SF SRO’s at Risk

by on December 5, 2016

The Union Square Plaza Hotel, 432 Geary, is one of 6 hotels seeking to convert

Planning Commission to Decide SRO’s Future

On December 8, the San Francisco Planning Commission will hear a case seeking to reverse the city’s 36 year history of protecting single room occupancy hotels (SROs). Six hotels with 214 residential units seek to convert to tourist lodgings using a legal argument that opponents believe violates city law. If the Commission grants the applications and its decision is upheld by the Department of Building Inspection, San Francisco would lose thousands of residential SRO units almost overnight.

We cannot allow this to happen.

The “Replacement Housing” Scam

In 1980, the city enacted the San Francisco Residential Hotel Unit Conversion and Demolition Ordinance (hereafter “the HCO’). San Francisco enacted the HCO after the Planning Department found that 6098 SRO units had been lost from 1975-1979 alone. The Board of Supervisors found “there is a severe shortage of decent, safe, sanitary and affordable rental housing” in San Francisco, and that it most impacts “the elderly, disabled and low-income persons.” Many of these groups “reside in residential hotel units.”

In response to this dramatic loss of housing affecting vulnerable residents, San Francisco declared a housing emergency for senior, disabled and low-income households. Thanks to the success of the HCO over the past 36 years, these are still the primary populations that live in SRO’s today.

Think about how effective this law has been. Despite dot com booms, tech “invasions” and housing bubbles, a far richer and gentrified San Francisco still has thousands of low-income, elderly and disabled residents living in SROs. The HCO has proved essential in keeping very low income people in the city.

That’s why no mayor or Board of Supervisors has weakened the law since its passage.

The HCO has always offered multiple options for legally converting residential SROs to tourist use. Most owners pay an in lieu fee to cover the cost of replacement housing. The last approved in lieu fee in San Francisco was $2,684,800 for 14 residential units at the Charles Hotel, 1030 Geary Street. That’s roughly $192,000 per unit. That was in 2012, so the amount would easily be $250,000 now.

If that seems like a lot, the Mayor’s Office of Housing estimates the actual replacement cost to be $300,000. As we all know, it’s expensive to build housing in San Francisco.

The current case began when an entrepreneur convinced six hotel owners that he had a far cheaper strategy for converting their hotels. He believes that hotels can convert for a tiny fraction of the standard cost by using Section 41.13(a) (1) of the HCO, which allows conversions for applicants that “construct, or cause to be constructed” replacement housing units.

The premise of the applications to be heard on December 8 is that it doesn’t matter how much hotel owners actually pay for replacement housing;  instead, all they must do is find a housing developer willing to define their project as “replacement housing” for converted residential SRO units.

Here, applicants are using as their “replacement housing.” an entitled Tenderloin project at 361 Turk/145 Leavenworth. A project approved as a stand- alone project in 2015 that did not need conversion money to be built.

This faulty premise—that there need be no connection between the hotel converter’s financial contribution and the construction of replacement housing— underlies the conversion applications up for approval this week. Applicants have failed to provide any evidence that applicants are either building or contributing money for replacement housing, or that any funds potentially paid actually replace converted SRO units

Two of the applicants have told me that the group is contributing $20,000 per unit, which is less than 10% of what the HCO requires. It is also far less than the Mayor’s Office of Housing estimated $300,000 per unit cost for building replacement SROs.

This is why this case has such dire implications for the city’s SRO housing stock. Allowing SRO conversions for $20,000 or less per unit would enable SRO owners to increase the value of their property by $100,000-200,000 per unit overnight by becoming a tourist hotel. All an SRO owner would have to do is call up someone with an approved housing development and offer them some cash to say the new project is “replacement housing” for converted SRO units.

That’s not how the HCO works.

Further, although the HCO requires replacement units to be “comparable,” these proposed replacement units are not rent-controlled. Nor do tenants in the replacement units get “just cause” eviction protections. The lack of tenant protections in the replacement housing proposed in this case means these units are not “comparable.”

Mayor Dianne Feinstein and the Board of Supervisors enacted the HCO in 1980 precisely to prevent what applicants are asking this Commission to jumpstart: the wholesale conversion of residential SROs to lucrative tourist lodgings.

The HCO’s Intent

In 1991, the Planning Commission considered this same replacement housing issue. In that case, the developer’s attorney agreed with the city that that “causing to construct” replacement units means contributing funds at  an amount at least equal to the HCO’s in lieu replacement housing fee. That project resulted in a residential SRO being demolished at Van Ness and Pine and replaced with newly constructed Section 8 housing at the Canon Kip Community House at 8th and Natoma in the South of Market.

That’s how the “cause to be constructed” option is supposed to work. Not as a vastly lower cost alternative that results in a dramatic net loss of residential SRO housing.

A law enacted to preserve residential SRO units should not be interpreted to allow the replacement of those units on a 1-15 basis. Yet that’s what applicants are asking the Commission to do by contributing $20,000 per unit when MOH estimates replacement housing costs at $300,000 per unit. Forge has an entitled $80 million plus project for which the applicants would be contributing less than $5 million—-that’s not “causing to construct” these new units.

Applicants want the Planning Commission to ignore the intent of the HCO’s replacement housing provisions and allow residential SRO units to be converted at less than 10% of their replacement cost. They also want a project independently approved over one year ago to serve as “replacement housing,” even though the developer never told the Planning Commission that his project was dependent on SRO conversion funds.

There are dozens upon dozens of approved projects that, under applicants reasoning, could immediately qualify as “replacement housing” for converted SROs. These developers would have the opportunity to get “free money” from SRO owners simply by stating that projects they planned to build anyway were now “replacement housing.”

With seniors and disabled tenants increasingly priced out of the city, SROs are their last refuge in San Francisco. From hotel owner/Mayor Dianne Feinstein to former tenant attorney Ed Lee, (who I met in the early 1980’s as we jointly battled hotel conversions), the city has spoken with one voice on the need to protect our SRO stock.

Of the 1935 tenants the Tenderloin Housing Clinic housed at the start of November, over 50% of are 55 or over. This is the population the HCO was passed to protect; it is still the population the city’s SRO’s primarily houses (in Chinatown, SRO’s are a key resource for family housing). Eliminate this housing resource and these folks will have nowhere else in the city to go.

It is now up the Planning Commission on December 8 to stay true to San Francisco’s proud 36 year legacy of SRO preservation. When the HCO passed, many doubted our ability to save our SROs and to keep them occupied by low-income residents—but we did it. As we face potentially dire HUD cuts in the Trump Administration, this is the wrong time to eliminate this vital San Francisco housing resource.

Supporters of SRO housing should come to the Planning Commission hearing or otherwise let commissioners know of their concerns.

Randy Shaw is Editor of Beyond Chron. He has fought to preserve and improve SRO’s for 36 years, and discusses the history of SROs in The Tenderloin: Sex, Crime and Resistance in the Heart of San Francisco.


Randy Shaw

Randy Shaw is the Editor of Beyond Chron and the Director of San Francisco’s Tenderloin Housing Clinic, which publishes Beyond Chron. Shaw's latest book is Generation Priced Out: Who Gets to Live in the New Urban America. He is the author of four prior books on activism, including The Activist's Handbook: Winning Social Change in the 21st Century, and Beyond the Fields: Cesar Chavez, the UFW and the Struggle for Justice in the 21st Century. He is also the author of The Tenderloin: Sex, Crime and Resistance in the Heart of San Francisco

More Posts

Filed under: San Francisco News