Zoning ordinance creates hurdle for President Hotel conversion | News | Palo Alto Online |


Zoning ordinance creates hurdle for President Hotel conversion

Commission recommendation: 'Grandfathered' residential downtown buildings must stay residential

In a bid to correct a zoning error, Palo Alto's planning commissioners endorsed an ordinance on Wednesday that will restore the right of owners of downtown buildings that are out of compliance with city code to use the building for different purposes.

However, they made an exception when it comes to residential buildings converting to non-residential use -- a provision that creates a fresh legal hurdle for the owner of the President Hotel Apartments and that is almost certain to invite a lawsuit.

The Planning and Transportation Commission voted unanimously on Wednesday to scrap a zoning restriction for "grandfathered facilities" -- buildings that were built before the current development standards were created and that don't comply with these standards. The provision, which was inadvertently inserted into the code in 2016 as part of a broader "code cleanup," states that the usage of grandfathered facilities cannot change, even to uses that are otherwise allowed under city zoning.

In explaining the impacts of this error, interim Planning Director Jonathan Lait pointed to several redevelopment projects that have been stymied by this administrative error -- including the former Cheesecake Factory building on University Avenue that owner Roxy Rapp is trying to convert to retail space and the former North Face building on Alma Street that the owner has been trying to turn into "personal services" from retail.

"This ordinance isn't about one particular property; it's about policy direction that affects downtown properties as a whole," Lait emphasized at the meeting.

Even so, most of the debate and all public comments focused on the proposed conversion of the 75-unit, six-story President Hotel Apartments, a project that has generated significant community opposition and that cast a large shadow over Wednesday's zoning debate.

David Lanferman, an attorney representing the building owner, Adventurous Journeys Capital Partners, argued that the restriction is inconsistent with both the city's Comprehensive Plan and with the state's Ellis Act, which empowers landlords to get out of the rental business.

In a further blow to AJ Capital's project, the commission voted not to include in the ordinance a newly proposed waiver process for developers who want to exempt their projects from the restriction on residential conversions. The wording, which was recommended by both the city's legal counsel and the City Council, was crafted for applicants who would assert that the restriction "is pre-empted by state or federal law."

Lanferman, however, opposes the waiver idea. He claimed it is pointless because the restriction itself is illegal.

"If a property owner is making residential use of it and wants to change the use, the statute says you can't unless you apply for waiver. The state says you have to grant the waiver. It is a pointless exercise," Lanferman said.

The President Hotel project's critics, meanwhile -- some of whom attended the commission meeting -- called the waiver clause "unfairness and subterfuge" on the part of city staff on behalf of AJ Capital.

"This waiver smacks of the promotion of AJ's interest without ever designating them by name," Palo Alto resident Beth Rosenthal said

Jeff Levinsky, a resident who discovered that the 2016 addition of the "grandfathered facilities" applied to the President Hotel conversion, argued that if the waiver process were to be implemented, it should be as transparent as possible.

"The tenants of the building shouldn't wake up and discover that the waiver has been granted and their residential use has been wiped out or something like that," Levinsky said.

But Lanferman argued in a letter that the new restriction is "very problematic," creating "unacceptable inconsistencies between the zoning ordinance and the city's Comprehensive Plan." The Comprehensive Plan, he wrote, specifically states that sites "within the existing commercial areas and corridors are suitable for hotels." The restriction, he argued, would "frustrate or obstruct the attainment of the fundamental policies of the Comprehensive Plan."

Lanferman also argued in his letter that the prohibition would constitute "spot zoning" (despite the fact that it would apply to every grandfathered property in the downtown area, where there are at least 13 such multifamily residential properties, according to Lait).

"Here, every property owner that exercises rights under the Ellis Act to withdraw from the residential market would be confronted by a new legal barrier to any lawful use," Lanferman wrote. "Forcing a property owner to seek a waiver would unlawfully impose a 'prohibitive price' on the exercise of Ellis Act rights."

Lanferman's argument did not sway the commission, which voted to keep the restriction on conversions from residential to non-residential use but eliminated the waiver process. The action means that anyone seeking an exemption would have to rely on the usual recourse -- a lawsuit.

Commissioner Doria Summa, who led the effort to delete the "waiver" process from the draft ordinance, took issue with city staff's assertion that the ordinance may not be legal. When she pressed Deputy City Attorney Albert Yang about the applicability of the Ellis Act to this ordinance, he declined to answer, citing "attorney-client privilege." Yang said he would be willing to offer the commission "confidential advice" about this topic.

"Why wouldn't we just use the same process that we generally use for any applicant that feels we're not treating them fairly in respect with the laws?" Summa asked.

Others also took issue with the proposed ordinance, even as they had acknowledged that the commission needs to correct the city's error from 2016. Commissioner Michael Alcheck said the zoning effort, which is being driven by the President Hotel "fiasco," feels like "partly damage control and part of an effort to course-correct."

"I don't think it's tenable to be in a land-use environment where the Cheesecake Factory cannot be a retail shop. ... The challenge here is how to facilitate these non-controversial changes without opening the doors too wide (to where) our housing stock is depleted.

"We're in a scenario now where the determination by staff has changed so much in seven months that we're losing credibility," Alcheck said.

Alcheck also made a motion to recommend the city hire an outside attorney to consider the Ellis Act issues Lanferman had cited, which passed 5-1-1, with Summa dissenting and Commissioner Asher Waldfogel abstaining.

Some in the community and on the commission pushed back against Lanferman's argument. Levinsky said that while the state law gives property owners the right to stop renting, it "does not give them the right to change to a different use."

"The Ellis Act does not present the threat that you've heard," Levinsky said.

While the city is debating the zoning change, residents of the President Hotel have been moving out, faced with a Jan. 31 deadline to vacate the building. Most have already left, although two of the building's disabled residents have secured the help of a local nonprofit that focuses on fair-housing services to request they be granted a temporary reprieve. Project Sentinel, the nonprofit that provides housing mediation services, urged AJ Capital in a letter on Jan. 25 to provide "reasonable accommodations" for the two.

On Jan. 29, the city of Palo Alto formally notified AJ Capital about the city's requirement that tenants be offered a one-year lease agreement -- a rule that has not been followed or enforced at the historic apartment building. The provision may give the building's few remaining tenants some leverage in a potential legal battle against AJ Capital.

Iqbal Serang, a President Hotel tenant, urged the commission Wednesday to do what it could to protect the residents.

"It's unbelievable that we can forward this idea where 75 units of housing that is compact can be eliminated forever," Serang said. "I strongly feel it is a responsibility for you the commissioners and our representatives on the council to help protect us individuals who are in dire need."


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54 people like this
Posted by Mark Weiss
a resident of Downtown North
on Jan 31, 2019 at 11:13 am

Mark Weiss is a registered user.

Aren’t WE your client, assistant city attorney Albert Yang?

36 people like this
Posted by Anon
a resident of Barron Park
on Jan 31, 2019 at 11:43 am

Anon is a registered user.

How could the wording of the new proposed (defeated) waiver have been recommended by the city council when the proposal was switched out at the last minute just before the PTC meeting last night? That it was sprung on the Commissioners and public without notice was bad practice and the City Attorney who must have drafted it and whoever else was involved should go to the woodshed.

That said, thank you Commissioners for unanimously passing the prohibition to conversion, and not passing the waiver. And for fixing the infamous typo.

Commissioner Alcheck hired the same attorney, Dave Lanferman, to fix his garage scandal, that AJ Capital hired for the President Hotel. Did that not present a conflict for Alcheck for which he should have recused himself last night? I say yes.

Now we know there are 13 residential buildings protected if the City Council agrees with the PTC. It better - that’s a lot of housing to lose and tenants displaced otherwise. If Council re-attaches the ill advised waiver, it will be open seaaon on housing downtown.

24 people like this
Posted by Annette
a resident of College Terrace
on Jan 31, 2019 at 11:48 am

Annette is a registered user.

@Mark Weiss: BINGO!

Last night's PTC meeting was replete with oddness, but not because of any of the Commissioners. The City Attorney's responses were faltering and confusing. I think the Commission made the correct decision about the waiver and applaud them for that.

1 person likes this
Posted by Louise Emerson
a resident of Fairmeadow
on Jan 31, 2019 at 12:00 pm

[Post removed; off topic.]

Like this comment
Posted by Neighbor
a resident of Midtown
on Jan 31, 2019 at 12:16 pm

[Post removed; off topic.]

21 people like this
Posted by eileen
a resident of College Terrace
on Jan 31, 2019 at 1:28 pm

eileen is a registered user.

I totally agree with Mark Weiss, I thought assistant city attorney Albert Yang represented the residents of Palo Alto
not outside property owners who want their way with the city!

6 people like this
Posted by Turn Back the Clock
a resident of Barron Park
on Jan 31, 2019 at 2:43 pm

Those who yearn for the 'Palo Alto of old' should simply disregard the Planning Commission as their policies are often questionable.

Let's go back to true 'mixed usage'in PA...with various businesses interspersed in residential areas, downtown auto dealerships and garages + additional grocery stores, bars, full functioning dry cleaners and gas stations.

Reopen Cubberley as a high school and reduce the student population at Gunn and Paly.

The list goes on...

15 people like this
Posted by Scrutiny
a resident of Another Palo Alto neighborhood
on Jan 31, 2019 at 3:23 pm

@ Turn back

"Disregard" the planning and transportation commission? Not so fast

Disregarding them is probably the reason why we have all the controversies which aren't really about the "Palo Alto of old." This commission should be scrutinized because they are (in theory) working on issues about the Palo Alto of the future. I would like to see "planning" for the future about

Safe streets and neighborhoods
Clean air and not sucking up fumes from the lack of planning to address traffic problems

Isn't that what every City wants?

Mixing offices with residential is an obvious mess. Corporate campuses should move to places where they need jobs and have giant space to build and build. These companies can still keep a satellite and vanity address in Palo Alto but they need to grow up somewhere else.

How about some leadership from this commission to plan on how to fix the office housing imbalance by discouraging offices?

18 people like this
Posted by About Alcheck
a resident of Crescent Park
on Jan 31, 2019 at 10:42 pm

>Commissioner Alcheck hired the same attorney, Dave Lanferman, to fix his garage scandal, that AJ Capital hired for the President Hotel. Did that not present a conflict for Alcheck for which he should have recused himself last night?
Alcheck's disregard for ethical behavior has been pointed out several times but the City attorney, or someone, doesn't do anything about it. Of course he should have recused himself,
Now he wants the city to hire an outside lawyer, presumably like himself, to study relevant law (Ellis Act?).
He also used his seat on the dais to chastise a member of the public who said something he didn't like. Unprofessional and bizarre behavior.

8 people like this
Posted by Exhausted
a resident of College Terrace
on Feb 1, 2019 at 12:04 am

For goodness sake, the appetite for scandal among this crowd is so ridiculous. Alcheck’s comments last night were exceptional. He came out early in support of changes that would stop AJ Capital. He clearly appreciated the legal issues and his motion that council get some legal guidance here seemed entirely appropriate considering the fact that the city attorney present was unwilling to provide any legal analysis for the commission to rely on. Which I think is the only thing remotely unethical that took place last night. You can’t have it both ways you know: criticizing the city attorney for not doing his job and criticizing Alcheck for suggesting that a proper legal review be completed and presented before the Council sticks their neck on the line. Puhlese take a break from the hypocrisy.

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