Record $15.5 million fine for Santa Monica hotel developer

US: A Santa Monica hotel developer has been fined a record $15.5 million by the California Coastal Commission.

Sunshine Enterprises Ltd was fined after it “replaced two of the only low-cost motels in Santa Monica with a luxury boutique hotel, without a permit,” the commission said in a statement. The fine is the largest ever levied by the 40-year-old agency.

“We as an agency have a mandate to encourage public access on the California coast and that means doing everything we can to ensure people can actually afford to stay there,” said Dayna Bochco, who chairs the commission.

In 2009, Sunshine Enterprises Ltd. was granted a permit to tear down two low-cost motels on Ocean Boulevard and replace them with one larger Travelodge.

The permit expired, the commission says, and Sunshine went on with its plan to build but instead of the budget hotel, where room rates would have been around $165 a night, Sunshine built the Shore Hotel, a boutique property where rooms start at around $300 a night and can go up to $800.

Under the California Coastal Act, a major part of the commission’s directive is to protect public access to the coast, and that includes ensuring that low-cost hotel rooms and other facilities are available.

The developer applied for an “after-the-fact” permit from the Coastal Commission in 2014, after receiving a notice-of-violation letter from the commission. Its request was denied.

The developer sued the commission for denying its permit, but a Los Angeles County Superior Court judge found in favour of the commission, “calling the developer’s actions ‘a bait and switch,'” the agency said in a statement.

“Shore Hotel recognises the hotel was opened without the Coastal Commission’s permit and regrets this violation took place,” the company said in statement. Sunshine also said it would pay the fine and work with the commission moving forward.

Commissioners told Sunshine that they wanted to see more affordable hotel rooms nearby or in the existing hotel.

“I don’t want their money – I want their hotel rooms,” said commissioner Aaron Peskin. “Why can’t they just convert 87 of the 164 rooms to an affordable price point?”

Be in the know.

Subscribe to our newsletter »