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California developer fined $15.58 Million

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A developer was hit Wednesday with a record $15.58 million fine for constructing a high-priced hotel on the Southern California coast after initially obtaining a permit for a property with moderately priced rooms, in what state officials called a "bait-and-switch" building scheme.

Sunshine Enterprises violated a state law that enshrines public access to beach areas, according to the California Coastal Commission.

Commissioners unanimously approved the fine — the largest in the agency's 40-year history — but decided not to immediately levy an additional, staff-recommended $5.9 million in mitigation fees linked to approval of a new permit.

The fees would have been held in an account to help fund projects offering lower-cost alternatives for people who might have stayed in the moderately priced rooms, such as rehabilitating old motels or expanding campgrounds.

Instead, the commissioners postponed a decision on issuing the fees and granting an after-the-fact permit. Commissioners indicated that they wanted to see dozens of replacement rooms created either at the current hotel or nearby. No deadline was given.

"Past behavior is often a predictor of future behavior," Commissioner Aaron Peskin said before the vote. "I don't want their money — I want their hotel rooms. Why can't they just convert 87 of the 164 rooms to an affordable price point?"

Sunshine Enterprises was permitted to rebuild and expand two motels — the Pacific Sands and a Travelodge — that were among a dwindling number of affordable accommodations along a tourist-heavy strip of pricey hotels near the Santa Monica Pier. The new hotel would not offer a bar, restaurant, spa or other "luxury" amenities and rooms would cost about $165 a night, according to the permit application.

But the company let that permit expire and instead built the boutique Shore Hotel, where rooms with a "bed and breakfast package" start at around $300 and ones featuring Pacific Ocean views can run up to $800, documents show.


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