Condo conversions stalled at San Francisco's Fairmont hotel 

Mayor Ed Lee’s plan to allow the Fairmont Hotel atop Nob Hill more time to convert 23 stories of hotel rooms into luxury condos has stalled along with talks between hotel workers and the owners.

The Mayor’s Office called for the legislation to be continued at the Planning Commission last week after a March 30 meeting between hotel-union representatives and the Fairmont’s owners ended without any agreement. The Fairmont’s ownership group includes ovserseas interests and SPO Partners, a Mill Valley-based private investment firm.

“Mayor Lee wants to make sure that both groups have ample time to come to some agreement because it could mean jobs in San Francisco for people who need them,” said mayoral spokeswoman Christine Falvey.

Adding to the intrigue are amendments introduced by the Planning Department that would allow not only the Fairmont another chance to approve its plans, but would give the Palace Hotel, the Grand Hyatt Hotel and the Mark Hopkins Hotel a chance to convert to condos as well.

Hotels atop Nob Hill have been struggling as tourist traffic has shifted toward the convention centers South of Market. The Mark Hopkins is already up for sale, while the owners of the Fairmont — home of the famed Tonga Room — across the street are threatening to sell if they can’t convert to condominiums.

“We support the mayor’s legislation because what we’re really hoping for is a chance to discuss a plan to build an economically viable and healthy Fairmont Hotel,” said Chuck Finnie, a spokesman for the Fairmont. “The current business plan just doesn’t work.”

A 2005 law designed to retain a minimum number of hotel rooms in The City restricts the ability of hotel owners to convert to condos. But in 2008, the opening of  the Intercontinental San Francisco created a surplus of 550 hotel rooms, opening the door for other hotel owners to apply for a condo-conversion waiver from the Planning Commission. The Fairmont and other hotels did just that.

But the Fairmont’s application hit a bureaucratic snag back in October when it brought forward an environmental review of its proposal to the Planning Commission. That review was continued and the Fairmont’s deadline to convert passed.

Lee said he introduced the legislation to revive the Fairmont’s waiver request because The City made a “mistake.”

The hotel is in Board of Supervisors President David Chiu’s district, but Chiu has refused to rubber stamp the extension until an agreement is reached.


Hotels seek refuge from room glut

If an extension passes, four hotels are already lined up for converting hotel rooms to condos:

Hotel Number of rooms
Palace Hotel 69
Mark Hopkins 179
Grand Hyatt Hotel 184
Fairmont Hotel 286

Source: Planning Department

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