What is the the Large Tourist Hotel
Conversion Ordinance?

In March 2008 the Board of Supervisors adopted the Large Tourist Hotel Conversion Ordinance (Administrative Code Chapter 41F). As amended in January 2009, the Ordinance regulates the conversion of Large Tourist Hotel rooms into condominiums or other ownership structures that reduce the City's inventory of large tourist hotel rooms. This document is intended to be a concise summary. The full text of the Ordinance, as amended, is available. Capitalized words in this document are further defined in the Ordinance.

The Ordinance provides for conversion of up to 550 Large Tourist Hotel Rooms prior to November 1, 2010. Beginning in 2010, the Planning Department will hold a Lottery for additional Conversions, but only if statutory preconditions are met.

 

The First 550 Conversion Credits

To implement the Ordinance the Planning Department has established a queue for use of the first 550 Conversion credits. Each member of the queue holds credits that allow the hotel to apply to the Planning Commission for permission to convert a fixed number of Large Tourist Hotel Rooms. The credits and the Planning Commission's approval are conditions precedent for conversion, but confer no development right or entitlement. Applicants must in addition obtain all local and state approvals for the proposed conversion.

In fall of 2008, the queue was established as follows:

Queue	Hotel Name, Address	Conversion Credits Requested / Lost Tourist Hotel Rooms
1.	The Palace Hotel 2 New Montgomery Street	69
2.	The St. Francis Hotel 455 Post/355 Powell Street	12
3.	The Grand Hyatt Hotel 345 Stockton Street	184
4.	The Fairmont Hotel 950 Mason Street	286

 

In January 2009, the Section 41F.2 definition of "convert" was amended and, as a consequence, the Ordinance no longer applies to the St. Francis Hotel's 12-room conversion (No. 2 in the queue). Under the amended Ordinance, the Mark Hopkins Hotel is eligible to use the remaining 11 Conversion credits.

 

2008-2010 Hotel Conversion Queue

In 2008 the Zoning Administrator established the queue for conversions as outlined in Administrative Code Section 41F. At that time, there were four hotels that qualified and met the requirements to be placed in the queue. The queue did not change from 2008-2010.

Queue	Hotel Name, Address	Conversion Credits Requested / Lost Tourist Hotel Rooms
1.	The Palace Hotel 2 New Montgomery Street	69 credits requested / 69 credits available
2.	The Grand Hyatt Hotel 345 Stockton Street	184 credits requested / 184 credits available
3.	The Fairmont Hotel 950 Mason Street	286 credits requested / 286 credits available
4.	The Mark Hopkins Hotel 850 Mason Street	179 credits requested / 11 credits available

 

Current Status of the Queue

Currently there are no pending hotels that are converting rooms to residences. All four hotel properties in the 2008-2010 queue failed to meet the November 1, 2010 deadline established in Administrative Code Section 41F.3 (b). This section states that a queue member must obtain Planning Commission approval of its conversion application prior to November 1, 2010.

Queue	Hotel Name, Address	Conversion Credits Requested / Lost Tourist Hotel Rooms
1.	The Palace Hotel 2 New Montgomery Street	Did not meet the 11/1/10 deadline to obtain Planning Commission entitlements.
2.	The Grand Hyatt Hotel 345 Stockton Street	Did not pursue conversion of rooms prior to the 11/1/10 deadline.
3.	The Fairmont Hotel 950 Mason Street	Did not meet the 11/1/10 deadline to obtain Planning Commission entitlements.
4.	The Mark Hopkins Hotel 850 Mason Street	Chose not to convert the 11 rooms allocated to them prior to the 11/1/10 deadline.

 

Since each of the four hotels in the queue did not meet the mandated deadline, there is no Large Tourist Hotel Conversion Queue. Under the Administrative Code provisions, new conversion ‘units’ may be created if there is a net increase of at least 100 Large Tourist Hotel Rooms over the prior year’s inventory. There has been no addition of rooms in the past year to the City’s stock of Large Tourist Hotels; therefore, the Planning Commission may not issue any new credits.

 

Annual Inventories of Large Tourist Hotels

Section 41F.3(g) of the Administration Code requires the Planning Department to adopt a "Baseline Inventory" of the number of rooms commercially available for rent as of March 1, 2009, in Large Tourist Hotels (hotels with over 99 rooms). This Section further requires that an "Annual Inventory" of the number of Large Tourist Hotel Rooms commercially available for rent be updated each year thereafter. The Planning Commission adopted the Baseline Inventory on February 12, 2009. As required, Planning Department staff sent a memorandum to the Commission on March 6, 2009 confirming that the Baseline Inventory adopted on February 12, 2009 remained accurate as of March 1, 2009.

Year	Hearing/Adoption Date	Case Report	Motion No.	Inventory
2011	March 3, 2011	2011 Case Report	18925	2011 Annual Inventory
2010	March 25, 2010	2010 Case Report	18057	2010 Annual Inventory
2009	March 1, 2009	2009 Case Report	17822	Baseline Inventory

 

Future Lotteries for Large Tourist Hotel Conversion Credits

The Planning Department will hold future lotteries if the following criteria are met:

1. the Annual update to the Baseline Inventory shows a net increase of at least 100 Large Tourist Hotel Rooms over the prior year's inventory; and
    
2. conducting a lottery would not result in a reduction in the number of Large Tourist Hotel Rooms below the Baseline Inventory.

(Note: this means that new Large Tourist Hotel Rooms will need to be created to replace the up-to-550 pre-lottery Conversions and an additional 100 rooms before the first lottery is held.)

Once sufficient Large Tourist Hotel Rooms have been built to allow a lottery to be held refer to Section 41F.3(d) for more information about how to apply for the lottery. After the first lottery is held, the following will apply to those who are issued Conversion credits through a lottery. To satisfy the diligent and good faith effort requirement during the initial nine months after lottery issuance of Conversion credits, applicants must, at a minimum, submit complete applications to the City for all associated permits. In addition, credits will expire if applicants fail to diligently and in good faith pursue conversion for any 18 consecutive months.