When tenants of the President Hotel received eviction notices from new building owner AJ Capital on June 12, they were promised help finding new housing, along with $3,000 in relocation assistance.
Now four months later, the tenants — aided by attorneys and the Palo Alto City Council — could walk away with upwards of $20,000 in cash and/or reduced rent, based on their individual circumstances.
The increase was sparked at least in part by zoning roadblocks that are preventing AJ Capital from moving ahead with the downtown building's conversion into a hotel, providing the company with incentive to negotiate with tenants and the city. Public outcry over the evictions also may have greased the negotiation wheels.
Lawyers for the tenants and AJ Capital started discussing the terms of an agreement in late summer, culminating in an Oct. 26 deal. According to the terms, tenants would be allowed to stay through at least Jan. 31, 2019, and possibly until June 16, 2019, rather than be evicted on Nov. 12; pay only half of their rent from November through January (or through June); and receive voluntary assistance payment in multiples of half of their rent, depending on when they move out.
The agreement is notable, however, for the benefits it gives to tenants if the city officials give AJ Capital what it wants by two deadlines: Dec. 10 and Dec. 17.
The voluntary assistance payment would kick in only if the city and the company "reach binding consensus on or before Dec. 10, 2018, on the applicable parking issues and planning department approvals" needed for the conversion, according to the Oct. 26 tenant agreement.
If the council were to approve two separate zoning changes by Dec. 17, then tenants would be allowed to stay through next June 16.
New documents released by the city of Palo Alto in response to a Public Records Act request filed by the Palo Alto Weekly give a glimpse inside the negotiating process.
Just before Labor Day, the developer offered to reduce tenants' rents by half and extend their tenancy through June 2019. According to an update that David Lanferman of law firm Rutan & Tucker provided to AJ Capital on Sept. 12, the tenants had been "mollified" by the proposal but wanted "MORE $$$ and more time." Lanferman said he indicated some "incredulity" as to the tenants' proposal, particularly their desire to get a $25,000 payment upon execution of the settlement agreement, eight months before they would have to relocate.
The tenants' attorney, Scott Emblidge, reportedly acknowledged that he had "cautioned the tenants about the legal vulnerability of their fairly extravagant demands" and the constraints of Ellis Act, according to Lanferman. (The Ellis Act ensures certain conditions and rights related to when a property owner closes a rental property and evicts all tenants.)
By October, a final deal had been struck: Residents who signed it agreed that they "shall withdraw all existing objections to, and shall not future contest, protest or otherwise interfere or attempt to interfere with, directly or directly, any permit application(s) or other submittals made by AJ CP to the city concerning the President Hotel restoration project."
The tenants are also forbidden by the contract from taking "any other action, directly or indirectly, that would potentially hinder, impede or delay the President Hotel restoration project," according to the contract.
Costing AJ Capital more money beyond the Oct. 26 agreement, the council adopted an urgency ordinance on Aug. 27 that required certain Palo Alto property owners to pay evicted tenants between $7,000 and $17,000 in relocation assistance, depending on the size of their rental. As an urgency ordinance, it applied only to those tenants making below the area median income, a restriction proposed by Councilman Greg Scharff. But on Sept. 17, when adopting a permanent ordinance, the council agreed to remove the income restriction, ensuring that every President Hotel tenant would be eligible for some additional compensation.
As the council considered the ordinance, AJ Capital strenuously objected, with Lanferman submitting a letter arguing that such an ordinance would be illegal. Adopting the ordinance "may needlessly expose the city to the risk of costly legal proceedings by many affected parties," Lanferman warned.
The Oct. 26 agreement, however, did include the city-mandated $7,000 in relocation assistance for President Hotel tenants in studio apartments, $9,000 for those in one-bedroom units, with an additional $3,000 given to persons who are of low-income, elderly, disabled or have a minor child living with them.
This article is part of a larger story titled "Documents reveal secret dealings over President Hotel."
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