How Suite It Isn't

Following the 1906 earthquake, a fire destroyed an entire block of Turk Street; the Gotham Hotel was built on part of that hole in the city, at what became 835 Turk. It was a fairly high-end hotel for the period, with a deco lobby that featured ornate chandeliers hanging from eloquently detailed work in the ceiling. It had tile floors, and a private bath in each of the rooms. But there were problems even before it was finished. In fact, the hotel almost wasn't finished. Thanks to the 1929 stock market crash, the Gotham's top floor is significantly smaller than the others. It seems the owners lost the money to pay for a full-size final floor.

The Gotham couldn't make it as a tourist magnet during the Depression; it served as a residential hotel nearly from the start. For years, the Gotham was home to a collection of characters who came from all walks of life to reside in one of its 114 small rooms. Some of these characters lived there a matter of months. Others stayed as long as 30 years. The legends of the Gotham are many:

A woman named Matilda who worked at the Presidio lived in the building for nearly 40 years. She loved orchids and had a piano in her room. On weekend nights, Matilda's longtime beau would pick her up to go dancing. He always brought a corsage.

A wife used to deliver her husband to the Gotham on the regular occasions when they separated. Later, she would come by and visit, and then he would move back home, and the cycle would start all over again.

For a time, the Gotham was home to a father, mother, and son. Each lived in separate rooms, creating a new form of extended family.

During down times, the Gotham had its share of prostitutes and drug dealers and ne'er-do-wells. Residents and employees remember that the hotel was particularly run-down in the early 1980s. But it cleaned up again, and the residents got younger. Over the years, the Gotham advertised itself as offering "Continental Suites," "efficiency apartments," and other types of rental opportunities, depending on what was moving in the market. But mostly, the Gotham was a way station for folks moving into or out of the city.

The hotel did not have the gritty feel of the down-and-out SROs in the Tenderloin, yet it was close enough to downtown to feel like it belonged to the city's core. Luxuries were minimal, but the hotel had an asset not visible to the naked eye: The accounting was less than formal, and rent was often paid in cash. In short, the place was convenient, cheap, comfortably stagnant.

Until about six months ago.
In February, Akihiko Ito, a middle-aged businessman of Japanese extraction, took over the Gotham and promptly set about remaking it into the image of some short-term, furnished apartments he had run in San Diego. The San Diego operation, which focused on renting to foreign students, was called Vantaggio Suites; so, now, was the Gotham.

The demand for short-term rentals is rising in San Francisco, thanks to a booming economy and a phenomenally low apartment vacancy rate, not to mention some of the highest hotel rates and taxes in America. And there is incentive to increase the supply of short-term rental stock. Rent control ordinances make it difficult for property owners to significantly increase their income from long-term rental properties; short-term residents, on the other hand, are willing to pay more than tenants with year-long leases, and nothing in the rent control ordinances outlaws rental increases on new short-term tenants. In crude real estate terms, the more rent a building generates, the higher its value. And owners tend to like higher property values.

Ito already was familiar with the foreign student housing market from his business in San Diego. Typically, these students come to the United States to improve their English and stay for less than a year; usually, the term is three to six months. And it did not take long to establish a clientele here.

"We made a business agreement with them to use them almost exclusively," says Kate Simmons at Language Resource Institute, a private language school catering to students from around the globe. The school has placed 10 to 15 students there since the Gotham became Vantaggio Suites. The Center for English Studies and the American Academy of English also have placed students at Vantaggio.

But San Francisco is not San Diego, and Ito quickly ran square into the barricade of laws that govern property rental here. Almost as quickly, he began to learn how to get around those laws.

The tenants he inherited soon cried foul, insisting that the businessman abide by the legal prohibitions against converting the residential hotel into short-term contract suites. That's when the residents learned that, through its welter of rental restrictions and regulation, San Francisco has made that sort of property conversion not just legal, but quite attractive, and almost inevitable.

What ensued has been a genuine soap opera, worthy of prime-time airplay. The plot has included reams of litigation, plagues of tenant activism, conspiracy theories, distrust, dislike, a variety of other types of dissing, and some odd business deals. Imagine Norman Lear's version of a landlord-tenant dispute. And the series has at least one more 13-week season to run.