore Hotel in Santa Monica. But on Thursday, the Coastal Commission used its muscle and mandate to make that hotel do the right thing.
Sunshine Enterprises LP applied to the Coastal Commission in 2009 for a permit to tear down two lower-cost motels on Ocean Avenue north of the Santa Monica Pier, and to build in their place the Shore Hotel, whose rooms would be low to moderately priced. (In a letter with its application, the company said the projected average daily rate for a room would be $160.)
That promise mattered to the Coastal Commission. The Coastal Act, from which the commission derives its authority, calls not just for the protection of the public’s physical access to the state’s beaches and waterfronts, but also for the preservation of lower-cost accommodations along the coast. The Coastal Commission, noting that the new hotel would replace the 72 affordable rooms lost in the demolition of the motel with other affordable rooms, approved the application. The developer was also required to submit routine compliance documents to get the permit.
But the developer never submitted those documents, and the two-year time period in which to get the permit expired.
That didn’t stop the project, however. Not only did the company go ahead and build without a permit in 2011, it reneged on its own promise to build an affordably priced hotel — and instead built and opened the 164-room boutique Shore Hotel where rooms run roughly from $300 a night to $800 a night.
As if that wasn’t sufficiently and breathtakingly egregious, the developer then sued the Coastal Commission when it refused to issue an after-the-fact permit in 2015. The commission, rightly, had decided against doing so, turning down as inadequate the developer’s offer of $2.9 million in mitigation for the loss of the lower-cost rooms. A Los Angeles County Superior Court judge agreed, calling the developer’s actions a “bait and switch.” The developer lost again on appeal.
In May, the Coastal Commission hit the developer with a $15.58-million fine — the largest administrative penalty in the agency’s history.
In a statement, Sunshine Enterprises said it would pay the fine and that it “regrets the violations took place.”
The developer also applied again for an after-the-fact permit, offering to pay an additional $8.2 million as mitigation for the demolished low-cost rooms — and to build a low-cost 14-room hostel on the grounds of the current hotel complex. Until the hostel was built, the developers would have allowed 14 rooms in the hotel to be booked at a moderate rate by first responders, teachers, military personnel and government employees.
But that wasn’t enough. The fees would not have re-created the 72 low-priced hotel rooms that were lost when the old motels were demolished. Nor do 14 hostel rooms — with shared bedrooms and bathrooms — replace the kind of rooms that were lost. Besides, building new affordable rooms elsewhere along the coast is not the same as restoring them in Santa Monica, whence the developer snatched them.
According to a 2016 Coastal Commission staff study of low-cost visitor accommodations in the California coastal zone, 24,720 economy-priced rooms have been lost since 1989. In the coastal zone of Santa Monica alone, there were an estimated 502 lower-cost overnight accommodations in 1990. By 2018, the number was 297.
The Coastal Act has it right: You shouldn’t have to be rich to take your family on a trip to the coast and stay a few days in a hotel. The loss of low-cost accommodations presents an obvious barrier to access.
And at its meeting Thursday, the Coastal Commission sent a clear signal to this renegade developer that it would not tolerate self-interested bait-and-switch schemes that make the coast less available to Californians. The commission played tough, with some commissioners suggesting they might deny the permit if the developer didn’t restore rooms. In a dramatic turnaround, the developer agreed to make 72 existing rooms in the hotel available for about $180 with reduced parking fees and resort fees waived. The developer said it would also build a 14-room micro hotel — instead of a hostel — with rooms at the same rate. In exchange, the commission dramatically lowered the mitigation fee to $2.3 million.
At a time when access to affordable accommodations is under attack by rapacious developers, the commission did good work protecting that access, and the developer did the right thing too. That’s a victory for all of us.