Guest Commentary

Proposed City Law Threatens Housing and Renters

January 27, 2019 – From the Palo Alto Neighborhoods Committee on Development, Zoning, and Enforcement (PANCODZE)

All Palo Altans should urge the Planning and Transportation Commission to reject a controversial staff proposal that would make it easier for Downtown residences such as the President Hotel Apartments at 488 University to become hotels or offices.  Scheduled for discussion this Wednesday, January 30, the staff proposal would create a new waiver process that vastly favors owners and developers of Downtown buildings over tenants.

Under the proposed waiver process, City staff could cast aside or “adjust” existing laws that require oversized Downtown buildings, such as the six-floor President Hotel, to retain the same mix of uses they have at present.   So while the rule, known as the Grandfathered Facility Law, currently protecting the residences would remain in place, owners and developers would need only to “assert” in writing that it conflicts with some state or federal law.  Staff would then need only to find that the “assertion has merit” and could then immediately grant the waiver.

The proposed process does not require that tenants of the buildings, the press, or the public at large be notified when a waiver is being sought.  No public hearing will necessarily occur and no written legal opinion from the City Attorney citing relevant case law for public review would necessarily be issued. Although the waiver could in theory be appealed to the City Council, tenants and others may not even know a waiver has been granted until after the appeal deadline expires.  Renters might instead find out only once their leases expire and be too late to appeal.

Palo Alto requires a much more open process for other waivers. For example, the law that buildings cannot convert existing ground floor retail and similar uses into offices requires that an exemption request be accompanied by financial data and be approved by the City Council at a public hearing.  Such exemptions might only affect thousands of dollars of rental income a year, yet the waiver enabling the President Hotel residences to become a hotel might be worth tens of millions of dollars. So why shouldn’t the waivers be decided by the City Council too, in full public view?

And why is a waiver process even needed for the law protecting Downtown residences? The staff report for Wednesday’s meeting states a waiver would be granted when the law preserving residences would lead to “a violation of state or federal law (i.e.; Ellis Act).”  But preserving residences is legal and cities have long had the right to do so. Most of Palo Alto is already zoned to allow only residential and similar uses such as day-care facilities. Federal law allows cities to further restrict what is in buildings as long as some viable economic use remains.  Residential property in Palo Alto is surely viable, given that it often sells for over $2,000 a square foot. 

Staff has repeatedly cited the state’s Ellis Act to justify the need for a waiver process, as in the quote above.  Yet that law explicitly states the opposite of what staff claims, namely that it does not bar cities from controlling how properties are used.  The Ellis Act merely allows owners to cease renting out residences and instead have those become owner-occupied or company-owned housing if cities so allow.  If the Ellis Act actually required cities to allow residential buildings to convert to some other use contrary to local laws, apartment complexes in Palo Alto and all over the state would have long ago turned into office buildings. 

So why are senior City staff actually asking for the waiver process for this law and not for the hundreds of others in our municipal code?   Despite staff’s insistence that they are not favoring AJ Capital, the Chicago-based purchaser of the President Hotel, the waiver proposal seems crafted to allow AJ Capital to sidestep many City laws and replace the existing housing in the building with a hotel.

We urgently need to retain housing in Palo Alto.  We do not want tenants evicted and forced to find new places to live.  And we do not want staff to grant waivers worth perhaps tens of millions of dollars to developers when there’s no legal necessity and outside of public view.  Please email the Planning and Transportation Commission at Planning.Commission@CityofPaloAlto.org to urge them in your own words to reject the waiver process proposed by staff.  And please attend the Commission meeting if possible at 6 pm on Wednesday night at City Hall (250 Hamilton).  

Links:

Planning Commission Agenda for January 30, 2019 Meeting: https://www.cityofpaloalto.org/civicax/filebank/documents/68695

Staff Report on the Proposed Change in the Law https://www.cityofpaloalto.org/civicax/filebank/documents/68694

Palo Alto Weekly December 7, 2018 Editorial Critical of Changing Laws to Help AJ Capital https://www.paloaltoonline.com/news/2018/12/07/editorial-a-stealth-agenda

Palo Alto Weekly Story on the December 10, 2018 City Council Action on the Waiver https://www.paloaltoonline.com/news/2018/12/11/proposed-law-would-prevent-president-hotel-conversion

Minutes of the December 10, 2018 City Council Meeting https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=52082.73&BlobID=68210

Palo Alto Weekly January 25, 2019 Update on the President Hotel

https://www.paloaltoonline.com/news/2019/01/25/nonprofit-tries-to-get-reprieve-for-president-hotel-tenants

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