Tom and Robert Fields bought the San Remo Hotel in 1971. The North Beach hotel was a historic building, constructed in 1906 to house workers displaced by the great earthquake and fire. When the Fieldses bought it, it was so rundown it otherwise might have been demolished. Today, it is an affordable jewel for discerning tourists.
No thanks to the supervisors of The Special City.
In 1990, after the Fieldses had sunk some $500,000 into renovations, they applied for a conversion permit to allow them to rent rooms to tourists. The City That Knows How knew how to say no. In 1979, the hotel had submitted a form to city government that said all of its units were residential units -- that is, rented by the week or month. A San Francisco ordinance prohibits the conversion of residential units -- specifically rooms that rented for less than $1,000 per month in 1979 -- to hotel rooms unless the hotel pays a hefty fee to finance replacement housing. San Francisco told the Fieldses they would have to pony up $567,000.
That's right, a $567,000 fee so that the San Remo Hotel could operate like a hotel. "I call it the hotel parking ticket," said Tom Fields, 52.
His brother, Robert, wrote the check to the city with a note that said it was paid "under protest."
Robert is standing in the hallway outside a number of small but charming rooms. Because guests share bathrooms, rooms go for $65 to $85 per night, plus tax. "We just couldn't sit back and watch this happen," Robert adds. "This is our livelihood and we have to fight for it."
Enter the lawyers. The Fieldses are suing to get their money back.
"Basically what the city has said is that there's a problem with homelessness in the city. Rather than spending money from the taxpayers so that the burden is shared equally by everyone, the city decided to pick out 500 hotel owners and said that they should provide housing for the homeless that the city is unwilling to pay for," attorney Paul Utrecht explained. Worse, because the city wasn't out to protect dowagers renting rooms at the Fairmont, city solons ended up passing a fee that applies only to affordable hotels.
The Pacific Legal Foundation -- a private property advocacy group that operates out of Sacramento -- has filed an amicus brief. The group calls the city's conversion fee a "ransom payment" that requires businesses to pay the city off if they want their establishments to live. Or as one supervisor put it when the conversion law passed -- "organized extortion."
Last week, an appellate panel voted to pass the case on to the California Supreme Court. "Affordable housing for the indigent may be a worthy goal, but it is also an expense traditionally and rightly borne by society as a whole," Justice Lawrence Stevens said.
Deputy City Attorney Andrew Schwartz, however, contends that the city will not lose in court. "The ordinance balanced the interests of the hotel owners and the interests in the city in preserving affordable housing," he said. "All land-use regulations, all zoning regulations restrain the use of property. This regulation is no different than any other zoning regulation."
But even if the city wins in court -- which this nonlawyer doubts -- the city loses. "People have been known to complain in this city about how we're losing our character, our family businesses, and they're being replaced by corporate entities and chain stores," noted Paul von Beroldingen, spokesman for the Fieldses. "Here's a great example of a family that made a contribution to the city. And the city has made it so difficult on them that they wouldn't do it again."