CITY COUNCIL PUBLIC HEARING

SUBJECT:

PREPARED BY:

JULY 9, 2018

APPEAL OF A PLANNING COMMISSION DECISION TO UPHOLD ZONING INTERPRETATION 17-0001, AND DE NOVO HEARING FOR CITY COUNCIL CONSIDERATION AND DECISION WHETHER MARKET-RATE DWELLING UNITS LOCATED IN THE WEST TOWER OF 8500 SUNSET BOULEVARD, WEST HOLLYWOOD (A) ARE BEING USED AS A "HOTEL", (B) ARE NOT BEING RENTED ON A "LONG-TERM BASIS" AND/OR (C) ARE NOT BEING USED AS APPROVED, IN CONTRAVENTION OF THE ZONING ORDINANCE, THE APPLICABLE DEVELOPMENT AGREEMENT AND PROJECT ENTITLEMENTS.

PLANNING & DEVELOPMENT SERVICE~ DEPARTMENT (John Keho, AICP, Interim Director)~ ~ 5k-, (David DeGrazia, Manager, CHPP) (Rachel Dimond, AICP, Senior Planner) ?-ti

STATEMENT ON THE SUBJECT:

The City Council will consider an appeal of a Planning Commission decision to uphold Zoning Interpretation 17-0001 and de nova hearing for consideration and decision whether market-rate dwelling units located in the west tower of 8500 Sunset Boulevard, West Hollywood (a) are being used as a "hotel", (b) are not being rented on a "long-term basis" and/or (c) are not being used as approved, in contravention of the Zoning Ordinance, the applicable development agreement and project entitlements.

RECOMMENDATION:

Staff has found that the information brought forth in the City Council appeal statement and supporting documentation (provided in Attachment B) do not provide new evidence, document errors or identify unsupported findings that would justify overturning the Planning Commission decision. Staff recommends that the City Council hold a public hearing, consider all pertinent testimony, deny the appeal, affirm the Planning Commission decision, and adopt the following resolution:

1) Draft Resolution No. CC 18-XXXX: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST HOLLYWOOD, (A) DENYING AN APPEAL AND UPHOLDING THE PLANNING COMMISSION'S DECISION TO UPHOLD THE DIRECTOR'S ZONING INTERPRETATION 17-0001, AND (B) FINDING ON A DE NOVO BASIS THAT, IN CONTRAVENTION OF THE ZONING ORDINANCE, THE APPLICABLE DEVELOPMENT AGREEMENT AND PROJECT ENTITLEMENTS, THE MARKET-RATE (NON-AFFORDABLE) DWELLING UNITS LOCATED IN THE WEST TOWER OF 8500 SUNSET BOULEVARD (1) ARE BEING USED AS A "HOTEL", (2) ARE NOT BEING RENTED ON A "LONG-TERM BASIS" AND/OR (3) ARE NOT BEING USED AS APPROVED." (ATTACHMENT A)

AGENDA ITEM 3.8.

BACKGROUND/ ANALYSIS:

Site and Area Conditions

The subject property is located on the south side of Sunset Boulevard, between Alta Loma Road to the west and La Cienega Boulevard to the east. The subject site includes two buildings, an east and west tower, with common subterranean parking. The west tower contains 110 units with 9 unoccupied designated affordable units, with an operational restaurant, and liquor store and boxing gym currently under construction, on the first floor. The east tower contains 80 units with 8 occupied designated affordable units with retail on the ground and subterranean level.

North

South

East

West

Properties to the north are zoned SSP and are developed with commercial uses along Sunset Blvd and residential multi-family uses on Miller Dr.

The properties to the south are zoned SSP and R4B, and include the 152 room Sunset Marquis Hotel. Properties to the east are zoned SSP and include the Jeremy Hotel, with a hotel restaurant and other amenities on the ground floor. Properties to the west are zoned SSP, and include three commercial structures with ground floor retail, restaurant, gym, and office uses on upper levels.

Project History

In 1999, the City entered into a Development Agreement with Sunset Millennium Associates ("SMA") for the development of the West, Middle, and East Parcels (Target

Page 2 of 27

Sites 4-C, 4-D, and 5-C) on Sunset Boulevard (aka Sunset Millennium). The approved plan included the development of one hotel with 371 rooms and 208,000 square feet of office space, with no residential development. The West Parcel (Target Site 5-C) was completed and certified for occupancy under the conditions of the original Development Agreement. The developer was unable to get tenants for the approved project on the west and middle parcels, and requested an amendment to the Development Agreement and associated entitlements to restructure the project.

In 2005, the parties entered into an Amended and Restated Development Agreement, which modified the land uses, design, schedule, and sequencing of the construction of the remaining two parcels (see Exhibit C of Attachment D for Development Agreement and Exhibit D and E of Attachment D for adopting resolutions). Development on the East Parcel, or Site 4-C, included two hotels with a total of 296 rooms, approximately 13,950 square feet of retail and restaurant space, 2,250 square feet of outdoor dining, and 811 parking spaces. The Middle Parcel, or Site 4-D, included two residential buildings with a total of 190 dwelling units to be condominiums, 25,832 square feet of retail/restaurant space, 2,250 square feet of outdoor dining, a tall wall, two double-faced billboards, and 268 parking spaces. The project also included certification of an Environmental Impact Report, which analyzed the impacts of the project on the environment. The project description specifically addressed the 190 "dwelling units", and both the Sunset Specific Plan and the West Hollywood General Plan goals of increasing the city's housing stock.

The Development Agreement includes details on project timing, assignment, amendment and review, default, remedies and termination, and other general provisions. The following are relevant components of the Development Agreement to the subject Interpretation (among many other items not listed here):

• Middle Parcel Description: Owner will construct a pedestrian-oriented development consisting of two nine-story residential condominium buildings with ground floor retail and restaurant ... The two residential buildings would each be 100 feet high plus mechanical equipment and screening and contain a total maximum residential floor area of 266,408 square feet. The Floor Area Ratio (FAR) of the Middle Parcel would be 3.25. The Sunset Specific Plan, which designates an FAR of 2. 75 with a density bonus of 0.5 for residential uses, would permit an FAR of 3.25 on the Middle Parcel.

• The condominium buildings would contain up to a maximum of 190 residential units. No less than ten percent of the market-rate units would be affordable housing on-site and the balance of the Affordable Housing Requirement (as defined in Section 3.3.4 of the Development Agreement) would be provided off­site in accordance with Section 3.3.4 of this Development Agreement. Of the maximum 190 on-site units, four two-bedroom units would be located on the ground floor, oriented toward a private courtyard in the central portion of the Proposed Project Site.

• Section 3.3.6 Mixed Use Component. In recognition of the provisions of the Sunset Specific Plan to encourage residential uses on commercial properties and to increase the City's housing stock, the City approves the combination of commercial and residential uses to be constructed on the Middle Parcel and the

Page 3 of 27

East Parcel. Such development meets the goals of the Sunset Specific Plan.

In 2011, SMA requested minor changes to the project, as well as a request for a force majeure delay. These changes included a reduction in public parking on the east parcel from 435 public parking spaces to 50 public parking spaces after the City conducted a parking supply study and determined there was an underutilized supply of such parking spaces. In lieu of the excess spaces, the owner agreed to provide 1 % increase in transient occupancy tax. Further, the tunnel connecting the middle and east parcels under La Cienega Boulevard was eliminated from the project.

In 2011, the CIM Group ("CIM") purchased the subject property from SMA. CIM requested minor changes to the Development Agreement which were approved by the City Manager in September 2012. The minor changes included revisions to the footprint, placement and height of the buildings, and the provision of parking for the middle parcel on the west parcel. The minor changes also clarified that the condominiums could be used as residential apartments. See Exhibit F of Attachment D for the 2012 approved changes to the Development Agreement and project.

In January 2017, the Middle Parcel received a Certificate of Occupancy. At that time, the Middle Parcel buildings remained vacant as additional entitlements were obtained and tenant improvement construction continued.

At some point in the spring of 2017, CIM sold the residential portion of the project to the current owner, BPREP 8500 Sunset LLC ("BPREP"). On June 28, 2017, through an article in the LA Times (see Exhibit G of Attachment D), the City became aware of that sale and purported operation of the Dwelling Units. The article described the project, now called AKA West Hollywood, as "an extended stay hotel". In response to this article, the City Manager sent a letter on June 30, 2017 to the property owner expressing concern over the described use (Exhibit H of Attachment D)

The operator, Korman Communities (together with BPREP, "appellants"), communicated its intention to rent units in the east tower as unfurnished units with one year leases and market-rate units in the west tower as furnished units on an extended­stay basis (30+ day stays) with various amenities.

On September 21, 2017, the Director issued a notice of his intent to issue a Zoning Interpretation regarding the contemplated use of the market-rate units in the west tower (see Attachment A of Exhibit B of Attachment D). Specifically, such notice reflected his intent to address the interpretations of "dwelling unit" and "hotel" as related to the approved entitlement for the subject property.

WHMC Section 19.03.010 states that "this chapter provides rules for resolving questions about the meaning or applicability of any requirement of this Zoning Ordinance. The rules provided in this chapter are intended to ensure the consistent interpretation and application of the provisions of this Zoning Ordinance and the General Plan." WHMC Section 19.03.020A states that "the Director [the West Hollywood Community Development Director, or designee of the Director] has the responsibility and authority to interpret the requirements of the Zoning Ordinance."

On September 29, 2017, appellants' sent a submission to the City in connection with the impending Zoning Interpretation, which submission purported to set forth appellant's intended extended-stay use of the units ("AKA's Use"), referred to as "the Submission"

Page 4 of 27

in the Zoning Interpretation (Attachment B of Exhibit B of Attachment D).

Pursuant to Chapter 19.03 of the Zoning Ordinance, on November 29, 2017, the Director issued Zoning Interpretation 17-0001 (see Exhibit B of Attachment D). Among other things, the Director made the following findings and determinations in that Interpretation:

1. The zoning for the property is DA Overlay and its approvals are for the development of 190 dwelling units.

2. WHMC section 19.90.020 defines "Dwelling Unit" as "a room or group of internally connected rooms that have sleeping, cooking, eating, and sanitation facilities, but not more than one kitchen, which constitute an independent housekeeping unit, occupied by or intended for one household on a long-term basis."

3. WHMC does not expressly define "long-term basis".

4. The terms "transitional housing", "emergency shelter'' and "corporate housing" provide the most significant context for the meaning of "long-term basis."

5. "Long-term basis" means one (1) year or more.

6. Based upon the Statement of Facts set forth in the appellant's September 29, 2017 submission (the "Submission") to the City in connection with the impending Official Interpretation, which Submission purported to set forth appellant's intended extended-stay use of the units ("AKA's Use"), AKA's Use is not on a "long-term basis" and, therefore, not permitted within the property approvals.

7. WHMC defines "Hotel" as "a facility with guest rooms or suites, provided with or without meals or kitchen facilities, rented to the general public for overnight or other temporary lodging, typically less than 30 days."

8. Based upon the Statement of Facts set forth in the Submission, AKA's Use (a) is "temporary lodging", (b) falls within the definition of "Hotel" and (c) is therefore, not permitted within the property approvals.

9. In response to appellant's contention in the Submission that (a) "there is ample precedent that the WHMC allows occupancy of one to six months within the meaning of dwelling unit", and (b) a February 6, 2017 staff report relating to the Corporate Housing ordinance stated that "several recently constructed buildings offer one-to six month leases for those who need short-term housing on an on­demand basis", the Director found that AKA's Use anticipates using (in a DA Overlay zone) an entire building (as opposed to 1 or 2 units) for prohibited purposes. Staff determined that the short-term housing use referenced in such staff report (not subject to a DA Overlay zone) is limited to one or two units in a building at any given time. The Director further noted that, subject to available resources, the City would moving forward enforce its laws in a manner consistent with the Official Interpretation.

1 O. In response to the appellant's contention in the Submission that "in fact, the City's website makes it entirely clear that 'dwelling units' can be rented on a minimum 31-day basis," the Director found that the City's website is not part of

Page 5 of 27

the WHMC and, therefore, disregarded for purposes of the Official Interpretation.

11. The official interpretations are consistent and compliant with the West Hollywood General Plan, including goals H1-H5.

Appeal of Director's Zoning Interpretation to Planning Commission

WHMC Section 19.03.30E provides that "any interpretation of this Zoning Ordinance by the Director may be appealed to the Planning Commission .... " On December 11, 2017, appellants submitted a timely appeal of the Zoning Interpretation (the "Planning Commission appeal statement"- see Exhibit I of Attachment D). The Planning Commission staff report and all attachments are included in Attachment D.

The subject dwelling units remained unoccupied until sometime in January, 2018, when AKA began operating with its extended-stay format in the west tower.

A snapshot of website information from February 23, 2018 and March 27, 2018 is provided in Exhibit J of the Attachment D, the Planning Commission packet. This snapshot references "luxury hotel", touts that it is the smart way to travel for two weeks or longer and touts a comprehensive list of amenities including a 24-hour resident services desk, a dedicated doorman, in-room therapeutic massages, meticulous housekeeping, same-day valet dry cleaning and laundering service, and management and maintenance on-site. Further, the snapshot shows that units can be rented online. Additional website screenshots are provided in Attachment 0. These screenshots further exemplify how the property is being rented as a hotel, including an affiliated hotel points program. When tenants of these units make a reservation, they are prompted to sign a lease, as provided by the appellants. The lease is provided in Attachment J, and includes a comparison between the subject hotel use and the east tower long term unfurnished annual leases.

On March 15, 2018, the Planning Commission continued the public hearing on these matters to April 19, 2018. On April 19, 2018, the Planning Commission adopted Resolution No. 18-1250 (Attachment C), a resolution (a) denying an appeal and upholding the Director's Zoning Interpretation 17-0001, and (b) finding on a de novo basis that, in contravention of the Zoning Ordinance, the applicable development agreement and project entitlements, the market-rate (non-affordable) dwelling units located in the west tower of 8500 Sunset Boulevard (1) are being used as a "hotel", (2) are not being rented on a "long-term basis" and/or (3) are not being used as approved.

Appeal and Staff Response

On April 30, 2018, the appellant, represented by Eric George, filed a timely appeal of the Planning Commission decision. The City Council appeal statement and supporting documentation are provided in Attachment B.

Appellants submitted an appeal statement on April 30, 2018 that provided four summary arguments and an addendum to that appeal statement with ten specific points (which set forth in greater detail the four summary arguments). The appeal statement and supporting documentation are provided in Attachment B. Staff organized the ten specific points within the four summary arguments to provide a thorough and coordinated response. The following provides the appellants summary arguments, the specific arguments in the appeal addendum, followed by staff's response:

Page 6 of 27

Appeal Summary Argument #1: The following summary argument #1 is followed by Appeal Addendum #1. #2 and #3. then followed by a staff response:

Appeal Summary Argument #1: The Commission erroneously concluded that 8500 Sunset's intended use is impermissible unless its units are rented for one year or longer. This contravenes (i) the governing development agreement; (ii) applicable land use approvals; and (iii) the plain language of the West Hollywood Municipal Code (the "WHMC"; expressly permitting dwelling units rented in excess of 30 days). Appeal Addendum #1: The Commission's decision contravenes the express provisions of that certain Amended and Restated Development Agreement 003-004 approved by the City Council on April 13, 2005 as Ordinance No. 05-708 with respect to 8500 Sunset (the "Development Agreement'J, and the other land use approvals ("Approvals'J including, but not limited to, Resolution No. 05- 3209 (approving among other things the Development Permit) and Minor Amendment No.AMP-12-024 (clarifying that residential apartment use is allowed). As the Assistant City Attorney correctly acknowledged in response to a Commission question at the April 19, 2018 hearing, "the purpose of the development agreement is to provide vesting to the developer and some certainty to the developer so that they can develop over a long period of time." Yet by its actions, the Commission eviscerated 8500 Sunset's legal rights to precisely such vesting and certainty, erroneously concluding that the 8500 Sunset project could not constitute a "dwelling unit" unless each of the units at 8500 Sunset was rented for a period of one year or longer. To the contrary, the Development Agreement and the Approvals (i) specifically contemplate that 8500 Sunset would consist of "dwelling units," and (ii) do not limit the time period for which such dwelling units would need to be rented.

Appeal Addendum #2: The City's present refusal to classify 8500 Sunset as "dwelling units" contravenes not only the Development Agreement and the Approvals, but the plain language of the West Hollywood Municipal Code ("WHMC'J. Given that the Development Agreement did not define "dwelling unit, " the Commission should have determined the meaning of that term by reference to applicable City ordinances in effect as of the date of the Development Agreement. 8500 Sunset explained at length in its April 19, 2018 presentation and its papers filed in anticipation of that hearing why, based on the law in effect as of the time of the Development Agreement, 8500 Sunset consists of "dwelling units. " The City's own website, and admissions against interest contained in its Planning Commission materials, demonstrate that units rented in excess of 30 days are expressly permitted under the WHMC. The City should not now be permitted to take a contrary position, and apply that position retroactively, without formally amending the WHMC in accordance with applicable legal requirements. Nor should the City be permitted to apply its newfound position solely - and therefore discriminatorily - to the 8500 Sunset project, especially given that the Development Agreement specifically restricts the City's ability to retroactively apply laws to 8500 Sunset that were enacted after the date of the Development Agreement. A straightforward application of the WHMC requires a determination that 8500 Sunset consists of "dwelling units. "

Appeal Addendum #3: The Planning Commission's election to ignore the mandates of the Development Agreement, the Approvals, and its own WHMC, and to instead

Page 7 of 27

proceed as if on a blank slate, is reflected throughout questions and statements by several Commissioners:

• Commissioner Aghaei: "Did you guys happen to do a Google search to find out about what the political temperature about corporate housing might be in this city and that possibly might be an issue?" Naturally, no Google search about the current "political temperature" would elicit information relevant to a proper interpretation of the Development Agreement entered into in 2005. (Tellingly, a Google search does reveal the City's stated position on its own website - i.e. that the only temporal limitation on dwelling units is that they must be rented for 31 or more days. One hundred percent of 8500 Sunset's units are rented out for 31 or more days.)

• Commissioner Altschul: "The city's philosophy, which is certainly clear [is that] the city represents a residential philosophy that says we are here to provide housing for families on a permanent basis .... [This) whole thing is a matter of semantics." Semantics - defined as "the meaning of a word, phrase, sentence, or text" - is not to be denigrated but embraced to determine the meaning of the Development Agreement. By contrast, a City's present "philosophy" - after having evolved more than a dozen years since execution of the Development Agreement - is not relevant to discerning the meaning of the Development Agreement, because property owners enter into development agreements precisely to protect themselves against subsequent changes in philosophy or composition of a city's governing bodies. That the City may now wish to impose a one-year minimum tenancy cannot overcome the plain meaning of a development agreement entered into in 2005 and justifiably relied upon by 8500 Sunset.

Although the Commissioners asserted that the intent of the Development Agreement was always to create housing (for example, Commissioner Aghaei stated "[t]his was intended to be housing; this is not housing"; Vice-Chair Jones stated "I would argue that had the City known that the intent was to do this type of housing that they would not have amended the Development Agreement in 2005 to grant you this use"; and Commissioner Hoopingarner stated "[t]his is a city that has been about residential housing since our founding day. Affordable housing. Anyone who knows anything about West Hollywood, knows that is our founding principle'1, this sentiment is inconsistent with the Development Agreement itself, which originally authorized a project with no residential component. Indeed, when amended years later to permit residential units, the Development Agreement (per Recital) identified the "continuation and expansion of existing commercial uses which are the principal economic strengths of the city" as the project's objectives, adding that "Commercial uses such as those proposed stimulate economic growth and, specifically, tax revenue .... " Accordingly, while the Development Agreement permits dwelling units, housing was not identified as its main purpose. Nor did the Commissioners demonstrate that 8500 Sunset does not constitute housing.

The following is the staff response related to the above appeal arguments:

A. Fundamental/Fatal Flaws with Appellants' Summary Argument #1

First, appellants misstate the Planning Commission's "conclusion" (e.g., "erroneously concluding that the 8500 Sunset project could not constitute a

Page B of 27

'dwelling unit' unless each of the units at 8500 Sunset was rented for a period of one year or longer", "The City's present refusal to classify 8500 Sunset as 'dwelling units"', etc.). The Planning Commission, in fact, found that the subject units were approved and are to be used as "dwelling units", but that appellants' are not using the market-rate units in the West Tower as dwelling units.

Additionally, with respect to appellants' argument that the Commission's decision contravenes the express provisions of the Development Agreement and the Approvals (including the Minor Amendment), appellants wholly fail to point out any such express provisions that are being contravened. Such failure is fatal to appellants' appeal as to such issues.

Additionally, although appellants' states their intention to operate in a certain manner, nothing obligates them to do so and there are no consequence for their failure to do so.

Finally, in contravention of the Development Agreement, appellants have never provided the required written notice to the City as to the change in ownership of the project.

B. Dwelling Unit

WHMC Section 19.90.020 defines a "dwelling unit" as "a room or group of internally connected rooms that have sleeping, cooking, eating, and sanitation facilities, but not more than one kitchen, which constitute an independent housekeeping unit, occupied by or intended for one household on a long-term basis." The Code does not expressly define "long-term basis."

Merriam-Webster's dictionary defines:

1) "long-term" as "occurring over or involving a relatively long period of time";

2) "household" as "those who dwell under the same roof and compose a family";

3) "dwell" as "to live as a resident"; and

4) "resident" as "living in a place for some length of time".

C. Development Agreement and Applicable Land Use Approvals

Neither the Development Agreement nor the applicable land use approvals defines "long-term basis". However, the Development Agreement and the applicable project approvals (including the final Environmental Impact Report and the then-existing General Plan) specifically evaluated and approved a project including 190 dwelling units to be condominiums and repeatedly demonstrated that such condominiums were understood and intended to be used to address the City's then-existing and anticipated housing needs/shortage. Needless to say, condominiums are not intended to satisfy "extended-stay" use (i.e., use of as little as 31 days). The inconsistency between the City's intended use and AKA's Use are highlighted by excerpts from the EIR as set forth in Exhibit K of Attachment D, which evidences that the project was intended to provide much needed permanent housing to meet General Plan goals. The project approval

Page 9 of 27

triggered a 20% inclusionary zoning requirement which is evidenced in the Development Agreement, including 10% on site and fees-in-lieu for the other 10%. An inclusionary requirement is only put in place for projects with intended long-term uses. Additionally, it is clear that the approvals clearly anticipated residency of one year or more (including Mitigation Measures G-8 and H-39, which require (among other things) that all high-rise occupants receive annual instruction on procedures to be followed in the event of fire, earthquake, or other emergency ... " in compliance with WHMC Section 14.08.010). It goes without saying that annual instruction would serve no purpose if residents turned over every 60 days. It should also be noted that in 2012, the then owner of the project was so concerned that the "Permitted Uses" of such condominiums did not include rental as residential apartments that such owner requested a Minor Amendment to the Development Agreement to confirm that such use would be permitted.

Development Agreement Section 3.3.4 (in part) states, "Owner agrees to enter into an agreement or agreements substantially similar to the City's "Agreement Imposing Restrictions on Real Property" in the form for condominium units or rental units, as appropriate, to be applicable to the Affordable Units upon completion of such Units."

Affordable housing agreement: Section 10 of the Affordable Housing Agreement provides that "the term of the lease agreement for the Affordable Units must meet the minimum lease term required by the rules and regulations of the owners association for the leasing of all units within the Project." Staff has reviewed all leases for affordable units entered into by applicants to date and such leases are for a minimum of one year. Consequently, staff concludes that the minimum lease term required by the rules and regulations for all units within the project is one year.

CC&Rs: The Declaration of Establishment of Conditions, Covenants and Restrictions for 8500 Sunset (A Mixed-use Condominium Project) (the "CC&Rs") covering the project were recorded on June 8, 2017, on or about the date that appellants acquired the project. Section 3.3.1 of the CC&Rs states that "no Owner shall be permitted to lease such Owner's Unit for transient or hotel purposes". Staff concludes that, when taken together with the terms of the Affordable Housing Agreement, the minimum lease term required by CC&Rs is one year. Section 12.1.1 states that "no Residential Condominium or Association Property shall be occupied or used except for residential purposes by the Owners, their tenants, and social guests, and no trade or business shall be conducted therein .... " Section 12.1.2 states that "no Residential Condominium shall be used or caused to be used directly, or indirectly, for any business, commercial ... purposes .... " Staff concludes that, when taken together with the terms of the Affordable Housing Agreement, appellants are in violation of the terms of the CC&Rs for conducting a trade or business on the project and for using the property for business and commercial purposes. Section 22.2.4 states that "the City shall have the right to enforce the provisions of [the CC&Rs] as a third party beneficiary ..... "

Page 10 of 27

D. WHMC Municipal Code

WHMC Section 19.03.010 states that "this chapter provides rules for resolving questions about the meaning or applicability of any requirement of this Zoning Ordinance. The rules provided in this chapter are intended to ensure the consistent interpretation and application of the provisions of this Zoning Ordinance and the General Plan." WHMC Section 19.03.020A states that "the Director [the West Hollywood Community Development Director, or designee of the Director] has the responsibility and authority to interpret the requirements of the Zoning Ordinance." The Director determined in the Zoning Interpretation that AKA's Use is not on a "long-term basis", which the Zoning Interpretation further defined as 1 year or more.

In rendering the Zoning Interpretation, the Director concluded (among other things) that the definitions for "corporate housing", "emergency shelter" and "transitional housing" in the WHMC provided the most significant context for interpreting the meaning of "long-term basis." "Corporate housing" is defined as" the temporary occupancy of any dwelling unit, by any person: (1) who does not intend to use it as their domicile, or who has not entered into a written rental or lease agreement to occupy the unit for at least one year; and (2) for which the dwelling unit is owned, leased, guaranteed or made available by a business entity for occupancy by the entity's officers, employees, consultants, vendors, or contractors." The actual subject of the definition is wholly irrelevant. However, the definition provides instruction as to the meaning of "long-term basis" (i.e. more than "temporary occupancy"). And the definition makes clear that "temporary occupancy" means a person who does not intend to use the dwelling units as their domicile or who has not entered into a lease to occupy the unit for at least one year. "Emergency shelter" is defined as "a facility that provides immediate and short-term housing ... that is limited to occupancy of six months or less ... ". The actual subject of the definition is wholly irrelevant. However, the definition provides instruction as to the meaning of "long-term basis" (i.e., more than "short-term housing"). And, the definition makes clear that "short-term housing" means up to six months. "Transitional housing" is defined as "temporary rental housing ... that calls for the ... recirculation of the dwelling unit ... which shall be no less than six months." The actual subject of the definition is wholly irrelevant. However, the definition provides instruction as to the meaning of "long-term basis" (i.e., more than "temporary rental housing"). And, the definition makes it clear that "temporary" means six months or more.

The corporate housing ordinance also sets forth the following express findings:

o § 1 - 'There is a documented shortage of housing throughout ... the County of Los Angeles. Residential developments approved in the City of West Hollywood are expected to be used as residential housing, and not used for short-term or temporary occupancy. Corporate housing takes away needed housing from the City's housing stock and that is inconsistent with the City's housing policies of requiring residential

Page 11 of 27

dwelling units to be used as places of domicile. This ordinance is intended to implement these housing policies."

o § 4 - "The proposed text amendments reaffirm and promote the long-term tenancy of dwelling units, as those units were intended and therefore will not have a significant effect on the environment."

o § 9 - "Paragraph (B) of Section 19.36.100 of Chapter 19.36 of Title 19 of the West Hollywood Municipal Code is amended to add the following new subsection 1 O to read as follows:

o § 10 - Use as a Dwelling. The CC&Rs and other management documents shall contain a provision as follows: 'Dwelling units within the property are intended to be used as domiciles for long-term occupancy, as reflected by the definition of 'Dwelling Unit' in Section 19.90.020. As such, no dwelling unit shall be used as corporate housing or short-term vacation rental."

Appellants posit that the meaning of "dwelling units" "should be determined by reference to applicable City ordinances in effect as of the date of the Development Agreement".

1) Terms of Development Agreement

The Development Agreement states the following in Section 3.1.1: Certain Changes Prohibited Without Consent of Owner. "Except as otherwise provided in this Agreement, during the Term, the City shall not, as to the Property and the Project, without the prior written consent of Owner: ... (b) apply to the Property or the Project any new or amended ordinance, resolution, rule, regulation, requirement or official policy that is inconsistent with the Current Land Use Regulations or the Project Approvals, so as to ... prevent or adversely affect the operation of the Project, in accordance with the Current Land Use Regulations or the Project Approvals .... For the purposes of this Section ''prevent or adversely affect the operation of the Project shall mean changes which fundamentally affect the ability of a Permitted Use to operate within the Project (e.g. prohibit a Permitted Use, change parking standards for a Permitted Use, etc.)." Staff contends that the Zoning Interpretation and subsequent Planning Commission determination (a) are not "inconsistent with the Current Land Use Regulations or the Project Approvals" and/or (b) do not "fundamentally affect the ability of a Permitted Use to operate within the Project (eg., prohibit a Permitted Use ... )". In fact, the definitions used by the Director in reaching the Zoning Interpretation simply provide insight into the meaning of "long-term". Therefore, there is no violation of the Development Agreement and the changed definitions may be used for purposes of interpreting "long-term."

2) Assuming 2005 Interpretation

If 2005 is "the date of the Development Agreement" and is more properly used to determine the meaning of "long-term", staff concludes that, based upon the

Page 12 of 27

Merriam-Webster dictionary definitions set forth above and the analysis set forth above under the heading Development Agreement and Applicable Land Use Approvals, the Director and the Planning Commission could have rendered the same decision that "long-term" means "one year or more".

3) Assuming 2012 Interpretation

If 2012 is "the date of the Development Agreement" and is more properly used to determine the meaning of "long-term", staff notes that in 2011/2012 the then owner of the project was so concerned that the "Permitted Uses" of such condominiums did not include rental as residential apartments that such owner requested a Minor Amendment to the Development Agreement. In 2012, use of the condominiums as residential apartment rentals was approved. Consequently, the City's understanding of "long-term" as of 2012 could clearly be relevant.

The findings for the 2012 Minor Amendment were as follows: 1. The minor amendment will not result in any new significant impacts to the

neighborhood since all conditions of approval and mitigation measures required for the Project remain unchanged and in full effect. The land uses proposed for the Middle Parcel and the East Parcel are unchanged, and there has been no increase in density or intensity to the project as a whole, nor any increase to the size and height of the buildings. Further, there has been no material change in architecture only minor enhancements to the design and the project will continue to meet all Zoning Ordinance requirements and has been designed to accommodate the standards of development required by the W.H.M.C.;

2. The minor amendment will not result in any new significant environmental impacts since all conditions of approval and mitigation measures required for the Project remain unchanged and in full effect and the amendment does not result in any physical activity that was not otherwise considered as a part of the Environmental Impact Report adopted in April 2005. The proposed minor amendment does not create any new or increased environmental impacts warranting the preparation of a subsequent or supplemental EIR under the California Environmental Quality Act ("CEQA") or the CEQA Guidelines (Section 15162 or Section 15163). The Long Range and Mobility Planning Division reviewed the minor changes based on ITE (Institute of Transportation Engineers) Trip Generation analysis and it is not anticipated to produce new significant traffic impacts compared to what is currently entitled. Using the ITE 8th Edition rates, the minor changes to the project will result in 381 less net daily trips, with 133 less net AM peak period trips and 76 less net PM peak period trips. Using the Sunset Specific Plan Environmental Impact Report trip generation analysis rates, the minor changes to the project will result in 398 less net daily trips, with 150 less net AM peak period trips and zero net new PM peak period trips. None of the proposed changes warrant the preparation of a subsequent or supplemental EIR with regard to other impact

Page 13 of 27

categories. No increases in density or intensity of use are proposed, and no increases in height or size are proposed. Proposed facade articulation and architectural features will differ from the approved project, but will not involve significant differences or changes that could result in significant aesthetic impacts. Retail and restaurant uses were considered along Sunset Boulevard in the Agreement. Thus the request to permit retail and restaurant uses throughout the ground floor facing Sunset Boulevard and on the lobby level, located one level below Sunset Boulevard, will not result in any impact warranting a supplemental EIR. The parking shortfall on the East Parcel will be remedied with approximately 100 spaces located in the Middle Parcel. Because the project is a unified development, locating some of the parking required for the East Parcel on the Middle Parcel will not result in any significant impacts related to parking supply. Therefore, the minor amendment will not endanger, jeopardize, or otherwise constitute a menace to the public convenience, health, interest, safety, or general welfare of persons residing or working in the neighborhood of the proposed project as the project will continue to meet all Zoning Ordinance requirements and has been designed to accommodate the standards of development required by the W.H.M.C.;

3. The amendment will not cause a change to the approved uses on the site. The land uses proposed for the Middle Parcel (residential and commercial uses) and the East Parcel (hotel and commercial uses) remain unchanged, and there has been no increase in density or intensity to the project as a whole, nor any increase to the size and height of the buildings. In the Middle Parcel, the overall permitted floor area (292,240 square feet) and FAR (3.25) of the project will not change, but the residential floor area will decrease from 266,408 to approximately 238,070 square feet and the. retail component of the project will increase from 25,832 square feet to approximately 54,170 square feet. The original approval contemplated that the retail square forage would include 12,916 square feet of restaurant uses. As part of the reallocation of square footage on the parcel, as currently contemplated, restaurant uses will be eliminated. The number of residential units remains unchanged at 190 units. In the East Parcel, the overall permitted floor area (235,000 square feet) and FAR (2.71) of the project will not change. 4,613 square feet of non-hotel-related restaurant use and 2,212 square feet of non-hotel­related retail use have been eliminated from the project. (There is now no non-hotel-related restaurant use and only approximately 2,856 square feet of non-hotel-related retail use). 3,488 square feet of hotel-related retail has also been eliminated. Hotel-related restaurant uses have been increased from 4,613 square feet to approximately 11,074 square feet. The total retail component including restaurant uses will not exceed the overall permitted floor area of 13,950 square feet. Also, the size of the hotel­ancillary meeting space has increased from 2,250 to approximately 7,013 square feet. The number of hotel rooms remains unchanged and will not exceed 296 rooms. Further, there has been no material change in architecture only minor enhancements to the overall architectural

Page 14 of 27

expression of the building exteriors. It is understood that the mix and type of retail tenants could change again in the future, and that changes in the tenant mix, including the inclusion of restaurant uses, are permissible subject to the review and approval of such changes by the City in accordance with Sections 4.2.1 and 4.2.2 of the Development Agreement, it being understood that to qualify as a "minor change" such proposed revised mix of uses shall not exceed the "baseline" trips provided for in the Final EIR for the project, and all other requirements of Section 4.2.1 must be met. The number of residential units remains unchanged at 190 units;

4. The amendment will not cause any change to the basis on which the environmental determination for the Project was made since no new significant impacts are anticipated and no new mitigation measures are required; and

5. The amendment will not cause a change to the basis upon which the review authority made the findings for approval of the Project as it continues to comply with the objectives, policies, general land uses and programs of the West Hollywood General Plan, including the following goals: ED-1 "Maintain a diverse and resilient economy"; ED-2 "Expand the City's tax base to support fiscal stability"; ED-3 "Provide for continued economic growth through development and public improvements"; ED-7 "Enhance the City as a regional, national and international destination for the entertainment, nightlife, dining and retail industries that are key to West Hollywood's fiscal health"; LU- 1 "Maintain an urban form and land use patter that enhances quality of life and meets the community's vision for its future; LU-2 "Maintain a balanced mix and distribution of land uses that encourage strategic development opportunities and mobility choices within the City"; LU-4 "Provide for an urban environment oriented and scaled to the pedestrian"; and LU-5 "Encourage a high level of quality in architecture and site design in all construction and renovation of buildings"; LU-15 "Maintain Sunset Boulevard as a regional, national and international destination for entertainment, and the primary economic engine of the City" amongst others. Furthermore, the public benefits and dedication of land associated with the project remain unchanged.

Staff concludes that, based upon the Merriam-Webster dictionary definitions and such findings, the Director and the Planning Commission could have reached the finding that "long-term" means "one year or more". It is further important to note that appellants did not acquire the project until around June of 2017 and acknowledged on the record at the Planning Commission hearing that they never contacted the City in connection with their due diligence of the property, including whether or not the City considered their intended use to be permitted.

E. Miscellaneous

Contrary to appellant's contention, the City's determination of the meaning of "long-term" is simply a clarification as to a term that is undefined in the Code, not a modification to the law.

Page 15 of 27

WHMC Section 19.36.331(A) (the Short-Term Vacation Rental Ordinance­Ordinance No. 15-598)provides, "No person or entity shall offer or provide a dwelling unit, or any portion thereof, for rent for 30 consecutive calendar days or less to any transient." Appellants argue that this section "defines" short term as "30 consecutive calendar days or less," and, therefore, that long-term must mean 31 days or more. Again, appellants are simply incorrect. The definition above makes no mention whatsoever of "short-term" or "temporary occupancy." Moreover, appellants' argument is inconsistent with other definitions in the Code that do in fact define "temporary" and "short-term" - namely, the definitions for "transitional housing", "emergency shelter'' and "corporate housing" (as discussed above).

The City was addressing a very specific problem of short term rentals when that ordinance was enacted. At the time, the proliferation of Airbnb and similar platforms made the short term rental of units a pressing issue. Neither the City nor staff anticipates every scenario when drafting very specific regulations that deal with a current issue, such as short term rental. As set forth in the City's express findings set forth above relating to the Corporate Housing Ordinance, the City did not intend to permit AKA's use.

Appellants content that the City's own website - to this day - contains a section that is actually captioned - in bold print - "What this law means ... " and that answers its own question by stating that "All rentals must be for 31 days or more." Again, as stated in the Zoning Interpretation, the City's website is not part of the Code and, therefore, is irrelevant in analyzing the Code.

The Short-Term Vacation Rentals Ordinance (Ordinance No. 15-958) was enacted on September 21, 2015 (some seventeen months before the Corporate Housing Ordinance and, therefore, less instructive).

WHMC Section 19.36.331(A) provides, "No person or entity shall offer or provide a dwelling unit, or any portion thereof, for rent for 30 consecutive calendar days or less to any transient."

Appellants argue that this section "defines" short term as "30 consecutive calendar days or less," and, therefore, that long-term must mean 31 days or more. Again, Appellants are simply wrong. The definition above makes no mention whatsoever of "short-term" or "temporary occupancy." Moreover, Appellants' argument is inconsistent with other definitions in the Code that do in fact define "temporary" and "short-term" - namely, the definitions for "transitional housing", "emergency shelter" and "corporate housing" (as discussed above).

Regarding the specific questions and statements by the Planning Commission, Commissioners are allowed to ask questions to understand the intent and knowledge of the appellants, which is what was occurring during this conversation. The concept of a de novo hearing allows for a brand new case to be heard, and the Commission was doing its job in fact finding to make a determination.

Page 16 of 27

As such, the above appeal statements do not provide any new evidence, document errors or identify unsupported findings that would justify overturning the Planning Commission decision.

Appeal Summary Argument #2: The following summary argument #2 is followed by Appeal Addendum #4 & #5, then followed by a staff response:

Summary Argument #2: The Commission's erroneous finding that "this building is being operated as a hotel" contravenes the WHMC's definition of a hotel- i.e. a facility rented "typically less than 30 days." Because 8500 Sunset never rents for fewer than 30 days (but only for 31 or more days), it cannot properly be deemed a hotel. The Commission's erroneous decision upheld a "Zoning Interpretation" purporting to "interpret" the WHMC, despite the fact that no WHMC provision requires a one year term.

Appeal Addendum ##4: The Commission's finding that "this building is being operated as a hotel" is incompatible with the WHMC, section 19.90.020 of which defines a hotel as a facility that is rented "typically less than 30 days. " 8500 Sunset never rents for fewer than 30 days (but only for 31 or more days). 8500 Sunset cannot be said to "typically" do that which it never does.

Appeal Addendum #5: The Commission's Staff Report challenged- as "unsupported" and "inaccurate" - 8500 Sunset's representation that '. 'most hotel guests stay for only a few days ... [whereas] residents [of 8500 Sunset] will have a minimum tenancy of 31 days .... " The Commission erred in doing so. 8500 Sunset's April 11, 2018 submission included the report of Bruce Ba/tin (Exhibit 1 hereto), a leading authority on hotels and the hospitality industry, who has been engaged by numerous municipalities and public agencies (including the City of Los Angeles and the Los Angeles Convention Center). Mr. Ba/tin's detailed and fact specific report supports 8500 Sunset's assertion about the duration of hotel guest stays versus 8500 Sunset's tenancies, stating, for example, that "[t]he minimum stay at 8500 Sunset is in the vicinity of 1, 000% of the medium stay at a hotel." Staff and the Commission ignored entirely the substance of Mr. Ba/tin's submission.

The following is the Staff Response related to the above appeal arguments:

A. Hotel

The definition of hotel in the Zoning Ordinance is "a facility with guest rooms or suites, provided with or without meals or kitchen facilities, rented to the general public for overnight or other temporary lodging, typically less than 30 days. Also may include accessory guest facilities such as swimming pools, tennis courts, indoor athletic facilities, accessory retail uses, meeting facilities, etc."

B. Fundamental Flaws with Appellants' Summary Argument #2

Appellants mistakenly argue that "because 8500 Sunset never rents for fewer than 30 days ... , it cannot properly be deemed a hotel. In so doing, appellants

Page 17 of 27

apparently miss at least 2 fundamental points: (1) "typically less than 30 days" modifies the immediately preceding words "other temporary lodging" and (2) that "typically less than 30 days" is a standard to be applied industry wide as opposed to a specific property. The Zoning Interpretation clearly read, and staff clearly reads, "typically less than 30 days" to address "other temporary lodging" and, therefore, includes uses that otherwise qualify as a hotel when the stay extends beyond 30 days. And, the Zoning Interpretation clearly read, and staff clearly reads, "typically less than 30 days" to apply on an industry wide basis as opposed to one particular property (i.e., not whether that property never rents for less than 30 days) and, therefore, includes uses that otherwise qualify as a hotel when a particular property never rents for less than 30 days. As to both of the foregoing points, if the requirement was to. have a hard and fast limit of 30 days, the definition would have read "less than 30 days" rather than "typically less than 30 days".

Additionally, while appellants maintain that they never rents for fewer than 30 days, it touts/has touted on its website "AKA Monthly Rates - the smart way to travel for two weeks or longer." (See Exhibit J of Attachment D and also Exhibit 0.) It is clear that appellants are targeting/have targeted guests staying two weeks or longer and, needless to say, such statement controverts appellants' claim that guests always stay for more than 30 days.

Finally, although appellant states their intention to operate in a certain manner, nothing obligates them to do so and there are no consequences for their failure to do so.

C. Evidence that the Project is not being run as an apartment building

A chart has been prepared to highlight the differences among (a) the "extended­stay" agreement used in connection with the use at issue, (b) the affordable housing agreement used in connection with the affordable units and (c) the lease agreement used in connection with the apartment units in the East Tower, which chart further evidences AKA's Use as a hotel. The differences between the extended stay agreement and the other leases are as follows:

• The rate provided on the agreement for the extended stay tower is listed as a nightly rate, whereas the standard lease for the East Tower and affordable units are in monthly rate terms.

• The extended stay lease stipulates that the premises may only be used by those listed on the Registration Card.

• The extended stay units are furnished units and the East Tower and affordable units are not.

• The extended stay agreement refers to a "suite type" whereas the East Tower and affordable unit leases refer to units.

• The extended stay agreement does not purport to be subject to the West Hollywood rent stabilization ordinance.

Page 18 of 27

• The extended stay agreement obligates the resident to provide a written request at least 15 days prior to expiration for any extension, whereas the other leases automatically extend.

Additionally, appellants advertise the property as a hotel or consistent with a hotel, as follows:

• The Website highlights "meticulous housekeeping," "a dedicated doorman," "24-Hour Resident Services Desk", "in-suite massages," "same­day valet dry cleaning," "daily maid service at an additional cost" "laundering services" and "luxury Sferra linens"

• Website references the property as a "luxury hotel" and (the website for Korman Communities refers to the property) "Hotel Residence."

• A charitable auction site (screenshot provided in Attachment 0) advertises an auction to win a three night stay at AKA West Hollywood.

• A Bing search of "AKA West Hollywood" references the Website which (based upon the terms/phrases contained therein) identifies the property as a "Hotel in West Hollywood"

• A Google search of "AKA West Hollywood" similarly references other websites which identify the property as a "hotel".

• The property maintains participation in a hotel points program (as shown in screenshots provided in Attachment 0).

D. The Baitlin Report

First, Mr. Baitlin's report states that "our opinions are based upon our knowledge of the subject development and local market as of April of 2017." As of April 2017, appellants did not own the project and the local market was substantially different that it is today. Consequently, staff considers the Baitlin report to be of limited value in assessing the relevant issues.

Additionally, the Baitlin report focused on the contractual nature of the "rental agreement" (already addressed in staff's response to Summary Argument #1), the "typical" size of hotel units vs. the project units the level of services (already addressed in staff's response to Summary Argument #2) and the "typical" hotel stay vs. the "minimum stay" at appellants' project. Significantly, Mr. Baltin has also authored reports related to the Wanda Hotel, wherein certain units which he clearly considered hotel rooms were much larger than the subject units. Specifically, a report to the City of Beverly Hills for the August 23, 2016 Planning Commission hearing on the Wanda Hotel, the project is identified as having 15 suites, or 11 % of the total units, that range from 970 to 1,940 square feet. The units at the subject property, AKA West Hollywood, range from 712 square feet to 1,728 square feet.

Nevertheless, the WHMC does not define hotel in the context of the unit size or length of stay ( other than for overnight or other temporary lodging, typically less than 30 days) and, therefore, the Baitlin report is wholly irrelevant for purposes of the determination of whether AKA's use is as a hotel.

And, in contravention of the Baitlin report, the City received a number of letters from West Hollywood hotel operators in the city requesting the appeal be

Page 19 of 27

overturned because the property is being run as a hotel. These hotel operators could be considered experts of a similar caliber to Mr. Baltin, and all hotel operator letters (included in Attachments D, E, F and G) seem to support that the property is being used as a hotel.

Appeal Summary Argument #3: The following summary argument #3 is followed by Appeal Addendum #6 1 then followed by a staff response:

Summary Argument #3: The Commission's newfound view prohibiting leases longer than 30 days and less than a year cannot be applied fairly and nondiscriminatorily to 8500 Sunset. Other large, City-approved apartment developments advertise monthly leases. Yet, the City appears never to have imposed a one-year minimum term, or undertaken any enforcement action for leases longer than 30 days but less than a year.

Appeal Addendum #6: The Commission was presented with the erroneous statement that no party had ever requested "this type of use before [i.e. the type of multi-month residence 8500 Sunset offers]. " (In addition, a Commissioner asked Ms. Diamond at the April 19, 2018 hearing whether she was aware "of any other apartment buildings that are listed on Preferred Hotels or any other websites that rent on a nightly basis, I mean is there anything comparable to this [8500 Sunset] that you found, I mean in our City?" and she responded: "no. '7 To begin with, 8500 Sunset does not rent on "a nightly basis"; it rents only for terms of 31 or more days. Moreover, as stated at the April 19, 2018 hearing by 8500 Sunset and members of the community, several other large, City-approved residential apartment developments prominently advertise monthly leases (Exhibit 5 hereto). In addition, as identified below, two City-approved hotel projects prominently advertise tenancies for more than 30 days and the waiver of any Occupancy Tax for such tenancies:

• the Chamberlain website contains a bolded "Extended Stay" section, extolling the fact that "Stays 30 days or longer are tax exempt. Taxes will be taken off after the 30th day of the stay"; and

• the Sunset Marquis -whose representative purported to speak at the April 19, 2018 hearing on behalf of the City's hotel industry in opposing 8500 Sunset-advertises ·a "Resident Package" for which "Occupancy tax is waived after 31 consecutive nights and thereafter."

We believe that the City has never undertaken with respect to any of these buildings (or others) any effort to impose a one-year minimum stay or to take code enforcement actions against anyone leasing for periods of more than 30 days but less than a year. Item 3 on 8500 Sunset's April 11, 2018 Public Records Act request (Exhibit 16 hereto) sought 'Ta]ny documents related to any code compliance or other enforcement action taken by the City against persons renting dwelling units for more than 30 but fewer than 365 days." As of this submission, almost three weeks later, not a single responsive document has been produced -presumably because none exists.

Staff Response:

Page 20 of 27

A. City-Wide Application

Appellants argue that "other large, City-approved apartment developments advertise monthly leases. Yet, the City appears never to have imposed a one­year minimum term, or undertaken any enforcement action". The City had not previously understood this to be a pervasive issue. And , to staff's knowledge, no apartment building (in a DA Overlay zone or otherwise) had attempted to use a more than 1 or 2 units, much less all, for such purposes. As part of the Zoning Interpretation, the Director stated his expectation that, subject to available resources, the City shall on a go forward basis enforce its laws in a manner consistent with its official interpretations.

In Exhibit 5 of the appeal documentation in Attachment B, appellants provided a list of buildings that may be out of compliance with the subject Zoning Interpretation, as they are allegedly renting dwelling units for less than a year.

Following the Planning Commission's determination, the City commenced enforcement action. On June 12, 2018, the City sent letters to four entities explaining the Zoning Interpretation and how it applies to the subject property. These letters are attached in Attachment I. This is the first round of letters to be sent out as part of this coordinated enforcement effort.

The following list summarizes the status or city response as to the 14 properties on appellants' list:

Property Address Enforcement Status

1. La Cienega WeHo (375 N La Cienega Blvd) Not in West Hollywood

2. Mediterranean Village WeHo (840 N Larrabee St ) Investigation Pending

3. Avalon West Hollywood: 7300 Santa Monica Blvd Letter sent 6/12/18

4. Domain WeHo 7141-7155 Santa Monica Blvd Letter sent 6/12/18

5. The Crescent at WeHo 1274 N Crescent Heights Blvd Investigation Pending

6. The Huxley 1234 N La Brea Ave Letter sent 6/12/18

7. The Dylan 7111-7119 Santa Monica Blvd Letter sent 6/12/18

8. Villa Elizabeth 7513 Fountain Ave Not in West Hollywood

9. Ascent 1218 N Larrabee St Investigation Pending

10. Villa Careena 1136 N Larrabee St Investigation Pending

11. Villa Esther 920 Kings Road Investigation Pending

12. Villa Francisca 930 N Palm Ave Investigation Pending

13. Angelene 915 N La Brea Ave Not in West Hollywood

14. Kings Road 733 N Kings Rd Not in West Hollywood

Page 21 of 27

Additionally, Appellants specifically identified "two City-approved hotel projects", namely the Chamberlain West Hollywood and the Sunset Marquis that "prominently advertise tenancies for more than 30 days and the waiver of any • Occupancy Tax for such tenancies". The Chamberlain West Hollywood, located at 1000 Westmount Drive, is an approved hotel. Such property was originally approved by the County of Los Angeles (before the incorporation of the City of West Hollywood) as a mixed use project with both hotel and residential units. The project entered into a settlement agreement with the City in 1988, and subsequently received a conditional use permit to expand the hotel uses (see Attachment N- The Chamberlain was referred to as Le Dufy). As such, the Chamberlain is a legally operating hotel that is permitted to rent units for any length of time.

The City does not collect transient occupancy tax (TOT) for any portion of any stay longer than 30 days. So, the Chamberlain's advertisement is an accurate portrayal of the City's taxation policies.

The Sunset Marquis has been a hotel since 1963, and can similarly rent hotel rooms for any length of time. Consistent with the above-stated policy, TOT is not collected on stays longer than 30 days.

Appeal Summary Argument #4: The following summary argument #4 is followed by Appeal Addendum #7,8.9.10. then followed by a staff response:

Summary Argument tu: Although the City has the right to revisit its ordinances, it cannot impose modifications in a retroactive and discriminatory manner to a single project owner. Nor can the City achieve by so-called "interpretation" and "clarification" that which would require an actual WHMC amendment.

Appeal Addendum #7: In order to conclude that a "dwelling unit" must require tenancies of a year or longer, the Commission and Staff relied upon an erroneous November 29, 2017 "Zoning Interpretation" issued by the Interim Director of the Community Development Department (17- 0001, Nov. 29, 2017), purporting to "interpret" the WHMC. No provision of the WHMC requires a one­year term, and the Commission's reliance on the Interim Director's faulty analysis is riddled with error.

First, there is no basis in the WHMC - or anywhere else - for this conclusion. After conceding that "WHMC does not expressly define 'long-term basis,"' the Interim Director proceeded to look "for the meaning of 'long-term basis"' in WHMC sections concerning Corporate Housing, Emergency Shelter, and Transitional Housing - despite the obvious inapplicability of any of these later­adopted sections to "dwelling units" or to 8500 Sunset. Although the City disavows retroactively applying a new law/requirement to 8500 Sunset in violation of the Development Agreement, the facts prove otherwise. The City on August 17, 2015 required 31-day minimum terms for leases or subleases (Ordinance No. 15-958), thereby permitting a City homeowner or tenant to rent or sublease a residential home or apartment for a term longer than 30 days. Yet

Page22 of 27

now, the City would prohibit 8500 Sunset from exercising precisely this right. It cannot be, and is not, the case that a 31-day lease or sublease by any other owner or tenant is permissible, yet a lease of a unit for the same duration to the same occupant by 8500 Sunset is forbidden. In enacting Ordinance No. 15-958, and from 2015 to the present, the City had the opportunity to define "long-term" relative to the needs of the City and its various constituents, including hotel owners and operators. It never determined anything other than to require 31-day minimum terms. While the City has the right to revisit its own laws and ordinances, it cannot impose such modifications in a retroactive and discriminatory manner to a single project owner.

Second, it is disingenuous to achieve by so-called "interpretation" that which would require an actual WHMC amendment. This is evidenced by the statements made by Ms. Dimond that "if the zoning ordinance interpretation is upheld, we would return in the future with a zone text amendment to clarify. " She also stated "should this zoning ordinance interpretation be upheld by the Planning Commission ... , Staff anticipates based upon the requirement in the zoning ordinance, that we would return to further clarify the definitions to make sure that that clarity is in the zoning ordinance. " These assertions about the need to engage in multiple "interpretation[s]" and "clarifications]" in order to affirm that "long-term" means a minimum of 12 months prove that the Development Agreement, the Approvals, and the WHMC do not remotely support the conclusions now reached by the Commission. Where a city is required to interpret and then clarify its interpretations, the original meaning of the interpreted documents has plainly been twisted. This process of changing the law via interpretation and clarification, moreover, would diminish the substantial and valuable property rights of the many City residents who operate monthly leases, and would do so without their participation, knowledge, or consent. Such actions deny 8500 Sunset due process, subject it to discriminatory treatment, and cause substantial monetary damages, along with unreasonably harming other property owners.

Appeal Addendum # 8: In attempting to define "long-term basis" as one year or more, the Commission made a series of admissions underscoring the absence of any basis for such a finding, including:

• Ms. Dimond: "You could connect that because we don't allow rentals for less than 31 days, that that automatically allows all rentals of more than 31 days, but that's not necessarily the case. The goal of that ordinance was to alleviate the short-term day to day rental of units." Not so. The referenced Ordinance (Ordinance 15-958) does not simply prohibit day-to-day rentals, but also prohibits all rentals of fewer than 31 days.

Moreover, Ms. Dimond's assertion misstates the City's own interpretation - as reflected by its website and publications (contained in 8500 Sunset's April 19, 2018 written and verbal presentation) - as to "What the law means" (stating that dwelling units may be rented for 31 days or more) (Exhibit 8 hereto; bold in original). Her assertion also contradicts the City's February 6, 2017 Staff Report

Page 23 of 27

(Exhibit 17 hereto), which permits rentals of dwelling units for periods in excess of 30 days.

• Commissioner Bass: "This whole concept of the short-term rentals wasn't at all on anyone's mind [when the Development Agreement was signed]." 8500 Sunset is not a "short-term rental"; the City's own Ordinance No. 15-958 defines short-term rentals as those being "a period of thirty consecutive calendar days or less. " The Development Agreement and the Approvals speak for themselves. All that is required is dwelling unit use.

• Commissioner Hoopingarner: "We have submeters for a reason so this is like a hotel [because it lacks submeters]. " She was then corrected by Commissioner Altschul, who pointed out that ''presently in West Hollywood we have quite a few buildings that have one meter and it's included in the rent or included in the homeowners' association [charges]." Even then, Commissioner Hoopingarner persisted, claiming that "the internet, your cable bill, usually these are paid by the individual in a normal tenancy, in a normal building unit. " Again, she was corrected by Commissioner Altschul, who said "not exactly, there are lots of bulk sale arrangements. It's built into the rent." Throughout the underlying process, 8500 Sunset submitted an abundance of facts and evidence which were roundly ignored, in favor of such inaccurate and irrelevant claims as the foregoing.

Appeal Addendum #9: The materials provided to the Commission by Staff included Exhibit K, a list of almost 100 references from the Environmental Impact Report ("EIR'? relating to dwelling units, housing stock, and the General Plan. The list sheds no light on the appropriate interpretation of dwelling unit, and demonstrates only the unremarkable fact (never contested by 8500 Sunset) that the EIR analyzed dwelling units and housing. 8500 Sunset's use is use as dwelling units, and therefore fully. compliant with the Approvals, including but not limited to the EIR. The 31- day or longer use of dwelling units at 8500 Sunset is consistent with and supportive of the specific goals set forth in General Plan Goal H-3 and H-3. 1 regarding the need for housing stock diversity and development of a diverse range of housing options including flexible housing types. The erroneous interpretation that a minimum one-year lease is required for dwelling units contravenes these goals. With an appropriate interpretation that dwelling unit use includes month-to-month leases, 8500 Sunset is in compliance with the EIR, the General Plan, and the other Approvals.

Appeal Addendum #10: At the April 19, 2018 hearing, Commissioner Bass questioned whether rentals of fewer than 31 days were allowed at 8500 Sunset. Unequivocally, they are not. Commissioner Bass personally inquired into a possible 8500 Sunset lease at 6:52 p.m. on April 15, 2018, but cancelled it 19 minutes later, at 7:11 p.m. Had he continued the process, he would have been required to sign a lease (for his occupancy of at least 31 days) in order to initiate his occupancy. Moreover, had the term of the lease commenced, he would have been obliged to lease his residential dwelling unit for more than 30 days, and would not have been entitled to a refund had he sought to terminate his lease prior to the end of the term.

Page 24 of 27

Staff Response:

A. Incorporation of Staff Responses Set Forth Above

Appellants largely repackage and rehash arguments advanced in Summary Arguments 1, 2 and 3. In that regard, staff incorporates its earlier responses.

B. Miscellaneous

The City has the authority to utilize a Zoning Interpretation to resolve the subject outstanding questions regarding appellants' property. Ultimately, this interpretation should result in a Zone Text Amendment, per Section 19.03.030C, which states in part that "any provisions of this Zoning Ordinance that are determined by the Director to need refinement or revision should be corrected by amending this Zoning Ordinance as soon as is practical." Furthermore, this is not a modification to the law, but rather a clarification to a definition.

In any hearing, there is extensive discussion to obtain facts and put them on the record. In this case, there were numerous conversations among staff and commissioners to discuss the conditions on the site and the relationship to regulations. While these statements may have been made in discussion among the commission, there is no proof that these statements alone underscore the absence of a basis for findings. Furthermore, these statements highlight individual commissioner's comments, while ultimately the commission adopted Resolution No. 18-1250, which made the required legal findings. Further, regarding the corporate housing statement, appellants contend that the Official Interpretation is "inconsistent with guidance previously provided by the City's own staff." They specifically cite to the "February 6, 2017 Staff Report Regarding Corporate Rentals" (the "Staff Report"), which they read to indicate that "leases of one-month to six-months, but less than one year, are 'acceptable' uses of 'dwelling units."' A comment in a staff report could hardly be considered "guidance". More importantly, appellants' argument is inconsistent with the City's actual findings (see findings under Corporate Housing Ordinance above) (which override any "guidance" in the Staff Report) in enacting the Corporate Housing Ordinance.

The above statement does not provide new evidence, document errors or identify unsupported findings that would justify overturning the Planning Commission decision. That being said, the lease that Commissioner Bass would have been required to provide is included in Attachment J. The lease differs from the standard residential lease provided for annual leases in the east tower. This provides further evidence these units are not being treated as residential dwelling units, and instead, are operating as hotel rooms.

Council Action

Staff has found that the information brought forth in the appeal document does not provide new evidence, document errors or identify unsupported findings that would justify overturning the Planning Commission decision to uphold the Zoning Interpretation. Staff recommends that the City Council hold a public hearing, consider

Page 25 of 27

all pertinent testimony, and take the following action:

1. Deny the appeal and affirm the Planning Commission decision to uphold Zoning Interpretation 17-0001, and on a de novo basis, determine that the market-rate dwelling units located in the west tower of 8500 Sunset Boulevard, West Hollywood (a) are being used as a "hotel", (b) are not being rented on a "long­term basis" and/or (c) are not being used as approved, in contravention of the Zoning Ordinance, the applicable development agreement and project entitlements.

CONFORMANCE WITH VISION 2020 AND THE GOALS OF THE WEST HOLLYWOOD GENERAL PLAN:

This item is consistent with the Primary Strategic Goal(s) (PSG) and/or Ongoing Strategic Program(s) (OSP) of: • PSG-1: Maintain the City's Unique Urban Balance with Emphasis on Residential

Neighborhood Livability. PSG-2: Affordable Housing.

In addition, this item is compliant with the following goal(s) of the West Hollywood General Plan: • H-1: Provide affordable rental housing. • H-2: Maintain and enhance the quality if the housing stock and residential

neighborhoods.

EVALUATION PROCESSES:

N/A

ENVIRONMENTAL SUSTAINABILITY AND HEALTH:

The approved project included an Environmental Impact Report that was certified by the City Council in 2005 as part of the entitlement for the project. The EIR included significant impacts that could not be mitigated for visual resources, traffic, air quality, construction impacts related to aesthetics, air quality, noise and ground-born vibrations. A statement of overriding considerations was made by the City Council when certifying the EIR, and the increase in housing stock was quoted numerous times as a reason for allowing such impacts. The Official Zoning Interpretation and subsequent appeals are not considered a project per CEQA, and thus, this action is not being analyzed for CEQA purposes.

COMMUNITY ENGAGEMENT:

This item was noticed as required, and a 500-ft radius mailer to tenants and owners was sent by June 21, 2018. The City received 10 letters as part of the Planning Commission hearing, provided in Attachments Hof Attachment D, Attachment F, and Attachment G. As of the publishing date of this staff report, staff did not receive any public input directly related to letters for the City Council hearing. In total, all 10 letters were in support of the Zoning Interpretation 17-0001.

Page 26 of 27

OFFICE OF PRIMARY RESPONSIBILITY:

PLANNING & DEVELOPMENT SERVICES DEPARTMENT/ LONG RANGE PLANNING DIVISION

FISCAL IMPACT:

None at this time.

ATTACHMENTS:

A. Draft Resolution CC 18-XXXX B. City Council Appeal Statement and Supporting Documentation C. Adopted PC Resolution 18-1250 D. Plahning Commission Staff Report dated April 19, 2018 E. Planning Commission Supplemental Staff Report No. 1 dated April 19, 2018 F. Planning Commission Supplemental Staff Report No. 2 dated April 19, 2018 G. Additional letters from the public to Planning Commission H. April 19, 2018 Planning Commission transcript I. Enforcement letters J. 8500 Sunset Lease Comparison Chart and Associated Leases K. Affordable Housing Agreement L. CC&Rs M. 9900 Wilshire Boulevard Baltin Report N. Ashkenazy Settlement Agreement 0. Additional Screenshots P. Article: "This Lodging Sector Needs Airbnb and Booking to Grow Its Business" Skrift.

April 12, 2018

Page 27 of 27