August 2005

San Remo Defeat: A Blow to Hotel Owners

The San Remo Hotel case suffered defeat on Monday, June 20, when the U.S. Supreme Court turned away its owners' challenge to San Francisco's conversion ordinance. This ordinance requires owners of long-term residential hotels to pay a fee to the city prior to converting their properties to short-term tourist use. The justices ruled unanimously that the owners had no right to go to federal court with their claim, since they had already lost the same argument in the California Supreme Court.

The case began in 1993 when San Remo Hotel owners Tom and Robert Field were assessed a $567,000 fee to reclassify the building as a hotel (versus residential), even though it had always been a hotel, at least in substantial part. The owners filed their complaint, arguing that by forcing them to choose between operating as a low-cost rental-apartment building or paying over a half-million dollars to operate as a hotel, the city ordinance effected an unconstitutional taking. The case bounced back and forth.

First, the federal appeals court told the plaintiffs that the “as applied” claims weren't “ripe,” and that they needed to first apply to the state for just compensation. So in the mid-1990s the plaintiffs took both their facial and as-applied claims to state court and lost. Recently, when they brought the case back to federal court, they were informed that because the state court had already resolved all the issues, the federal court would not reconsider the claims. (They based this on the 1985 Williamson County ruling, which stated that plaintiffs must bring their claims for compensation to a state court before they can file an as-applied federal takings claim in federal court.)

The ordinance has been a thorn in the side of San Francisco hotel owners since it became effective in 1990. Originally intended to preserve low-cost housing, it requires hotel owners to replace residential rooms or pay a fee equal to 80% of the rooms' construction costs plus site acquisition. Even though the San Remo ruling was based on procedural grounds, it was perceived as a victory for the city.

“The Fields had a good claim and no court has ever looked at it on its merits,” says their attorney, Paul Utrecht. “At some level, defeat may have been easier if the Supreme Court had actually looked at the case on its merits rather than on some procedural issues.”

New Ellis Relocation Law to Remain in Effect
San Francisco Superior Court Judge James Warren struck down Supervisor Aaron Peskin's legislation increasing Ellis Act relocation payments. Warren said it was thrown out because it imposes a prohibited price on the right to exercise the Ellis Act. According to the judge, relocation payments of any amount are illegal because they have the potential to prevent landlords from exercising statutory rights. However, on June 27, 2005, Warren denied landlord efforts to immediately suspend the new city law. Landlords must continue to make payments in accordance with the ordinance until the Court of Appeal can review Warren's ruling next year. There is a silver lining, however. Since the judge's ruling found the ordinance facially invalid (meaning that it could not be valid as applied against anyone) without applying the proper legal standard, the prospects are better than normal for a Court of Appeal reversal.

Hot Tamales! miniFESTIVA 2005 is Almost Here
Calling all networkers—don't miss your chance to meet and greet many area property owners. We've only got limited spaces left, and the deadline is August 15. Our theme is tamales, so come on down for some hot summer fun.

Businesses have their choice of four sponsorship types, from a $200 regular-participant level to the $3,000 Whole Enchilada package (with premier stage space, co-branding, promotional material and signage, and more).

When: September 19, 2005, 6 p.m.
(August 15 deadline to reserve space)
Where: Fort Mason Center, Building A, Conference Center, San Francisco

Tables will be reserved on a first-come, first-served basis.
Call Jennifer Finlay, miniFESTIVA Coordinator, at 415-255-2288 ext. 10 to reserve a table or for more information.

Many thanks to some of our top sponsors so far:

• Law Offices of Saul M. Ferster (Tamale)
• The Window Specialist (Tamale)
• Great Escape Fire Escape (Tamale)
• Wasserman-Taxman (Tamale)
• IPX1031 (Tamale)
• Erika Burke Zephyr Real Estate (Burrito)
• American Blinds and Draperies (Taco)
• Law Offices of James M. Millar (Taco)
• Credit Bureau Associates (Tamale)
• Fred Schmidt & Associates (Taco)
• Burr, Pilger & Mayer (Taco)

Fall Property-Management Courses
We're offering our fall series of property-management courses from September 8 through November 17, 2005. There are nine courses in all, offering comprehensive training on the effective management and operation of rental properties in California. Topics include: leasing skills, application processing, maintenance and liability management, fair-housing issues and more. The classes are ideal for small owners, on-site resident managers, property-management professionals and leasing agents. Enrollees have the option of either completing the entire series and taking an exam to earn the California Certified Resident Manager certification or taking classes individually. Instruction is provided by Trinity Properties General Manager Craig Waddle. For detailed information and registration, please check online at www.sfaa.org/education or call Greg Miller, SFAA Education Director, at (415) 255-2288. Information on the fall series can also be found on page 48.

Seeking a Few Good Men & Women
The San Francisco Apartment Association is seeking candidates to serve on its board of directors. A nomination form requesting background information on qualified candidates can be found here (PDF) . Please submit the form, along with any pertinent data, by September 15.

Lead Awareness
This month we publish two brief articles concerning the proper handling and disclosure of lead paint in rental housing. On page 34, the San Francisco Health Department writes about the city's efforts, through education, mediation and code enforcement, to prevent lead-paint poisoning of local children. The federal requirements governing lead-paint disclosure are listed on page 36, along with the federal warning-statement form.