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San Francisco City Attorney Dennis Herrera announced Monday a $1.46 million settlement with a residential hotel owner accused of converting low-cost housing units into tourist rooms. In a statement, Herrera said Harsch Investment Corp. agreed to pay $1.36 million to three nonprofit groups to create new affordable housing and another $100,000 to a program that provides senior housing. Harsch was accused by the city of violating San Francisco’s residential hotel conversion ordinance that seeks to maintain a supply of low-income housing. In addition to the payments, Harsch agreed to drop its appeal of a Superior Court ruling that it violated the law by converting residential units at its Allison Hotel into tourist rooms. It also agreed not to pursue a federal lawsuit filed against the city challenging the conversion ordinance. “This is a just outcome that upholds the integrity of an important law and will make a real difference in the lives of those most affected by our city’s affordable housing crisis,” Herrera said. The city attorney said the settlement was approved by the Board of Supervisors in November and signed by Mayor Willie Brown last week. Under its terms, Harsch will pay $1,064,000 to the Tenderloin Neighborhood Development Corp. toward the renovation of the West Hotel at 144 Eddy St. It will also pay $150,000 to North of Market Senior Services to help create 13 new residential units at 313 Turk St., $150,000 to Friendship House Association of America to help build a drug treatment center in the Mission District for Native Americans, and $100,000 to the Hebrew Home for the Aged Disabled, a skilled nursing facility. Deputy City Attorney Andrew Schwartz, who negotiated the settlement, called it a fitting end to a decade-long legal battle. “This is an excellent settlement that contributes to the solution rather than the problem and averts costly litigation down the road,” Schwartz said.

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