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Understanding ADA Implications When Renovating or Repositioning your Hotel

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By Jim Butler, April 9, 2009

As a sign of the times, we are working with the owners of several distressed branded and independent hotels (particularly extended stay hotels) and condominium hotels to explore whether a conversion to timeshare or fractional may be a preferable use. Although the timeshare receivables financing market has been crushed by the general credit crisis, there are still limited sources of qualified consumer financing available for timeshare acquisition purposes, and even with downward pricing pressure on timeshare sales, the economics of timeshare properties in certain locations may be more attractive than continued operations of distressed hotel properties. 

Whether we are advising our clients regarding the conversion of an existing hotel project to vacation ownership use or the conversion of a hotel property from one brand to another, the rebirth typically involves some renovation or modification. Whether a renovation is necessary due to conversion, a product improvement plan or otherwise, the owner and operator of the property need to be cognizant of the issues outlined in the article below. The article below was written by our own hotel and time share lawyer, David Sudeck, in consultation with JMBM's ADA expert Marty Orlick. 

When you renovate or reposition your hotel (or timeshare property), 
understand ADA implications! 

By David Sudeck and Marty Orlick

The Global Financial Crisis is motivating lenders, developers and operators to get creative. We at JMBM are busy looking at opportunities with our clients to purchase and/or reposition distressed hotel properties, unsold condo hotels or condo hotel inventory (see articles on how to "uncondo" a condo hotel elsewhere on www.hotellawblog.com), and unsold timeshares and timeshare inventory. Some of these properties will need to be renovated and repurposed to compete in this difficult market. It is important to understand what physical modifications to a timeshare, hotel or other facility may involve upgrades under the Americans with Disabilities Act and applicable state disabled access laws.
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How can you determine if your property is compliant with applicable access laws?

Title III of the Americans with Disabilities Act prohibits discrimination against individuals "on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation". See 42 U.S.C. § 12182(a). If the property in question is older and currently "grandfathered in" under the ADA, the property may currently comply with the Act even though the physical characteristics of the property would not comply if built today. However, if the property is renovated, certain areas may need to comply with the alterations standards of the ADA and state laws. 

In determining whether a property complies with the requirements of the ADA, compliance authorities (e.g., building and safety officials in connection with the issuance of a building permit) will likely focus in part on whether the inaccessibility of a property to a disabled person constitutes discrimination. Keep in mind that neither the issuance of a building permit by a department of building and safety or its equivalent nor the preparation of design plans by a licensed architect is a guarantee that a property complies with state and federal requirements relating to disabled access. In particular, out-of-state and international architecture firms may not be sufficiently familiar with accessibility requirements to serve as a meaningful resource in this regard. You should have an expert attorney (like those at JMBM), along with an experienced local site-adapt architect or access consultant, conduct an overview of the plans.

What is the "Path of Travel" and must it be accessible?

Is a modification an "alteration"?

To determine whether a modification to a structure is an "alteration" under the Americans with Disabilities Act, the following are considerations:

1. The aggregate cost of the modification relative to the physical and financial characteristics of the structure

2. The physical scope of the modification (e.g., What specific portions of the structure were modified? Did the modification affect only the structure's surfaces or did it affect the structural components? Did the modifications affect only personal property or did it affect fixtures that are considered realty? Did the modifications affect the "usability" of the building or facility?)

3. The reason for undertaking the modification (e.g., maintenance? improvement? to change the purpose, function, or use of the structure?)

Basically, as the cost, degree, and scope of the modifications increase, the ADA Standards may change. However, even an inexpensive or minor modification to an important accessible element of a property may be regarded as an "alteration" if it fundamentally changes the use or "usability" of the facility.

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Relevant provisions of the ADA provide that "discrimination" includes, "a failure to make alterations in such a manner that, to the maximum extent feasible, the altered portions of the facility are readily accessible to and usable by individuals with disabilities, including individuals who use wheelchairs. Where the entity is undertaking an alteration that affects or could affect usability of or access to an area of the facility containing a primary function, the entity shall also make the alterations in such a manner that, to the maximum extent feasible, the path of travel to the altered area and the bathrooms, telephones, and drinking fountains serving the altered area, are readily accessible ... where such alterations ... are not disproportionate to the overall alterations." That being said, the Department of Justice in its implementing regulation does recognize that normal maintenance and certain upgrades that do not affect the "usability" of the building or facility are not alterations. 
 
Title III of the ADA, under certain circumstances, requires that altered portions of public accommodations be made accessible to the disabled, but this does not apply if the property has not been altered after January 26, 1992.

Where certain alterations are made, it is possible that the "path of travel" to the altered area must also be made accessible for the disabled, and the defined "path of travel" may be much broader than you would expect. However, the cost of modifying a "path of travel" may be considered, when it was the alteration of a portion of a property that triggered the additional requirement to make the path of travel to the altered area accessible. Specifically, a proportionality requirement (looking at the cost of modifying the path of travel in proportion to the cost of the unit alterations) can limit the extent to which a supporting area must be made accessible. A different standard may apply when architectural barriers exist that limit accessibility. This analysis is complex, and you should be sure to have competent counsel and consultants review the standards and the facility with you.

Should you be concerned?

The Department of Justice and local Attorneys General offices are stepping up the enforcement of federal and state accessibility requirements. The factors relating to compliance requirements are not straightforward, but JMBM's attorneys have deep experience in this area of the law, and you should consult with ADA counsel in connection with any renovation that you are contemplating or undertaking. Our ADA attorneys also work with other experts to conduct independent surveys of our client's hotel and resort properties to assess the level of accessibility and recommend cost-effective ADA compliance strategies. 


About the Author:
Jim Butler is one of the top hotel lawyers in the world. GOOGLE “hotel lawyer” or “hotel mixed-use” or “condo hotel lawyer” and you will see why.  He devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders.  Jim leads JMBM’s Global Hospitality Group®—a team of 50 seasoned professionals with more than $40 billion of hotel transactional experience, involving more than 1,000 properties located around the globe. In the last 5 years alone, they have brought their practical advice to more than 80 “hotel-enhanced mixed-use” projects, a term Jim coined to fill a void in industry lexicon.  This term describes one of the hottest developments in real estate-where hotels work together with shopping center, residential, office, retail, spa and sports facility components to mutually enhance the entire project’s excitement and success. Jim and his team are more than “just” great hotel lawyers.  They are also hospitality consultants and business advisors.  They are deal makers.  They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right “fit” for all parts of the capital stack.  Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.  Jim is the author of the Hotel Law Blog, www.HotelLawBlog.com.  He can be reached at +1 310.201.3526 or jbutler@jmbm.com.

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Contact:

Jim Butler
Chairman, Global Hospitality Group
Jeffer, Mangels, Butler & Marmaro LLP
1900 Avenue of the Stars, 7th Floor
Los Angeles, CA 90067-4308
(310) 201-3526 direct
jbutler@jmbm.com
www.HotelLawBlog.com

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Also See: A New Sheriff in Town, the Department of Justice Auditing Hotels for ADA Compliance; Cost Effective Steps for a Proactive ADA Compliance Program / March 2009
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