• Watch Weekly journalists discuss the implications of the President Hotel sale on an episode of "Behind the Headlines."
Residents at the historic President Hotel Apartments in downtown Palo Alto received notice Tuesday, June 12, that they will have to move out of the building by Nov. 12.
Letters from Chicago-based developer AJ Capital, which has purchased the six-story Spanish Colonial building at 488 University Ave. for an undisclosed price, were placed under tenants' doors Tuesday afternoon notifying them that the building will be converted back to its original purpose as a hotel.
The new owners plan to do an historic renovation of the building and reopen it in 2020 as the Graduate Palo Alto hotel, which will include 100 guestrooms, a lobby coffee shop, street-level retail and the restoration of its original rooftop garden, according to company press release sent out Wednesday, June 13. LoanCore Capital will provide financing for the project.
The renovation will touch all guestrooms, corridors and the lobby, while preserving the building's façade and interior historic elements.
Built in 1929, the President has served as an apartment complex for the past 50 years. Rents for the mostly month-to-month leases are relatively low for Palo Alto; they range from $1,200 to $2,400, according to a sign posted at the 75-unit complex.
Iqbal Serang, an architect who has lived in various apartments on different floors in the building over the past 30 years, said he was in shock over his impending eviction.
"There's just this feeling of helplessness," he said.
Neighbor Diane Boxill has taught piano out of her studio apartment at the President Hotel Apartments over the past 30 years.
"Many of my students walk or bike to lessons. Relocation risks my livelihood," she said on Tuesday.
Many residents said they had heard rumors about the possible conversion of the property last week but had been kept in the dark.
"Everyone is devastated," said resident Pemo Theodore, who has lived at the President for three years.
According to the notice, the company "did not have the contractual authorization" to communicate with anyone other than city officials about the property prior to closing escrow on Tuesday.
Timothy G. Franzen, president of Graduate Hotels, a division of AJ Capital Partners, stated in the letter that the firm does understand the predicament the conversion presents.
"We appreciate that being forced to move can have the potential for numerous burdens and difficulties, so we are committed to providing each of you with the time and resources to mitigate any hardships that may raise," Franzen wrote.
As such, the company will provide each residential unit $3,000 to assist with moving-related expenses and is working with "a local relocation expert to provide customized services" to households that may require additional help.
The complex was not at full capacity at the time of the sale. Residents said the property's management had stopped leasing out apartments as they became vacant in recent months. Of the 75 units, 58 were occupied at the time of the sale, former property owner Chris Dressel confirmed.
City Manager Jim Keene publicly acknowledged the building's sale at the City Council meeting on Monday night.
"The big concern would be the displacement of 75 units, given the city's current housing shortage," Keene said. City staff has been encouraging the property owner to provide "generous relocation packages" to the residents.
Dressel, president of University President Associates LLC, which had owned the property since 1996, said the building was never listed on the market. He decided to sell the complex after a representative of AJ Capital approached him about purchasing it.
Graduate Hotels specializes in developing boutique-style hotels in college towns, according to its website. The company is a "passionate steward of historic properties," Franzen wrote in his notice to the residents.
The historic property, designed by noted Palo Alto architect Birge Clark, currently includes six shops on the first floor -- including the President Barbershop, several eateries and a clothing boutique -- and 70 studio apartments and five one-bedroom units ranging between 250 and 800 square feet on the upper five stories.
Keene said the property is listed as a Category 2 resource on the city's Historic Inventory. The city's Architectural Review Board and Historic Resources Board are expected to review the conversion plans later this year. He also noted that the hotel use is allowed by right at the downtown location.
Residents, who have discussed retaining an attorney to explore their rights, are contemplating their futures.
"There's no way all of us can get accommodations in Palo Alto, and there's no way for us to find what we're paying here to live in one room," Theodore said. "It really is the most amazing community, and none of us will be able to reproduce this anywhere else we go."