Committee delays action on residential-hotel (SRO) conversion amendments after owners raise notice and legal concerns

The Land Use & Transportation Committee took up Item 2 on Feb. 13: proposed amendments to Chapter 41 of the Administrative Code that would revise the residential-hotel (single-room occupancy, or SRO) unit-conversion and demolition rules by adding a definition of “tourist and transit use,” setting tenancy terms and creating an amortization period with a case-by-case extension process.

Board President Aaron Peskin framed the item as a long-standing effort to protect SRO housing stock, citing an historical decline from about 35,000 units to roughly 19,000 that serve low- and extremely low-income residents. Peskin noted a Planning Department negative declaration under the California Environmental Quality Act (CEQA) and proposed a narrow technical amendment to correct the ordinance’s file reference (striking 190946 and replacing it with 220815).

Two callers representing Hotel Des Arts and multiple SRO owners urged a continuance and opposed the measure on procedural and legal grounds. Brian O'Neil, counsel for Hotel Des Arts, said his immigrant-owner clients received no notice of the hearing and submitted written comments the same day; he argued the ordinance would take owners’ businesses without compensation, that the amortization period and extension-hearing process are legally deficient, and that the Business and Industry Commission (BIC) lacks judicial authority to conduct quasi-judicial hearings proposed by the ordinance. “The ordinance before you today would take away our client's business without compensation,” O'Neil told the committee.

Ryan Patterson, also representing Hotel Des Arts, reiterated the lack-of-notice concern and called the proposal unconstitutional, saying the ordinance would force owners to pay for conversions they previously operated lawfully. Both attorneys cited prior Board files (including 161291, 190049, 191258 and 190946) and requested the committee continue the item so the corrected version can be circulated and stakeholders given adequate notice.

The committee voted first to adopt Peskin’s amendment and send the amended file with recommendation to the full Board. After conferring with the deputy city attorney during a brief recess, the committee returned and voted to rescind the earlier direction to send the item to the full Board while retaining the substantive amendment; the committee then voted to continue Item 2 to Feb. 27.

Next steps: Committee staff will return the amended ordinance on Feb. 27; affected owners and interested parties indicated they will provide additional written comments and may pursue legal remedies if they believe the ordinance effects a taking or lacks proper process.