A simple alcohol use permit became mired in controversy at two Planning Commission meetings because the restaurant will open inside the Shore Hotel.

The seaside hotel has recently been entangled in two high profile legal disputes. In one case, the California Coastal Commission has maintained the Shore Hotel did not provide adequate information during the permitting process and is thus operating illegally. Without a valid permit, the Shore could face millions of dollars in fines or be completely shutdown until meeting certain conditions.

The Coastal Commission says the developers promised to build a moderate-priced hotel without “luxury” amenities like a restaurant and bar. To make the matter more complicated, the City allowed construction of the hotel, apparently without the correct permits. Owners of the Shore maintain they filed all appropriate paperwork.

Just this week, the Shore settled a case to pay $100,000 in back pay to three workers as part of a separate settlement with the hotel workers’ union, Unite Here Chapter 11. One of the workers, Jonah Breslau, says he was disciplined and then fired after he testified at the Coastal Commission that the hotel was violating its permit.

With all this litigation hanging in the air, a new restaurant wants to open up inside the hotel, facing 2nd Street. While an alcohol license for the new restaurant was the only issue before the Planning Commission, the discussion became wrapped up in whether the hotel’s permit issues would impact the restaurant.

“Its foundations are in quicksand,” Commissioner Mario Fonda-Bonardi said at the Wednesday night meeting. “We don’t know if it’s going to float or it’s going to sink and that’s added some additional weight on our deliberations.”

Fonda-Bonardi went on to call the Shore Hotel an “untrustworthy operator” but voted in favor of allowing the new restaurant an alcohol permit because the applicant, Full of Flavor, LLC, is a completely different business.

“In the interest of evenhandedness, it’s very hard to deny this (permit) unless someone can show us a link between the hotel and this restaurant. If someone has it, I would love to see it,” Fonda-Bonardi said.

The conditional use permit passed with support from four commissioners, with Commissioner Jennifer Kennedy and Vice Chair Nina Fresco voting against the permit. Commissioner Richard McKinnon was absent but had previously criticized the application at a January meeting.

Fresco said the commission should consider the potential legal implications of continuing to grant permits to a business entrenched in litigation over its right to operate.

“When we have conditional approval, the reason it’s conditional is because that kind of narrow view of the project doesn’t work and it requires a judgment call,” Fresco said, later adding “If we pretend all that stuff doesn’t matter, we’re not doing justice to our responsibility.”

Several local groups in support of workers’ rights spoke out against the permit. Rent Control Board member Nicole Phillis also spoke out as a concerned citizen about the City’s potential liability.

“The Coastal Commission has questioned whether the City of Santa Monica can be liable if we grant a conditional use permit knowing that the hotel itself in violation,” Phillis said.

While Full of Flavor is a distinct entity from the Shore Hotel, critics argued the hotel will benefit from rent it receives on the lease. Commissioner Leslie Lambert noted there is a distinction between a “hotel restaurant” and a hotel in a restaurant. Several commissioners asked Code Enforcement whether the Shore would be violating its City permits by advertising the hotel to guests as an onsite amenity.

“I’m not convinced based on what I’ve read on the hotel’s website and what I’m hearing from the applicant that this will be neighborhood serving,” Kennedy said before voting against the permit.

Voting down the permit would not have prohibited the restaurant from opening, merely from serving alcohol. To the members of the commission who approved the permit, Full of Flavor alone is taking on the risk of opening a restaurant inside the Shore Hotel. It’s a gamble the new owners can now drink to.

kate@www.smdp.com