Ninth District Court of Appeals Bars Plaintiffs from Re-litigating Failed Claim That S.F. Hotel Conversion Ordinance Amounts to Unconstitutional ‘Taking’
City Attorney Dennis Herrera chalked up another major victory in his office’s defense of the City’s Hotel Conversion Ordinance (HCO) from a decade-long legal onslaught by attorneys for the San Remo Hotel, when the U.S. Court of Appeals for the Ninth Circuit last week affirmed an Oct. 2002 federal district court ruling that the North Beach-based establishment was barred from “re-litigating” its claim that the ordinance amounted to an unconstitutional “taking.”
After exhausting its takings claims in state court litigation first filed in 1993, San Remo continued its pursuit of federal takings claims in federal court. In 2002, however, the U.S. District Court for the Northern District of California held that the California Supreme Court’s decision regarding the state claims was an “equivalent determination” of federal claims, thereby prohibiting still further attempts to re-litigate identical issues under the legal doctrine known as “issue preclusion.”
“The San Remo Hotel has tried, tried and tried again — and lost every time,” Herrera said. “This victory does more than merely solidify the legal foundation upon which our Hotel Conversion Ordinance stands. It underscores the continued importance of thoughtful and effective public policies to protect the supply of affordable housing for our City’s most vulnerable tenants — especially elderly, disabled and low-income San Franciscans.”
The Hotel Conversion Ordinance, which was first enacted in 1981 and later re-enacted in modified form in 1990, prevents owners of residential hotels from converting their units historically used for tenants into lodging for tourists, which is typically more lucrative, unless steps are taken to ameliorate the housing lost to San Francisco’s permanent residents. Those steps include: replacing the converted units through construction of an equal number of units for residents; rehabilitation of an equal number of residential hotel units; or by making an “in lieu payment” to the San Francisco Residential Hotel Preservation Fund Account for part of the construction costs for the number of units being converted. The longstanding measure has been acknowledged as a critically important source of funding to offset negative impacts to housing stock when residential hotels convert permanently to tourist use.
The San Remo Hotel, whose owners paid $567,000 under protest to the City’s Residential Hotel Preservation Fund in 1996, currently operates as a fully licensed tourist hotel. According to a report last week in the legal newspaper, The Recorder, counsel for San Remo intends to “seek an en banc Ninth Circuit hearing, and if that fails, [to] seek review by the U.S. Supreme Court.”
“We’re delighted with the Ninth Circuit’s decision, and we fully expect that the City will continue to prevail should plaintiffs choose to exercise their dwindling legal options to appeal yet again,” said Deputy City Attorney Andrew Schwartz, who argued the case for the City in March.
The Ninth Circuit panel hearing the case was comprised of Hon. Ferdinand F. Fernandez, Hon. Michael Daly Hawkins and Hon. Sidney R. Thomas, with Judge Hawkins authoring the unanimous opinion that was filed Wednesday, April 14, 2004. The City and County of San Francisco was supported in the case by amici curiae briefs from the California State Association of Counties, the League of California Cities and the International Municipal Lawyers Association.
The case is San Remo Hotel L.P. v. City and County of San Francisco, United States Court of Appeals for the Ninth Circuit No. 03-15853.