Demolition notice posted at WSC builder’s remedy site

WS Communities, the Santa Monica-based development firm whose torrent of unexpected builder’s remedy applications set off a statewide frenzy earlier this fall, has now applied for a permit to knock down the existing apartment buildings at one of its builder’s remedy project sites.

Two notices were posted on Monday outside the company’s apartment complex at 1433 and 1437 Euclid Street, off Santa Monica Boulevard east of the city’s downtown.

“Notice Of Pending Demolition Permit,” the large white signs read, which were posted in front of the complex’s twin buildings. The signs also include the property address and contact information for Santa Monica’s building and safety division and a WSC employee, per city requirements.

Scott Walter, the firm’s CEO, refuted any suggestion that the notices meant a demolition was imminent, however. The firm is currently working on its full project application for the site, he said, and is thereby required to post the demolition signs.

“So this is just a standard part of the normal process,” he said.

After filing preliminary project applications in October, the firm is now working on full applications for most of the sites, and filed its first full application, for a project on 7th Street, late last week. https://therealdeal.com/la/2022/12/12/wsc-files-first-full-builders-remedy-application-in-santa-monica/

The preliminary application for the Euclid Street property includes plans for a 12-story, 190-unit project that would also include 38 affordable units. The 38 affordable units meet a 20 percent requirement that’s a condition of the state’s builder’s remedy provision, a legal tool for developers that allows projects to bypass local zoning in cities that are out of compliance on their state-mandated housing planning. The provision comes from a 1990 state law but had remained almost entirely unknown until this year, and burst into the public limelight after more than a dozen project applications — mostly from WSC, a spinoff of Neil Shekhter’s NMS properties — were revealed at one Santa Monica City Council meeting in October.
https://therealdeal.com/issues_articles/builders-remedy-will-reshape-california-real-estate/

WSC and its affiliate entities filed 13 development applications using the provision at properties it owns throughout the coastal city, including an application for a 2,000-unit project in the city’s Bergamot District.

“We felt this was the best way to try and get housing built as fast as possible,” Walter said in October.

While the applications, particularly the Bergamot project, set off a firestorm of controversy over potential future construction, the firm’s Euclid Street property had already been the subject of a legal battle. In early 2021, when pandemic regulations were still in place, the Santa Monica City Attorney’s Office charged WSC with criminal rent gouging after the landlord had quickly raised one tenant’s rent from $865 to $3,000.

In September, the defendants in the case agreed to a criminal diversion program where they agreed to pay $35,000, including $20,000 to a local homeless organization, and attend a tenants’ rights program; the deal meant that the city could dismiss the charges next fall.

That dispute has had no impact on the firm’s current plans, Walter said. “And we didn’t believe that we ever did anything wrong,” he added. “In an effort to just get it behind us we just agreed to do the diversion program.”

The twin apartment buildings were built in the 1960s and purchased by WSC in 2016. A city representative did not immediately respond to an inquiry on the demolition application, and the timeline for any knockdown remained unclear, although it could still be a year or more away.

This week’s notices, nevertheless, have sparked fresh panic among tenants, many of whom are rent-protected and have lived in their units for decades.

“Anger and stress,” one tenant, who declined to be named, said to The Real Deal. “Imagine finding a sign out front that says your building is going to be demolished and absolutely no communication from management.”

Years ago, after WSC took over the property, some tenants had been nervous about being evicted through the state’s Ellis Act, the tenant added. “When they renovated and created a website to rent out the units we thought we were safe … Then the builder’s remedy changed everything.”