Responding to pleas for help from dozens of tenants facing eviction, the Palo Alto City Council passed an emergency law Monday night that could help some of them relocate to new homes.

In a public hearing that brought dozens of tenants, landlords and community activists to City Hall and that featured competing motions and sharp disagreements between council members, the council moved to approve an "emergency law" that requires landlords to provide relocation assistance based on the size of the unit. The payments would range from $7,000 for studios to $17,000 for units with three or more bedrooms.

The law applies to buildings with 50 or more units.

While the measure could provide some temporary assistance for residents of President Hotel, who are being evicted as part of a plan to convert it back to a hotel, it falls well short of what many in the community had requested and what staff had proposed last week.

The council summarily rejected an alternative ordinance drafted by staff that would have also required landlords to declare the cause for eviction. And in another surprising departure from the staff proposal, the emergency law approved by the council only apply to those residents who make below 100 percent of Santa Clara County's area median income. Those making above that threshold would get no relocation payments.

The decision to limit the relocation assistance to those making below the AMI was proposed by Councilman Greg Scharff and Mayor Liz Kniss and moved ahead despite opposition from the council majority. That's because as an "emergency" measure, the motion needed support from seven of eight council members present (Adrian Fine was absent). The high threshold gave Scharff and Kniss the leverage to effectively veto any competing proposal that would either raise the income-eligibility level or eliminate it entirely.

Scharff argued that the goal of the new ordinance should be to protect those who are "most vulnerable." He had initially proposed limiting relocation assistance to those making below 80 percent AMI -- which for an individual is about $66,150. He later agreed to raise it to 100 percent.

"I agree that what we need to do here is craft an ordinance that is citywide and does something that we're looking to do -- protect the most vulnerable in our community, who can't get the money together," Scharff said.

Councilman Tom DuBois and Councilwoman Karen Holman both made a case for either raising the eligibility threshold or scrapping it. DuBois proposed setting the eligibility level at 120 percent of the AMI. Holman suggested removing it, consistent with the ordinance drafted by the office of City Attorney Molly Stump.

DuBois called the 80-percent AMI level "arbitrary" and argued that it is reasonable for evicted tenants to get payments that amount to first- and last-month rent and a security deposit. Holman agreed.

"We're talking about people being displaced," Holman said. "We need to go to 120 percent to have a meaningful impact on people being displaced."

Many of people who would be affected by the new law attended the Monday meeting to request that the council adopt the emergency law. Dennis Backlund, 76, said he is afraid of what will happen when he has to leave his apartment.

"I have been in my apartment half of my entire life and in Palo Alto, in some ways, my entire life. The sudden loss of one's home is fairly devastating," Backlund said.

Officials from various nonprofit and pro-housing groups, including Silicon Valley at Home and the Housing Trust of Silicon Valley, also came to the meeting to support the residents and urge the council to pass an ordinance that would assist those facing eviction.

Nadia Aziz, an attorney with Law Foundation of Silicon Valley who recently represented residents of Buena Vista Mobile Home Park in their successful battle against eviction, told the council that the region is facing a "housing catastrophe" and that the council needs to take "bold action" to avoid displacement of residents.

"The people from President Hotel facing eviction will no longer be able to stay in Palo Alto ... The time is now to act," Aziz said.

On the other side of the debate were dozens of landlords and realtors who argued equally passionately against any new renter protections, measures that they argued would punish landlords by making renting more expensive and, as a result, restrict housing supply. They were particularly concerned about the prospect of the city outlawing no-cause eviction -- an idea that the council did not seriously entertain Monday night.

Some argued that the city should focus on mediating the dispute between Adventurous Journeys Property Capital, the new owner of President Hotel, and the tenants of the 75-unit building at 488 University Ave. Passing a citywide law is far to sweeping a measure, they argued.

"In the real world, issues come up every day that only apply to a special situation," said resident Linda Xu. "We don't want a citywide rule or law being forced because of one special case."

AJ Capital also pushed back against a new law mandating relocation assistance. Its attorney, David Lanferman of the firm Rutan & Tucker LLC, submitted a letter to the city on Monday claiming that such a law would violate AJ Capital's property rights by -- among other things -- "discriminating against certain property owners." Lanferman also argued that adopting the law on an "emergency" basis is improper and that the law should not be exempt from the California Environmental Quality Act, as city officials had maintained. He urged the council to reject the notion.

"Adoption of the proposed Emergency Ordinances or Ordinances in the present form would lead to many adverse consequences and may needlessly expose the City to the risk of costly legal proceedings by many affected parties," Lanferman wrote.

Timothy Franzen, principal at AJ Capital and president of its Graduate Hotels division, sent the residents another letter last Thursday to remind them that their time in the apartment building is running out and that they need to take "all appropriate steps to timely relocate your residence."

On Monday, Franzen told the council that his firm has a "unique and special expertise" in restoring historic assets, which it recognizes President Hotel to be.

AJ Capital also recognized that the proposed conversion of the apartment building back into a hotel would cause disruption to tenants, he said, which is why it gave them a five-month notice of eviction, financial assistance totaling $3,000 for relocation and the services of a relocation-consultancy firm, he said.

Franzen said that while the firm is moving ahead with its plan to convert the "architectural gem" back into its original use as a hotel, the laws being discussed by the council could prevent it from making upgrades to the building.

But perhaps the biggest critic of the new law wasn't a property owner but Councilman Greg Tanaka, who repeatedly characterized the proposal for relocation assistance as a stance against diversity. He disputed the idea that the new law addresses an actual "emergency" and argued that an ordinance like this would restrict housing supply and effectively raise the "drawbridge" and keep new residents from coming to Palo Alto.

He also said he believes the city is running a "huge legal risk" in moving ahead with the law and proposed that the council not pass anything but revisit the topic in two weeks, at the council's next meeting -- a proposal the council rejected.

"We could be making a dire legal mistake that will cause trouble for the city," Tanaka said.

In addition to passing the emergency ordinance, the council approved a virtually identical law that would take effect on a permanent basis (as such, it requires only five votes but does not take effect until after two public hearings). The council also plans to discuss other measures relating to rental protections at its next meeting on Sept. 10.