Associated Press - March 28, 2005
Court hears housing dispute between San Francisco, historic hotel
By Erica Werner

WASHINGTON - The Supreme Court debated a long-running dispute between the city of San Francisco and the historic San Remo Hotel on Monday, but justices questioned whether there should be federal involvement in the property rights struggle between a local government and a business owner.

The San Remo, a 62-room, 1906 hotel two blocks from Fisherman's Wharf, was required to pay the city a $567,000 fee in the early 1990s in order to get the right to rent all its units to tourists for short-term stays. The payment was imposed under the city's new "hotel conversion ordinances," which were designed to maintain residential units in hotels in order to meet San Francisco's low-income housing needs.

The San Remo's owners sued in state court to overturn the fine, and narrowly lost at the California Supreme Court in 2002. Then they turned to federal courts, claiming the limit on the use of their property was an unconstitutional "taking."

The issue in their appeal to the Supreme Court was a technical one - whether property owners who can't convince state courts to compensate them in property takings cases should be able to turn to federal courts to adjudicate the constitutional issues.

Seth Waxman, the Washington, D.C., attorney representing the city and county of San Francisco, said San Remo's owners had already had their day in court.

"Every issue relevant to the federal constitutional claims was fully and fairly litigated," he told the court.

But San Francisco attorney Paul Utrecht, representing the hotel, said the city's actions were unfair and the San Remo's case had never been fully heard.

"We have never had an opportunity to have a federal takings claim decided on the merits," Utrecht said.

Justices had more questions for Utrecht than for Waxman. Justice Stephen Breyer asked why Utrecht thought he had issues to raise in federal court that hadn't already been decided in state court.

"It seems to me, here they have decided matters of whether there was a reasonable purpose or not to this ordinance. ... Now what else do you want to raise?" Breyer asked.

Utrecht contended that Supreme Court precedent envisioned a two-track litigation scheme in which the issue of compensation would be decided in state court and federal courts would hear the federal takings claims.

Some justices sounded unconvinced.

Justice Sandra Day O'Connor said it wasn't clear the Supreme Court had ever envisioned "two separate ... parallel systems of factual determination."

The court will rule at a later date.

The case is San Remo Hotel v. City and County of San Francisco, 04-340.