Terminal Plaza Corp. v. City and County of San Francisco

CourtCalifornia Court of Appeals
Citation223 Cal.Rptr. 379,177 Cal.App.3d 892
Decision Date24 February 1986
PartiesTERMINAL PLAZA CORPORATION, Plaintiff and Cross-Appellant, v. CITY & COUNTY OF SAN FRANCISCO, et al., Defendants and Appellants. Jim Parodi, et al., Intervenors. A021611.

Page 379

223 Cal.Rptr. 379
177 Cal.App.3d 892
TERMINAL PLAZA CORPORATION, Plaintiff and Cross-Appellant,
CITY & COUNTY OF SAN FRANCISCO, et al., Defendants and Appellants.
Jim Parodi, et al., Intervenors.
Court of Appeal, First District, Division 1, California.
Feb. 24, 1986.

[177 Cal.App.3d 897]

Page 381

George Agnost, City Atty., Paula Jesson, Kathryn Pennypacker, Melba Yee, Deputy City Attys., San Francisco, for defendants and appellants.

Colvin, Martin & Links, Robert D. Links, Paul Wartelle, San Francisco, for plaintiff and cross-appellant.

[177 Cal.App.3d 898] NEWSOM, Associate Justice.

The present appeal comes before us under the following circumstances.

In 1979, the Board of Supervisors of the City and County of San Francisco (hereafter the Board) perceived a serious housing shortage for low income and elderly residents caused by the conversion of residential hotels to tourist hotels or condominiums. In response, on November 23, 1979, the Board enacted a moratorium on the demolition or conversion of residential hotel units.

In February of 1981, the moratorium was replaced with a permanent regulation governing and restricting the conversion of "residential hotels," known as the Residential Hotel Unit Conversion and Demolition Ordinance (Ord. 15-81, chapter 41, San Francisco Administrative Code) (hereafter the ordinance). The ordinance was amended and redrafted in June of 1981 (Ord. No. 330-81). Its stated objective is to alleviate the "adverse impact on the housing supply and on displaced low income, elderly and disabled persons resulting from the loss of residential hotel units through their conversion and demolition." (Ord., § 41.2.) 1 Findings were made by the Board in support of the ordinance: a study indicated that residential housing units in the city had decreased dramatically since 1975 due to "vacation, conversion or demolition" of such housing; residential hotel units were declared an endangered housing resource in need of preservation. ( § 41.3.)

The ordinance provides that owners of residential hotel units must obtain a permit from the City and County of San Francisco (hereafter appellant or the City) prior to conversion of the property to any other use. A permit will be granted only if the property owner provides relocation assistance to hotel residents and makes a "one-for-one replacement" for the residential hotel units being converted by one of the following methods: 1) constructing the replacement units, 2) rehabilitating an equal number of residential hotel units, or 3) contributing an "in lieu" fee to the City's Residential Hotel Preservation Fund Account in the amount of 40 percent of the construction cost of the number of units converted.

The ordinance defines "residential unit" as a hotel guest room occupied by a permanent resident as of September 23, 1979; a "permanent resident" for purposes of the ordinance is a person who occupied a hotel guest room [177 Cal.App.3d 899] for at least 32 consecutive days on that date. A "residential hotel" is any building containing a "residential unit" as of September 23, 1979. ( § 41.4.)

Exemptions and exceptions are provided in the ordinance. It does not apply to residential hotels which had commenced substantial capital improvements or rehabilitation work prior to the effective date of the ordinance for the purpose of converting the hotel to another use; it also specifically permits a residential hotel to rent any vacant residential unit to tourists during the designated tourist season, May 1 to September 30. ( § 41.16.)

According to the terms of the ordinance, hotel owners and operators are required to submit to the San Francisco Bureau of Building Inspection information on the number of units falling within the residential classification. Then, the number of units the owner is required to maintain for residential use is certified. ( § 41.6.)

Respondent and cross-appellant Terminal Plaza Corporation (hereafter Terminal or respondent), owns real property located at

Page 382

190 O'Farrell Street in San Francisco. The St. Moritz Hotel is operated on the property by a third-party lessee. Most of the rooms at the St. Moritz Hotel are rented on a monthly basis, and consequently are classified as "residential units" under the ordinance. On October 27, 1981, Terminal's lessee filed an Initial Unit Usage Report with the Bureau of Building Inspection which indicated that as of the effective date of the ordinance the St. Moritz Hotel contained 60 residential units and 15 tourist units. Terminal has not sought to convert the residential units to any other use.

Terminal filed an action for declaratory and injunctive relief, challenging the validity of the ordinance on grounds that it was adopted without prior review by the Planning Commission in violation of section 7.501 of the San Francisco City Charter; was enacted without proper environmental evaluation as required in the California Environmental Quality Act (Pub.Res.Code, § 21000, et seq., hereafter CEQA); not approved by two-thirds of the voters in the City as mandated by section 4 of article XIIIA of the California Constitution for "special tax" legislation; violates the due process and equal protection clauses of the California and United States Constitutions; and constitutes a "taking" of property for which just compensation to Terminal must be paid. The trial court ruled that the Board violated section 7.501 of the San Francisco City Charter and CEQA by enacting the ordinance without prior review by the Planning Commission or other adequate environmental evaluation, but found in favor of the City on the remaining contentions, and denied Terminal's claim for attorney's fees.

[177 Cal.App.3d 900] The City filed an appeal; Terminal has cross-appealed. 2 After trial, the Board reenacted the ordinance following a hearing by the City Planning Commission in accordance with section 7.501 and issuance of a "negative declaration" by the City in accordance with the dictates of CEQA.

The City contends that the trial court erred by concluding that the ordinance falls within the terms of section 7.501 of the San Francisco City Charter, which, in pertinent part, provides: "The City Planning Commission shall consider and hold hearings on proposed ordinances and amendments thereto regulating or controlling the height, area, bulk, setbacks, location, use or related aspects of any building or structure or land, including but not limited to the zoning ordinance or other portions of the city planning code...." The City and the intervenors argue that section 7.501 has limited application to zoning or similar land use legislation regulating "the distribution and location of uses throughout the City." They suggest that the ordinance does not fall within the category of a zoning law, but rather is merely "legislation of uniform applicability, which does not require the comparative analysis of neighborhood needs," and concerning which the input of the Planning Commission is unnecessary. 3

Our initial task is to determine the meaning and scope of section 7.501. Established maxims of interpretation provide us with useful guidance. Our primary goal is to ascertain the legislative intent so that the objective of the law may be effectuated. (Moyer v. Workmen's Comp. Appeals

Page 383

Bd. (1973) 10 Cal.3d 222, 230, 110 Cal.Rptr. 144, 514 P.2d 1224; Herbert Hawkins Realtors, Inc. v. Milheiser (1983) 140 Cal.App.3d 334, 338, 189 Cal.Rptr. 450.) Statutory language must be read in context, keeping in mind the nature and purpose of the enactment, and must be given such interpretation as will promote rather than defeat the objective of the law. (Pennisi v. Department of Fish & Game (1979) 97 Cal.App.3d 268, 272, 158 Cal.Rptr. 683; Steilberg v. Lackner (1977) 69 Cal.App.3d 780, 785, 138 Cal.Rptr. 378.)

[177 Cal.App.3d 901] The language of section 7.501, 4 we observe, mandates Planning Commission consideration of enactments "regulating or controlling the height, area, bulk, setbacks, location, use or related aspects of any building or structure." (Emphasis added.) That the ordinance regulates and controls the use of buildings within the City is clear, for it recognizes a property use classification--"residential hotel units"--and prohibits such use from being terminated unless replacement units are provided by the property owner.

Appellant and intervenors acknowledge that the ordinance "does indeed impose new restrictions on a particular type and use of property," but insist that the term "use" must be read in light of the more specific provisions of section 7.501: "height, area, bulk, setback and location." They note that the ordinance does not address such specific considerations, nor does it seek to regulate the "appropriate location and structuring of the 'use' which is classified," such as do zoning laws, and for that reason is not governed by section 7.501.

The history and regulatory scheme of which section 7.501 is a part support the City's position. Section 7.501 entitled "Zoning Amendments" appears in the "Zoning Chapter" of the San Francisco City Charter. It was originally adopted as article XVII of the 1929 San Francisco City Charter, which created the Planning Commission to "consider and hold hearings on the proposed changes in the classification of the use to which property in the City and County may be put...." The law was amended over the years until it was enacted in its present form by the voters as Proposition M in 1971. In every instance, this section was treated as a zoning regulation, a practice consistent with the traditional primary role of the Planning Commission to "adopt a land-use plan showing the proposed general distribution and the general location and extent of housing, business industry, recreation ... and other categories of public and private uses of land...." (San Francisco City Charter section 3.524.)

Zoning laws typically regulate such facets of land...

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