Mugged by the Law
By Randy Fitzgerald

The Hotel Operators
After French immigrants Claude and Micheline Lambert arrived in San Francisco, Claude worked as a janitor in return for room and board. Then he and his wife went to work for the Cornell, a six-story, 58-room Victorian hotel.

Dark, filthy, and in disrepair, the Cornell in 1966 housed two dozen residents. Ashamed at seeing people living in such deplorable conditions, the Lamberts worked seven days a week cleaning and remodeling the building. By the time they purchased the hotel in 1978, all of the rooms had been upgraded and there was a French restaurant in the basement.

Their business was struck a punishing blow three years later when the Board of Supervisors adopted an ordinance designed to prevent hotels from converting all of their residential rooms (rented to the same guests for 32 days or more) into daily rentals.

The ostensible goal of the ordinance was to preserve affordable housing in San Francisco. But the city’s guidelines meant that 31 of Lamberts’ 58 rooms would now have to be made available only to long-term residents.

Because the hotel was not allowed to rent the 31 rooms to tourists- by then the bulk of the Lamberts’ business- the ordinance sucked potential income from the Cornell year after year.

Finally in 1990 the Lamberts applied for permits from two city agencies to convert their often-vacant residential rooms to tourist use. After two appraisals of the hotel, obtained by the city real estate department at a cost to the Lamberts of several thousand dollars, the department calculated that if their permits were granted, the couple would have to pay the city a $600,000 “housing replacement fee” for the right to rent the rest of their rooms on a daily basis.

Claude was outraged. “We can’t afford this,” he told his wife.

Then-Mayor Frank Jordan took the Lamberts’ side, arguing that they should receive a conversion permit. “It is hard for anyone to see how preventing the Cornell Hotel from carrying out business activity adversely affects low-income or senior residents in San Francisco,” he wrote the Planning Commission.

Nevertheless, the commission and the Board of Permit Appeals denied the Lamberts’ request, but the board did reduce the number of residential rooms to 24.

Claude and Micheline Lambert argue that the city’s regulation “takes” their private property- in this case, their rooms- from them for a public use (affordable housing) but without compensation, as guaranteed by the U.S. Constitution. They filed a lawsuit, demanding the right to convert all their rooms to tourist use. With help from the Sacramento-based Pacific Legal Foundation, the Lamberts’ case is now before the California Supreme Court.

“Half their hotel is being held hostage for ransom,” says Andrew Zacks, the Lamberts’ attorney for nine years. “The city needs to recognize that rectifying a housing-shortage problem shouldn’t be attempted on the backs of individual property owners.”

After more than $100,000 in legal and other fees, the Lamberts say that they continue to lose about $5000 a week because they are not allowed to rent all their rooms each night. “I just want the flexibility to run this hotel like any other business,” says Claude.

Reprinted from Readers’ Digest, August 1999