Hotel Ordinance Facing Stiff U.S. Court Challenge

A federal District Court judge is expected to rule April 23 that the city’s Residential Hotel Conversion Ordinance is unconstitutional, thereby setting up a battle between the city and residential hotel owners who wish to convert their buildings into tourist facilities. 

Federal District Court Judge John Vukasin is scheduled to hear a lawsuit filed by residential hotel owners against the city and the ordinance. In past discussion of the law, Vukasin has described the ordinance as “outrageous,” “atrocious” and “what I consider to be a heinous and egregiously horrid solution” to the city’s demand for low-cost housing. 

Supporters of the ordinance say the matter should not be in Vukasin’s court in the first place, and that any ruling he makes on April 23 is not binding.

“This case should not be in federal court,” said Randy Shaw of the Tenderloin Housing Clinic. “Three state Court of Appeals decisions have upheld the constitutionality of the ordinance on its face.”

Shaw said that Vukasin is “using the federal bench to inject himself into an issue that has been resolved by the state courts.”

Deputy City Attorney Dennis Aftergut said he could not comment on the case specifically, but said the city has “always defended the ordinance vigorously and will continue to do so.”

Elizabeth Grayson, the attorney representing the hotel owners, said that if Vukasin rules from the bench on April 23, and rules in her clients’ favor, the hotels can immediately convert to tourist facilities.

“I would say that the city can’t enforce the residential hotel ordinance anymore,” she said. “It would also mean that every single hotel that is classified as residential can immediately rent to tourists.”

Under the ordinance, hotels classified as residential are not allowed to rent more than a specific percentage of their rooms to tourists.

Residential hotels represent the majority of low-cost housing in the city. In the four years before the law was enacted in 1979, the city lost 6,098 residential hotel rooms. 

Between 1981 and 1988, when the ordinance was in effect, only 1,743 rooms were lost.

Shaw said a decision by Vukasin is not final, and that the appeals process would in all probability place a hold on any ruling Vukasin makes. 

But he expressed concern that the Jordan administration might attempt to use Vukasin’s ruling to stop enforcing the ordinance. 

“I get the very strong sense that this administration would like to overturn the (ordinance),” he said. “That just doesn’t make sense. There already is a glut of tourist hotel rooms.”

Jordan’s housing director, Ted Dienstfrey, said he felt that the city has an “obligation to appeal the decision” because the ordinance is a law passed by the Board of Supervisors.

But Dienstfrey indicated he personally was opposed to the ordinance.