Dec. 31 2002 12:00 AM

Downtown residential hotel lost to revitalization, tenants evicted

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    The 200-plus residents of the Maryland Hotel will spend the first month of 2003 looking for a new place to live. If they're unsuccessful, they'll join the growing ranks of the homeless in San Diego.

    On Monday, Dec. 30, the downtown residential hotel's tenants were given 30 days to vacate their rooms. Michael Kelly, who along with his brother, Richard, acquired the hotel this past spring for $8 million, said they plan to convert the 135,000-square-foot, six-story building, located at 630 F St., into a boutique hotel, similar to the hip W Hotel chain. Construction has already begun on an attached restaurant and lounge.

    The new hotel's opening is projected to coincide with that of the ballpark.

    The brothers, who formed 630 F Street LLC when they bought the Maryland and several surrounding storefronts, own First Commercial Corp., a successful downtown investment firm, and the Bitter End bar and nightclub located in the Gaslamp District.

    The modest, 90-year-old hotel's current occupants are mostly individuals on fixed incomes—senior citizens, mentally ill, the disabled. Of the hotel's six floors, only one floor is open to daily occupancy; the other five floors hold tenants who pay monthly rent in the mid-$500s.

    According to the San Diego Housing Commission, the Maryland is an SRO (single room occupancy) hotel—it's listed as such in the city's current affordable housing guide and was part of the Housing Commission's 2000 inventory of SROs. Kelly, however, has a 1998 letter from the Housing Commission to the Maryland's then-owner stating that the hotel was, in fact, not an SRO because rents, at that time, included meals. Rents no longer include meals, but Kelly said he bought the property with the understanding that his hotel was not an SRO.

    The Housing Commission's most recent survey of SROs, conducted two years ago, counted less than 3,800 rooms, down from 4,600 in the late 1980s. This past year, another 298 units were lost to make way for the expansion of the Federal Courthouse and in September, the Housing Commission counted six SRO hotels, or 450 units, scheduled for demolition or conversion.

    Councilmember Toni Atkins has been a vocal advocate for the preservation of SROs, the tenants of which are often one step away from homelessness. In October, Atkins, along with Councilmember Ralph Inzunza, held a press conference to demand that the federal government replace SRO units lost to the courthouse expansion. Also in October, the City Council's Land Use and Housing Committee recommended the council take action to update the current SRO Ordinance to afford tenants additional protection should an SRO hotel owner decide to convert the hotel into something more profitable. A hearing to update the ordinance is scheduled for January.

    Under the city's current SRO Ordinance, a property owner who wishes to convert or demolish an SRO must give tenants 90 days' notice, provide them with relocation assistance, two months' rent and either contribute to a Residential Hotel Replacement Fund or build additional residential hotel rooms to make up for the lost rooms. Affordable housing advocates have argued that, for low-income individuals, that's simply not enough given San Diego's inflated housing costs.

    In the case of the Maryland Hotel, Kelly said he's under no obligation to provide assistance to ousted residents. Regardless, he said that he plans to provide tenants with two months' rent, or around $1,200, and hire, at his cost, a relocation assistance group to help residents find a new place to live. However, a Dec. 12 letter from 630 F Street LLC to the Housing Commission states that both California state law and the 1998 letter from the Housing Commission exempt 630 F Street from being required to either build replacement SROs or contribute to the Residential Hotel Replacement Fund.

    “Obviously I genuinely have a soft spot for the people living at the hotel,” Kelly said. “We purchased the property with the intent to remodel, and by law we have the right to close the hotel.... If it didn't bother me, or if I didn't care about the welfare of these people, we would not be offering relocation assistance nor would we be paying people the money that we're going to pay them.”

    Kelly estimates that the new hotel will generate well over $1 million in tax revenue that the city can then put towards low-income housing.

    Kelly also said that he's been upfront about plans to convert the hotel for months. Housing Commission Chief Executive Officer Elizabeth Morris said that it wasn't until mid-November that she was made aware that eviction notices were going out at the end of December.

    Planning Commissioner Carolyn Chase said she knew about the mass eviction as early as October, when an elderly woman with a history of mental illness who resided at the Maryland Hotel testified at a Planning Commission meeting. The woman went so far as to formally appeal the Planning Commission's decision to grant 630 F Street a permit to open a bar and nightclub on the premises. The permit was approved, but Chase said that the woman's testimony was compelling enough to prompt planning commissioners to contact the Housing Commission to see if anything could be done.

    On Dec. 10, the last City Council meeting of the year, the Housing Commission urged the council to pass a temporary Emergency SRO Ordinance that would carry through January. The emergency ordinance would have, among other things, required that property owners looking to convert or demolish an SRO provide displaced tenants with moving expenses and up to 48 months of financial assistance, or a maximum of $5,250, rather than the two months' rent required by the existing ordinance. The emergency ordinance also expanded the definition of “conversion” to include substantial rent increases, which the ordinance deemed a form of economic conversion.

    The significance of the emergency ordinance was that it would have been a safety net for all SRO tenants during the City Council's month-long winter break should any property owner—the Maryland included—decide to serve eviction notices during that time. At the hearing, 630 F Street representatives insisted that, if passed, the ordinance would not apply to them, though the Housing Commission's Morris said she was confident that the city attorney would think otherwise.

    The ordinance required six of the nine City Council votes to pass but ended up with only five. As expected, Mayor Dick Murphy and Councilmember Jim Madaffer voted no. Councilmember Brian Maienschein, who Atkins claims had planned to vote in favor of the ordinance, had to leave before the vote due to a prior obligation. The surprise opposition vote came from newly appointed Deputy Mayor Ralph Inzunza, who, only a couple months ago, had been an outspoken advocate of SRO preservation. Atkins said she had fully expected Inzunza to vote in favor of the ordinance and said she couldn't understand why he changed his mind. Inzunza did not return CityBeat's phone calls.

    There were some legitimate concerns about the way the ordinance was crafted, Atkins said, “but it would have been an ordinance in place for 45 days, and we would have had the time to try to address some of those issues.

    “I believe the Maryland is an SRO by definition of our existing current ordinance,” she said. “Our attempt was to strengthen that position and it failed.... We knew this was our last council meeting and if we were to address or deal with this issue we had to take action. Because it failed, it leaves people unprotected and I am extremely frustrated with my peers and disappointed for the [Maryland tenants].”

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