THIRD STREET — City officials disappointed neighbors of a luxury hotel on Third Street Monday, declaring that there was no evidence that the business had violated any laws despite residents’ concerns to the contrary.
The Palihouse Santa Monica — formerly the Embassy Hotel and Apartments — has been under fire in recent months by neighbors who have accused the hotel of operating a public restaurant, doing construction work without permits and packing the street with traffic from a valet operation out front.
E-mails have flown to various sections of city government laden with anecdotes about illegal food service, noise from drunken revelers and pictures of boxes, debris and a discarded sink.
The situation has become unlivable, said Laura Wilson, one of the most vocal people in the anti-Palihouse fight.
“I’m fighting to protect the quality of my home,” Wilson said. She says she hasn’t been able to sleep past 6 a.m. since the hotel opened this spring, and is woken up in the middle of the night by noisy — and temporary — neighbors.
Unfortunately for Wilson and those that share her concerns, city officials have not found any evidence that Palihouse is violating local laws or regulations.
In a six-page item released Monday by the Planning Department, Principal Planner Bradley Misner asserted that in the eyes of City Hall, the Palihouse was fully within its rights to operate its hotel in the neighborhood.
That includes using temporary residential parking permits for its guests, a valet operation and the ability to serve its guests food prepared on site.
As far as construction, many of the changes to the interior like light fixtures and others have not needed permits, and the owners did take out permits to install two utility sinks, a coffee maker and a floor sink in the lobby.
The hotel wants to provide alcohol to its guests both in that lobby and in their rooms, and has applied for a conditional use permit with City Hall to make that happen.
Although city officials have voiced some concerns about the traffic situation around the hotel, it too seems to be operating within the rules, according to the report.
The building itself, originally built in 1927, has no on-site parking. The Paligroup, owners of the hotel, set up a valet parking system with the blessing of City Hall that parks cars in an off-site lot.
A video posted by Wilson to YouTube shows cars lining up in front of the hotel and a large van making what she said is an illegal U-turn at the end of the street.
The Code Enforcement Division is aware of the issue and working to correct it, said Joe Trujillo, the manager of the division.
“I personally discussed the issue [Monday] with the business operator,” Trujillo said. “We’re working with the business operator and the valet that there can’t be double parking of vehicles in front of that valet.”
Code Compliance employees have been investigating complaints brought to them by angry residents by making inspections, working with building and safety officials and even trying to get served by the hotel cafe, something that is against the rules for the general public.
Residents have been unhappy with the pace of the investigations, Trujillo said, but his staff has been monitoring the property on a daily basis for possible violations.
“I think our goals are the same,” Trujillo said. “I don’t want any property in the city to be out of compliance.”
That’s little consolation to Wilson, who believes that city officials have been unfairly biased in favor of the hotel business because of the lucrative taxes assessed on room stays in Santa Monica.
Each guest pays an additional 14 percent on their room that flows to City Hall. In the most recent budget, that tax made up 14 percent of general fund revenues.
“It doesn’t feel like they’re doing anything,” Wilson said.
For its part, the hotel owners will be connecting with residents as part of their application to sell alcohol, said Kirsten Leigh Pratt, executive vice president of hotels and branding for the Paligroup.
At that point, they will be able to discuss questions and concerns, and a special e-mail address will also be set up for neighbors’ use, Pratt said.
Still, the business is operating “a legal operation” and has all the required permits to do so, she said.
ashley@www.smdp.com
These days the better name for SM is BS! I’ve never heard such blatant lies. I live in the general area and walk my dog in the specific area. The residents, from what I observed, are entirely accurate!
and Ms Kristen L Pratt- why are you bothering to “talk with the residents?- you could not care less how they feel or what they want- that is why you make the ‘big bucks’ forget the show- we’ve seen it before- it’s running all over town- tired old cast- cheap seats.
I’m on California Avenue and 4th. Palihouse is on Washington and 3rd. Even at that distance I can hear what a nightmare the place is. Who puts what amounts to an upscale “Rave” house in a quiet residential neighborhood? That 14% tax that lines the pockets of City Hall is quite an incentive, but I’m sure there’s more that we don’t even know about.
Nice review for Palihouse…
Please read the review below. This explains the loud banging on Palihouse doors at 6am last week!
Valet is suppose to be from 7am to 11pm. But this person was promised his car would be available early. His banging woke us up last week at 6am and now I know why.
Also, He reports crossed electrical wires! This is what happens when you ignore Code compliance complaints. Shoddy work is done that can be a hazard! Clearly Palihouse installed new ceiling fan/lights WITHOUT permits and now they have electrical wires crossed.
“They are just getting started and need to fine tune”.
Reviewed June 20, 2013 NEW.
Nice hotel. I would stay there again but there were a few weird things:
1. Room didn’t have a dresser or a place to put the suitcase.
2. Very interesting light/ceiling fan setup that has its signal crossed with another room so we were turning on and off our light and controlling someone else’s fan and vice versa. I woke up at 3AM one night when our neighbor turned on the light in our room. I’m sure they will get this fixed.
3. Bathroom had no place to hang the toilet paper and is pretty small in general.
4. abusive pricing for coffee @ $4.00/cup.
5. The seat for the desk was basically a hard stool that was extremely uncomfortable to sit at.
6. Elevator is old and cute but hard to manage if you are toting bags. Doors are spring loaded.
7. Poor communication with the valet the day we left. Car was supposed to be there early but wasn’t. Hotel manager left to get the car while we were wondering what was happening. I almost banged the front door down to try to find out what was happening since when we left we were locked out without a car and no clue if anyone knew it.
Stayed June 2013, traveled with family.
I have posted the 6 page report below in sections… it would not let me post it all at once.
Date: June 21, 2013.
To: Mayor and City Council.
From: David Martin, Director of Planning and Community Development Department.
Subject: 1001 3rd Street (Palihouse Hotel).
This Information Item is to clarify the status of the Palihouse Hotel located at 1001 3rd Street. City staff and the Council have received numerous inquiries from concerned residents. This item is intended to address the legal use of the property, parking, valet parking, preferential parking, and food and alcohol service questions.
Background
The property at 1001 3rd Street was built in 1927 as a 38-unit apartment building and it has been commonly known as the Embassy Hotel and Apartments. The property is located in the R3 (Multiple Family) Zoning District. It is unclear exactly when the property began functioning with hotel guest units. However, a Settlement Agreement in December of 2000 between the property owners and the City of Santa Monica determined that 19 units were operating as hotel units and 19 units were rent controlled apartments. Subsequently, in another Settlement Agreement entered into on May 10, 2011, the remaining 19 rent controlled units were authorized for conversion into hotel units, with certain rent control conditions, thereby enabling the full conversion of the building to a hotel use. Additionally, in 2003 the building was designated as a City Landmark.
Introduction
Sometime in 2012 the hotel was sold. On December 4, 2012, a business license application was filed by the new owner. With the change of ownership, the hotel was renamed Palihouse. Since the change of ownership, renovations have been in process and a Conditional Use Permit (CUP) application has been filed requesting approval to obtain a Type-66 alcohol license to authorize in-room mini bars and a Type-71 alcohol license to allow service in the hotel lobby to hotel patrons and their guests. The CUP application is currently pending.
Discussion
Permit History
The scope of work for the renovations to the hotel have been limited to interior renovations such as resurfacing of tile work, new carpeting, painting, lighting fixtures, and new kitchen appliances in the larger hotel rooms. Additionally, new televisions and furniture have been installed in the hotel rooms. Many of the interior improvements have not needed building permits. However, Combination Building Permit (13CBP0363) was issued on May 7, 2013 to allow for the installation of two utility sinks, a coffee maker, and a floor sink in the 1st floor lobby. Additional work requiring a building permit has been identified and the owners are aware of the permit requirements. Building and Safety and Code Compliance staff members continue to conduct inspections to ensure requisite permits are obtained and to identify any violations. Code Compliance staff is scheduled to meet with concerned residents on June 25, 2013 to provide them with an update on the status of their concerns.
Other improvements such as landscape renovations and maintenance and installation of new canvas awnings on the building have been authorized through a Certificate of Appropriateness (C of A) application, since external alterations are subject to Landmarks Commission approval. Accordingly, C of A 13CA-006 has been reviewed and approved on March 4, 2013 to authorize these changes. Additionally, a total of five.

lighting fixtures on the exterior of the building have been replaced and will require review and approval and the necessary building permits.
Parking
There is no on-site parking for the hotel due to the age of the structure and lack of parking standards when the building was constructed. For this reason, the owner hired a valet parking company to park hotel patron’s vehicles and applied for a Valet Parking Permit on June 10, 2013 to allow guests to leave their car with a parking attendant in- lieu of self-parking. For purposes of the valet permit, parking spaces have been secured in an existing surface parking lot at 1148 5th Street. The owner is seeking to lease additional parking spaces in the vicinity, but has not secured additional spaces at this time. Additionally, opportunities to maximize the amount of cars that could be reasonably parked at 1148 5th Street are also being analyzed.
Two short-term metered spaces have historically been maintained on 3rd Street to support the hotel guests’ need to load and unload. These spaces were recently converted to valet parking through a City-approved Valet Parking Permit. The valet parking operator agreement is set forth in Santa Monica Municipal Code (SMMC) Section 6.122.060 with additional regulations agreed to as part of the application.
In addition to the valet parking spaces, The Palihouse, as a hotel operator of a City- designated historic landmark, is entitled to purchase guest parking permits as a result of the hotel fronting on a preferential parking district. Palihouse is eligible to purchase one guest permit per room based on Section 3.08.070(d) of the Municipal Code addressing Preferential Parking Permits stating:
Guest Permits. The owner or owner’s agent of a commercial property which is a City-designated historic landmark and which provides overnight accommodations on residentially-zoned property within a preferential parking zone may obtain one guest permit for preferential parking per guest unit. Such permits shall be in lieu of an exemption of the property’s frontage from preferential parking regulations.


This section of the code was added in response to a settlement agreement in 2003 with the prior hotel operator, Embassy Hotel and Apartments, after an adverse determination by the Coastal Commission.
Complaints
Several complaints have been filed by nearby residents. The complaints are related to activities associated with the change of ownership, physical renovations, and parking. Primarily they are focused on construction activities, work without permits, noise disruptions associated with the valet parking, claims that the hotel is not permitted to operate in the R3 Zoning District, concerns about the service of alcohol, and claims that a full service kitchen has been constructed to allow a public restaurant to operate. City staff is reviewing these complaints and is monitoring the construction and on-going operations closely.
Initially there was some confusion concerning whether permits were required to be obtained for some of the interior renovations. Work requiring a permit is currently authorized through permit 13CBP0363. Furthermore, the work that has been completed is legal. Additional work requiring a building permit has been identified and the owners are aware of the permit requirements.
Concerns related to the valet parking permit have been expressed ranging from general noise concerns to claims that valet parking is not permitted as an incidental business to a hotel in the R3 Zoning District. First, the valet parking operations are governed under SMMC Section 6.122.060 with additional regulations agreed to as part of the application and any violation of the conditions of this permit could be cause for revocation. Staff is closely monitoring this situation and will ensure compliance. Second, valet parking is considered to be an associated activity for a hotel, not an incidental business to a hotel, and therefore it has been common practice to allow valet parking for hotels citywide.
Questions regarding the legality of the hotel itself have also been raised. Specifically, that R3 Zoning does not permit hotels. The R3 zoning rules do however recognize.

hotels as permitted uses as long as they were in existence as of January 1, 1995. Furthermore, the status of this building as a hotel was confirmed in the 2000 and 2011 Settlement Agreements related to this site.
Lastly, concerns related to the construction of a new kitchen to enable a full service public restaurant are unfounded. The building has had a food service area of approximately 470 square feet in the basement for several years which contains appliances to aid in the preparation of food for hotel patrons only, via in-room service and in the hotel lobby lounge. There is not a commercial grade oven or venting system. The public is not permitted to visit the hotel unless they are guests of a hotel patron. Staff has discussed with the hotel operators that service to the public is not permitted, since a public restaurant associated with the hotel is not permitted. Food service for guests is an ancillary function common to any hotel and therefore is permitted. Since this nuance is an important distinction, staff met with the hotel operators to inform them clearly of the limitations. The hotel operators understand this point and do not disagree.
The operator has filed a Conditional Use Permit application requesting approval to sell alcohol to hotel patrons. Alcohol service would be limited to hotel patrons and their guests only and would only be authorized in the hotel rooms and lobby lounge areas, if approved. The application has yet to be reviewed by staff and is anticipated to be heard by the Planning Commission before the end of 2013.
Summary
The Palihouse is a legal hotel operating within the R3 Zoning District. Food service for patrons is authorized, as food service is customarily associated with hotels of this nature. Any service of alcohol would require the approval of a Conditional Use Permit by the Planning Commission. This issue is scheduled for hearing this year. A full analysis will be provided when the CUP is brought forward to public hearing. Issues related to construction without permits have been rectified and the requisite building permits are in the process of being obtained. Lastly, issues concerning valet parking and preferential.

parking have also been addressed. Specifically, the proper valet parking permit has been obtained and the hotel, as a city-designated historic landmark, is legally entitled to have one preferential parking permit per guest unit. The City will closely monitor the valet parking operation to ensure that it conforms to the permitted approval.
Prepared By: Bradley J. Misner, AICP, Principal Planner.
Everything the Planning Department writes is total fiction, anything to support developers. Money talks, residents can walk, as far as the City is concerned. The inspections are done in the daytime? Wonder why they don’t discover the violations that happen between checkin time at 3 pm and checkout time at 11, and usually at night? And why aren’t Laura’s videos evidence of violations? If it were me making that illegal u-turn (not at the end of the street as the article says, but in the middle of the block), police could see my license number and ticket me from the video. This kind of ignoring residents in favor of ANYTHING tourists and developers want–because 14% of the general fund so they can spend it on things like $55 million on two blocks of parks in front of City Hall is more important to the Council than 100% of residents who vote and are against hotels in residential neighborhoods–is why Davis and O’Day should have been voted out last time and we have to get O’Connor out and another anti-development councilmember to replace Holbrook, who’s not running again. Better yet, let’s pass an initiative requiring OUR approval b/4 any development is allowed, the way Encinitas did yesterday.
Is anyone surprised here? ONe look at the face of the council 4 will tell you – it’s a done deal – and they aren’t listening to anyone – they know better.