Lawsuit alleges illegal use of rental housing; one building owner says he’s played by the rules

By Gary Walker

Venice Beach Suites is among several properties that the city alleges were illegally converted from housing to vacation rentals

Venice Beach Suites is among several properties that the city alleges were illegally converted from housing to vacation rentals

Two historic beachfront buildings in Venice are among the targets of an unprecedented volley of city lawsuits claiming property owners have illegally converted residential apartment buildings into hotels offering much more lucrative short-term vacation rentals.

On Monday, Los Angeles City Attorney Mike Feuer filed the suits alleging violations of the city’s Rent Stabilization Ordinance against the owners of three multi-unit properties — the 30-unit Venice Suites at 417 Ocean Front Walk, the 32-unit Venice Beach Suites at 1305 Ocean Front Walk and a 59-unit building in Hollywood.

The lawsuits seek financial restitution for any displaced tenants, fines for breaking city statutes and court-appointed receivers to operate the properties until they are brought into compliance, Feuer said.

“In a city with a profound shortage of affordable housing, unlawfully converting rental units to operate as hotels has got to stop. My office will continue to intervene to keep rent-stabilized units on the market and hold owners accountable for not complying with the law,” said Feuer, adding that the cases are supported by lengthy city investigations.

Feuer also acknowledged that asking the court to appoint a receiver is an unusual step, but “it underscores how serious we take this issue,” he said.

Carl Lambert, the owner of Venice Suites and numerous other properties in Venice, said Feuer’s lawsuits were filed prematurely because he is still dealing with the city permit process and the Los Angeles City Council has yet to adopt rules that govern short-term rentals.

“It is improper for the city attorney to file these lawsuits while I’m undertaking steps to formalize the conversion [of the property into hotel use] with the city,” Lambert said. “Historically, Venice Suites has been a hotel and has operated legally since before 1925,” he said.

Lambert pled his case to permanently designate Venice Suites as a hotel before the Venice Neighborhood Council in February. Those speaking in support of a hotel designation greatly outnumbered those opposed, but the council voted 10-6 to recommend against hotel certification amid concerns that a certificate of occupancy describes the property as an apartment building.

Back in November, the California Coastal Commission gave Lambert a retroactive green light to continue using one of his other buildings, Venice Breeze Suites at 2 Breeze Ave., as a hotel. That 31-unit building had already transitioned from housing to hotel use before he bought the property, and city officials resolved permitting issues for the building in 2013.

Lambert has voiced support for the city imposing regulations on short-term rentals, says he’s always paid hotel taxes for guests at his properties and has stated publicly that such taxes should be used to create more affordable housing. Lambert also said he’s created affordable housing units on the Westside and has never evicted anybody to free up a unit for short-term rentals.

William and Rose Layman, the listed owners of Venice Beach Suites, could not be reached for comment.

Feuer’s office announced the lawsuits in the same week that the city’s Planning Commission takes its first look at the city’s draft ordinance to regulate short-term rentals.

Los Angeles Short-Term Rental Alliance Director of Operations Robert St. Genis questioned the timing of the lawsuits.

“I believe that there’s political motivation behind it. It’s happening right before the Planning Commission hearing,” noted St. Genis, whose group supports Lambert’s use of Venice Suites as a hotel.

Feuer brushed aside assertions that his actions were to do anything but uphold the law.

“There are laws against illegal conversions of apartment units that have a detrimental effect on tenants. That has never been as important as it is today. We filed these lawsuits because we believe these conversions are illegal — period,” Feuer said.

In addition to the civil suits, Feuer filed criminal charges on Monday against the owner of a four-unit apartment complex in the Fairfax District who allegedly evicted tenants in order to put their units on the short-term rental market.

Venice residents actively campaigning against short-term rental conversions have complained for years that long-term rental housing is being taken off the housing market, resulting in a loss of affordable housing and pitting residents against tourists’ wallets for the housing stock that remains.

Judith Goldman, cofounder of the short-term rental opposition group Keep Neighborhoods First, said the city’s lawsuits take into account the negative effects of losing rent-stabilized housing.

“We do feel vindicated and like we have been listened to. We were able to effectively mobilize and come together to demonstrate to the city that neighborhoods are being severely impacted by short-term rentals,” Goldman said.

Los Angeles City Councilman Mike Bonin, a co-sponsor of the proposed city ordinance to govern short-term rentals, said the lawsuits underscore the need for clear and fair home-sharing guidelines.

“Simple regulations that allow honest home-sharing while making it easier to go after rogue operators who are running de facto hotels will help protect affordable housing and the character of our neighborhoods,” Bonin said.

Feuer said this may not be the last time his office takes action regarding short-term rentals.

“We’re looking at other locations throughout the city as well,” he said.