June 25, 2013 -- Despite residents' claims, City staff has affirmed that a small hotel in a quiet residential neighborhood north of Downtown Santa Monica is not breaking any rules.

In a report issued Friday, staff states that The Palihouse Hotel, which is in the midst of remodeling the 86-year-old former Embassy Hotel and Apartment building, is a legal operation, countering contentions repeatedly made by neighboring residents.

“The Palihouse is a legal hotel operating within the R3 (Multiple Family Residential) Zoning District,” staff wrote.

The report, which responds to residents claims that the construction is noisy and outside the scope of what's permitted in the area, outlines the steps Palihouse owners have taken to assure that the renovation project for the landmark building meets all of the City's requirements.

“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,” staff said. “Many of the interior improvements have not needed building permits.”

Construction on the project isn't the only source of frustration for residents. Much of the controversy surrounding the Palihouse revolves around the hotel's neighbors growing concern that the revamped venue will be a source of noise, traffic and overall “chaos.”

“The thought of a full restaurant under my bedroom window in what WAS a silent neighborhood is appalling,” Laura Wilson, a resident of the well-heeled neighborhood and vocal opponent of the Palihouse Santa Monica, wrote in an emal to The Lookout.

Wilson has characterized the renovation of the hotel, as well as activities taling place in those parts of the facility that are opearting during the work, as an example of Santa Monica's bustling Downtown encroaching on quiet residential streets.

“The noise is already out of hand,” she wrote. “Imagine your next door neighbor having 100 or more invited guest coming and going all day long at ALL hours of the night!”

Wilson has established a Youtube page where she posts videos of the activities at the Palihouse as part of her campaign to get the City Council's attention.

Currently, the Palihouse owners are applying for a Conditional Use Permit (CUP) that would allow the sale of alcohol.

“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,” staff said.

City staff hoped to address residents' concerns about parking and other logistics surrounding the hotel.

“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,” staff said. As a result, the Palihouse owners applied for a valet permit.

“The owner is seeking to lease additional parking spaces in the vicinity, but has not secured additional spaces at this time,” staff said.

Before hotel developer Avi Brosh and investors bought the building in December 2012, the 38 rooms at the Embassy Hotel and Apartments included 19 rent-controlled residences.

Opponents have questioned whether those rent-controlled units have been taken off the market legally, but City staff said that proper procedures have been followed.

Despite the Rent Board's attempts to prevent the hotel's previous owners from converting the 19 rent-controlled units back into hotel rooms, a 2011 court decision found that, under State law, the Embassy's owners were within their rights.

Residents have been active in voicing their frustrations.

“I have passed all the complaints on to staff, and I know that staff was meeting with some of the residents today,” said Council member Kevin McKeown on Monday.

In Friday's report, City staff tried to assure residents that they would be making sure that Palihouse operations follow City guidelines.

“Staff is closely monitoring this situation and will ensure compliance,” staff said, adding that Code Compliance staff is scheduled to meet with residents Tuesday.

The Palihouse will also go before the Planning Commission for its CUP later this year, staff said.