As Palo Alto prepares for a possible legal showdown with the new owners of downtown's President Hotel over conversion of the apartment building to a hotel, residents are asking the City Council to pass an urgency ordinance that would assist them with their pending eviction from the historic building.
The City Council last week heard from more than a dozen residents of the President Hotel, which in June was purchased by the Chicago-based Adventurous Journey Capital Partners (AJ Capital). Days after buying the 1929 building at 488 University Ave., AJ Capital informed the residents that they have until Nov. 12 to vacate their apartments.
The announcement prompted an outpouring of community support and a rare consensus from the city's two leading advocacy groups. Both Palo Alto Forward, which favors more housing, and Palo Altans for Sensible Zoning, which focuses on slow-growth policies, have urged the council to do what it can to preserve the 75-unit building for residential use.
One action has already been taken. Last month, council members Tom DuBois, Karen Holman, Lydia Kou and Cory Wolbach submitted a colleagues memo urging the city to update its policies protecting renters, with a focus on providing more relocation assistance to residents who are evicted because of severe rent spikes. The memo is a revised version of the memo that DuBois, Holman and Kou offered last fall, but with two notable differences: It does not propose to cap allowed rent increases; and it now has the support of Wolbach, who last year was part of the majority who opposed the rent-stabilization proposal.
The new proposal is unlikely to help the residents of President Hotel with their near-term dilemma. The "colleagues memo" process typically takes months to produce results, as city staff analyzes the memo's implications and as the appropriate committees vet the memo before sending it to the council for adoption. While City Manager James Keene indicated on July 30 that staff is preparing to move ahead with this process, he also noted that staff will consider near-term actions aimed specifically at helping President Hotel residents.
"Time is of the essence," Keene said. "Are there adjustments to our current ordinances that could enhance renter protections?"
Dennis Backlund, who has lived in President Hotel for the past 37 years and who had previously worked as a historic preservation planner for the city, was among a group of residents who last month appealed to the council to step pass an "urgency" ordinance to stave off their displacement, even if temporarily. He argued that AJ Capital's planned conversion of the building will have a serious impact on downtown businesses, including those operated by building residents. These include a music school and a language-art school, he said.
"We request the council consider an urgency ordinance or a moratorium that would, for example, delay the expulsion for the residents until after the holidays and to explore the possibility of permanent residential use of the building," Backlund said.
Katya Priess, who operates the language-art school, appealed to the council, pointing to the support that the residents had received from the wider community -- including a petition signed by 1,300 residents asking for the preservation of President Hotel for residential use. Priess asked that the council pass an ordinance protecting residents from unjust evictions and that it enforce the existing requirement for one-year leases.
"We understand that economic growth is important for a community to thrive and develop," Priess said. "But in a place where people, due to lack of housing and exorbitant rents, are forced to be stuck daily on congested highways for hours while commuting to work, start to live out of cars (and) rent tents in backyards, each substantial loss of housing becomes a moral issue as well."
As of Tuesday, AJ Capital has not filed any applications for a building permit or an architectural review, according to the planning department. As such, the city has not taken any action that would require a formal appeal, Chief Planning Official Amy French told the Weekly.
Even so, the company has indicated that it plans to challenge the determination by the planning department that the proposed conversion of the building to a hotel would violate the city's zoning code pertaining to "grandfathered buildings" -- those that were in place before the current zoning provisions were adopted. The code specifies that such buildings can only be remodeled or improved if they retain "the same use" after the renovation.
The city announced its determination in a July 17 letter that interim Planning Director Jonathan Lait sent to Timothy Franzen, president of the Graduate Hotels division of AJ Capital.
Prior to that letter, there was little indication that the city considered the conversion illegal. In early June, the city received a request for information from The Planning and Zoning Resource Company, LLC, an Oklahoma-based firm that was performing a zoning analysis on the property. In a June 5 response to the firm, French alluded to a conversation that she had with the firm employee, Alissa Winkle, about the proposal to create a boutique hotel, according to documents obtained by the Weekly through a Public Records Act request.
French provided information about the property and requested clarification about "any potential renovations, or proposed conversion back to hotel use."
Two days later, on June 7, AJ Capital's consultants on the project -- former Planning Director Steve Emslie and former management analyst Richard Hackmann -- met with Lait to discuss the proposal. At that meeting, Lait reportedly asked the applicant team if it had reviewed the city's municipal code for "compliance with applicable provisions." According to Lait's July 17 letter, Hackmann indicated "only a need to address parking and obtain design review approval."
Keene publicly announced the proposal to convert President Hotel at the June 11 meeting of the council. Though Keene said he was concerned about the displacement of residents, he gave no indication that the project would be illegal. Hotels, he said at that meeting, "are uses permitted by right downtown." Two days later, in response to an inquiry from the Weekly, the city's Chief Communication Officer Claudia Keith wrote: "There is no permit needed for the current use to be switched back to hotel."
On June 12, AJ Capital completed its purchase of the building. The following week, however, Keene walked back the earlier statement. He told the council on June 18 that city staff was evaluating the proposed conversion's compliance with the city's code.
By July 17, staff concluded that the planned conversation would, in fact, be illegal. Lait informed Franzen in the letter that the city's zoning code "precludes the remodeling, improving or replacement of site improvements together with the conversion of an existing non-complying facility in the subject property's Downtown Commercial CD-C district to a different land use."
AJ Capital has since maintained that the city's determination has not changed the firm's plans. On July 23, President Hotel residents received a letter, signed by Franzen, telling them that the company "respectfully disagree(s) with the city's current reading of the municipal code provisions" and that it will continue its discussions with the city in the coming days.
Meanwhile, the residents have hired their own land-use attorney, who concurred with the city's findings prohibiting the conversion of the hotel. Heather Minner, an attorney with the firm Shute, Mihaly & Weinberger, LLC, argued in a July 27 letter to the city that the conversion of President Hotel back to a hotel would violate the zoning code.
"The city's determination that the zoning code prohibits converting this noncomplying building into a hotel is not only supported by the plain language of the code and legal precedent; it is also good policy," Minner wrote. "Developers should not be able to take advantage of existing, oversized buildings to establish a brand new hotel that would far exceed the height and size limits for hotels currently imposed by the zoning code.
"Doing so would lead to excess noise, traffic, and other adverse impacts in the Downtown."