The City AttorneyÕs Office, Rent Control Board and owners of the Embassy reached a settlement agreement which gives the residentsÕ four years to leave the apartments and collect relocation benefits. (photo by Ashley Archibald)

THIRD STREET — Residents of the Embassy Hotel and Apartments can breathe a little easier.

The City Attorney’s Office, Rent Control Board and owners of the Embassy reached a settlement agreement announced at last week’s City Council meeting, which gives the residents’ four years to leave the apartments and collect relocation benefits.

The settlement also gives the Embassy owners the right to offer tenants a buy-out if they choose to leave sooner.

“They have the ability to negotiate a buy-out,” confirmed Deputy City Attorney Alan Seltzer. “The offer of the Embassy cannot be less than the relocation benefit, and there is ‘no harassment’ in the terms.”

The settlement saves nine apartments, occupied by an unspecified number of people, from being converted into hotel rooms under the terms of the Ellis Act, which allows a landlord to remove rental properties from the market at will.

Embassy LLC and Embassy Properties, L.P., the two corporations that own and operate the building, wanted to convert 19 units into extra hotel rooms, saying that it was a burden to operate the building as both a hotel and apartment complex.

Those 19 units became apartments in a 2000 settlement agreement between City Hall and the owners in a dispute over the failure to collect and pay the city tax on hotel beds.

The owners decided to remove those 19 units from the rental housing pool under the Ellis Act, but City Hall objected, saying that the owners had waived that right in the 2000 agreement.

In February 2009, the owners filed a petition for writ of mandate, requesting that a judge tell City Hall to back off.

A court battle between Embassy, City Hall and the Rent Control Board ensued.

There was just one group missing: The tenants.

Tenants had no lawyer in the court when the City Attorney’s Office and Rent Control Board triumphed in a lower court, and then lost in appeal, leaving the tenants with the distinct possibility they could be asked to leave their homes at any point.

“Because of that loss (in the appellate court), it is possible with the case returned to trial court, that the city and Rent Board will lose again,” City Attorney Marsha Moutrie explained at the April 12 City Council meeting. “If that happens, the tenants could be evicted immediately.”

The settlement agreement reached in recent weeks takes that possibility off the table, much to the relief of the tenants, although mixed feelings remain.

Several of the tenants have lived in their apartments for decades, said one resident, who wished to remain anonymous.

“We believe that the city fought for the tenants’ interests and got the best deal possible, but some of the tenants have lived in the Embassy for over 20 years, and no one wants to be evicted from their homes even if it is four years from now,” the tenant said. “The conversion of the Embassy to a boutique hotel is another death knell of the old Santa Monica, which is becoming the Beverly Hills by the sea.”

Although the City Attorney’s Office did not represent the tenants during the lawsuit, it can provide protection to them if they feel they’re being harassed into leaving the Embassy before the four years are up.

Seltzer did not believe that there would be a harassment issue, but said that the Consumer Protection Unit of the City Attorney’s Office would handle any complaints by the tenants.

Although the Embassy owners would have preferred a shorter move-out period, they are happy that the lawsuit is over with, said Anthony J. Oliva, the attorney that represented Embassy LLC and Embassy Properties, L.P.

“In any settlement agreement, both parties have to accept a result that wasn’t their preference,” Oliva said. “I think they feel that they reached a fair agreement with the city and the Rent Control Board.”

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