City of San Francisco Building Department is Sued For Allegedly Issuing False Violations Against Landlords And Stalling Major Redevelopment of Affordable Housing in Hunters Point.

Business, News & Real Estate Editors

SAN FRANCISCO--(BUSINESS WIRE)--Dec. 9, 2002

According to a lawsuit filed by Bingham McCutchen, the City of San Francisco's Building Inspection Department is allegedly delaying a major redevelopment of four properties in Hunters Point by harassing owners while stalling a $30 million dollar investment in the community.

The complaint alleges that a city building inspector is unfairly targeting owners of four San Francisco apartment complexes in order to raise millions of dollars in funds for the department, according to a lawsuit filed with the City Controller's office.

The lawsuit by four apartment owners in the Bayview Hunters Point area of San Francisco says the City is attempting to penalize them and direct money to a building department "special fund" rather than improving the properties for the benefit of the tenants who live there.

"We want to begin a major $30 million redevelopment of our apartment complexes in San Francisco, but the City of San Francisco itself is standing in the way of providing quality affordable housing for its residents," said James Hunt of the law firm of Bingham McCutchen, attorney for the apartment owners. "In a city that is critically strapped for quality affordable housing, this delay is unconscionable."

A recent survey of residents conducted by the apartment owners shows that nearly 90 percent are supportive of the renovation plans put forward by the owners. Additionally, the properties have received passing marks in annual inspections by the Department of Housing and Urban Development (HUD).

The lawsuit against the city says since 2000, both the City and tenant groups have approached the owners in an effort to purchase the properties. When the owners did not want to sell, and even though there was no change in the condition of the properties, the City's housing inspector started issuing violation notices at a dramatic and unprecedented rate, according to Hunt.

The City's building inspector John Kerley issued 75 Notice of Violations for everything from burned out light bulbs to broken door bells without giving the owners an opportunity to fix the minor problems, according to Hunt.

"Many tenant complaints were solicited or promoted by the City, and the conditions described would not have resulted in the issuance of a violation in other properties in San Francisco. The amount of time devoted by the housing inspector to these properties far exceeds the attention directed at properties in similar or worse condition with comparable or higher levels of tenant complaints," according to the lawsuit.

Hunt said the City building department issued only 53 notices of violations to all of the other 1,292 Section 8 apartment buildings in San Francisco during the same time period. "Something is just plain wrong in the building inspection department," Hunt said. "Normally, apartment owners would be given a warning and an opportunity to fix the problems, but not in this case. You have to ask yourself why?"

The suit further states, "this discriminatory over-enforcement of the codes is part of the City's campaign to subject the Owners to excessive fines, to cause them to lose the use and enjoyment of their properties without due process of law and without just compensation, and to force the Owners out of business."

The apartments, All Hallows Gardens LP, Bayview Hunters Point Apartments LP, LaSalle Apartments LP, Shoreview Apartments LP are ready to invest an additional $30 million dollars in the 604 unit apartment complexes to completely renovate the units inside and out. Extensive interior improvements include new kitchens, bathrooms and washer/dryers. The exterior renovations include new siding, windows, enhanced drainage systems, lighting to improve safety; and enhanced landscaping.

The properties are owned by partnerships that were organized under a Congressional chartered company to promote affordable housing throughout the United States and the tenants currently have their rents subsidized under Section 8 by HUD. HUD fully supports the proposed redevelopment.

The City, in January of this year, filed its own lawsuit against the apartment owners for $110 million for alleged Notice of Violation issues, ranging from broken doorbells to burned-out light bulbs. The funds from that case, if won, would not go to improving the properties in question, but instead would go directly to the Department of Building Inspection's "Special Fund" to pay for the department's expenses.

It is because of this lawsuit that the owners have been forced to stall its plans for a complete renovation of the properties. "While we are ready to move forward with the renovation program, and while our tenants are anxious to have these renovations made, we can not proceed while we are engaged in a lawsuit with the City," said Hunt. "The City knew that this would happen, and chose to file its lawsuit rather than work with us to mediate the issues."

"For reasons we have yet to understand, the City now stands in the way of these renovation plans, stands in the way of creating a better environment for our residents, and stands in the way of what is right," Hunt said. "Meanwhile, our residents, who have overwhelmingly supported our efforts to improve the properties, are forced to wait."