Land Use Committee delays InterContinental POPOS fee-out after enforcement questions

The Land Use and Transportation Committee on Jan. 3 continued, to the call of the chair, proposed amendments to the Downtown Support Special Use District that would let the InterContinental Hotel convert underused privately owned public open spaces (POPOS) into private event space in exchange for a fee dedicated to lighting and safety improvements at Victoria Manalo Draves Park.

Supervisor Jane Kim, sponsor of the measure, told the committee the hotel and the city negotiated a fee intended to fund improvements to an on-the-ground park in SoMa and said the legislation requires that improvements be delivered within two years of the city receiving funds or the money will default to the SOMA stabilization fund. Kim said the fee was calculated using costs from recent South of Market improvements and cited comparative figures discussed during the hearing: a $209 per-square-foot estimate and a separate $290.7-per-square-foot figure referenced by committee members asking about the cost-basis.

Planning staff told the committee the amendments narrow findings and tighten language to avoid setting a precedent for other POPOS. Aaron Starr of the Planning Department described the commission’s recommended changes as meant to ensure any fee would cover enclosure or canopy-related costs and to keep the ordinance from creating an easy opt-out for on-site public space.

Committee members pressed the project sponsor and planning staff for the status of long-running enforcement actions. Supervisor Kim noted the planning department holds notices of violation related to the hotel’s Fourth- and Sixth-floor terraces and said committee staff discovered rental listings on the hotel’s website. John Bass, representing the hotel, said the terraces are used as an integral part of hotel operations as overflow space and are not “rented out to the public” as a standalone product, while Larry Badner (project representative) and Karen Johnston (hotel counsel) said enforcement actions had been held in abeyance while the parties sought a long-term solution.

Supervisors repeatedly requested clear answers before forwarding the matter: how frequently the terraces have been used for private events, whether the city has assessed penalties or fines, what revenue (if any) the hotel obtains from those events, and whether passage of the ordinance would abate outstanding enforcement. Planning staff said enforcement is a multi-step process and they could not confirm whether penalties had been assessed.

Given those outstanding questions and the competing factual claims — project representatives said usage is limited and operational, supervisors said listings and prior enforcement papers suggest repeated, unauthorized use — Supervisor Aaron Peskin moved to continue the item to the call of the chair so staff and the sponsor could return with clarified figures and enforcement status. The motion passed without objection.

Next steps: the committee asked the sponsor and planning staff to (1) provide the fee calculation methodology and reconcile the differing per-square-foot figures discussed at the hearing, (2) report the exact status and history of any notices of violation or fines tied to the Fourth- and Sixth-floor terraces, and (3) quantify any revenue the hotel has derived from events that used the POPOS. The item will return when the chair calls it back to committee.