Murad Gets Thumbs-Up on SRO Paperwork

After incorrectly filling out one round of paperwork and paying $3,600 in late-filing fines, restaurateur and hotel owner Gus Murad—and his Elements Hotel—are in compliance with the city’s Residential Hotel Conversion Ordinance, according to housing officials.

“At this point in time what we’ll do is follow up with an unannounced inspection,” said Chief Housing Inspector Rosemary Bosque. During the inspection, Bosque said they will make sure the hotel’s records and receipts match what they are reporting. If that goes well, the investigation will be closed.

Mission Loc@l reported in February that for four years running Murad failed to file documents showing he was operating his Mission Street hostel according to the Residential Hotel Conversion Ordinance.

That law requires that Murad rent nine of his rooms as “residential” rather than tourist units. In practice, it means the rooms must be rented for at least seven days at a time, rather than nightly. Although the rule is intended to preserve affordable housing, only nonprofit hotels that receive public money are required to rent at below-market rates.  For-profit businesses–like Elements–have no legal obligations to rent to low-income people. Of the city’s 19,119 residential rooms, 14,233—74 percent—are for-profit.

If owners want to turn the residential rooms into true hotel rooms, they must pay a hefty conversion fee. Otherwise, they must submit annual reports to the Department of Building Inspection to show they are complying with the ordinance and renting the residential rooms out for stays of at least seven days.

Murad had failed to submit those reports between 2004, when Elements opened, and November 2008, when the most recent reports were due. The hotel’s first round of reports showed that not one of its nine residential rooms had been rented long-term. But that, said Murad’s assistant, was a result of a misunderstanding about how to fill out the documents, called Annual Unit Usage Reports.

“When we had first done [the paperwork], I was unaware of how to do it correctly,” said an assistant of Murad’s who filled out the paperwork. “We had never done it before.”

A representative from Mission Housing Development Corporation, Justin Solomon, helped revise the reports. And on the second try, they were deemed kosher by city officials after being corroborated by rental receipts.

Meanwhile, Murad—who has come under so much scrutiny partly because of his connections with local politicians—is still embroiled in two other Mission Street controversies. Last Thursday, he won the latest skirmish in what has become a protracted battle over the height of his New Mission Theater condo project. After heated debate, the Planning Commission voted to recommend that the Board of Supervisors reject David Campos-sponsored legislation that would knock the development from 85 to 65 feet high.

In August 2008, the planning commission proposed raising the heights along Mission Street to 85 feet. Planners have again been holding neighborhood meetings on the issue.

Murad is faring less well at Medjool, where the popular roof-deck bar was ordered closed in an April 24 letter from the Planning Department. Murad can seek a reversal of that decision from the city’s Board of Appeals—and he will, said his spokesman PJ Johnston–but it’s a risky and expensive proposition. The restaurant began accruing $250 daily fines on April 24—and though the accumulated sum will be waived if Murad wins before the board, if he loses, the city will come collecting.

Johnston, Murad’s spokesman, contends that the deck is and always has been legal. He also says he has the documents–including building plans bearing the planning department’s “approved” stamp–to prove it. “The roof deck portion of the restaurant was approved by both the Planning Commission and the Building Department in August of 2003,” Johnston wrote in an email.

But the roof deck was approved in 2003 only for the use of people staying at Elements Hotel, said senior planner Craig Nikitas. “PJ Johnston is a PR guy—he doesn’t deal in planning facts, he deals in spin,” Nikitas said. The deck was never supposed to be used as part of the bar, he added.

“A roof deck is a thing, and a bar and a restaurant is a use,” Nikitas said. “I have a roof deck on my house too, but that doesn’t mean I can open a bar and restaurant there.” Planning code, he said, prohibits Medjool from operating above the second floor.

Johnston disagreed in an email:

“It was always intended to function as part of the restaurant, and as everybody on the planet is aware, it has operated in exactly that manner for five years. Certainly, planning staff was aware of its existence all that time—most of the department’s leadership has spent a fair amount of time there. Only when Mr. Murad became embroiled in a political tug of war between city hall factions did anyone develop a problem with Medjool. Now there appears to be enormous pressure on the planning department to go after Gus where it hurts–in his existing business.”

In 2000, Murad applied for a permit to use ground-floor outdoor space for Medjool. Planning commissioners denied that application, citing noise concerns. Planners told Mission Loc@l they have indeed known that the deck was illegal since the restaurant opened, but they put enforcement on hold during the years-long development of the Eastern Neighborhood Plans. The idea was that the Plans’ revised land-use restrictions might render the deck legal. But when the Plans became law in January, they included no such provisions for Medjool–and the department cranked back into action.

As the fight’s gone on, the restaurant has begun to suffer despite a “Save Medjool” campaign, including a Facebook group with 1,335 members, a website and petition, and a proliferation of placards in the windows of local shopkeepers. Johnston said that after the Chronicle ran a City Insider blog post about the business’ troubles last Thursday night, the restaurant “experienced a first”: 49 no-shows for Friday-night dinner, more than five times any previous cancellation rate.

Just today, Mission resident Erin Wolthausen launched a counter-campaign. She started a “Do Not Save Medjool” Facebook group. So far, membership stands at four.

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