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San Remo Hotel in San Francisco Responds to U.S.
Supreme Court Decision in Property Rights Case

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SAN FRANCISCO - June 20, 2005 -- Owners of the historic San Remo Hotel in San Francisco point to today's U.S. Supreme Court decision as a signal that property owners in future cases may gain improved access to the court system for Fifth Amendment claims against local regulations of private property.

In deciding San Remo Hotel v. San Francisco, the Supreme Court upheld a ruling by the Ninth Circuit Court of Appeals that hotel owners, brothers Tom and Robert Field, were precluded from arguing their property rights case in federal court because they had previously lost their state law claims in California courts. The California Supreme Court rejected their claims in a 4-to-3 decision in 2002.

According to Paul F. Utrecht at Zacks Utrecht & Leadbetter, the law firm representing the Fields, "Today's decision means state courts must consider federal takings claims at the same time as state law claims. This will finally make it possible for other plaintiffs to bring all their claims in one state court proceeding. The Fields were prevented from pursuing their federal claims on the merits by a 'Catch-22' -- the state courts refused to consider federal takings claims and the federal courts rejected those claims based on the state courts ruling on state law issues."

Although the high court's opinion resolves the Catch-22, the decision does not help the Fields. "This is a sad day for the Fields because their federal constitutional claims will never be decided on the merits," says Utrecht. "But there is hope for other plaintiffs who challenge local property regulations as unconstitutional."

The Field brothers continue to believe they would have prevailed on the merits of their case if it had reached a trial stage at a federal level.

San Francisco's Hotel Conversion Ordinance, a controversial law at the center of the 12-year legal battle, restricts tourist use of available rooms in hundreds of the city's smaller private hotels. Enacted 20 years after the Fields purchased the 62-room San Remo as a fully licensed tourist hotel, the law required the Fields to pay a $567,000 fee to continue renting available rooms to tourists rather than reserving them for low-income residential housing.

In addition, the city insisted the Fields offer lifetime leases to existing long-term tenants who had already been welcome at the hotel indefinitely. The brothers offered the leases and paid the fee under protest, but sued the city in 1993 in state and federal court for taking private property in violation of their state and federal constitutional rights.

In recent years the San Remo saga reached center stage within legal and public policy circles and captured the attention of leading property rights groups. Judicial opinions in the case are often cited in lawsuits over similar issues, and the Fields' claims in state court in 2002 triggered a frequently quoted dissent by California Supreme Court Justice Janice Brown: "Private property, already an endangered species in California, is now entirely extinct in San Francisco."

When the U.S. Supreme Court determined the case deserved review, the city was required to appear in the high court as a defendant in a takings case for only the second time in 100 years.

Organizations supporting the hotel included the U.S. Chamber of Commerce, the National Association of Realtors, the National Association of Home Builders, the Washington Legal Foundation, the Pacific Legal Foundation and the Small Property Owners of San Francisco.

Located a few blocks from Fisherman's Wharf at 2237 Mason Street in the colorful North Beach District, the fully restored three-story Victorian hotel was built by Bank of America founder A.P. Gianinni shortly after the 1906 earthquake and fire.

The Fields intend to maintain the historic decor and low room rates, popular with budget-conscious travelers. Building on the hotel's reputation for service and hospitality, they recently leased the ground floor to Fior d'Italia, America's oldest Italian restaurant.

Founded in 1886 and currently located six blocks from San Remo, the restaurant is set to move to the hotel later this year. Fior d'Italia owner Bob Larive had been searching for new space after extensive fire damage forced him to close his venerable establishment.

"The timing was just right," said Tom Field. "The hotel's bar and restaurant had been vacant while we looked for a new tenant that matched our Old World ambience. We'll be in perfect company with the restaurant, especially since its owners also challenged regulations they felt were unfair. Like us, they took their case all the way to the Supreme Court."

Larive and his partners charged the IRS with using arbitrary methods for estimating Social Security taxes they owed on customer tips to employees. U.S. v. Fior d'Italia was decided in favor of the federal government in 2002.
 

SAN REMO HOTEL FACT SHEET 
Updated: March 30, 2005

LOCATION: The San Remo Hotel is located in a quiet North Beach neighborhood at 2237 Mason at Chestnut Street, within walking distance of Fisherman’s Wharf in San Francisco, California. The hotel’s north wall faces historic Water Street, an alley that marks the city’s actual shoreline before landfill began in the 1860s.

DESCRIPTION: The small Italianate Victorian property contains 62-units on two levels, above the hotel’s street-level bar and restaurant, which is currently closed. Moderately priced cozy rooms have shared baths and are decorated in a country style with historic touches. Brass fixtures, antique furniture, historic prints and photos are found throughout the hotel. Maid service is provided to guests.

RESTORATION: Brothers Tom Field, 57, and Robert Field, 53, purchased the building in 1970 and restored the property, which had been neglected in the 1960s. At a cost of more than $500,000 and through years of painstaking work, they returned the hotel to classic turn-of-the-century mint condition. The Fields have operated it as a European-style establishment, popular with visitors from around the world for more than three decades. Because of its restored architecture and continuous maintenance, the San Remo has been selected by location scouts as a setting for dozens of motion pictures, commercials and television series.

STAFF: In addition to their hands-on management, the Field brothers employ 17 hotel workers: four desk clerks, nine housekeepers, two maintenance workers and two managers.

ROOM RATES: Nightly rates for tourist rooms are $55 – $75 for single or double occupancy. Seven long-term residents pay rents of $114 - $180 per month or weekly rents of $39 - $115 per week for residential rooms.

HISTORY: Built In 1906 by A. P. Giannini, the founder of Bank of America, the hotel supplied much-needed lodging after the great San Francisco earthquake and fire that occurred that year. In decades immediately after the quake, as the city rebuilt and neighborhood commercial vitality was restored, the San Remo continued to provide convenient lodging for merchant seaman and waterfront workers. During the last half of the 20th Century, the hotel’s clientele expanded to include North Beach artists, poets, journalists and an increasing number of tourists and business travelers. After the Loma Prieta Earthquake in 1989, the Field brothers offered rooms without charge to local quake victims whose homes were either destroyed or damaged.

BATTLE OVER SF HOTEL LAW The Field brothers claim the city relied on unconstitutional provisions in the San Francisco Residential Hotel Unit Conversion and Demolition Ordinance, a controversial law enacted in 1981 and amended in 1990 with more restrictive regulations. The hotel ordinance requires that unless operators of certain small hotels reserve rooms for low-income residents rather than tourists, they must replace or pay for housing “lost” as a result of “converting” any of those residential rooms to tourist use. In 1993 the city demanded the brothers pay $567,000 as a “replacement housing fee” for all 62 rooms to continue operating the San Remo primarily as a tourist hotel. City officials also insisted the Fields offer lifetime leases to long-term residential tenants – who had already been welcome indefinitely for many years at the hotel. The Fields offered the leases and paid the fee under protest, but sued the city in state and federal courts, demanding a refund. Issues in the case center on the constitutionality of local governments taking targeted sectors of private property for public purposes and whether courts in individual states, in this case California, can legally serve as ultimate forums in determining the extent of private property rights guaranteed under the U.S. Constitution.

U.S. SUPREME COURT After 12 years of litigation in state and federal court, the Fields petitioned the U.S. Supreme Court to hear their case on September 7, 2004. The request for a hearing was granted on December 10, 2005, and oral arguments were heard on March 28, 2005. The Fields now await a decision from the high court. The San Remo case raises key questions about the proper forum for constitutional “takings” claims — state courts or federal courts. If property owners challenge an ordinance as unconstitutional, can federal courts first tell them to seek compensation in state courts before federal courts will consider their claim? If state courts deny compensation, can federal courts say that federal claims are barred by the state court decision? In addition, San Remo attorneys Paul Utrecht and Andrew Zacks contend there is a split of authority in the nation’s courts as to what constitutes an unlawful taking under the Fifth Amendment. Organizations siding with the San Remo in amicus briefs include the Chamber of Commerce of the United States, the National Association of Realtors, the National Association of Home Builders, the Washington
Legal Foundation, the Pacific Legal Foundation and the Small Property Owners of San Francisco Institute.

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Contact:

Paul von Beroldingen, 
PVB Public Relations
Phone: 415-751-1858
E-mail: paulvonb@ix.netcom.com

Zacks Utrecht & Leadbetter
http://www.zulpc.com/cases.html

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Also See: After Saving the 94-year-old San Remo Hotel from Condemnation, Owners Fight City of San Francisco Over Ordinance Necessitating Lifetime Leases to the Hotel’s Long-term Residential Tenants and a $567,000 Replacement Housing Fee / Sept 2000


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