The Santa Monica City Council helped finalize the sale of an iconic local hotel and earned an estimated $500,000 for the City thanks to an $80 million-plus transfer of ownership agreement.
Thanks to the extension of a labor agreement through August 2011, the sale of the Viceroy Hotel from Roscoe Real Estate Limited Partnership to Seaside Hotel Limited Partnership was officially completed on March 16, according to the City’s Economic Development Office.
Originally an issue on the council’s agenda at its March 8 meeting, the sale of the Viceroy Hotel was held to complete a collective bargaining agreement between union officials, the current hotel management, the new ownership group, and the City. Rod Gould, Santa Monica’s city manager, was authorized to negotiate a labor agreement with the affected parties to expedite the transaction.
“The council authorized the city manager to sign whatever documents were necessary so that the current owner of Viceroy Hotel can assign its ground lease to the new entity, and the council’s approval was subject to the seller and the buyer and the union demonstrating they have a collective bargaining agreement,” Miriam Mack, the City’s economic development manager, said before the sale was finalized.
By the afternoon on March 15, a collective bargaining agreement was indeed formalized and Seaside Hotel Limited Partnership officially acquired the Viceroy Hotel; KHM Viceroy Santa Monica, LLC, remains as the hotel’s operator.
Mack added the collective bargaining agreement, which had expired almost eight months ago, was only renewed and extended through the end of July; Seaside Hotel Limited Partnership must determine whether to move forward with a new labor agreement on Aug. 1.
“[The City] own(s) the ground lease, and the ground lease has a provision in it that if the property [or lease] is assigned, then the City gets a percentage of the net proceeds,” Mack said. “We estimate that the seller would be subject to a transfer premium of approximately $500,000.”
When the matter was before the council on the consent calendar, a valid labor agreement between the union and the Roscoe entity was not in place; the council pulled the issue from the consent calendar agenda and determined the transfer of ownership could not be completed before a labor agreement was instituted.
In an 82-year deal signed in 1966, the City entered into a ground lease agreement with Royal Inns of America, Inc., to develop “a first-class hotel,” which is currently the Viceroy, located on the corner of Ocean Avenue and Pico Boulevard, in the heart of the city, with an ocean view and within walking distance of the beach, Main Street, the pier, and the downtown shopping area. In September 2000, the council extended the lease another 17 years to make it a 99-year term ending in September 2065.
KHM Viceroy Santa Monica, LLC, had a collective bargaining agreement with Unite Here Local 11, which, prior to the March 16 extension, expired on July 31, 2010.
