Mayor Ed Lee wants more time for Fairmont Hotel condo deal 

The owners of the iconic Fairmont Hotel might receive an extension on a controversial plan to replace 23 stories of hotel rooms atop Nob Hill with luxury condominiums.

Mayor Ed Lee is asking the Board of Supervisors to extend a deadline that already passed in November, allowing the owners of the Fairmont Hotel — current home of the famed Tonga Room Tiki bar — more time to get approval from the Planning Commission. Board of Supervisors President David Chiu, whose district includes the Fairmont, has resisted introducing the legislation himself because of union concerns. 

Under the plans, the tower that contains nearly half the hotel’s rooms will be toppled and replaced with condos. That plan has yet to pass environmental scrutiny and has been criticized by the Historic Preservation Commission as being out of sync with the neighborhood.

But SPO Partners, which co-owns the hotel with overseas interests, is threatening to sell if the condo plan is not approved. Bill Oberndorf, one of the partners, said most of the hotel business has migrated south of Market Street near the convention center and the Fairmont is not making enough money to be profitable.

“All I can tell you is that I wouldn’t spend this amount of time anywhere else,” Oberndorf said when asked why he hasn’t sold yet. “This is a civics project more than anything else. I live and work here, and it would be a real shame to not get this right.”

The controversy has been going on since 2005, when former Board of Supervisors President Aaron Peskin successfully banned hotels from converting rooms into condos, saying owners were just trying to cash in on real estate without solving housing issues.

While the moratorium was eventually lifted, the Fairmont owners only had one year to produce an environmental impact report for city planners. They did so on time, but a 3-3 vote at the Planning Commission basically scuttled the development.

Now there’s a new supervisor in the district, but still no support. Chiu said he is concerned that dozens of people will lose their jobs with 300 fewer hotel rooms. He wants the owners to sit down with hotel union President Michael Casey to come up with a plan to save those jobs.

“I continue to share the concerns about the project that have been raised by neighbors, the Planning Commission and hotel workers,” Chiu said.

Oberndorf said he has offered a deal for hotel workers to get their jobs back and to keep them stabilized during construction.

The Mayor’s Office did not comment on the legislation, and Casey did not return calls for comment. The legislation will first go before the Board of Supervisors Land Use and Economic Development Committee.

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