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San Remo Hotel L.P. v. San Francisco, City & Cty. of

ELR Citation: 32 ELR 20533
Nos. S091757, 41 P.3d 87/(Cal., 03/04/2002)

The court reverses an appellate court decision that a hotel did not need to obtain a conditional use permit before converting from residential to strictly tourist use and that a conversion fee required by the San Francisco Hotel Conversion Ordinance (HCO) constituted a taking. Although the hotel rented vacant rooms in the summer and occasionally in the winter, both of which were permitted under the HCO, it was zoned as a residential hotel. The hotel applied to the city for approval to rent all the rooms to tourists rather than to long-term renters. The city consented, but only after requiring the hotel to obtain a conditional use permit and to help replace the residential units the city claimed would be lost by the conversion, which the hotel elected to do by paying an in-lieu fee to a government fund for the construction of low- and moderate-income housing. The court first holds that the appellate court erred in concluding that the hotel did not have to obtain a conditional use permit for full tourist use of the hotel. Because tourist use of the hotel before enactment of the HCO's conditional use requirements neither encompassed all the hotel's units nor occurred full-time without regard to residential occupancy and demand, the hotel owners' proposal to convert to full-time tourist use constitutes an expansion of the hotel's historical use requiring conditional use authorization. The court also holds that the in-lieu fees assessed under the HCO and paid by the hotel are not entitled to heightened scrutiny under the Takings Clauses of the U.S. or California Constitutions. The court then holds that the in-lieu fees did not constitute a taking. The HCO neither targets an arbitrary small group of property owners nor deprives all the burdened properties of so much of their value, without any corresponding benefit, as to constitute a taking on its face. Moreover, the in-lieu fee has a relevant connection to the tourist use of the hotel. The fee was based on the number of units designated residential that were proposed for conversion, and the residential designation of the hotel's rooms was reasonably based on the hotel management's own report on the use of the rooms. Nowhere do the hotel owners allege that the hotel was at any time entirely in tourist use, as would be required to support their claim that the housing replacement fee has no connection at all to the hotel's historical use, and, thus, their claim fails to state a cause of action.

The full text of this decision is available from ELR (85 pp., ELR Order No. L-463).

[Counsel not available at this printing.]