Developers granted more time to finish 8920 Sunset Blvd.

City Council on Monday approved a development agreement extension for the nine-story commercial project located at 8920 Sunset Boulevard, a significant development at the corner of Sunset Boulevard and Hilldale Avenue.

The project, which will replace the historic Hustler building with a modern commercial complex, had originally been approved by Council in 2018 and had already been granted two prior permit extensions. The purpose of the hearing was to consider a request for an additional seven-year extension on the construction timeline. The applicant cited several challenges, including the economic impacts of the COVID-19 pandemic and rising construction costs, as reasons for the delay.

The hearing, part of a broader meeting agenda that addressed various city issues, drew significant attention from the public and councilmembers alike, given the high-profile nature of the project, which has been the subject of both support and controversy since its inception.

The building, designed by architecture firm Gensler, aims to be a landmark development for the Sunset Strip, incorporating a private membership club, creative office spaces, retail shops, a restaurant and outdoor terraces, along with a rooftop deck and an underground parking garage featuring 279 valet-operated spaces.

Community Development Director Nick Maricich presented the staff report on the matter, introducing Planning Manager Jennifer Alarcon and Senior Planner Doug Vu. Alarcon provided a detailed history of the project, highlighting its evolution over the years. She explained that the original development agreement had included several public benefits totaling $13.35 million. These benefits were designed to provide long-term cultural and financial advantages to West Hollywood, including a 21,100-square-foot public art gallery and rehearsal space for performance artists, which would be made available at no charge for at least 25 years. Other benefits included an annual $50,000 payment to support local artists and performers, a $1 million cash benefit to the city (a portion of which was earmarked for the Sunset Boulevard Beautification Fund and the Affordable Housing Trust Fund), and an agreement to contribute $100,000 per year for ten years to support the arts.

Alarcon outlined how the development agreement had been amended twice since its initial approval, with the most recent amendment occurring in March 2024. This amendment allowed the project to request further extensions beyond the original timeline. The Planning Commission had reviewed the proposed seven-year extension in a meeting the previous month and ultimately recommended approval, but with several modifications. Among these changes was an extension of the agreement’s term to eight years instead of seven, and the inclusion of penalty payments that would survive the agreement’s expiration, ensuring the city would still benefit financially even if construction was delayed further.

The Planning Commission also recommended that the project incorporate support for education in addition to the arts, reflecting West Hollywood’s increasing focus on educational initiatives as part of its broader community engagement strategy. The commission also explored the possibility of activating the vacant property before construction begins, suggesting the use of the space for a community garden. The applicant had agreed to all of the recommended revisions, and these updates were included in the meeting packet for Council’s consideration. 

DJ Moore, representing the applicant 8920 Sunset LLC, emphasized that despite the delays, the project remained a key priority for his client and represented a major cultural and economic opportunity for the city of West Hollywood.  He walked the Council through a series of renderings of the structure, adn noted that the private membership club on the upper floors would provide a sophisticated space for creative professionals to collaborate and network, while the ground-floor retail and restaurant space would enhance the public’s experience of the Sunset Strip.

Moore then turned to the public benefits package that had been a critical component of the original development agreement. In addition to the $1 million contribution to the arts fund, the project would deliver another $1 million in cash payments to the city and provide the long-term public art gallery and rehearsal space at no cost to local artists. He explained that this aspect of the project had garnered significant community support throughout the entitlement process, particularly from groups such as the West Hollywood Heights Neighborhood Association, the Norma Triangle Neighborhood Watch and the Friends of West Hollywood Elementary. In 2019, the project had been the subject of a citywide referendum, where over 60% of West Hollywood voters supported its approval.

However, Moore acknowledged that the project had faced substantial delays due to the COVID-19 pandemic, which had severely impacted both the construction industry and financial markets. He cited rising construction costs, increased interest rates, and overall financial instability as key challenges that had made it difficult to secure the necessary funding to break ground on the development. As a result, the applicant had filed for the development agreement extension in late 2023, hoping to keep the project on track.

Moore went on to explain that the revised development agreement now included several provisions aimed at encouraging timely construction. These provisions included financial penalties of up to $5 million if physical construction does not commence within a specified time frame and additional penalties of up to $4 million if construction is paused for more than six months. He expressed optimism that financial conditions were improving, noting that interest rates had recently begun to stabilize and that construction costs, though still high, were becoming more predictable. He assured the Council that the applicant was already re-engaging with architects and construction management teams in preparation for moving forward with the project.

Moore acknowledged that the property, which has remained vacant since the former Hustler store was demolished, had become something of an eyesore for the community. He explained that the removal of a transformer from the site had left the property without electricity, complicating efforts to maintain or activate the space in a meaningful way. Reconnecting the site to the power grid would require installing a new transformer, a costly process that could take up to two years to complete. As a temporary measure, Moore proposed installing an art mural on the building, which would align with the city’s mural program and be developed in consultation with the Arts and Cultural Affairs Commission. The mural would provide an artistic activation of the site while the applicant worked through the complexities of reconnecting the site to electricity and securing financing for construction.

The idea of using the rear parking lot as a community garden, a suggestion raised by the Planning Commission, was also addressed. Moore said the applicant was supportive of this concept and would work closely with the city to explore its feasibility. However, he reiterated that the primary goal was to get the project moving as quickly as possible, noting that every additional delay added to the financial burden of completing the development.

Councilmember Lauren Meister expressed concern about the proposed mural, pointing out that the building’s glass facade would make it difficult for a small mural to have any significant visual impact. She suggested that the applicant consider covering larger portions of the north- and west-facing sides of the building with art to create a more substantial activation of the space. Moore agreed to take her suggestions under advisement, acknowledging the importance of making the mural a meaningful contribution to the community during the interim period before construction.

Council then shifted its discussion to the financial aspects of the development agreement. Meister raised the issue of inflation, arguing that the public benefits package — particularly the $1 million cash payment and the annual contributions to the arts — should be adjusted to reflect the significant rise in construction costs and inflation since the original agreement was approved in 2018. She emphasized that failing to adjust these amounts would diminish the value of the public benefits, particularly when compared to the escalating costs of construction and living in the city.

Vice Mayor Chelsea Lee Byers expressed her general support for the project, particularly the idea of installing the mural as a way to keep the community engaged while the project remains in its pre-construction phase. However, she raised questions about the timeline for the mural’s installation. Byers noted that a 90-day timeline had been mentioned in previous discussions but was not reflected in the current staff report. In response, City Manager David Wilson confirmed that the 90-day timeline for installing the mural was indeed part of the development agreement, despite its omission from the report.

Byers also asked about the community garden concept, specifically whether it would be viable given the logistical challenges associated with reconnecting the site to utilities. Helen Collins from the Community Services Department explained that establishing the necessary utilities for the garden could take longer than expected, estimating that it might take up to 10 months to develop the garden, compared to the five months it took for a similar project at Plummer Park. Byers accepted the explanation but urged the applicant to prioritize activating the site in some way, whether through the mural or the garden, to keep the community engaged during the construction delays.

Councilmember Sepi Shyne focused on the penalties outlined in the development agreement, asking for clarification on when the financial penalties would take effect. City Attorney Lauren Langer explained that the penalties, which could total up to $5 million, would be imposed if construction did not begin by specific deadlines set within the agreement. Shyne, like her colleagues, worried about the lengthy timeline for the project, suggesting that Council might consider reducing the extension from seven years to something shorter, like five or six years.

Shyne also echoed Meister’s concerns about inflation, arguing that both the public benefits and penalties should be adjusted to account for the increasing costs of living and construction in West Hollywood. She said ensuring the financial terms of the agreement kept pace with inflation would protect the city’s interests and ensure that the community continued to receive meaningful benefits from the project.

Meister suggested that the annual $100,000 payments to support education and the arts should begin as soon as the development agreement is signed, rather than waiting until the building is completed. She pointed out that students at West Hollywood Elementary, which stands to benefit from the funds, might have already graduated by the time the project is finished. Wilson clarified that some of the financial contributions were tied to the issuance of the certificate of occupancy, meaning they would not begin until after the project is operational. Meister pushed back, arguing that the payments should start immediately to ensure that the community receives timely benefits.

Council agreed to a compromise, proposing a six-year term for the development agreement, with built-in reviews at the four-year mark to assess progress and consider whether further adjustments were necessary. They also agreed to adjust the public benefits and penalties for inflation, ensuring that the financial terms remained relevant to the city’s current economic conditions.