Koreatown Developer Michael Hakim Sued by LA County for $220,000 in Legal Costs

Jay Yim, Nov. 12, 2019, 5:10 p.m.

Mike Feuer, Los Angeles City Attorney, has filed for a breach-of-contract lawsuit against the Koreatown residential tower developer, Michael Hakim, claiming that he owes the city more than $220,000 for unpaid legal bills over his project.

According to Feuer's legal team, in a lawsuit filed last week, they claimed that Hakim and his company, Colony Holdings, did not hold up their end of the agreement which required them to reimburse the city for costs amassed during a legal battle over the 27-story tower project.

In 2015, the City Council had approved Hakim's 269-unit apartment tower even though planning department staff and Mayor Eric Garcetti's appointees on the planning commission opposed the project. Three years after, a judge rejected the approval for the project, and said the city did not properly examine the project's impact on traffic, public safety and other issues.

The project was never followed through with, and in an interview, Hakim said that he had not yet seen the city's lawsuit.

“I have to look into it,” he said. “You know when you buy something in the store, or online ... that has that small, little fine print? The city probably put that in the conditions of approval.”

This lawsuit comes after the news about council President Herb Wesson a few weeks ago and how he had helped Hakim win approval of the Koreatown tower while his son, Herb Wesson III, was living in an apartment building that was owned by a company that listed Hakim as an executive.

Three tenants who used to live in the building revealed that Wesson III was receiving special rent discount because of his father's business with Hakim. Two of the tenants were even told by Wesson III himself that he was getting a rent break.

Wesson III moved in a Rosewood Avenue apartment in 2011, owned by Rosewood Corp., which identified Hakim as its chief financial officer in state business filings. Hakim even signed a document in 2017 declaring he was the owner of the 20-unit building.

The room where Wesson III was staying in was constantly receiving rent breaks, for more than five years. On the other hand, most other eligible units were the victims of rent spikes. Several tenants even received multiple rent increases. Last year, Wesson III moved into another unit in the same building.

Once that news broke out, a spokeswoman for Dist. Atty. Jackie Lacey said the D.A.'s office would go over questions surrounding that apartment building.

Futhermore, a spokesman for Wesson said that the council president does not arrange such rental agreements for his adult children. Hakim even said that he only knew about the rent situation after he was contacted by the Los Angeles Times.

Hakim is a first-time developer, but scored big with his 2015 project. He persuaded councilman Wesson and his colleagues to rezone his property so that the building could allow for twice as many apartments than the city's planning rules permits at one time.

One planning commissioner warned that it would be "illegal" for the city to approve the project in the months leading up to the council's vote. In addition, neighborhood activists showed their discontent toward the project as they feared it would prompt other landloards to hike up rent prices and push out low-income families.

In 2016, the council cast its final vote which approved Hakim's project. However, in that same year, the city required Hakim and his company to “indemnify, defend, hold harmless and reimburse the city” for the legal fees amassed during the trial in court.

There were three groups in total that sued to overturn the city's initial decision, and after Hakim's project was struckdown, a judge awarded one of the groups, Fix the City, $210,779 in legal fees and costs. Since then, the city and its lawyers are demanding that either Hakim or his company compensate the city for the legal fees that were paid out.

However, according to the lawsuit, Colony Holdings and Hakim have refused to oblige. Futhermore, the lawsuit states that both owe the city another near $10,000 for work performed by one of the city's law firms.

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