By Kaleene Kenning

A jury sided with the San Francisco Redevelopment Agency in its eminent domain suit against the owners of a large, empty, but somewhat artsy former tenement building, the Hugo Hotel at Howard and Sixth. The 144-room, 99-year-old hotel has been vacant since it was gutted by fire 20 years ago. San Francisco’s most quaintly decorated blight, the Hugo Hotel had furniture hung off its exterior walls by an artist in the late 1990s.

The San Francisco Redevelopment Agency began working in the area after the 1989 Loma Prieta earthquake, but the agency failed to encourage the owners of the Hugo Hotel to replace, rehabilitate, or sell their property. The owners, the Patel family of Hillsborough, CA who owned the site through an Oregon-based corporation, have allegedly turned down thirty offers since 2003. When offered $3.25 million, they asked for $4.6 million, but even though the buyer agreed to the price the transaction never happened for lack of motivation on the owner’s part. In April, the redevelopment agency offered to buy the property for $3.25 million, but the owners sought $7 million, according to the report. The agency filed an eminent domain lawsuit in June 2008.

The San Francisco Redevelopment Agency was awarded the building and the Patel family was awarded $4.6 million. $4.6 million is perhaps well below the profit that would have come had the property been zoned for a high-rise, but it is also well below the $400,000 the family paid for the property in 1964. The owners were paying only a $7,000 tax bill on the hotel, so they could afford to wait, and with height restrictions preventing them from tearing it down and building a 30-story skyscraper, it appears they were happy to hold out.

The Hugo Hotel is slated to be demolished and replaced with low-cost housing units with stores at street level.