West Hollywood City Council will hold a public hearing Monday to discuss extending the timeline for a commercial project at 8920 Sunset Boulevard. The project was approved in 2018 and amended in 2022 but has been delayed due to the COVID-19 pandemic and economic issues.
The plan is to build a nine-story, 116,801-square-foot building to replace the current commercial structure on the Sunset Strip. It will feature a private membership club with lounges, dining rooms, outdoor terraces, and a rooftop deck. There will also be office spaces, retail shops, and a restaurant with outdoor seating, all above an underground garage with 279 parking spaces. The design focuses on energy efficiency and supports the arts, enhancing the pedestrian experience with ground-level cafés, shops, and art galleries.
The property owner says the pandemic and economic problems have delayed the project’s start.
To help, City Council passed Ordinance 24-06 on March 18, 2024, giving an extra six months to projects seeking to extend their timelines, including this one. This was meant to allow time to negotiate an agreement to ensure the project moves forward without long delays, so vacant sites don’t become eyesores.
The proposed agreement would extend the project’s timeline by eight years and includes measures to encourage timely construction and offer public benefits. The owner will create and maintain a 2,100-square-foot public art gallery and rehearsal space on the building’s first floor, free for performance artists and groups, for at least 25 years under an agreement with the city. They will also pay $50,000 annually to the city’s Arts Division to help artists and performers seek grants or other support. Additionally, there’s a one-time cash payment of $1 million to the city, with at least 25% allocated to the Sunset Boulevard Beautification Fund and at least 25% to the city’s Affordable Housing Trust Fund. The owner will also contribute $100,000 per year for 10 years to support the arts and education.
To ensure the project moves forward without delays, the agreement includes financial penalties if construction doesn’t start or continue as planned. If construction hasn’t begun, the owner must make payments totaling up to $5 million to the city at specified times after the agreement’s approval. If construction starts but then stops for more than six months, the owner must pay a penalty of $500,000 every six months until construction resumes, up to $4 million. Exceptions are made for delays beyond the owner’s control. Before construction begins, the owner must install an art mural on the existing building by a specified date to improve the property and add to the city’s cultural life. The mural will be approved by the city following its guidelines.
The Planning Commission reviewed the proposed agreement on September 4. After discussion, they voted 6 to 1 to recommend approval to City Council, with suggestions to improve the agreement. They proposed extending the term to eight years, ensuring penalty payments continue even if the agreement expires before the project is finished, expanding support to include education, and exploring the idea of a community garden on the site before construction starts. The developer agreed to these suggestions, and the agreement was updated. The community garden idea depends on the city’s assessment of the site’s suitability, considering factors like exposure, preparation, water access, accessibility, parking, and maintenance costs. The city needs to complete this assessment quickly, as the public hearing and ordinance adoption must be finalized by December 1.
The public benefits of the project over at least 25 years are estimated at about $13.35 million, including $3.25 million in payments and $10.1 million in in-kind benefits from the art gallery and rehearsal space. These benefits are more than the $7.4 million target set in 2018. During the six-month negotiation period, more benefits and penalties related to the timeline were negotiated. Though the time wasn’t enough to fully reevaluate the financial contributions, the value of the in-kind benefits has likely increased due to higher rents and costs over the past five years. The city focused on ensuring the project moves forward on time rather than renegotiating everything. The maximum penalties for delayed construction start and suspension are $5 million and $4 million. These significant penalties are meant to ensure the developer follows the timeline, reducing the chance of the site remaining vacant and negatively impacting the community.
To approve the agreement, City Council must find that it’s in the city’s interest, consistent with plans and laws, doesn’t harm the public, and meets legal requirements. If approved, City Council will introduce ordinances to approve the development agreement and extend the timeline, find it exempt from environmental review, amend the zoning map related to the agreement, and adopt a resolution to extend the permit expiration date to match the agreement. These steps formalize the project’s terms, providing a clear plan for progress.
Does the City get bonds for these financial promises? Bonds guarantee the money will be forthcoming, and are common requirements in many cities. Otherwise the entity supposed to pay simply goes out of business and declares bankruptcy, meaning at best a major delay and, if this is an entity created for this specific project only, no recourse at all as a practical matter. And if the entity cannot get a bond, that tells you something about their financial capabilities.
Good points!
This extension should be denied. Let’s get a developer that helps with building more affordable housing. There already is the incentive of adding billboards.
Agreed
The infamous “Arts Club” has been a great bait and switch. The City Council was totally infatuated, indeed star struck, by the notion of having a branch of the London based Arts Club on the Strip. Of course the Arts Club has severed all ties with the developer so the supposed reason for the give away of valuable entitlements has largely vanished. I pointed out in 2018 that the rear portion of the parcel (40% of the total) was zoned for residential use and that the project should have been a mixed use project. The “public benefits” were originally under-valued… Read more »