The legal fight over affordable housing at 1217 Euclid Street in Santa Monica has ended with La Brea Washington Co. LLC agreeing to drop its appeals and pay $250,000 in attorney fees. The company had challenged the city’s approval of a development agreement and ground lease with a nonprofit housing developer; a judge found the lawsuits were brought to delay the project.
The Santa Monica City Council approved the settlement 6-0 after a closed session last Tuesday, according to the Santa Monica Daily Press. La Brea Washington will pay $125,000 each to the city and Hollywood Community Housing Corp. Mayor Pro Tem Jesse Zwick recused himself, citing his job as Southern California director of the Housing Action Coalition.
The council approved a development agreement and ground lease with Hollywood Community Housing Corp. for the site in December 2024. La Brea Washington, which owns the adjacent historic Wilshire Theater, filed two lawsuits in early 2025. One argued that the city had not adequately studied environmental effects under the California Environmental Quality Act, including impacts on the theater and nearby parking. The other challenged the project under a 1954 deed restriction requiring public use of the land and alleged inadequate notice about parking losses.
Court Rulings and Delay Findings
Judge James C. Chalfant granted motions to strike both petitions in June and July 2025, and the cases were dismissed that August, the Daily Press reported. Judge Tiana J. Murillo, who separately considered a bond dispute, wrote that the CEQA claims lacked merit and had been filed after the deadline to challenge the city’s housing element environmental impact report. That report had already analyzed parking effects near historic resources and identified the Wilshire Theater. Murillo also found the deed-restriction case facially defective because La Brea Washington had disclaimed ownership in the property, and said the city had no discretion to require replacement parking.
In considering the bond request, Murillo cited the timing and handling of the litigation as evidence of delay: the initial filing came at the end of the limitations period, the company challenged the assigned judge on the last day, waited roughly 50 of its 60 days to appeal, and failed to pay appellate transcript fees, prompting a default notice, according to the Daily Press. Court evidence indicated that Masoud Netty said he intended to prolong the case to stop the project unless it settled on terms he preferred. La Brea Washington objected to that evidence but did not dispute its substance; Murillo said the record supported a finding of delay even without Netty’s statements.
Bond Dispute and Project Costs
Hollywood Community Housing Corp. sought a bond under a state law intended to protect low- and moderate-income housing developers from lawsuits brought to delay or thwart projects. Murillo granted the request, finding the court could consider it while the appeal was pending, and ordered La Brea Washington to post $500,000—the statutory maximum—within 15 days. The company argued that the bond would cause undue hardship because it had no revenue and paid property costs out of pocket. Murillo found the company had provided only conclusory support for that claim. The bond is to be released once the appeal is dismissed.
Hollywood Community Housing Corp. told the court that further delay could put $33.6 million in project funding at risk. The nonprofit said it had taken on a $28.5 million construction loan and more than $1 million in predevelopment debt, and had incurred $967,000 in predevelopment costs. In November 2025, a court awarded the city and the nonprofit $548,911.30 in attorney fees. La Brea Washington appealed the underlying judgment in October 2025 and the fee award in January 2026.
The Project’s Scope
Accounts of the project's scope differ depending on the source. The Daily Press describes the plan as replacing roughly 100 public parking spaces with 130 affordable housing units. Hollywood Community Housing Corporation, however, lists its approved concept for the Euclid site itself as 48 units of affordable rental housing, on a parcel it says is currently owned by the City of Santa Monica. A separate report from the Lookout News, covering the council's December 2024 vote, described a revised development spanning multiple city-owned sites — 48 family apartments at 1217 Euclid Street alongside 82 senior apartments at parcels on 14th Street and Wilshire Boulevard, for 130 units in total across all three locations.
Approved Euclid Street Plan
For 1217 Euclid Street itself, Hollywood Community Housing Corporation’s project page lists an approved concept of 48 affordable rental units, most of them family-sized apartments with two or three bedrooms.
City Attorney Heidi von Tongeln said the city and Hollywood Community Housing had prevailed in both lawsuits and were awarded attorney fees. The court record described in the Daily Press did not include a statement from La Brea Washington denying that it litigated to delay the project. With the council-approved settlement, the appeals are being dropped and the dispute is coming to a close.
Housing litigation of this kind is not unique to Santa Monica. In a separate case, a Los Angeles County Superior Court judge denied a legal challenge to a City of West Hollywood project on Fountain Avenue, ruling that its first phase was exempt from environmental review, according to WEHO Times.
