After evictions, President Hotel owners claim support from local nonprofits

This story appeared originally in the Thursday, Oct. 24, print edition of the Daily Post. Most of the local stories printed in the Post do not appear on this website. To get all of the local news, pick up a copy of the Post at 1,000 locations in the mid-Peninsula.

BY SARA TABIN
Daily Post Staff Writer

The owners of President Hotel in Palo Alto are offering money to nonprofits like Palo Alto Housing and the Downtown Streets Team while their newest proposal to turn the apartment building into a hotel is reviewed by the city.

One critic said the owners are bribing the organizations in order to get their members to support the hotel proposal.

Chicago-based hotelier Adventurous Journeys Capital purchased the President Hotel at 488 University Ave. in June 2018 for $65 million. The 75 tenants have been evicted and the company wants to turn the 90-year-old building into a hotel. AJ Capital’s previous application to renovate the apartment building and turn it into a hotel was rejected.

In September, the company turned in a new application to the city.

Jeff Levinsky, a resident who opposed to the renovation, showed the Post a 44-page booklet about the project that he received from AJ Capital on Tuesday. The booklet, titled “Hotel President Restoration Project Overview September 2019,” advertises that the company will be giving $1.4 million to local nonprofits.

“There are some respectable organizations here,” Levinsky said. “I would think they wouldn’t want to lend their name.”

Representatives from Palo Alto Housing, homelessness advocacy group Downtown Streets Team, Palo Alto Museum, transportation organization Palo Alto TMA and Palo Alto Partners in Education did not respond to requests for comment on their relationship with AJ Capital.

Catherine Martineau, president of tree-advocacy group Canopy, sounded surprised to learn that Canopy was listed in the booklet. She said she had asked for the tree nonprofit to be left off promotional material since they are only getting what she said was a very small donation. She then asked a Post reporter to consider her comments to be off the record. The Post refused, saying it doesn’t take off-the-record comments and if it did, such an agreement would have to be made before the interview.

Donations “subject to change”

Fine print at the bottom of the page touting donations says that all donation amounts are subject to change.

The company will still need to convince City Council to change the zoning of the building to allow a hotel. They will also need to either build, or pay in-lieu fees for, 168 parking spots.
Levinsky said AJ Capital originally reached out to him several months ago and asked for a confidential meeting which he turned down.

He said he thinks the company is trying to bribe the organizations to support their application. He pointed out that the company previously said tenants could stay longer if the company got what it wanted from the city. Levinsky said he thinks AJ Capital made that offer to get the tenants to help them persuade council. Now, they are trying a similar stunt with the non-profits, Levinsky said.

Leslie Rodriguez, AJ Capital spokeswoman, said she wasn’t sure about the booklet, but said AJ Capital typically provides community outreach benefits to the cities in which it operates. She said people working for AJ Capital in California have been recommending organizations that might be a good fit.

AJ Capital is also trying to reduce the number of parking spots they are supposed to provide or mitigate. AJ Capital’s Chief Development Officer Alex Stanford submitted a memo to the city that says the company thinks it will only need 60 to 75 spaces for its 100 rooms based on capacity at other hotels.

The hotel also plans to offer a valet service for an off-site garage, so they will really only need 30 to 40 spaces on site, according to the memo. It was not clear from the memo where cars in valet parking will be stored, and the company did not provide an answer to that question yesterday.

Update printed Tuesday, Oct. 29, in the Daily Post

City-funded nonprofit distances itself from President Hotel

BY SARA TABIN
Daily Post Staff Writer

The Palo Alto City Council set up the Transportation Management Association in 2016 to reduce solo-car driving downtown.

Now the TMA has allowed the new owners of the President Hotel to use their name and logo in an advertising campaign to convince residents and city officials to allow the building to become a hotel.

AJ Capital, the new owner of the President Hotel, threw out the 75 tenants who lived in the downtown apartment house, outraging Palo Altans who said it would worsen the housing crisis.

AJ Capital now says in its advertising materials that it is making donations to seven nonprofits including the TMA, which is largely funded by the city government. One critic, Jeff Levinsky, said AJ Capital is basically bribing local organizations to get their support.

TMA Executive Director Steve Raney said the company isn’t making a donation to the TMA. He said AJ Capital is paying the TMA for help in meeting their transportation demand since they will need to mitigate their traffic to get approval for the project from City Council.

AJ Capital said it plans to give the TMA $39,000. The TMA will use the money to help hotel employees find alternatives to commuting by car, according to Raney. He said the TMA will only keep about $2,000 to pay for administrative costs. The rest of the money will be spent on the commutes of hotel employees. Although Raney said the money isn’t a donation, he also would not say that AJ Capital was misleading the public.

“It’s just the way the private sector spins things,” said Raney. “Certainly the developers will try to say its a big benefit.”

Raney would not send the Post a copy of the email AJ Capital sent him asking to work with the TMA. While the TMA was set up by the city, it is legally a nonprofit and doesn’t have to obey the state’s open records laws that apply to cities.

TMA gets city funding

While the TMA is a nonprofit, it gets funding from the city’s parking permit fund. The TMA is getting $750,000 from the city for the current fiscal year, according to Chief Transportation Official Philip Kamhi.

Chicago-based hotelier Adventurous Journeys Capital purchased the President Hotel at 488 University Ave. in June 2018 for $65 million. The tenants were kicked out and the company wants to turn the 89-year-old building into a hotel. AJ Capital’s previous applications to turn the building into a hotel have been rejected.

In September, the company turned in its latest application to the city.

To become a hotel, AJ Capital needs City Council to change the building’s zoning. And they will need to either build, or pay in-lieu fees for, 168 parking spots.

Jeff Levinsky, a resident opposed to the renovation, showed the Post a 44-page booklet about the project that he received from AJ Capital last Tuesday. The booklet, titled “Hotel President Restoration Project Overview, September 2019,” says the company will be giving $1.4 million to groups including the TMA and the Palo Alto Museum and will give another million to Palo Alto Housing, a nonprofit that builds low-income housing. Fine print at the bottom of the page touting donations says that all donation amounts are subject to change.

“There are some respectable organizations here,” Levinsky said. “I would think they wouldn’t want to lend their name.”

Should the TMA lend its name to AJ Capital?

Raney would not say whether he had given his permission for the TMA logo to be used on AJ Capital’s promotional material. He did not seem to think it was a problem that AJ Capital was using the TMA logo to promote a politically divisive project.

“If it’s a controversial development it will go through a bruising process,” he said. “It can’t hide.”

Raney would not say whether the TMA’s board had voted to work with AJ Capital. AJ Capital approached the TMA sometime at the end of July, said Raney. He said that the work the TMA will do with AJ Capital had been presented to the board.

Minutes from the TMA’s meetings over the summer do not mention AJ Capital at all. However, the minutes are not detailed and list topics of conversation rather than providing the details of what was said. On Aug. 15, the board discussed traffic demand management programs for hotels, but no hotel names are given in the minutes.