When San Francisco Supervisor David Chiu introduced legislation last April to restrict the illegal conversion of apartments to tourist rentals, I praised the measure and wrote that “San Francisco May Finally Stop” the longtime practice. Now Chiu’s legislation is finally being considered at the October 1 Land Use Committee. Although real estate interests profiting from illegally apartment rentals have prevailed in the past, the tremendous demand for permanent housing in San Francisco could change the political calculus. And there is a larger issue at stake. It sends the wrong message to everyone doing business in San Francisco when the city has a law on the books it either does not or feels it cannot enforce. The Board of Supervisors and the Mayor should either eliminate restrictions on apartment conversions entirely, or pass Chiu’s legislation.

From 1979-1981, San Francisco passed separate measures designed to preserve residential housing by preventing the conversion of SRO’s and apartments to tourist and transient uses. Neither law was effectively enforced until May 1990, in which a revised Residential Hotel Ordinance gave nonprofit groups the legal right to bring enforcement actions. Since May 1990, my organization, the Tenderloin Housing Clinic (THC), has won injunctions against nearly thirty SRO’s and most illegal SRO conversions have been stopped.

Apartment conversions are a different story.

From the passage of the apartment conversion ordinance to 1995, it was entirely unenforced and unenforceable. A number of us got candidate Willie Brown to commit to strengthening the law as part of his 1995 mayoral campaign’s “Tenant Bill of Rights,” but could not overcome opposition from large landlords at Golden Gateway in particular who opposed any meaningful changes.

THC did file a lawsuit in the 1990’s against Grosvenor House at 899 Pine Street for illegal apartment conversion, and we prevailed both at trial and the Court of Appeal. The case showed us how easy it was under the current law for owners to evade liability for corporate and transient rentals. The case also raised questions about our priorities. We were not eager to again spend a tremendous amount of work litigating against a building whose vacant units were not “affordable” to even middle-class tenants.

From the 1990’s until recent years, illegal apartment rentals were primarily confined to upscale properties. But the Internet changed this dynamic. Now, it does not take a major marketing effort to secure transient occupancy, and even Tenderloin tenants use airbnb and other services to illegally sublet apartments to tourist.

A “Hollow” Law

In The Activist’s Handbook I describe measures passed by politicians with great fanfare that are designed to have no actual impact as “hollow” laws. San Francisco’s Apartment Conversion Ordinance fits this description.

Unlike the SRO law, no city agency was designated to enforce apartment conversions. Since many of these illegal rentals constitute zoning violations (many apartment buildings are in districts prohibiting transient occupancies), the person most responsible for enforcement is the Zoning Administrator in the Planning Department (the position is currently held by Scott Sanchez).

But the Zoning Administrator was given no resources or staff to investigate apartment conversion cases. They also have far too many other important responsibilities to spend sufficient time preparing cases for referral to the City Attorney’s office for enforcement.

That’s why Supervisor Chiu’s amendment giving nonprofit groups the same standing to enforce apartment conversions that they have long held for SRO’s is critical. San Francisco can pass the strongest ban possible against illegal apartment conversions, but the law will remain “hollow” if it is not enforced.

Similarly, Chiu’s measure closes the loophole in current law allowing corporations to use apartment units as short-term housing for employees. Corporations should be housing employees coming here for business in tourist lodgings, rather than depleting the city’s apartment housing stock.

Unfair Competition

The San Francisco Tenants Union and other tenant and housing groups oppose apartment conversions for their impact on the residential rental supply and for its creating an economic incentive to evict longterm tenants. But another group hurt by illegal apartment conversions is legitimate tourist lodgings.

Tourist hotel owners do not feel comfortable going down to City Hall bashing fellow property owners, but talk to them privately as I have done and they will ask why the city enables illegal operators to take tourist business from them. Those in the “corporate rental” market describe themselves as offering a positive “service” to the city, but this “service” is at the expense of other business people who are facing unfair competition by those not playing by the rules.

That’s why continuing to allow illegal conversions while making believe there is a law prohibiting such is untenable.

If the supervisors want to eliminate restrictions on the conversion of residential apartments to tourist rentals, effectually creating a citywide waiver of residential zoning restrictions, the Board should abolish the current law. If it wants to preserve the city’s residential apartments for their intended and legal use, it should revise the current “hollow” law and pass Chiu’s measure.