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State high court upholds S.F. hotel conversion law
The
San Francisco Chronicle
Tuesday, March 5, 2002
Harriet Chiang
Chronicle Legal Affairs Writer
San
Francisco's hotel conversion ordinance, intended to preserve
affordable housing, was upheld yesterday by the California
Supreme Court.
The
ruling was a defeat for the owners of the San Remo Hotel,
a 62-room Victorian inn in North Beach, who have been waging
a 12-year battle to overturn the 1981 law. The ordinance requires
owners of residential hotels to pay a city fee or provide
replacement units before they convert their hotels for tourist
use.
"We're
delighted with the decision," said Andrew Schwartz, the
deputy city attorney who defended the ordinance. The ruling
"vindicates the city's residential hotel ordinance and
other affordable housing programs under attack in the courts."
He
said the effect of the decision extends beyond housing. The
ruling protects millions of dollars in development impact
fees that public agencies rely on to finance schools, sewage
systems, water treatment, parks, transportation and other
basic services, he said.
Tom and Robert
Field, brothers who have owned the San Remo Hotel since 1970,
paid a $567,000 conversion fee under protest in 1996 so they
could convert the inn to an all-tourist hotel. They had been
wrangling unsuccessfully with city officials for six years.
In
yesterday's 4-to-3 ruling, the court rejected the brothers'
argument that the ordinance amounts to an unconstitutional
taking of their property without just compensation.
The
housing replacement fees bear a reasonable relationship to
the loss of housing," wrote Justice Kathryn Mickle Werdegar
in the majority decision.
She
denied the Fields' claim that the ordinance unfairly singles
out a small group of property owners, noting that it affects
all 500 residential hotels in San Francisco.
Justice
Marvin Baxter, joined by Justice Ming Chin, dissented and
suggested that the Fields may be entitled to a partial refund
and favored sending it back to the trial court to decide.
Justice
Janice Rogers Brown issued her own dissent, blasting the law
as unfairly concentrating on a small group of property owners
to solve the city's low-income housing problems.
Private
property, already an endangered species in California, is
now entirely extinct in San Francisco," she wrote.
The
Fields said yesterday that they will press ahead with a lawsuit
in federal court to try to get their money back.
We're
going to pursue this until we can no longer pursue this,"
Robert Field said. He said that other hotel owners have suffered
financially because of the ordinance but lack the resources
to fight the hefty city fees.
We're
just two brothers who have owned this building for a long
time trying to make a living," Field said.
Andrew
Zack, a lawyer for the brothers, said that in the federal
civil rights suit they will be asking for more than $1 million
for the $567,000 conversion fee, interest that has accumulated
and attorney fees.
We
are going to take our case to the U.S. Supreme Court, one
way or another," Zack said.
The
Field brothers began their legal quest in 1990 when they attempted
to convert their hotel for tourism use and were told they
had to pay a hefty fee before they could receive the permit.
The
Fields argued that they were already operating as a tourist
hotel because they rented vacant rooms to tourists during
the summer as permitted by the ordinance.
But
city officials found that between 1982 and 1992, there were
times when as few as five of the hotel's units were not being
occupied by residents -- some of whom called the hotel home
for as long as 10 years.
A
trial judge threw out the brothers' lawsuit. But a state appeals
court reinstated the complaint, saying that the law may be
an unconstitutional taking of property.
In
yesterday's split decision, the majority agreed that changing
the hotel from a partial tourist use to a complete tourist
use is a significant change in the way the building is used.
Werdegar
dismissed the brothers' argument that the fee is arbitrarily
set, noting that it is based on the number of rooms being
converted from residential to tourist designation.
Hotel
owners don't have to pay the fee, she added. They can build
new rental housing or restore units and rent them to the elderly,
the disabled or low-income residents.
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