Santa Monica hotel developer fined $16M for “bait-and-switch” construction scheme

Sunshine Enterprises built its high-end Shore Hotel after permits expired for a lower-priced version

May.May 09, 2019 10:00 AM
Coastal Commission Chair Dayna Bochco and the Shore Hotel
Coastal Commission Chair Dayna Bochco and the Shore Hotel

The developer of Santa Monica’s Shore Hotel had agreed to build a moderately-priced property, in line with the two it would replace. But what ended up rising at 1515 Ocean Avenue was a high-end hotel that would price out a large number of potential guests.

Now, the developer and owner, Sunshine Enterprises, has been slapped with the largest fine the state’s coastal commission has ever imposed for pulling off what one official called a “bait-and-switch” scheme.

The California Coastal Commission approved the $15.6 million penalty against Sunshine for building the high-end property without state approval, according to the Los Angeles Times.

Before building the Shore Hotel, the 12-member Coastal Commission approved permits allowing Sunshine to replace two lower-priced hotels at 1515 Ocean Avenue with another moderately-priced hotel.

Those permits expired, and Sunshine sought a permit for the upscale Shore Hotel. The Coastal Commission denied the permit because Sunshine didn’t plan to make up for the loss of affordable rooms, a requirement of the California Coastal Act.

Sunshine built the Shore Hotel anyway and it opened in 2011. Rooms typically rent for between $300-$800 per night.

Sunshine’s fine will go to an environmental remediation account with the State Coastal Conservancy Fund, according to the Times.

The California Coastal Act was passed in 1976 and guarantees public access to the state’s coastline. The state used the Coastal Act to press wealthy homeowners into offering public access to Hollister Ranch, in what became a highly-contentious issue surrounding the 8.5-mile stretch of beaches near Santa Barbara.

Commission staff have recommended $9.5 million more in fees for Sunshine to obtain a proper permit that would legalize the hotel. That money would support building lower-cost hotel properties along the coast. Some commissioners also want Sunshine to take additional measures, like offering cheaper rooms at the Shore Hotel.

Representatives for Sunshine say owners are ready to comply with additional conditions. [LAT]Dennis Lynch 

Related Articles

La Mirada industrial building

Clarion pays $77M for La Mirada industrial project

510 Park Avenue and CEO of Monster Beverage Rodney Sacks

Monster Beverage affiliate guzzles down industrial project in San Fernando

The 5 priciest residential sales

Here are the 5 priciest resi sales in LA County last week

Clockwise from top left: 1155 Angelo Drive, 1116 Laurel Way, 613 N. Sierra Drive, 32453 Pacific Coast Highway and 705 N. Arden Drive (Credit: Redfin)

Beverly Hills dominates list of top resi sales in LA County last week

Lightstone’s Eugene Rozovsky, Neil Shekhter and a rendering of 1650 Lincoln Boulevard

Lightstone provides $44M loan to Shekhter-owned WS Communities

Pierce Brosnan and his new home in Santa Monica

“The world is not enough,” but for one former James Bond this Santa Monica pad is

Witkoff Group’s Steve Witkoff and a rendering of the project at 500 Broadway

Witkoff Group snags construction loan for Santa Monica luxury development

Universal Music Group CEO Lucian Grainge and a rendering of Colorado Campus Building B

Universal Music Group is expanding footprint at Colorado Campus office complex: sources