Lawsuits go after SF landlords doing illegal short-term apartment rentals

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Airbnb was flagrantly defying city laws and taxes when we wrote "Into Thin Air" in August, but the crackdown has begun

The San Francisco City Attorney’s Office today filed a pair of lawsuits against local landlords who illegally rent out apartments on a short-term basis, units that had been cleared of tenants using the Ellis Act. Meanwhile, the San Francisco Tenants Unions has hired attorney Joseph Tobener to file more such lawsuits, and he is preparing to file at least seven lawsuits involving 20 units.

The lawsuits are the latest actions in a fast-moving crackdown on Airbnb and other online companies that facilitate short-term apartment rentals that violate city laws against converting apartments into de facto hotel rooms, including VRBO.com and Homeaway.com.

Board of Supervisors President David Chiu recently introduced legalization that would legalize, limit, and regulate such rentals, a measure that will be considered this summer. That legislation comes on the heels of Airbnb’s decision to stop stonewalling the city (and us at the Guardian, which has been raising these issues for the last two years) by agreeing to start paying the transient occupancy taxes it owes to the city for its transactions and creating new terms of service that acknowledge its business model may violate local laws in San Francisco and elsewhere.

As we’ve reported, City Attorney Dennis Herrera has been working with tenant groups and others on a legal action aimed at curtailing the growing practice of landlords using online rental services to skirt rent control laws and othet tenant protection, removing units from the permanent housing market while still renting them out at a profit.   

“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 in a public statement. “The cases I’ve filed today target two egregious offenders. These defendants didn’t just flout state and local law to conduct their illegal businesses, they evicted disabled tenants in order to do so. 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 lawsuits allege violations of the city’s Planning and Administrative codes, as well as the state’s Unfair Competition Law, targetting 3073-3075 Clay Street, owned by defendants Darren and Valerie Lee; and 734 and 790 Bay Street, which is owned or managed by defendants Lev, Tamara and Tatyana Yurovsky (founder of SRT Consultants).

Guardian calls to both parties were not immediately returned, but we’ll update this post if and when we hear back. Tobener tells the Guardian that the San Francisco Tenants Union hired him to discourage local landlords from removing units from the market.

“The San Francisco Tenants Union is just fed up with the loss of affordable housing,” Tobener told us. “It’s not about the money, it’s about getting these units back on the market.”

The San Francisco Apartment Conversion Ordinance prescribes penalties of $1,000 per day for units rented out for less than 30 days. That now applies to buildings with four or more units, although Chiu’s legislation would lower that to buildings with two or more units while legalizing such rentals and requiring host to register with the city and live in the units for at least 275 days per year, meaning rentals would be limited to 90 days per year.

Tobener’s lawsuits list 210 violations in the 20 units it targets, seeking fines totaling $210,000. But he emphasized that money is not the issue: “The San Francisco Tenants Union doesn’t care about the penalties, they just want to put the message out that we’re going after landlords who do this and we want those units returned to the market.”