• Watch Weekly journalists discuss the implications of the President Hotel sale on an episode of "Behind the Headlines."
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Residents at the historic President Hotel Apartments in downtown Palo Alto received notice Tuesday, June 12, that they will have to move out of the building by Nov. 12.
Letters from Chicago-based developer AJ Capital, which has purchased the six-story Spanish Colonial building at 488 University Ave. for an undisclosed price, were placed under tenants' doors Tuesday afternoon notifying them that the building will be converted back to its original purpose as a hotel.
The new owners plan to do an historic renovation of the building and reopen it in 2020 as the Graduate Palo Alto hotel, which will include 100 guestrooms, a lobby coffee shop, street-level retail and the restoration of its original rooftop garden, according to company press release sent out Wednesday, June 13. LoanCore Capital will provide financing for the project.
The renovation will touch all guestrooms, corridors and the lobby, while preserving the building's façade and interior historic elements.
Built in 1929, the President has served as an apartment complex for the past 50 years. Rents for the mostly month-to-month leases are relatively low for Palo Alto; they range from $1,200 to $2,400, according to a sign posted at the 75-unit complex.
Iqbal Serang, an architect who has lived in various apartments on different floors in the building over the past 30 years, said he was in shock over his impending eviction.
"There's just this feeling of helplessness," he said.
Neighbor Diane Boxill has taught piano out of her studio apartment at the President Hotel Apartments over the past 30 years.
"Many of my students walk or bike to lessons. Relocation risks my livelihood," she said on Tuesday.
Many residents said they had heard rumors about the possible conversion of the property last week but had been kept in the dark.
"Everyone is devastated," said resident Pemo Theodore, who has lived at the President for three years.
According to the notice, the company "did not have the contractual authorization" to communicate with anyone other than city officials about the property prior to closing escrow on Tuesday.
Timothy G. Franzen, president of Graduate Hotels, a division of AJ Capital Partners, stated in the letter that the firm does understand the predicament the conversion presents.
"We appreciate that being forced to move can have the potential for numerous burdens and difficulties, so we are committed to providing each of you with the time and resources to mitigate any hardships that may raise," Franzen wrote.
As such, the company will provide each residential unit $3,000 to assist with moving-related expenses and is working with "a local relocation expert to provide customized services" to households that may require additional help.
The complex was not at full capacity at the time of the sale. Residents said the property's management had stopped leasing out apartments as they became vacant in recent months. Of the 75 units, 58 were occupied at the time of the sale, former property owner Chris Dressel confirmed.
City Manager Jim Keene publicly acknowledged the building's sale at the City Council meeting on Monday night.
"The big concern would be the displacement of 75 units, given the city's current housing shortage," Keene said. City staff has been encouraging the property owner to provide "generous relocation packages" to the residents.
Dressel, president of University President Associates LLC, which had owned the property since 1996, said the building was never listed on the market. He decided to sell the complex after a representative of AJ Capital approached him about purchasing it.
Graduate Hotels specializes in developing boutique-style hotels in college towns, according to its website. The company is a "passionate steward of historic properties," Franzen wrote in his notice to the residents.
The historic property, designed by noted Palo Alto architect Birge Clark, currently includes six shops on the first floor -- including the President Barbershop, several eateries and a clothing boutique -- and 70 studio apartments and five one-bedroom units ranging between 250 and 800 square feet on the upper five stories.
Keene said the property is listed as a Category 2 resource on the city's Historic Inventory. The city's Architectural Review Board and Historic Resources Board are expected to review the conversion plans later this year. He also noted that the hotel use is allowed by right at the downtown location.
Residents, who have discussed retaining an attorney to explore their rights, are contemplating their futures.
"There's no way all of us can get accommodations in Palo Alto, and there's no way for us to find what we're paying here to live in one room," Theodore said. "It really is the most amazing community, and none of us will be able to reproduce this anywhere else we go."
Comments
Another Palo Alto neighborhood
on Jun 13, 2018 at 10:32 am
on Jun 13, 2018 at 10:32 am
By-right conversion is just not a good enough response, Jim Keene. It may be true at first glance, but start digging deeper into the codes - you have an office full of attorneys.
You say in Council meetings that you are all about housing. This is the time to prove it. You could do a really good thing here, Jim - save a lot of housing and avoid a lot of misery. 75 units is worth the time and trouble.
Crescent Park
on Jun 13, 2018 at 1:47 pm
on Jun 13, 2018 at 1:47 pm
We should handle this like we handled Buena Vista.
1a. Get the owner to agree to hold off while we "work" to create some tax changes that benefit the owner. This is a stalling tactic. We will never implement any changes.
1b. Simultaneously, we retroactively impose a closure and relocation ordinance on the property and owner to make it prohibitively expensive for them to close.
2. Let the owner go through years of cost and time complying with the closure ordinance while we support the residents
3a. When the owner has jumped through all the legal hoops and has an offer on the table and closure looks imminent, Influence the assessor to increase the compensation to the residents required of the owner.
3b. Residents sue the owner and the city.
4. Having made the owners life miserable and inflated the closure costs to make closure prohibitive - Make a low ball purchase offer to the owner.
5. Get SC Supervisor Simitian to lead a campaign to get the county to kick in funds and split the purchase with us.
6. Buy the property and give all slots to the current residents - no rent increases and free upgrades.
Midtown
on Jun 13, 2018 at 2:20 pm
on Jun 13, 2018 at 2:20 pm
Interested to know how much Burma Vista trailer park owners got from City of PA for their relocation packages.....I’m sure a lot more than 3,000 was offered after much wrangling. Double standard here, the City is now in the position of offering same amount. Don’t use my $$ for social engineering.just dumb
Another Palo Alto neighborhood
on Jun 13, 2018 at 2:38 pm
on Jun 13, 2018 at 2:38 pm
.
Editor —
Are you sure you have the apartment unit square footage range correct? At the minimum 250 square feet, a studio apartment would be smaller than 16’ x 16’. So generous for $1,200.00/month.
Pleeeeease tell me this is a typo. I’m feeling claustrophobic already.
Old Palo Alto
on Jun 13, 2018 at 2:54 pm
on Jun 13, 2018 at 2:54 pm
Or just let the market work its supply and demand function as it has done well for centuries.
Atherton
on Jun 13, 2018 at 3:31 pm
on Jun 13, 2018 at 3:31 pm
Excited that they're turning this building back into a hotel!
Can't wait to see the finished product.
University South
on Jun 13, 2018 at 4:10 pm
on Jun 13, 2018 at 4:10 pm
not good enough,
do you believe in the rule of law or do you just make things up as you go along?
what makes you think you can overturn this?
Duveneck/St. Francis
on Jun 13, 2018 at 4:14 pm
on Jun 13, 2018 at 4:14 pm
My reaction is: location, location, location!
Registered user
College Terrace
on Jun 13, 2018 at 4:52 pm
Registered user
on Jun 13, 2018 at 4:52 pm
This is when our development policies smack us upside the head.
Were we not in the vortex of a self-imposed housing crisis thanks to the relentless efforts of the pro-development crowd, this would be a simple matter of private property changing hands and a hotel turned apartment building reopening as a hotel. And a special one, at that. Instead, we have the loss of much need relatively affordable housing and the displacement of at least 75 residents who in all likelihood will not find comparably priced housing here. In fact, they may not find housing here at all. Said differently, these people are now the face of unsustainable growth.
City Council Majority: PLEASE STOP the nonsensical over-growth of office development that is causing demand on housing that only worsens with each new building. The consequences are severe. And heartbreaking.
Charleston Gardens
on Jun 13, 2018 at 4:59 pm
on Jun 13, 2018 at 4:59 pm
"There's just this feeling of helplessness," he said.
That's how most of us feel every day.
Old Palo Alto
on Jun 13, 2018 at 5:00 pm
on Jun 13, 2018 at 5:00 pm
Why am I not surprised the new owner has already had secret talks with City Hall before the tenants had any notice to vacate?
City Hall did not protect the fixed/lower income residents at the Craig Hotel nor the seniors at Casa Olga as they did the Buena Vista residents. The downtown priority has been to increase property taxes from hotels, offices and high end housing through generous upzoning, with creative TDRs and use permits to favored property redevelopers. With some on the City Council still under developers' campaign cash scandals we can forget about preserving low/fixed income housing anywhere near City Hall unless its on Alma or El Camino to be run by favored nonprofits where the developers can't make much profits with car and train noise.
Meanwhile, our latest low income housing success story is to approve more low income housing around El Camino at Page Mill at the busiest intersection in town for renters to breathe dense vehicle exhaust and tire dust all day long while we gloat at saving a trailer park behind a strip mall at a huge cost to City and County taxpayers.
Maybe if Presidente tenants had a critical mass of undocumented aliens and/or had an ethniciity or national origin deserving taxpayer charity or perhaps many children enrolled in local schools who want to finsih their schooling without changing school districts maybe there could be at least 2-3 years of City administrative delay in allowing yet another downtown luxury hotel.
Hint to Presidente tenants: offer your apartment addresses to low income children from favored ethnicities from neighnorhing towns to enroll in local schools as families here did in the Tinsley decision years.
Community Center
on Jun 13, 2018 at 5:15 pm
on Jun 13, 2018 at 5:15 pm
Unfortunately, if you rent you have no control of your destiny.
I hope that young people see this as what can happen if you rent instead of owning your residence. Every year the San Jose Mercury runs a stupid article comparing the cost of renting versus buying. They never factor in the huge cost increases that are inevitable in this region and they don't mention the most important fact - that buying provides control of the most essential part of your life.
Barron Park
on Jun 13, 2018 at 5:32 pm
on Jun 13, 2018 at 5:32 pm
Who was the owner that sold it?
Registered user
College Terrace
on Jun 13, 2018 at 8:20 pm
Registered user
on Jun 13, 2018 at 8:20 pm
Jim, do you really think these young people want to rent? They have jobs here and MOST do not have "millions"
in the bank ready to pay, all cash, for homes here. Your statement is ridiculous.
East Palo Alto
on Jun 13, 2018 at 11:08 pm
on Jun 13, 2018 at 11:08 pm
Chris Dresel, LOL! Too bad Palo Alto has, for decades, rejected rent control. It's a fascinating building and I'm sorry for all the residents losing their housing.
Registered user
Downtown North
on Jun 13, 2018 at 11:10 pm
Registered user
on Jun 13, 2018 at 11:10 pm
I like it if it dovetails with my plan to turn the varsity theater into a world class entertainment hall maybe the whole thing to be like the ace hotel in Los Angeles here’s your chance Chop
Palo Alto High School
on Jun 14, 2018 at 5:36 am
on Jun 14, 2018 at 5:36 am
What will happen to the businesses on the first floor!?! Granted this is secondary to the plight of the renters...but it's an important consideration.
The President barber shop is the only affordable place in the south Peninsula to get a cheap, fantastic haircut.
Plutos is the only place to get a reasonable meal in Downtown. Also, the cigar shop is historic (the only place anyone could buy Cubans...or so I heard).
This move puts some truly iconic Palo Alto businesses in peril...and I for one won't stand for it (I'm just not sure what to do about it).
Crescent Park
on Jun 14, 2018 at 5:40 am
on Jun 14, 2018 at 5:40 am
I wonder how the land owners of Palo Alto feel about this move? It seems like this comment thread has a lot of “renter perspective” in it.
Perhaps the City Council should hold a meeting to find out what the true tax payers think?
Registered user
College Terrace
on Jun 14, 2018 at 6:48 am
Registered user
on Jun 14, 2018 at 6:48 am
I think we sometimes forget that private property owners have the right to sell and new owners have the right to build or renovate. The problem with this particular sale is the context in which it is happening. And the blame for the lousy rotten circumstances is on our development policies. We build without regard for the human cost of development. It is ironic that we get all upset about ICE separating family members when we blithely pursue development that ultimately uproots individuals and families from this community. Someone recently posted: if you cannot afford Palo Alto, move. There is some reason in that, but the comment evidences a change in this community that is both harsh and pathetic. Moving is a complicated and emotional undertaking, especially when children are involved or when one's livelihood is here. We should not disregard that.
Nor should we disregard that people put roots down in their community. That's a good thing b/c it is what builds a community's character. Do we want to become a place where that doesn't happen?
I suspect there is a silent majority of Palo Altans who object to what's going on here, and not just because of the traffic. I doubt anyone chose to move here in hopes that this would someday be a dense, quasi-urban city. We are losing community-serving retail, we have more office space than we can sustain, we have a horrible jobs:housing imbalance, and people in community-serving jobs cannot afford to live here. And we are creating homelessness.
If you are in the silent majority, now is the time to speak up and let the Council Majority (Wolbach, Kniss, Scharff, Fine, Tanaka) know that you think it is time to curb office development so that we can stop making existing problems worse. Write the Council, go to meetings, pay attention to what is happening in and to this community. And most importantly, vote carefully in November.
Barron Park
on Jun 14, 2018 at 6:50 am
on Jun 14, 2018 at 6:50 am
Why no mention of the seller? Seems the seller shows little care for the future of his former tenants by selling to the hotel developer.
Old Palo Alto
on Jun 14, 2018 at 7:46 am
on Jun 14, 2018 at 7:46 am
Sorry to say it, but the Palo Alto Daily Post's coverage is much more pro-tenant, and I would say better. These are the people we want housed in our community. Workers at the VA, retail workers. We don't need another hotel downtown. It's certainly the diversity our "pro-housing" council and Palo Alto Forward claim they want. Let's see what they do about it. And, $3,000 and 5 months is not enough.
As a side note, take a look at the article about the Korean restaurant opening to the public three nights a week downtown. A wealthy Los Altos family has been operating it as a private dining room the past year. Is this really the town we want to become?
Registered user
Duveneck/St. Francis
on Jun 14, 2018 at 9:52 am
Registered user
on Jun 14, 2018 at 9:52 am
This sort of situation is fairly normal. People renting month-to-month need to realize that they can be asked to leave at a month's notice.
My daughter and her family are renting a house in PA on a month-to-month basis. They have been looking for a solution and are fully prepared to have to move out on short notice.
At the President, the owner is giving five months of notice and offering relocation assistance. This goes beyond their obligation.
Things change very quickly here and you have to be prepared.
Registered user
Duveneck/St. Francis
on Jun 14, 2018 at 9:55 am
Registered user
on Jun 14, 2018 at 9:55 am
Buena Vista was an entirely different situation legally.
There was a state law and also a stronger city ordinance for trailer parks. Buena Vista was the only property in PA that was under rent control.
The city also pushed this very hard
another community
on Jun 14, 2018 at 10:14 am
on Jun 14, 2018 at 10:14 am
With that $3k they can move out of state like Texas and rent to own a house on some land. I recommend going south because of the upcoming ice age.
Downtown North
on Jun 14, 2018 at 11:47 am
on Jun 14, 2018 at 11:47 am
This is really bad news. The President Hotel is one of the very few sources of smaller units, located close to transit.
It seems like a done deal, but I really encourage our Council to look at any means of pushing this out so that we can preserve these units.
another community
on Jun 14, 2018 at 12:21 pm
on Jun 14, 2018 at 12:21 pm
Sadly, too many of you are anti-liberty and anti-american.
Buena Vista is a preposterous comparison. The President was a hotel that's being turned back into a hotel; there's no such analogy for the Buena Vista. Everything being done so far is within code...and frankly, the relocation package is far more generous than it the buyer needed it to be.
Stop being lazy, stop making other people solve housing prices that are in no way caused by them. Palo Alto has ample opportunity to play a role in addressing housing costs without making it someone else's problem. At some point, you people are going to have to stop thinking everyone else's property is under your domain.
When you support the stripping of liberty for things you like, you support the stripping of liberty for the things you don't like.
Adobe-Meadow
on Jun 14, 2018 at 12:37 pm
on Jun 14, 2018 at 12:37 pm
From where I am sitting this is totally predictable. It is the battle between private ownership of a home vs living in some apartment or condo owned by a developer/investor. All actions going on now are attempting to set up the developer/investor. If Sacramento has it's way the whole area next to transit will be in the same category of multiple occupied buildings in which the residents have no real control over their occupancy. Be careful who you sell your home to - could be a consolidator who will tear down your whole block and build condos. We are losing our identity as a suburban residential city.
Midtown
on Jun 14, 2018 at 12:56 pm
on Jun 14, 2018 at 12:56 pm
Palo Alto No More: Send your idea to the members of the City Council.
Perhaps your plan is possible or perhaps it would be illegal.
This is a different situation but I like your idea.
Old Palo Alto
on Jun 14, 2018 at 1:32 pm
on Jun 14, 2018 at 1:32 pm
Palo Alto is sure living up to its nickname "shallow Alto". As a native Palo Altan, it is disheartening to see my town transform from a relatively progressive and charitable community to one that is "for sale to the highest bidder". In the 1970's my (single) mom raised two-children whilst working and attending Stanford. She was able to do this because a kind landlord named Mr. Jim Anderson had a heart and rented to mostly single mom's in his El Carmelo/Emerson St. apt. complex for $250-$350/mos (low for the time). He even left a box of Sees candy every Christmas. Besse Bolton childcare was free/co-op. My mom went on to a successful career. I've raised my son here "for the schools", I own a home, but will move once he's finished to a more charitable community. I hope Palo Alto will find its way back to showing some of the same common decency we experienced from Mr. Anderson.
East Palo Alto
on Jun 14, 2018 at 1:48 pm
on Jun 14, 2018 at 1:48 pm
Native Palo Altan - thank you for the reminder of kinder days past.
another community
on Jun 14, 2018 at 8:19 pm
on Jun 14, 2018 at 8:19 pm
Capitalism is in full force in this case. Demand and supply will determine how this hotel renovation project goes in the next few years.
Evergreen Park
on Jun 15, 2018 at 12:23 pm
on Jun 15, 2018 at 12:23 pm
Annette, thank you for pointing out that this transaction would not be problematic were it not for the context in which it is taking place and the vast amount of suffering it will cause. I'm appalled that the City is making it so easy for them and will absolutely remember this when it's time to vote. We will all pay the price for this, as our community becomes less of a community (and less diverse) and as the costs of goods and services increase because fewer and fewer can afford to live not only here but anywhere even close.
Downtown North
on Jun 18, 2018 at 4:32 am
on Jun 18, 2018 at 4:32 am
@Native Palo Altan Thank you for your comment. It makes me feel better to know that at least once upon a time, this was better town to live in. And do not take this the wrong way, but just out of honest curiosity, when you move to a more charitable community, I imagine you are considering selling your home? Will you sell to the highest bidder? Or to a single mom raising two kids who can only afford a $600,000 home?
another community
on Jun 18, 2018 at 8:12 am
on Jun 18, 2018 at 8:12 am
@Eric Rosenblum
"This is bad news".
Very true but sadly not a surprise since PA has so little in the books for Tenant Protection (apparently not even a standard relocation package) and Housing Preservation (no net loss of housing, no conversion from housing to any other use....). Wasn't there also a precedent when Casa Olga (closed in 2009) made way for the Epiphany Hotel (opened in 2014)? Preserving Casa Olga's SROs (single room occupancy) use could have gone a long way in addressing the current homelessness crisis.
Consensus among many affordable housing advocates (including CASA working group) is that any housing strategy should be based on the "three P's": Produce ...but just as importantly Protect and Preserve. Time for Palo Alto and its neighbors to adopt that 3 legged approach?
Another Palo Alto neighborhood
on Jun 19, 2018 at 6:13 am
on Jun 19, 2018 at 6:13 am
I believe there is an existing ordinance in Palo Alto restricting the conversion of rental units to condominiums if the apt rental vacancy rate is below a certain level like 5% or so. So there is a precedent for the City to not allow the conversion of rental units to other uses which might displace existing residents.If that ordinance is still in
effect it could be amended to cover the current
situation at the President Hotel based on current
housing market conditions.
Registered user
Duveneck/St. Francis
on Jun 19, 2018 at 10:18 am
Registered user
on Jun 19, 2018 at 10:18 am
Operating a hotel is a permitted zoning use for this property and it is not being converted to condos, so the ordinance mentioned by @legal precedent wouldn't apply. It is very sad that these residents and the former residents of Casa Olga (now the Epiphany Hotel) are/were being displaced. As stated by many previously, our housing issue is over development of offices and the increasing number of workers per square foot.
Registered user
Duveneck/St. Francis
on Jun 20, 2018 at 11:09 am
Registered user
on Jun 20, 2018 at 11:09 am
There are also some benefits to the city and its residents from this sale.
1. The building will get a number of needed improvements including seismic and an elevator. Given the rents being charged, the building has probably not had a lot spent on it in the last 50 years. It is a classic building that deserves good treatment and preservation.
2. This cannot hurt downtown business. Visitors like to stay downtown so that they can walk around and shop. For example, we have a family event this August and have booked a block of rooms at the Garden Court for out-of-towners.
3. The city loves hotels because of all the taxes. The transit fee tax is now a huge 14% and the city council is planning on 15.75% and is putting this on the ballot.
I also think that the offer to the current tenants is fairly generous. The leases are currently month-to-month, which typically provides little protection, and the tenants should have been aware that they could be asked to leave at any time. The offer of 5 months and $3000 relocation fee is generous.
I am sure that the tenants see the President as their home and am sorry for them, but it is not a one-sided situation at all.
Registered user
Embarcadero Oaks/Leland
on Jun 20, 2018 at 11:13 am
Registered user
on Jun 20, 2018 at 11:13 am
Of course it can hurt downtown businesses because the hotel guests and workers will need parking and downtown is already under-parked. You're also assuming that voters will support the higher hotel tax.