San Francisco City Attorney Dennis Herrera has filed two lawsuits against property owners who allegedly broke the law by converting residential apartments into high-priced commercial lodging for tourists.
The suits, filed Wednesday, represent the latest volley in the uproar over the deepening housing shortage in the city and the proliferation of short-term rentals all over town.
The two sets of landlords — who own property in Pacific Heights and North Beach — relied on online platforms such as Airbnb, HomeAway and VRBO to market their units. The defendants in both cases had evicted long-term residents from their apartments under the state’s Ellis Act, which permits some landlords to do so if they want to get out of the rental market.
Two of the evicted tenants were disabled, according to San Francisco Superior Court and Rent Board records cited in the pleadings.
“In the midst of a housing crisis of historic proportions, illegal short-term rental conversions of our scarce residential housing stock risks becoming a major contributing factor,” Herrera said yesterday in a statement. “The cases I’ve filed today target two egregious offenders. … Today’s cases are the first among several housing-related matters under investigation by my office, and we intend to crack down hard on unlawful conduct that’s exacerbating — and in many cases profiting from — San Francisco’s alarming lack of affordable housing.”
The owners violated San Francisco housing and zoning laws as well as the state’s unfair competition law, according to Herrera. The suit is seeking thousands of dollars in penalties, and also injunctions that would put a stop to the short-term rentals.
Emphasizing that the conversion of residential units to tourist hotels has significantly contributed to the city’s housing shortage, the suit cited short-term rentals advertised on April 10: 6,225 on Airbnb, 1,413 on VRBO, 1,351 on HomeAway and 511 on FlipKey.
The suit notes that San Francisco’s Rent Stabilization and Arbitration Ordinance covers about 172,000 rental units and “should mitigate the effects of such an explosive housing market” by capping annual rent hikes and allowing evictions only in limited circumstances. Instead, the units are being threatened by owners eager to cash in on short-term vacation rentals, the suit says, jeopardizing the character of San Francisco neighborhoods.
According to the lawsuit, Valerie and Darren Lee bought property at 3073-3075 Clay St. in 2004 and invoked the Ellis Act the following year to evict tenants from both residential units. One house was described on vacation websites as an “exquisitely renovated home, in prime Pacific Heights.” The Lees charged their guests between $395 and $595 each night for a minimum three-night stay.
By doing this, they ignored the city’s conditional use process, which has requirements that include obtaining a permit for rentals shorter than 30 days. The Lees were repeatedly cited for their illegal use of the property, paying more than $8,000 in penalties — and they now owe the city more than $39,000. Although they assured Planning Department officials they’d stopped, the suit says, they resumed their illegal conduct and evicted a disabled tenant who’d lived in one unit for more than 10 years, paying $1,087 a month.
Despite Ellis Act restrictions, they rented the unit again for between $5,000 and $7,083 a month. They started offering short-term rentals in 2009, charging between four and seven times what they’d previously asked for, the suit says.
Darren Lee told San Francisco Chronicle reporter Bob Egelko that he was surprised by the suit.
“I think they have the wrong information,” Lee said. “I’ve got a tenant in there right now, a long-term tenant who’s paying me rent.”
The other suit named Lev, Tamara and Tatyana Yurovsky, who own buildings at 734 and 790 Bay St. They, too, are accused of using the Ellis Act to evict tenants — one who is disabled — in 2006 and converting three units to hotels four years later. They bragged on social media that they’d hosted several hundred tourists.
The Yurovskys could not be reached for comment.
“I think it’s important that those of us in City Hall send the message out loud and clearly that we expect people to abide by the law with respect to the properties that they own,” Herrera told KQED.