October 6, 2022


Just Do Travel

Laguna Beach partially withdraws Hotel Laguna stop-work order

4 min read
A lone guest keeps a light on at Hotel Laguna in the last weeks of its operation back in December 2017. Photo by Mitch Ridder

Laguna Beach partially lifted a stop-work order at Hotel Laguna on Thursday, allowing a remodel of the restaurant, bar, and hotel lobby to resume, according to a city press release.

City building officials recently inspected and confirmed that the interior work underway at Hotel Laguna by lease-owner Mohammad Honarkar meets the required construction standards. However, work won’t be allowed in other areas of the hotel, including the Rose Garden and Terrace, until the developer submits a comprehensive plan for the overall restoration of Hotel Laguna and receives permits. 

“Hotel Laguna is a historic landmark and an important asset to this community, and we are supportive of the end-goal of restoring Hotel Laguna,” City Manager Shohreh Dupuis said in a prepared statement. “At the same time, we will continue to make it clear that all the procedures and requirements applicable to the project are to be followed.”

None of the areas where work will resume are part of the Coastal Development Permit appeal to the California Coastal Commission filed by Laguna Beach residents Mark and Sharon Fudge, city officials said. City officials notified the Coastal Commission staff that the remaining minor work is resuming.

Before Laguna Beach issues a temporary occupancy permit for the first-floor restaurant, lobby, bar, and kitchen areas, a structural engineer must confirm that the Hotel Laguna remains in structurally sound condition and is safe to occupy. Building inspectors will continue making regular daily visits to the project site to ensure that no unpermitted work is occurring, according to a press release.

“The decision by the City is vindication for me, my family and the entire team at the Laguna Beach Company,” Honarkar said in a prepared statement Thursday. “We are thrilled to get back to work and complete the first-floor restoration and renovation of the Hotel Laguna. The final touches are expected to take just a few weeks to complete. Then, we will open the doors and join together with the Laguna community to honor the hotel’s storied history while celebrating its future.”

In May, Laguna Beach ordered construction at Hotel Laguna to stop after city officials discovered that exterior work was underway without a permit. This was at least the third time city officials have formally warned Honarkar to stop unpermitted work at Hotel Laguna.

At that time, Mayor Bob Whalen said it was “very disappointing and frustrating” that unpermitted work continued at the Hotel despite previous stop-work orders on various elements of the property.

“We all have a common goal of getting that hotel open again but it has to happen within the rules,” Whalen said in May.

On June 29, the City Council held a closed session discussion to discuss possible legal action regarding Hotel Laguna, according to a letter from City Attorney Phil Kohn to the Fudges. At Tuesday’s city council meeting, Mark Fudge said he had information that city officials discussed a new conditional use permit for Hotel Laguna—these permits are typically necessary when developers want to add new amenities. Kohn has reportedly denied this but didn’t share any public comments regarding this matter on Tuesday.

“My goal is to determine who is telling the truth, what the truth is, and to get Hotel Laguna back in front of the public in a public hearing for a major land-use item and not to have it obscured behind closed doors,” Mark Fudge said.

A timetable for reopening hotel rooms to guests at the historic landmark remains uncertain.

Last month, an Orange County Superior Court judge cleared the way for Honarkar to escape a months-long receivership for an 18-property portfolio that does not include the lease with Hotel Laguna. Judge Charles Margines approved an order granting permission to Honarkar’s companies to refinance a $195 million loan. Before Honarkar inked this refinance deal, his then-creditor had intended to foreclose on the properties. That never came to pass, delivering a major win for the local developer whose hospitality-focused portfolio, according to court records, saw severe losses over the last year due to COVID-19 restrictions.

Honarkar’s team is working to submit a comprehensive plan for the overall restoration of Hotel Laguna. This includes a schedule and description of the future work that is proposed, including all proposed renovations, a summary of the intended use of the lower-level areas such as the conference room and commercial spaces along South Coast Highway.

Plans for the total hotel overhaul will be brought before the Planning Commission for public review at a yet to be determined date, city officials said.