President Hotel owner warned about lease law

Preparing for a potential eviction of tenants from President Hotel, Palo Alto formally notified the building’s new owner Tuesday 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.

City Manager Ed Shikada on Tuesday notified the building’s owner, Adventurous Journeys Capital Partners, the company’s attorney David Lanferman and Santa Clara County Sheriff Laurie Smith about the applicable code provision, which states: “If a tenant or prospective tenant wishes to rent a rental unit from a landlord and if said landlord wishes to rent said rental unit to said tenant or prospective tenant, the landlord must offer to the tenant or prospective tenant a written lease which has a minimum term of one year.”

Shikada wrote that the letter is being submitted “in potential tenant eviction actions that may be under consideration by their offices in the near future.” AJ Capital, a Chicago-based company that bought the building at 488 University Ave. last summer, had given the tenants a deadline of this Thursday to vacate the building.

It is planning to convert the six-story building at 488 University Ave. into a hotel, a project that would violate two zoning code provisions: the downtown cap on non-residential development and a “grandfathered facilities” provision that bans old downtown buildings undergoing conversions to change uses.

But while the City Council is scheduled to discuss and possibly scrap the zoning provisions in the coming weeks (the Planning and Transportation Commission is scheduled to make a recommendation on the “grandfathered facility” clause Wednesday night), the new letter focuses on the section of the code that pertains to “rental housing stabilization.”

“Our City Attorney has informed the tenants’ legal counsel of the requirements of the Rental Housing Stabilization Ordinance,” Shikada wrote. “We are communicating directly to you to ensure that, prior to any eviction action, you are similarly aware of the Ordinance and responsibilities of landlords as prescribed.”

The city’s one-year lease requirement does not apply to owner-occupied units, subleases from one tenant to another and situations where a tenancy is a work-related condition. While the city has not actively enforced the provision, it does give the building’s few remaining tenants some leverage in a potential legal battle against the landlord.

The city’s municipal code specifies that “failure of a landlord to comply with any of the provisions of this chapter shall provide the tenant with a defense in any legal action brought by the landlord to recover possession of the rental unit.”

While tenants have been calling for months for the city to step in and request, in a non-binding manner, a lease extension, Palo Alto officials have been reluctant to do so. Earlier this month, Shikada told the Weekly that the city has effectively done what it can and that the issue is between the landlord and the tenants.

“If the City were to weigh in on tenancy, that could be misinterpreted as setting some expectations for future actions,” Shikada said.

City Attorney Molly Stump told the Weekly that the one-year lease rule “provides for enforcement in an eviction proceeding in court.”

“I’m not aware that the City has ever attempted to take an enforcement role, and doing so here would require careful evaluation of legal issues,” Stump said in an email.

While the city’s letter does not explicitly request that AJ Capital delay the eviction proceedings, it highlights one of several legal hurdles that AJ Capital will have to overcome as it moves ahead with its hotel plan. In addition to the city’s letter, the nonprofit Project Sentinel, which provides services relating to fair-housing laws, sent a letter to AJ Capital last Friday on behalf of two tenants with disabilities.

The Project Sentinel letter requests that AJ Capital provide “reasonable accommodation” to the two tenants, an exception to the landlord’s general policy that may be necessary to “afford a person with a disability an equal opportunity to use and enjoy her home,” according to the nonprofit.

AJ Capital did not respond to a request for comment about the city’s and Project Sentinel’s letters. Tenants, meanwhile, have been expressing frustration about the city’s inaction. Several had publicly testified in the past about the landlord’s failure to comply with the one-year-lease requirement (tenants have been renting on a month-to-month basis).

Karen Kao, a physical therapist who remains a tenant, told the City Council on Monday that she and her fellow tenants are considering litigation against the city for not enforcing its laws and enabling AJ Capital to move ahead with its hotel project.

“We are thinking about a class-action lawsuit against the city of Palo Alto,” Kao said. “We feel you have really failed us.”

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