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Nightly Sublets at Palazzo East?

Recently, travel websites have described a new Los Angeles hotel like so:

"Stay in a gated community where residents are pampered with resort-style amenities including a full-service concierge, a world-class health spa, a state-of-the-art fitness center with personal trainers, a pool and sundeck. These neatly appointed one- and two-bedroom units feature spectacular views and spacious terraces."

All this, near The Grove, and from $159 per night? The hitch is, this "hotel" is actually a series of sparsely furnished apartments in the Palazzo East complex in Park La Brea. Currently in lease-up, 81 of Palazzo's units are being used for short term (like, nightly) rentals. This being illegal (uh, zoning anyone?), the owners have recently been cited by the city and the "hotel" operations closed. Oh well, there's always the Holiday Inn Express.
· Hotel Operation Near the Grove to Be Shut Down [LA Times]