Council flip-flops and approves conversion of President to a hotel

The 91-year-old President Hotel’s sign bears the building’s original name, Hotel President. Post photo.

Daily Post Staff Writer

Palo Alto City Council made a U-turn tonight and voted 6-1 to approve the conversion of the President Hotel from housing to a hotel in an apparent attempt to avoid a lawsuit from the owner.

Chicago-based Adventurous Journeys Capital bought the 75-unit apartment building in June 2018 for $65 million and evicted the tenants within the next few months.

At the time, the city argued that the building couldn’t be converted from housing to a hotel because of various city ordinances. But the city changed its tune after examining the Ellis Act, a 1985 state law that says landlords can evict their tenants if they intend to get out of the housing business. AJ Capital could have sued the city saying its rights under the Ellis Act were violated by various city regulations. So last night the council voted 6-1 to provide the developer with a waiver to those regulations so it could move forward with the conversion.

The lone dissenter in the vote was Councilwoman Lydia Kou, who objected to the city being forced to approve the conversion due to a state law.

City Attorney Molly Stump, who recommended the council approve the conversion, provided advice to council in closed sessions about the Brown Act. Council members instructed Stump to write a memo to the public to explain her advice, which has been confidential due to attorney-client privilege.

Mayor Adrian Fine, who proposed that Stump write the public memo, said he didn’t want to vote for the conversion, but felt the law forced his hand. Other council members echoed that sentiment.

Councilwoman Liz Kniss said that she couldn’t go along with the argument made by some residents that the city should buy the six-story building and keep it as affordable housing. She said buying the property from AJ Capital and then bringing it up to current codes could cost the city at least $150 million, and the city doesn’t have that kind of money.

All seven council members lamented the loss of housing. Palo Alto has only approved one affordable-housing development in the past five years, the 59-unit Wilton Court project at 3703-09 El Camino Real. The loss of affordable housing at the President wiped out any gains from Wilton Court.

Kniss said she is happy that AJ Capital will be restoring the historic building, which was designed by well-known local architect Birge Clark. It opened in 1929. She said she thinks the city will be proud of the hotel when it is finished and she hopes to celebrate on its rooftop when it opens in 2022.

AJ Capital hasn’t been a popular company in Palo Alto after it evicted the building’s tenants. Councilman Tom DuBois said he thinks the company had a rocky start but honestly wants to be a good member of the community.

Other members of council said they weren’t happy about the change but feel they had no choice.

Several residents asked council to fight AJ Capital.

Norman Beamer said the company ruthlessly evicted a bunch of low-income residents to create a luxury hotel. He said the council should use its power to not grant a waiver.

Ryan Globus said there are two sides in a typical courtroom with a lawyer representing each perspective. He said the city only presented AJ Capital’s side and let the group walk all over the city. He said the city should take them to court to send a message to future developers that they can’t rip families from their homes.

Becky Sanders said she thinks AJ Capital is bullying the city and trying to intimidate them. She said she was disappointed that Planning Director Jonathan Lait and Stump presented an echo chamber for AJ Capital.

Former tenant Iqbal Serang said he is against the change but other former tenants can’t speak out because they were forced to sign non-disclosure agreements limiting them from speaking on the matter if they accepted money from the developer.

John Shenk, president of Thoits Bros., a landlord to 17 commercial properties downtown, said he is in favor of the hotel conversion. He said having a company willing to invest in a historic building is a gift.

Councilman Eric Filseth said he was worried that if council approved the change to a hotel, the owners might change its use to an office building in the future.
Pablo David, a representative from AJ Capital, said he had no problem with the city specifying that the building can’t be changed to office space.