Sutter Hotel Owner Sues City of Oakland Over Residential Hotel Conversion Ban

584 14th St LLC, the owner of the Sutter Hotel,  filed suit against the city of Oakland last month in an attempt to invalidate recently passed City of Oakland rules that bar  demolition or conversion of residential hotels (aka SRO hotels). 584 14th St also seeks an injunction against the city to prevent it applying the law against the downtown SRO.

The suit filed in Alameda County Superior Court, by Ryan J. Patterson, of Zacks, Freedman and Patterson law firm in January 2019, alleges that the law discriminates against Residential Hotel owners, denies them the right to their business model, and violates state CEQA regulations. The lawsuit also alleges improper noticing and public hearing practices by the City of Oakland, including violations of the Brown Act. Notably, the lawsuit also alleges that the city of Oakland violated the 14th amendment rights of the hotel owners.

584 14th LLC purchased the Sutter,one of Oakland’s few remaining residential hotels, from its previous owner, Raj Singh, in 2017, while a city-council ordered moratorium on demolition or alteration of Residential Hotel’s was in effect. Singh had already begun the process of evicting low-income tenants in order to put the Sutter on the market.

During council discussion of the proposed permanent ban on demolition of residential hotels through 2018, city council members publicly discussed the situation of the Sutter and offered to exempt the company either partially or fully from the new rules. In her comments prior to the vote for first passage on November 27, 2018, District 3 Council Person Lynnette Gibson McElhaney vowed to work to introduce amendments specifically meant to resolve issues for the Sutter Hotel after the passage of the ordinance.

The lawsuit, in fact, refers to a letter from the city stating such an attempt for the 584 14th St LLC’s project at Sutter, but also claims that the company rejected the exemptions as insufficient because “the property itself, and any new projects are still subject” to the new rules. The lawsuit seeks to have all the rules invalidated–not only for the corporation, but for all residential hotel owners in the city of Oakland. Patterson, the attorney, has also notified the California Attorney General’s office of the alleged CEQA violations contained in the lawsuit.

This is not Patterson’s first high-profile lawsuit challenging city rules on development. Patterson has made a name for himself in the bay area by challenging city and state laws in favor of developers in high-profile signal cases, often in the service of the YIMBY-associated CARLA leader and former San Francisco City Council candidate, Sonja Trauss. Patterson represented Trauss in a successful series of suits that eventually forced the city of Berkeley to allow a housing development it had previously denied. Patterson also represented Trauss and her group in a similar fight in the city of Lafayette, and in other lawsuits throughout the Bay Area. Patterson has also defended landlords accused of illegal and unsafe housing violations, and in potentially precedent-setting evictions in San Francisco.

Patterson has stated that he sometimes wages lawsuits for his plaintiffs for their “educational value”. In fact, Patterson’s firm advertises itself as “the Voice of Bay Area Property Owners”, noting that it often takes on cases in order to change laws and procedures to the advantage of property owners and landlords.

584 14th St.’s lawsuit contains several controversial claims. Invoking the 14th amendment–originally intended to give former slaves ostensible equal protection under the law–the suit claims 584 14th Street has been discriminated against as the city is singling out SRO owners. The lawsuit also claims that the city council violated the Brown Act when it disallowed counsel for 584 14th st from speaking during council’s second reading on the Residential Hotel legislation.

The lawsuit claims that 584 14th St’s counsel was not allowed to speak because they had not properly presented a speakers card before the item was heard. The suit claims that requiring a speaker card in the first place is a Brown Act violation. The lawsuit states that it seeks to have the council actions thus invalidated, and further to declare that speakers during council deliberations are not required to present a speakers card to speak.

Publicly available video of the council session on December 4, 2018, show Patterson and an unidentified woman, sitting in the audience during the hearing of the residential hotel item. As the final speaker on the list finishes their comments, the unidentified woman can be seen requesting a speakers card from a seated clerk. She then insists on speaking and offers the same argument presented in the lawsuit regarding the right to speak. Council President Larry Reid confers with the city attorney who then states that such speaking would be at the President’s discretion. Reid then denies her request and continues with the motion on the second hearing, which passes the ordinance.

 

 

The city council’s moratorium and later ban on demolition and conversion of SROs has come in the midst of a homelessness crisis that has reached epidemic proportions in the past five years in Oakland. The loss of “housing of last resort” over the past decades has paralleled the rise in homelessness, as nearly half of the city’s original estimated 2,000 SRO units have been lost due to conversion or demolition. The legislative report for the Residential Hotel legislation  specifically addressed the advent of “boutique hotel” conversions, like the one 584 14th St plans for the Sutter, as one of the biggest problems facing last resort housing SROs. A 2015 report on SRO’s noted a similar concern.

The city of Oakland has not publicly commented on the suit or its defense. The city will confer with the Judge and plaintiff in late March.

The lawsuit can be found here: Patterson 14th llc lawsuit

 

Correction: an earlier version of this article stated that the ordinance also banned the sale of Residential hotels. While parts of the legislation at one time governed how the building could be sold, they were eliminated from the final legislation. The moratorium did not have a ban on sales.