CFAH

40-44 Pleasant Street

Tagged for illegally renting the three one-bedroom flats at 40-44 Pleasant Street as short-term rentals in violation of San Francisco’s so-called “Airbnb law,” the owner of the Nob Hill building has applied to technically convert the units, none of which she occupies as a primary residence, into “hotel rooms” and continue to airbnb, or at least VRBO, the three flats on a full-time basis.

From the Planning Department’s review and summary of the building owner’s request:

  1. The project would remove three rent-controlled dwelling units from the housing stock.
  2. The removal of three dwelling units could incrementally exacerbate the current housing crisis, as the removal of three units reduces housing supply and places additional demand on fewer units.
  3. Although there are numerous surrounding hotels, tourist hotel use does not fit in with the surrounding residential context on Pleasant Street, or the residential district in which the subject property is located.
  4. The project is compliant with the applicable provisions of the Planning Code; however, the project is not desirable for, nor compatible with the surrounding neighborhood.

As such, the Planning Department is recommending that San Francisco’s Planning Commission deny the conversion and uphold the Notice of Violation for the “Elegant & Best Nob Hill Property” which was issued over a year ago, with the threat of daily fines, but doesn’t appear to have put a dent in the building owner’s ongoing short-term rental activity.

Comments from Plugged-In Readers

  1. Posted by Hitman

    If she is denied, I hope she will exponentially contribute to exacerbate the housing crisis by continuing to refuse to participate in rent control, which does the same.

    So what happens when nobody uses the property?

    • Posted by two beers

      First, there is no housing crisis. There _is_ an affordability crisis, because most of the many units being built are unaffordable to the majority of San Franciscans. The new units are targeted to the high-end market, which skews prices much, much higher.

      Second, how does rent control “exacerbate” the crisis? Without rent control, tens of thousands of residents would have left the city and been replaced by wealthier tenants, skewing average rents even higher, making rent even more unaffordable, leading to more residents leaving the city and wealthier replacements, leading to higher rents, etc.

      • Posted by wonkster

        “leading to more residents leaving the city and wealthier replacements, leading to higher rents” . I think that most of the folks commenting on this site would see that as a feature not a bug. I’m not one of them, but I am certain that they see that as a net gain. If there are two things that are popular here it’s repealing rent control and buildings that are as high as possible. The vision seems to be “Dubai by the Bay” which would sadden Herb Caen if he were alive I think.

        • Posted by two beers

          I understand that, and have no problem with landlords being honest about wanting to repeal rent control because it is in their own financial self-interest. I’m just trying to balance the constant “rent control is the cause of all housing problems” grumblings.

          • Posted by SFrentier

            Rent control, so they say, is the root of all evil today

          • Posted by anona

            Ah, the Fox News-esque technique of “fair and balanced” reporting, even if the “other side” has no basis in reality. Are you claiming that rent control does not increase the market rate of units that become vacant?

      • Posted by moto mayhem

        even if newer buildings with cheaper materials and less perks were being built, they would be exorbitantly expensive. There is just too much demand at the top end and not enough supply. there is no way to build “more affordable”units, unless built in highly undesirable areas or without huge subsidizes and entitlements for the lucky few.

      • Posted by Yup Let's Do It

        Your argument is absurd! There absolutely is a housing crisis. When any market is only allowed to build/manufacture a small number of items then they must be expensive in order to make a profit. Were we to allow for a larger number of units to be built the prices would go down because of economies of scale. You have zero concept of the reality of markets!

      • Posted by BayviewSF

        Rent control makes rent prohibitively high for new tenants because it discourages existing tenants from moving. Many existing tenants do not consider moving to other cities since their rent controlled rent is so low.

      • Posted by Ohlone Californio

        Do you understand how much it costs to build in San Francisco these days, Two Beers?

      • Posted by Frank C.

        Stop this implied nonsense that SF is doing fine with its housing production. No, there is a housing supply crisis, because by any reasonable measure, there is not enough of an increase in units to satisfy demand, as evidenced, among other examples, by the awful metastasizing regional traffic as people commute from afar. SPUR estimates 5000 units are needed every year, and they said that in 2012, I think. So we are nowhere near enough currently and there is a backlog.

        Neither are the outlying cities. They too need to create units, but are not creating enough. From Oakland to SJ. You could also say this is a job growth crisis, since too many jobs have been created given the region’s ability to cope. Soon traffic will get so bad productivity and recruitment will be impeded. And that sucks for all of us.

        • Posted by Orland

          And it certainly doesn’t help when residential units are converted to “hotel rooms” as is being proposed here.

          Of course, the “owner’s” application must be denied.

      • Posted by San FronziScheme (formerly known as lol)

        Basically the tail wagging the dog.

        I see you haven’t changed, two beers.

    • Posted by redseca2

      There is a very large & empty three flat Victorian (with multiple garages) at the corner of Waller and Downey Street in the Upper Haight that has stood empty since at least the mid 1980’s, if not before. Strangely, the building was repainted and the yellowed and decayed window blinds were replace with fresh ones (still all pulled down tight) about 2000 or so. Now th eblinds are yellow and decayed again. Someone keeps the porch clean, but I have never seen a light on in the building while living within a block since 1979.

      I asked a title company friend about it once and they checked around and told me it was the lingering result of a particularly nasty divorce.

    • Posted by Sabbie

      What part of scofflaw don’t you understand? Places like SF need rent control to avoid social upheaval during speculative episodes. But if you disagree, that’s fine. DON’T BUY A RENT CONTROLLED BUILDING. There are plenty of other options. And if you already own one, you can exchange it. Pretty basic.

      Rent control was enacted democratically, and the SCOTUS has ruled over and over that government may place restrictions on property rights for the public good, and most reasonable people agree. This lady is flaunting the law and needs to be punished until she stops.

      • Posted by anon

        Has the entire past 40 years been a speculative episode?

  2. Posted by BayviewSF

    If the denial is final, the owner should convert this building to TIC or condo and sell the units for owner occupants. She can use the fund to buy or develop in another city with no rent control.

    • Posted by medalist

      Totally, the units as TIC would fetch at least $1m a piece, probably more like $3.5m gross for the entire building. Even if she owes $1m on she’d could clear $2.5m. In a exchange she should be able to buy a $10m building using this a 25% down.

  3. Posted by Conifer

    These units are quite small, not even the size of many hotel rooms. This is a part of the un-Nob Hill properties that constitute the majority of buildings on Nob Hill (although perhaps not the majority of units.)

    There is no chance that this owner or any future owner would rent them under rent control. Vacancy decontrol is the saving grace of the rent control problem.

    But as I have said on socketsite before, unless you are running a large real estate investment company, it is unwise to buy rent controlled units.

    • Posted by SocketSite

      The three flats in question average around 1,000 square feet apiece. The average hotel room is closer to 300.

      • Posted by Conifer

        I suppose my memory failed. I looked at this building when it was for sale many years ago, needing a lot of work, and decided the units were far too small, especially for my wife and me.

      • Posted by SFrentier

        That’s easy then- tic baby tic!

        • Posted by SocketSite

          Which would result in three units of housing for residents versus hotel rooms for tourists.

          • Posted by SFrentier

            Totally different. Housing activists and the sups who placate to them don’t give a sh*t about home ownership. They are generally against rentals to tic conversions. All they care about is preserving RC units for tenants. Fact this owner will have all these units vacant, it’s an easy renovation to tic conversion. Great location, solid market, it’ll be a slam dunk. They probably just filed for the hotel request to milk their rentals for more time (as this goes slowly through the rejection process). Nothing like using city delays for your own benefit! (And then you have a good end game to sell off as TIC’s). Smart IMO.

        • Posted by BayviewSF

          TIC is the way to go. This owner should TIC and sell. Use the proceeds to buy a second building as replacement. Of course, tax will hit on the sale.

          • Posted by medalist

            1031 Exchange and viola no taxes…

  4. Posted by Dave

    Neighbors inherited a house near me from their recently deceased mother. A bunch of kids and they don’t get along and are fighting over the inheritance.

    The home is empty now. Has been for over a year. It could rent for 4K/month. They don’t rent it, not because of rent control which it would not fall under, but SFH rentals can be a problem too. If you rent to someone with kids or someone who becomes disabled, or for any number of other reasons, it apparently can be hard to evict a tenant from a rental home in SF. Or take a prolonged period to do so.

    I suggested they go the AirBnB route.

    • Posted by AK

      I am struggling to follow your logic (which seems to be a theme). You know of one instance in which a home is not being rented due to familial infighting, so you thought you would bring it up, even though it doesn’t directly relate to the issue being discussed, as you admit. But it does somehow tangentially relate to the fact that it is hard to evict a certain subset of renters (perhaps this relates back to the previous example, under the assumption that one of the inheritors of the house you mentioned might want to live in it at some point and that might be hard if they rented it out now?), without going into whether or not it is hard to evict tenants under any circumstances or simply without cause, and this somehow is evidence that the subject of this post should continue doing something illegal?

      • Posted by BobN

        I would think they could rent it through a corporate-rental company and avoid the problems of tenant laws and the hassles of scheduling/maintenance of AirBNB.

        • Posted by San FronziScheme (formerly known as lol)

          I do corporate rentals using Airbnb. I get 1/3 corporate types, 1/3 long term tourists, 1/3 individuals with a new job and a relocation stipend. I have a friend handling the keys, a cleaning person. All I need to do is come every 6 months to replace breakage, monitor a deep cleaning, check on what works and what doesn’t.

    • Posted by BayviewSF

      The owners may want to sell and split the proceeds. It would be wise to keep the house vacant so that they can sell for a good price. A tenant occupied property will sell at a discount due to various tenant protection regulations. The kids maybe working out a fair split among themselves before selling.

      • Posted by Dave

        Yes. Its another manifestation of the difficulty property owners have in SF. I am talking folks who have one home or own a 3 or so unit apartment.

        The burden of the restrictions falls on them. Not corporate owners. This is why I would never purchase a rental in SF – not that I could afford it.

        The example is but one of half a dozen or so in my neighborhood that I know of over the past few years. Older owners passing on and leaving a paid off home with minimal property taxes to their kids. In some cases the kids are not sure what to do and sometimes are advised sit on the property for a year or two and take your time to decide. They can afford to leave it empty and avoid potential problems if they decide to sell.

        I would think AirBnB would allow one to avoid the problems of a long-term tenant and give flexibility to sell pretty much on a dime. Not aware of any neighbor that has gone that route though and restrictions on that option may make it a not so viable alternative.

        • Posted by SocketSite

          Keep in mind that a “restriction” that might “make it a not so viable alternative” is that airbnb-ing a unit which is not the primary residence of the owner in San Francisco is illegal and subject to rather substantial fines.

        • Posted by Adam

          My reading of the law implies that as long as the renter agrees in writing that at the end of their lease you will have the right to evict them without cause (which just means to place a limit on the rental) you won’t have any issues. This is spelled out on a thousand different websites, but I guess following the law and making a profit are too difficult for some. All of these people whining about how hard it is rent out their rental units, which makes me wonder why they don’t sell out and get out of the rental business if it is such a burden. Even a rent-controlled unit can be rented for thousands of dollars a year, so I am unclear what the problem is.

          • Posted by SFrentier

            Sucker born every minute.

  5. Posted by BayviewSF

    Since “The project is compliant with the applicable provisions of the Planning Code”, the hotel conversion can be approved. Can the owner appeal the decision at the state or federal level? Does the city have the final say on the hotel conversion request?

    • Posted by Joel

      It’s an application for a conditional use, which means that the commission/city can deny it at their discretion if they deem that it is not “necessary or desirable”, a pretty broad standard. Compliance with the planning code simply means that it would be legal for the city to allow the project, if it chose to do so.

    • Posted by hgh

      Same question. What is the recourse here?

      • Posted by Carlson

        Conditional Use applications can be appealed to the Board of Supervisors.

        • Posted by hgh

          I think they’re appealed to the Planning Commission first. Then there’s an Appeals Board.

          My question is if the Planning Department conduct is monitored, and by whom? Can one go above them?

      • Posted by SFrentier

        Recourse: continue this nonsense with the permit by appealing to the board (read: milk the time to get a definitive “no” answer, while still renting out on Airbnb.). Then remodel units, sell off as TIC’s (bye bye rent controlled units;) and 1031 into another investment prop of your liking.

        • Posted by hgh

          It’s going to get harder to do the TIC’s, and it forces a property owner to sell off when they might not want to. I have to wonder if that’s the end game goal, seeing as it’s in line with the big rezoning proposal being tossed around.

  6. Posted by Amewsed

    Continue with short term rentals until owner decides to sell if hotel status is denied. Given the neighborhood, there would be good demand to buy the entire building or each unit at any time in SF.

    This property along with countless others will not be returned into the rent control market regardless of the commission’s decision.

    • Posted by San FronziScheme (formerly known as lol)

      Yes, this is what I also see. People who buy today DO know what they’re getting into. As a buyer of a multi-unit property you see all these horror stories of people who tried to be the decent guys. You end up seeing yourself as the 70-year-old landlord with MS and a building with old time tenants producing zero dollars net. There are 2 possible plays: speculation and added value through upgrades and TIC, or finding an angle to get the property to produce without getting the short end of the rent control stick.

      • Posted by Sue Yu

        NO! PROPERTY OWNERS DO NOT KNOW WHAT THEY ARE GETTING THEMSELVES INTO when they buy and the Board of Sups then changes to the rules every few months.

        If someone bought in the summer there was a certain set of rules, if someone bought last month they were hit w/ a sh!tstorm of unjust laws.

        Like many small property owners Jennifer is just one of thousands of owners keeping units of the regular market, and for good reason! As one poster correctly noted, it’s really hard to buy here and those of us who have save & scrimped are not about to offer units at ‘affordable rates’. We will keep units Vacant, or rent only to those who can document that their stay is not forever.

        In complete agreement w/ Jennifer, Kim’s new ‘rental protections’ that came into play in Dec are the straw that broke the camels back for many small property owners. Expect rents to rise until these laws are repealed.

        If the housing activists really wanted more housing, they should expose all the master tenants in SF who are rent-gouging their subtenants. Plenty of these scammers are work for the City.

        SF needs a complete REFROM OF RENT CONTROL to free up units, lower rents & end the corruption from bad tenants:
        1) it needs to be Means Tested so that it actually benefits those who need it (not those making $100k/up)
        2) It needs to be paid for by all San Franciscans, and
        3) tenants who own property elsewhere should not be covered by it, period.

  7. Posted by sfdragonboy

    Should have known (with an unlucky address of 44)…

    • Posted by Amewsed

      Guess Chinese people won’t be buying the property and/or profiting from it. That means less competition.

      • Posted by soccermom

        I’m sure he was referring to the untimely demise of Hank Gathers, #44.

  8. Posted by AnonAnon

    “which was issued over a year ago, with the threat of daily fines, but doesn’t appear to have put a dent in the building owner’s ongoing short-term rental activity.”

    Why is the City holding off on issuing the daily fines?

    • Posted by SFrentier

      Because owners are “doing the right thing” by attempting to legalize their hotel usage….ha ha ha. Smart.

  9. Posted by geekgrrl

    I checked out the vrbo.com listing – the owner is requiring 30 days minimum to rent a unit which is completely legal. Short-term is defined as < 30 days.

    So technically this owner is not doing short-term rentals.

    • Posted by SocketSite

      According to the listing and rates, as linked above, the minimum stay is 2 nights.

      • Posted by geekgrrl

        The 2-30 night minimum is most likely still displaying because of system caching.

        If you request a check-in date in the online calendar it forces you to select a departure date 30 days after your check-in date.

        • Posted by SocketSite

          From the first paragraph of the listing which was last updated yesterday: “Due to cancellation we have the first floor open Dec 19 till January 7th” with a “2 night min stay” according to the rate table. The updated rate table also defines the standard rate and a “3 night min stay.”

          • Posted by BayviewSF

            The regulation seems too much. There is no huge difference between a 30 day rental and a 3 day rental. Even if you sign a 30 day contract, the tourist can break the lease and leave early.

            In SF, tenant can break the lease and move out anytime they want. But landlord have no right to terminate the lease even when the lease term ends. All these regulations make no sense.

          • Posted by San FronziScheme (formerly known as lol)

            BayviewSF, yes, it’s a possibility, but no tourist will ever commit to 30 days with the intend to break the commitment after a fee days. Tourists are not aware of rent control or airbnb restrictions nor do they care.

  10. Posted by BayviewSF

    Why does the owner not sell the building as TICs? She charges a very low rate of $215 per night. With a 33% vacancy, she only gets $4300 per month for a 1000 sf unit with a lot of labor. There might be some reason she can not sell or she really loves this building and does not want to sell.

    Generally I am surprised of so few TIC conversions in SF. If I own a rent controlled building, I would sell it as TIC whenever it becomes vacant.

    • Posted by SFrentier

      Actually TIC’s are pretty popular in SF, especially in nabes like Noe, Cole, height, mission, duboce, nopa, etc. I don’t think there have been too many in Bayview but I’m quite sure that will change over the next few years. Nice upside in some of ‘dem 2-4’s there 😉

  11. Posted by Ellis Zactor

    She has cojones, hope it works.

  12. Posted by hgh

    So the Planning Department are activists now?

    Easy for [them] to take a stand when it involves a small time landlord and 3 units, but they do nothing when it really matters, and have even made a habit of insisting on a reduction in units before giving approval to projects. Fire them.

  13. Posted by BobN

    Point #3 “Although there are numerous surrounding hotels, tourist hotel use does not fit in with the surrounding residential context on Pleasant Street, or the residential district in which the subject property is located.”

    Nice example of self-undermining statements.

    • Posted by SFrentier

      I think numerous surrounding hotels means enough exist, no new ones are needed. Now if the owner proposed something more innovative, like say a cat cafe or new age brothel, well that may fly.

  14. Posted by Jennifer Solomon

    I appreciate all the comments you have made and have read all. I am the owner of the building, Jennifer. I never wanted to apply for a hotel license. What I want to do is bring the building into compliance with the historic use and I asked the planning department to apply for a variance. At first I was told that I could do that. A bit later I was told that I needed to apply for a hotel license and prepare a costly hotel study! Apparently they make no distinction between a hotel, a hostel, a transient cheap hotel and 3 short term/fixed term rentals. Vacation rentals are not a dirty word any longer as now the city of San Francisco with the Air bnb law as it is called has enabled everyone to rent their couch or any part of their occupied house 100% of the time and their entire home/apartment 25% of the time they live there no matter what neighborhood they live in. I am located at the top of Nob Hill, right next to Grace Cathedral, near numerous hotels, not in a low priced housing area, great walking score, arguably perhaps the best location for short term rentals in the city. Rather than have people speculate about my situation, it seems best to just explain it.

    If after you have read what I have written or even part way through it as it is wordy, you feel compelled to send an email to the planning department in support of my request please send it to the attention of Carly Grobe (carly.grob@sfgov.org) at the San Francisco Planning Department (she has been very patient with me and my frustration) re: Variance request 40-44 Pleasant Street, San Francisco.

    The violation that I have and am attempting to resolve came up when I objected to my neighbors 2 plus story addition and he called the planning department, the FBI and CIA on me (and any other agency he could think of so he says. I think we have worked things out though so hopefully he will not call any more agencies on me). To my knowledge in 23 years this is the only complaint till the recent attention surrounding the use of the property.

    Prior to his complaint, I voluntarily went into the city years ago to discuss the short term rental use of my units. I was advised at the time that while I was in a gray area the city was working on the short term rental issue and that things would become clear and that I could apply for a variance or wait to see what came of the cities trying to tackle the growing volume of short term rentals. At that time Air bnb was just a fledgling business. I have been on Vrbo since they started their business. Since they were working on it, I waited thinking somehow that I would be able to apply under whatever decision was made and become one of the options for short term housing in San Franicsco. Before they solved the problem my neighbor made his myriad of phone calls. Now we have the violation, I have no more short term rental reservations on the books and I am trying to decide what to do and hoping that I can be granted a variance based on this being the use of my property that I want combined with it being a valuable neighborhood asset, located in the perfect place for this use and the fact that no matter what the final decision, no affordable priced rentals will be added to the market.

    So just a little bit of history. I have owned this property for 23 years. Before I bought it the previous owners operated the property as a unofficial bed and breakfast, they lived in the top unit and rented out the bottom units short or fixed term. In the months after I bought the property which I bought with the two bottom floors furnished, they passed on guests to me. I bought the property so that I would have a place to come to with my family in the city as I raised my kids in Sebastopol. What actually happened was that when we came to SF they ended up helping me clean, organize and repair things and learned a lot. The property is a terrific property as is the street, lots of history in this for lack of a better description, aristocratic part of the city. So to me it is not a dispassionate investment, it is a 110 year old labor of love which I believe I have owned longer than any previous owner. It is also a lot of work, I do not have a property manager, I am the property manager. Being able to share a bit of San Francisco history with my renters is a pleasure. The rent I earn makes me a living and allows me to maintain this historically designated building in good order.

    Who are my typical renters? People staying for various months have included opera singers, the ice skating rink manager, doctors under short term contract at a local hospital to fill in staff shortages, actors here for a several month long play and rehearsals, girls doing summer internships at the SF Ballet (and their mothers), a number of neighbors who have remodeled their houses, snow birds from other states, visiting professors from one of the art schools etc. Obviously I prefer when people stay for 4 weeks to several months like those listed above. To be able to guarantee that the unit they have rented and paid for is open when they arrive I have to set up shorter stays in between. Shorter stays often include families that reserve the whole building for weddings at Grace Cathedral or the Fairmont that want to have the whole family together in an environment where they can cook and visit and meet each other, a huge number of my neighbors parents when they have babies, couples going through the 3 week infertility treatment, dot com people that are between rentals, lots of parents who’s adult children live in San Francisco and they come to visit for more than just a couple of days but do not want to stay in a standard hotel nor can they afford it. Families from (often Australia and Germany, do not know why) that have kids and are happy with my kitchens and having extra space to be in while the children are sleeping. The people I rent to do not want to rent a 2nd spare bedroom or someone’s couch, a hotel room or a house that comes with underwear and clothes in most of the closets and dressers. The opera singers and people who come to work in the city on contracts need to have guaranteed housing. I have received numerous panicked phone calls from people coming to work under a city related contract who’s pre paid apartment was not available as a monthly renter did not leave. Many people only agree to do a several month long stint in San Francisco if they can stay in somewhere like what I offer, homey and centrally located with parking for 2 of the 3 units, that being said, most people do not have cars. They want a place of their own and what they get for the price is much more than what they would get in a standard hotel room. My guess is that most of the San Francisco planning staff, most of the planning commissioners, most of the board and most of you have used some type of short term rental service to find a non-standard hotel place to stay.

    These were not rent controlled units and I am not a landlord who used nefarious means to evict the tenants so I could offer short term rentals and fixed term rentals. I feel for the tenants that have been manipulated so an owner can offer the unit at much higher prices. If you buy a rent control building with people living in it then that is what you bought. Tenants can feel in a very insecure place and someone doing everything they can to get you out so they can TURN the apartment into a vacation rental is not correct I bought a vacant building which was already being used that way. Never evicted anyone or paid anyone to move out.

    I feel that a rental contract should run both ways. I promise to deliver to you an apartment in good working order, if the stove breaks, I fix it, if the heating breaks, I fix it, if the frig breaks, I replace it, roof leaks, also, I fix it. It is my asset, my property and investment and it is in my best, the City of San Francisco’s and the tenant’s best interest that it is kept in the best shape possible. With these old wooden buildings, the minute you fix something it starts falling apart again. A tenant also has responsibilities under the contract. Your duty as tenant, if you ruin the floors you fix them (normal wear and tear is normal), if you rent a non smoking building you respect that, same goes for pet rules, the number of people living there and finally, you pay the rent each month on time. A landlord has picked you as your requests meet their needs, they have believed what you said. Landlords should not discriminate based on tattoos (many of my swing dance partners are covered with tattoos) or any of the other things that the law states but we can say, wow I am only comfortable with two people in there or I need to verify your income to make sure you can and will pay the rent (cause no one gives us a break on those pesky property taxes and mortgages) no drumming at night, no smoking and no pets. People have allergies and with the Edwardian style buildings that have vertical light wells, sound and smells travel up and make everyone else miserable in the building if someone does not keep follow the contract they signed when a landlord agrees to rent to them.

    Previously 3 unit or fewer buildings were governed by a different set of rules. That was to rightfully recognize that people who buy a 3 unit building are often not in the business of being full time professional landlords. This is the only multi unit building I own, I bought a 3 unit vacant building as that was what I wanted. Took some looking and I feel very lucky to have been able to buy the property and also lucky to be able to continue to make the mortgage payments, pay he property taxes and pay for the new foundation and new roof and all of the repairs that I have made to the building.

    Under the recently passed laws which as I understand it were to try to dissuade nuisance evictions from rent control units, I lose almost all my rights to evict someone should they get dogs, cats, smoke and bring in two friends to live with them. It is my understanding that a renter, once they have stayed 30 days, can stay 5 months without paying rent before I can go through the process of beginning an expensive eviction. I had been thinking, even though I love what I do, I am older now and it might be better to switch to long term rentals, so much easier. Unfortunately, when they passed the new law toward the end of last year labeling pretty much every reason for eviction a “nuisance” eviction that made being a full time landlord not a possibility for me of for almost anyone who only owns one 3 unit building in San Francisco. In the city of San Francisco, one has to either have very deep pockets, other sources of income or own many units to handle one or two problem tenants in a 3 unit building.

    Unfortunately it seems that San Francisco has pitted us (landlords) against them (tenants) and not taken the bull by the horns and built more housing. I think it would have been better for the people living in San Francisco to have more housing options and not a sports arena or more corporate headquarters and parking lots.

    To help with the housing crisis and deal with the demand for short term housing, San Francisco has instituted the commonly called Air bnb law which supposedly helps people to stay in their market driven overpriced rentals and homes. I think that the law will actually reduce the amount of more affordable full time housing options. For example, instead of getting a full time roommate for a 2 bedroom apartment and thus providing full time housing for two full time SF resident one can rent their 2nd bedroom from time to time or stay somewhere else occasionally and make the same money as a full time roommate would have brought in which allows one to pay their rent but not provide additional housing for a full time resident that the affordably priced unit, which is often under rent control. Now I have probably brought Air bnb down on my head along with whoever is putting misleading green flyers all over my neighborhood claiming that I want to open a hotel and increase garbage in the area and cause a parking problem on the street.

    I could sell the building which I love, do a 1031, and move my investment out of San Francisco. As someone stated correctly, I would have much much higher property taxes. Another option, at market rental rates, rent each of the 3 one bedroom units (they are full floors with nice floor plans with the top unit being two stories) full time and at current market rates, earn more than I am making now, (not have to pay the telephone, the heating, the wifi and there would be no vacancies) and have a lot more free time. Again the recent morph of the rent control laws was the straw that broke the camels back for me with that idea. I am researching my other options but really, I do not want to sell my building and strongly feel that it is a unique property in a perfect location atop Nob Hill for what I have done for years, meets a need for many city providers and people with special needs visiting San Francisco and in no way will add to or solve in any way shape or form the shortage of affordable or even mid price housing. I feel the best use of this property is as short term rentals. It is much better to have the whole building managed in this fashion than to have transient units mixed into apartment buildings and housing areas throughout the city as the current Air bnb law allows. In time the powers that be will come to realize this.

    I am sure that some people will have nasty comments to make but I have done my best to explain things clearly. At the hearing I will be requesting a continuance as the surprising flow of support and the bile of opposition has been daunting and I need another month to finish analyzing the options and coordinating my presentation particularly in light of the misleading nasty green flyer campaign throughout my neighborhood and pasted to my building. It is my wish that both sides, tenants and landlords, could get together in San Francisco and reach a common ground and place of respect. That of course requires that both sides accept their responsibilities and put hate away. That sounds so wishy washy but it is true, not normally a Namaste type but…. maybe a Buddhist officiator with a plethora of common sense is what we need now to work out the tangled web that is the City of San Francisco housing plan, complicated rules regarding short term rentals and rent control laws.

    • Posted by rad

      Thank you.

    • Posted by EcceMorons

      It would be nice to have a Buddhist officiator with common sense untangle the mess here, but the opposing side would be:

      1 – Politicians who have learned that, in a city of 65% tenants, one gains power by trumpeting that they are “fighting for tenants’ rights” by creating ever-increasing laws which are written by:

      2 – Tenant attorneys who write these laws with intentional “vagueness” and enough gray area that every landlord/tenant issue is a potential lawsuit – which they can use to threaten small landlords with long, drawn-out, very expensive court battles. Since, unlike corporate landlords who have an attorney in-house, small landlords realize it’s best to cave, and pay – and tenant attorneys get their 33% cut, and have become millionaires with more clients than they can handle.

      So, it’s “common-sense” versus a Kafka-esque meat-grinder – and if you ever decide to rent your vacant units to long-term tenants, you’ll become the meat.

      If you want peace of mind, don’t even think of it. If you’re not allowed to convert to a hotel (sounds unlikely) take the hit on your loss of Prop 13 lower-taxes, sell the vacant units as TIC’s, and do the 1031 exchange into property which is in a town that doesn’t have a tenant-majority, and has sane landlord-tenant laws. Your return might be a little lower (at first – if you get long-term SF tenants, believe me, your bottom line will soon be better elsewhere), but you’ll never have to deal with the stress that comes with being a small landlord in SF.

      You bought your 3 unit building before Prop I put it under rent control – that changed everything. Be grateful that you were able to create a “labor of love” for 23 years (despite the fact that you had to break laws to do it), but realize that the ground is ever-shifting against you if you rent to long-term tenants here. Make life easy. Re-create your labor of love somewhere where the local Powers That Be don’t see you as an easy target to exploit.

      As you grow older, and hassles grow harder to deal with, you’ll appreciate that you made the move.

      • Posted by Jennifer Solomon

        Probably good advise. I just sent away a many timed renter who with her sister and husband had rented from me over the years. She is bummed she can’t come back and her sister has cancer I am not interested in doing a TIC. Sort of like I do not like billboards, I do not like splitting up old buildings. Always wanted to keep the building in one piece, under one owner so that the classic features would not be remodeled away by 3 different owners and modernized. Wanted to bring the top floor kitchen back to the old traditional style so deciding what to do. I am very lucky and these are good problems to have.

    • Posted by Conifer

      Brava! Brava!

    • Posted by Dave

      Thanks.

      It is hard to be a small landlord in SF.

      I applaud you for your love of the building and efforts to provide a service for people.

      Hope you can hang onto the property. If it becomes too much a 1031 is your practical alternative. Exchange to a more balanced tenant/landlord location. I did a 1031 this past year and it worked out very, very well.

      The property tax thing can’t be gotten around given your low base, having had the property so long.

      Good luck..

      • Posted by Orland

        Or, she could make it available to 3 San Franciscan families to rent as their homes.

        • Posted by parklife

          Or she could sell it as TICs and make it available to 3 San Franciscan families to own as their homes.

          • Posted by Orland

            There’s a relative glut of such properties (including condos) available to that market whereas removal of these three units from their historical status as rental apartments contributes to the affordability crisis this city is experiencing.

          • Posted by parklife

            I think that if we were experiencing a relative glut of TICs/Condos then you would see softening in that marketplace, thereby easing the affordability crisis. The affordability crisis is present for both renters and owners and it could even be argued that it is worse for potential owners given the relatively greater cost to own than to rent.

        • Posted by Conifer

          But since she is not a masochist and not running a charity, she would be foolish to do so. She is an intelligent and thoughtful and decent person, a small property owner, the classic victim of leftist policies wherever they come to power. The so-called “progressives” will exploit people like her, but fear to confront the really powerful so-called “university” and other large corporate real estate investors.

          I agree with those who suggest that she and others in a similar position should move their investments to a jurisdiction run by mainstream politicians.

    • Posted by soccermom

      Thank you for sharing such a thoughtful articulation of your situation. It’s easy for observers with limited information to make generalizations that prove unfair to the involved parties. Best of luck to you. As someone trying to play by the rules and who was able to do so prior to advent of the AirBnB ‘sharing’ economy, your rental business seems to be collateral damage.

      Ultimately, you have a very first-world problem (a visible, appreciated asset) that faces a lot of political headwinds.

      Have you considered tax-free municipal bonds? They won’t let you meet interesting people who want to visit San Francisco, but they will give you income without the hassle or the taxes.

    • Posted by HousingWonk

      Thank you for the comment. I think there is a difference between someone who buys a rent-controlled apartment with tenants and uses whatever means by hook-or-crook to evict tenants in order to AirBnB it (or someone who buys a vacant building that a flipper conveniently took care of the evictions), versus someone in your situation who purchased a property long operated as a quasi B&B well before the current housing crisis.

      The former should be drawn & quartered on the public square and their remains urinated on.

      The latter (your situation) hopefully the City will see that variances were designed for just this situation – the odd duck project that doesn’t quite fit squarely into a pre-designated hole and is coming to the situation with “clean hands”.

    • Posted by BayviewSF

      Jennifer, I really do not understand why you would even consider to change your building to a hotel use. You would be better off financially to change it into 3 unit TIC and sell all 3 units. You would get more for 3 unit TIC than a hotel. In San Francisco, vacant residential property is more valuable than comparable hotels.

      Even a short term rental can turn into a rent controlled unit if the guest overstays. One such incident would reduce your property value.

      You can simply sell it off as 3 TIC units, 1031 to a 30 units apartment in Seattle or 100 units in Austin, and retire from running a hotel business.

      • Posted by kbbl

        I think she adequately explained that she actually enjoys ownership and enjoys interacting with the fixed-term tenants. Those are the sort of intangibles that have been thrown by the wayside as the fights over housing have gotten more dogmatic. (Another thing that’s oft-forgotten: there will always be ways for folks to convert assets into income.)

      • Posted by hgh

        It’s so difficult to buy property in SF that selling it shouldn’t be the solution to the asinine bureaucracy.

        The hotel/short stay income is obviously of more value to them.

    • Posted by hgh

      I think there’s a bigger red flag here, and maybe someone can explain to me what’s going on?

      Why has this draft of a Planning Commission motion been written that says “The Commission has heard and considered the testimony presented to it at the public hearing” when the date of the hearing is the 7th? Am I misreading something?

      Who decided this?

      Has Carly Grob taken it upon herself to reject something she personally decided is “not desirable” nor “compatible”, even though the motion concedes your project “is compliant with the applicable provisions of the Planning Code” and admits “on balance the project does comply”?

      Does this Carly Grob think she’s the Zoning Administrator?

      If LinkedIn is accurate, she only moved here 3 years ago, and this is her first Urban Planning job out of school, after only living in SF for a year. Is that really who the City has tasked to decide if your project contributes to the “character and stability” of the neighborhood?

      I don’t get it. The arguments against AirBnb and short stays is that they skirt laws, and act as Hotels, often reducing rental inventory. Here you have a vacancy market rate building, and you want to become legalized as a Hotel and pay the appropriate taxes, regulations, and it’s denied?

  15. Posted by katdip

    While I feel some sympathy for Jennifer, can anyone explain the law on short term rentals that applied to her situation before the AirBnB ordinance? She admits she’s been operating in a legal “grey area” for many years, which has its risks. By doing so she has enjoyed the benefits of owning an appreciating asset, managing it the way she wants, meeting new people, and avoiding the headaches of long-term rentals. In all that time, was she skirting requirements for hotels, provision of safety, paying hotel taxes, paying income and sales taxes on those services, etc? It may be that her time of doing it “her way” is over.

    Her situation makes me wonder how a dynamic, transient, international city like San Francisco provides short to medium term housing for all the types of folks like her clients? It doesn’t seem right to have a binary choice of long-term rentals and traditional hotels. Where do furnished corporate rentals fall in the current regulatory scheme?

    [Editor’s Note: How To Lose Up To $1,000 A Day (Or Your Lease) Using Airbnb.]

    • Posted by Sigmarlin

      It was not legal “grey area.” Before the “airbnb law” you could not rent for less than 30 days. Now you can but you must register, get proper insurance for the commercial use and it must be your PRIMARY RESIDENCE. This is not the case for Jennifer. She’s distracting you from the fact she was always in violation of the law and probably even looked it up and decided to ignore it since the city does not enforce.

      • Posted by Orland

        Thanks for the dose of reality.

  16. Posted by katdip

    Thanks, Editor, but did Chiu’s legislation pass? And it seems like short-term rentals have been restricted for a long time, so Jennifer was not in a “gray area”, she was definitely operating illegally for any rentals under 30 days. Are the mid-term/fixed term rentals still legal under the new ordinance?

    • Posted by BayviewSF

      A “fixed term rental” does not exist in SF. Tenant can choose to stay after lease expiration and landlord can not evict them if they keep paying rent.

  17. Posted by SFrentier

    I appreciate your situation and all the anecdotal details. Trying to help you out, here is my take.

    1- I think the likelihood of getting the variance is small, but who knows until you go through with the entire process. If you do get it, keep in mind that your building will probably be worth less as a boutique hotel rather than 3 optimized TIC’s. But since you want to keep the bldg. in original shape, maybe that’s a trade off you’re willing to make.

    2- keep bldg as is and just rent for 30 days plus. Make sure your rate is high enough that no sane person would want to overstay, as financially it will not be worth it.

    3- if you make those flats 2 BR given their large size, you could rent to long term tenants. With careful tenant selection, you minimize long term/lifer tenants. As a 2BR th rent will be quite high to begin with. Focus on young tech folks or people here on 1-2 year stays. You could also consider a property management company if you want to remove yourself from the process (it may be the buffer that you need.)

    4- if you do decide to sell it, you should definitely renovate, increase BR count and get the best value. The tic owners will respect the facade and will be happy to have nice units in that location. Controlling the interior isn’t practical, unless you’re willing to keep renting it out. Then 1031 either out of SF, or look for a commercial or a non RC bldg in the city, if operating in the city is important to you.

    But you seem rather attached to doing the short stays, so just go with option 2. It’s the path of least change and you’re fully compliant. That, or you’re truly tired of the intense management. If that’s the case options 3 & 4 are good ones.

    Look, you’re in a blessed situation. I think the fact that you will have to make a change is bothering you more than the actual reality of your options.

    Best of luck to you.

  18. Posted by Carlson

    Planning Commission rejected Solomon’s application 6-0

  19. Posted by Dont Rent

    Be a landlord go to jail! Who in the right mind wants to be landlord in San Francisco?
    Landlords are demons in the eye of the all mighty Tenant’s Union who controls the board of Supervisors.

  20. Posted by Dont Rent

    Most pro-landlord comments are deleted from Socketsite. It is so sad that Socketsite is now the pawn of Tenant’s Union.

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