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TOURIST HOTEL CONVERSION *
TOURIST HOTEL CONVERSION *
This Chapter 41F may be referred to as the Tourist Hotel Conversion Ordinance.
(Added by Ord. 41-08, File No. 071528, App. 3/24/2008; amended by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
(a) As one of the country’s premier travel destinations, the City and County of San Francisco (“San Francisco” or “the City”) depends on visitors for its economic health and well-being.
(b) During the past eleven years since 2008, San Francisco’s economy has been bolstered by its convention market. In 2013, San Francisco deepened its investment in the convention market by financing the expansion of the Moscone Center, noting at the time that the City had lost over $2 billion worth of trade show business due to capacity limitations. To remain competitive with other large cities with respect to attracting conventions, which typically book large blocks of rooms in large hotels, the City needs to continue the restrictions on the conversion of rooms in large hotels to condominiums.
(c) Since its passage in 2008, the Tourist Hotel Conversion Ordinance (the “THCO”) has stabilized San Francisco’s hotel sector and preserved thousands of hospitality industry jobs in the City by restricting the conversion of rooms and suites in large hotels to condominiums. Because the THCO has been a proven success over the past decade in fulfilling its purpose, the City wants to continue it and strengthen its provisions.
(d) Absent the THCO, the high price of luxury housing would likely have resulted in the conversion of thousands of tourist hotel units to condominiums, thereby constricting the number of hotel rooms available to convention attendees and risking the loss of convention business to competing markets. Given the continuing high prices of housing in San Francisco, it is vital to the City’s economic interest and well-being to continue the restriction on conversion of hotel rooms to condominiums.
(Added by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
(Former Sec. 41F.2 added by Ord. 41-08, File No. 071528, App. 3/24/2008; Ord. 14-09, File No. 081564, App. 1/16/2009; redesignated as Sec. 41F.3 and amended by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
For purposes of this Chapter 41F, the following definitions shall apply:
(a) “Baseline Inventory” shall mean an inventory of the number of Large Tourist Hotel Rooms commercially available for rent as of October 1, 2019, as calculated according to the process described in Section 41F.4(f).
(b) “Annual Inventory” shall mean the inventory of the number of Tourist Hotel Rooms commercially available for rent as updated in each year after the Baseline Inventory, as calculated according to the process described in Section 41F.4(f).
(c) “Ancillary Hotel Area” shall mean any area within a Large Tourist Hotel not defined as a Large Tourist Hotel Room, including, but not limited to, restaurant, retail, and parking areas.
(d) “Condominium Project” shall mean (1) a Community Apartment as defined in Section 1308(b) of the Subdivision Code; (2) a Condominium as defined in Section 1308(c) of the Subdivision Code; (3) a Stock Cooperative as defined in Section 1308(f) of the Subdivision Code; or (4) any other subdivided interest in land.
(e) “Convert” shall mean: (1) to change the type of ownership of any real property to that defined as a Condominium Project and in which two or more units are newly created wholly or in substantial part within the existing structure of a Large Tourist Hotel, regardless of whether substantial improvements have been made to such structures; or (2) to change the ownership structure of one or more guest rooms, one or more suites of rooms, or any portion thereof within an existing Large Tourist Hotel in a manner that reduces the number of Large Tourist Hotel Rooms available for rent to the general public.
(f) “Dwelling Unit” shall mean any building or portion thereof that contains living facilities, including provisions for sleeping, eating, cooking, and sanitation as required by the Housing Code, for not more than one Family.
(g) “Family” shall mean one or more persons, related or unrelated, living together as a single integrated household in a dwelling unit.
(h) “Large Tourist Hotel” shall mean any building or set of buildings (which shall mean buildings on the same lot, adjacent lots, or within the same block and owned by the same entity) in the City containing 100 or more guest rooms or suites of rooms intended or designated to be used for commercial tourist use by providing accommodation to transient guests on a nightly basis or longer, as contemplated by the definition in Section 102 of the Planning Code. The definition of Large Tourist Hotel shall include, a building (or set of buildings) which would have qualified as a Large Tourist Hotel in any of the five years preceding the application for Conversion. A building (or set of buildings) shall not be considered a Large Tourist Hotel if the total number of rooms intended to be operated separately for transient use is less than 100 rooms.
(i) “Large Tourist Hotel Room” shall mean any guest room, suite of rooms, or any portion thereof in a Large Tourist Hotel intended or designated to be used for commercial tourist use by providing accommodation to transient guests on a nightly basis or longer, as contemplated by the definition in Section 102 of the Planning Code.
(Added as Sec. 41F.2 by Ord. 41-08, File No. 071528, App. 3/24/2008; Ord. 14-09, File No. 081564, App. 1/16/2009; redesignated and amended by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
(Former Sec. 41F.3 added by Ord. 41-08, File No. 071528, App. 3/24/2008; Ord. 14-09, File No. 081564, App. 1/16/2009; redesignated as Sec. 41F.4 and amended by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
(a) General Prohibition. Except as provided in subsection (b) below, it shall be unlawful for any person to Convert any portion of a Large Tourist Hotel except as provided in this Chapter. Notwithstanding Conversion approval under this Chapter, a Conversion project must in addition obtain all applicable City permits and approvals, including any applicable conditional use authorization requirements. This Chapter shall not limit City discretion to deny or approve with conditions a proposed Conversion project.
(b) Ancillary Hotel Areas. A person may Convert all or any portion of an Ancillary Hotel Area with a Conditional Use authorization and a showing to the Planning Commission that the Conversion will not result in a reduction in the number of Large Tourist Hotel Rooms in the subject hotel.
(c) Conversion Lottery. Beginning in 2019, the Planning Department shall hold an annual lottery for Conversion credits for Large Tourist Hotel Rooms in accordance with the following:
(1) The Planning Department shall hold the lottery only if:
(i) The Annual Inventory is above 40,000 hotel rooms; and
(ii) The Annual Inventory shows a net increase of at least 100 Large Tourist Hotel Rooms over the prior year’s inventory, as calculated in Section 41F.4(f) below; and
(iii) Conducting a lottery would not result in a reduction in the number of Large Tourist Hotel Rooms below 40,000 Large Tourist Hotel Room inventory citywide.
(2) The number of Conversion credits available in each lottery shall equal the net increase in Large Tourist Hotel Rooms during the previous year’s inventory. Large Tourist Hotel Rooms lost through authorized Conversions shall not be considered for purposes of calculating the net increase in Large Tourist Hotel Rooms under this section, as described in Section 41F.4(f), below.
(3) In order to participate in the conversion credit lottery, applicants must submit a Section 41F.4(e)(3) application within 15 business days of the formal adoption of the Annual Inventory update. The Planning Department shall issue one lottery ticket per Large Tourist Hotel applicant. Only one application may be submitted per Large Tourist Hotel.
(4) The Planning Department shall hold the lottery at a public hearing within six weeks of the formal adoption of the Annual Inventory. Winning lottery tickets shall be chosen randomly, one at a time. If not enough credits remain in the pool to satisfy a winning ticket, then the applicant shall receive the number of credits remaining in the pool and be eligible to receive the remainder as the first applicant on the standby list. If a lottery would otherwise be required by the Chapter and the number of available credits exceeds the total number of applicants’ requests for Conversion credits in a particular year, then the credits shall be granted and no lottery shall take place.
(5) If applicants collectively seek more Conversion credits than are available in the lottery pool, then, after the last winning ticket is drawn, the Planning Department shall draw a reasonable number of alternate tickets for inclusion in a standby list. If, nine months after the lottery, the Planning Department revokes winning credits according to subsection (d)(2), below, the credits shall be reallocated to the standby list, in the order drawn.
(d) Large Tourist Hotel Conversion Credits.
(1) Conversion is prohibited unless the applicant uses Conversion credits to offset the loss of Large Tourist Hotel Rooms. An award of Conversion credits does not grant the credit-holder a right to development or otherwise limit City discretion to deny or approve with conditions a proposed Conversion project. A credit holder must still obtain all otherwise applicable City permits and approvals, including but not limited to Planning Commission approval of the Conversion pursuant to Section 41F.4(e).
(2) Credits are building-specific and non-transferable, except that if the credit holder does not make diligent and good faith efforts within nine months of issuance of the Conversion credit(s), the credits may be revoked and reallocated to the queue, for pre-lottery credits, or the standby list, for lottery credits. Credits shall expire if the applicant or standby-list recipient fails to diligently and in good faith pursue Conversion for any 18 consecutive months, as determined by the Zoning Administrator after notice and a public hearing. The Board of Appeals shall hear and determine appeals under this section.
(e) Conversion Process.
(1) The City may not issue permits related to use of pre-lottery or lottery Conversion credits until and unless the Planning Commission approves a Section 41F.4(e) Conversion application for the proposed Conversion project.
(2) The notice and hearing requirements applicable to conditional use authorizations shall apply to Planning Commission’s action to approve or deny Conversion applications for use of Conversion credits under this Chapter.
(3) Any party seeking Conversion under this Chapter shall submit a written Conversion application to the Planning Department containing, at minimum, the following information:
(i) The name and address of the building in which the conversions are proposed;
(ii) The names and addresses of all owners and operators of said building;
(iii) A description of the proposed Conversion including the nature of the Conversion, the total number of Large Tourist Hotel Rooms prior to and following Conversion, a description of the area and/or rooms to be Converted, including floor number and location, and the estimated total number of Condominium Units to be created;
(iv) Preliminary drawings showing the existing floor plans and proposed floor plans;
(v) A description of the improvements or changes proposed to be constructed or installed and the tentative schedule for start of construction;
(vi) Information specifying any changes to the subject building or buildings’ inventory of rooms in the 5 years preceding the date of application for Conversion;
(vii) The average rental rates of the rooms to be converted, calculated over the calendar year preceding the year of application for Conversion;
(viii) Applicants for the lottery must provide information demonstrating that the Conversion will not reduce the supply of Large Tourist Hotel Rooms to levels below the Baseline Inventory.
(ix) Applicants for Ancillary Hotel Area Conversion must provide information demonstrating that the proposed Conversion will not result in loss of Large Tourist Hotel Rooms in the subject Large Tourist Hotel, including specifying any proposed changes to the subject buildings’ inventory of rooms planned in the 5 years following the date of application for Conversion.
(x) Applicants for Conversion must pay the Planning Department a processing fee set by the Planning Director at a full cost recovery level.
(xi) As a condition of approval, an applicant must provide annual updates to the Planning Department on the status of the approved Conversions until such time as the Conversions are complete or the Conversion credits have been revoked or have expired.
(4) The Zoning Administrator shall make a recommendation regarding the approval, denial, or approval with conditions of the Conversion application to the Planning Commission, based upon whether the proposed Conversion meets Planning Code requirements including, but not limited to, this Chapter. The Planning Commission shall approve the Conversion, deny it, or approve it with conditions. Any member of the public wishing to appeal the decision of the Planning Commission must appeal the decision to the Board of Supervisors pursuant to the appeals process set forth in Section 308 of the Planning Code.
(f) Inventory Procedure.
(1) Adoption of Inventory. The Planning Commission shall adopt a Baseline Inventory and subsequent Annual Inventories of the number of Large Tourist Hotel Rooms in the City no later than October 1 of each year. The Planning Department shall provide the public with an opportunity for meaningful review and comment on Baseline and Annual Inventories, including a public hearing held no later than October 15th of each year.
(2) Calculating Additions to the Annual Inventory. Large Tourist Hotel Rooms created by new Large Tourist Hotel construction and/or expansion shall be counted as part of the Annual Inventory year in which the City issues final certificates of occupancy.
(3) Calculating Losses from the Annual Inventory.
(i) Losses of Large Tourist Hotel Rooms shall count in the inventory year in which the rooms cease to be commercially available for rent.
(ii) In conducting its Annual Inventory, the Planning Department will distinguish how many Large Tourist Hotel Rooms were lost due to authorized Conversions, and how many were lost for other reasons.
(4) Calculating the number of Conversion credits available for the annual lottery. No conversions can take place until the City’s Baseline Inventory of Large Tourist Hotel Rooms exceeds 40,000. Once the Baseline Inventory exceeds 40,000 rooms, the number of Conversion credits available for each year’s lottery shall equal the number of additions as calculated in subsection (2) above, less the number of rooms lost due to reasons other than authorized Conversions, as calculated in subsection (3) above.
(Added as Sec. 41F.3 by Ord. 41-08, File No. 071528, App. 3/24/2008; Ord. 14-09, File No. 081564, App. 1/16/2009; redesignated and amended by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
(Former Sec. 41F.4 added by Ord. 41-08, File No. 071528, App. 3/24/2008; redesignated as Sec. 41F.5 and amended by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
(a) The Department of Building Inspection, in consultation with the Departments of Planning and Public Works, shall be responsible for enforcement of this Chapter 41F as it may relate to physical alterations to a Large Tourist Hotel and may take any appropriate action within its powers to enforce this Chapter, including, but not limited to, denial of any building, construction, or change of use permits. The Department of Public Works, in consultation with the Departments of Building Inspection and Planning, shall be responsible for enforcement of this Chapter as it may relate to actions involving a subdivision under the Subdivision Map Act, California Government Code Sections 66410 et seq.
(b) Civil Penalties.
(1) The Department of Building Inspection or the Department of Public Works may recommend to the City Attorney initiation of a civil action to enforce this Chapter. The City Attorney shall have the power to bring an action for injunctive relief to restrain or summary abatement to cause the correction or abatement of the violation of this article and for assessment and recovery of a civil penalty and reasonable attorney’s fees for such violation, or other judicial relief hereunder.
(2) Any person who violates this Chapter 41F may be liable for a civil penalty, not to exceed $1,200 per room for each day such violation is committed or permitted to continue, which penalty shall be assessed and recovered in a civil action brought in the name of the people of the City by the City Attorney in any court of competent jurisdiction. The City Attorney also may seek recovery of attorney’s fees and costs incurred in bringing a civil action pursuant to this subsection (b).
(c) Criminal Penalties.
(1) The Department of Building Inspection or the Department of Public Works may recommend to the District Attorney initiation of a criminal action to enforce this Chapter.
(2) Any person who violates this Chapter 41F shall be deemed guilty of a misdemeanor. Every violation determined to be a misdemeanor is punishable by a fine of not more than $1,000 or by imprisonment in the County Jail for a period of not more than six months, or by both such fines or imprisonments.
(Added as Sec. 41F.4 by Ord. 41-08, File No. 071528, App. 3/24/2008; redesignated and amended by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
(Former Sec. 41F.5 added by Ord. 41-08, File No. 071528, App. 3/24/2008; repealed by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
If any section, subsection, sentence, clause, phrase, or word of this Chapter 41F, or any application thereof to any person or circumstance, is held to be invalid or unconstitutional by a decision of a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions or applications of this Chapter. The Board of Supervisors hereby declares that it would have passed this Chapter and each and every section, subsection, sentence, clause, phrase, and word not declared invalid or unconstitutional without regard to whether any other portion of this Chapter or application thereof would be subsequently declared invalid or unconstitutional.
(Added by Ord. 41-08, File No. 071528, App. 3/24/2008; amended by Ord. 222-19, File No. 190683, App. 10/11/2019, Eff. 11/11/2019)
Ord. 41-08, File No. 071528, Approved March 24, 2008, repealed former Ch. 41F, in its entirety, and enacted provisions designated as a new Ch. 41F to read as herein set out. Prior to inclusion of said ordinance, Ch. 41F pertained to similar subject matter and derived from Ord. 214-05, File No. 051333, App. 8/18/2005 and Ord. 21-07, File No. 061536, App. 2/9/2007.