President Hotel Apartments entrance
August 28, 2018

Silicon Valley Business Journal: Palo Alto enacts ’emergency’ law requiring landlords to provide financial assistance to some displaced renters


The Silicon Valley Business Journal covered the August 27 meeting of the Palo Alto city council, where Silicon Valley at Home and others showed up to ask council members to provide relief to long-time tenants of the President Hotel Apartments, who are being evicted because the new building owner plans to convert the below market rate apartment complex into a hotel.

The city council responded by passing an emergency law that requires landlords to provide relocation assistance to renters making less than 100% of the area median income (AMI) as a result of being displaced.

See the original story at Silicon Valley Business Journal.

Palo Alto enacts ’emergency’ law requiring landlords to provide financial assistance to some displaced renters

By Marlize van Romburgh

The Palo Alto City Council passed an emergency ordinance on Monday night that requires landlords to provide relocation assistance to some tenants facing eviction, Palo Alto Online reported.

The move comes as a direct response to pleas from residents of the downtown President Hotel Apartments, a historic apartment complex that sold this summer to a developer looking to turn it back into a hotel.

Under the new city law, landlords of buildings with 50 or more units must provide financial assistance to evicted tenants making less than the county’s median household income. The amount of assistance is determined by the size of the unit: From $7,000 for studio apartments to $17,000 to units that have three or more bedrooms, according to Palo Alto Online.

Monday night’s public hearing at City Hall drew dozens of tenants, landlords and community activists, including representatives from the nonprofit advocacy groups Silicon Valley at Home and Housing Trust Silicon Valley, the publication reported.

Landlords and real estate professionals also showed up to make their voices heard, the publication reported, with some arguing that the new regulations will only further discourage new residential development in a housing-starved region by making it less profitable for developers to build.

Others argued that the city had enacted an overreaching law to address a specific situation at the President Hotel.

“In the real world, issues come up every day that only apply to a special situation,” resident Linda Xu said at the hearing, according to Palo Alto Online. “We don’t want a citywide rule or law being forced because of one special case.”

“While the measure could provide some temporary assistance for residents of President Hotel, who are being evicted as part of a plan to convert it back to a hotel, it falls well short of what many in the community had requested and what staff had proposed last week,” Palo Alto Online reported. “The council summarily rejected an alternative ordinance drafted by staff that would have also required landlords to declare the cause for eviction. And in another surprising departure from the staff proposal, the emergency law approved by the council only apply to those residents who make below 100 percent of Santa Clara County’s area median income. Those making above that threshold would get no relocation payments.”

While not officially designated as affordable housing, the President Hotel had over the years turned into a haven for an eclectic mix of tenants, including artists and other creatives, paying below-market rents.

In June, developer Adventurous Journeys (AJ) Capital Partners bought the 75-unit property at 488 University Ave. for $65 million and said it planned to redevelop “the architectural gem” back into a hotel.

Tim Franzen, president of the Graduate Hotels division of Chicago-based AJ Capital Partners, told the Business Journal at the time that his division’s success in operating Graduate Hotels along the West Coast was a big reason for the acquisition.

“Palo Alto has always been at the top of our list of target markets due to its rich history and multitude of reasons to draw people to the City, and with the success we’ve seen at Graduate Berkeley across the Bay, and the opening of Graduate Seattle this fall, we felt that this was the most opportune time to continue our expansion on the West Coast,” Franzen said in an email statement to the Business Journal earlier this year.

The developer later said it would provide tenants with $3,000 in financial assistance, access to the services of a tenant relocation consulting firm, and five months notice of eviction. A July letter gave tenants notice to vacate the property by Nov. 12.

An executive from AJ Capital Partners urged the City Council on Monday night to reject the ordinance. An attorney for the company also submitted a letter to the city on Monday, Palo Alto Online reports, warning that the city could face legal action if it passes the law and that he believes the ordinance violates AJ Capital’s property rights by “discriminating against certain property owners.”

Separately, there are also lingering questions about whether Palo Alto zoning laws allow the property to be converted into a hotel at all. In a letter dated July 17, Jonathan Lait, assistant director of Palo Alto’s planning and community environment department, told Franzen that the establishment of a hotel at the site of the apartment building is “impermissible based on existing zoning regulations and site characteristics.”

— Read more about Monday night’s City Council meeting the new ordinance at Palo Alto Online.