Santa Monica Hotel Developer Fined $15.5 Million

 In 1031, California, Commercial, development, investing, Los Angeles, net lease, nnn, Retail, Santa Monica

A local Santa Monica, California hotel developer was fined $15.5 million for what considered a ‘bait and switch’ by a local judge for tearing down two of the very few low cost hotels in Santa Monica, the Travelodge and the Pacific Sands at 1505 and 1515 Ocean Avenue, to supposedly replace it with a larger Travelodge.  Demolition permits were granted in 2009.

That’s not quite what ended up happening.  Instead of the moderate priced new Travelodge with rooms at $165 per night, the developer, Sunshine Enterprises Ltd., built the Shore Hotel with rooms in the $300 to $800 per night range.  The permit expired, but Sunshine continued with its plan to build.

The developer applied for an ‘after the fact’ permit in 2014 and was denied, then sued the commission in LA Superior Court and lost again.  The developer has since agreed to pay the fine and work with the Coastal Commission.  Commission wants them to lower the price to ‘affordable’ price point on about half their rooms.  The Coastal Commission said the fine will go toward funding public access projects and existing lower-cost hotels like the Santa Monica hostel or the Topanga Ranch Motel.

Santa Monica commercial realtors, agents and brokers are well aware of how incredibly expensive Santa Monica commercial real estate for sale for redevelopment is so many of us are surprised that it took so long for the Coastal Commission to act.  No question that the developer was able to sneak one through.

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