Thursday, June 5, 2014


This Saturday (6/7/14, 10am-3pm) at the African-American Cultural Center (762 Fulton Street) the San Francisco Community Land Trust will host a Town Hall Meeting.  Among others, these workshops will feature two speakers, one from The John Stewart Company, a national prominent HUD management company, and a lawyer from Goldfarb & Lipman, a large national law firm with strong practices on HUD housings.  Continental breakfast in the morning and fried chicken, egg rolls, chow mein, and other yummy Chinese foods for lunch.  It's only two blocks away from us on Fulton St.

All Freedom West residents, especially committee members, present and former Board Directors, should attend this event because your attendance will debunk any of HUD’s and the government’s contention that Freedom West people don’t deserve to live in a cooperative.  If you still want to live in Freedom West in six months, attend the workshops.  If you find the normal lame excuses not going, like doing laundry or washing your car, the government would say we don’t deserve to be a co-op at all since none of us cares.  Click for my reasons.   This is the start of my education series on co-operatives.  You would need to know all these postings for us to survive.

Workshop topics include:

Co-op Finance and Budgeting
Catt Olazabal of WAGES, a non-profit that develops housecleaning worker cooperatives, and Mary Carleton, SFCLT staff, will present co-op financial statements and how to understand what they say.

Annual Board Elections and Shareholder Participation
Carlos Aznar a regional manager of The John Stewart Company, and Karen Tiedemann of the law firm Goldfarb and Lipman, LLP will present the democratic open process of Co-op governance and the vital role shareholders play in maintaining governance of their property

Organizing and collaborating to increase political and financial power in San Francisco
Organizing meeting #1
Meet in small groups to plan:
*Banking Services Improvements for Co-op Members and Co-ops
*Effective Lobbying for City Neighborhood Services and Co-op Support
*Inter-Co-op Collaboration - joint training, mutual support

*Resource "library" of trainers, translators, contractors, homeownership venues to advertise in

The following is an excerpt from a book I read:

“Many cooperatives were started by people with little knowledge of cooperative principles. I have seen societies in which no member and no director knew what the Rochdale Principles were. Failure always befell them. This was because they violated cooperation out of sheer ignorance, and converted their societies into confused business enterprises. But despite the information made available by The Cooperative League, there are now many cooperatives in the United States in this same condition. Failure awaits them unless they engage in cooperative education…. Their idea was that they would learn cooperation by practicing… Most fail before the members can learn about cooperation... It has been demonstrated that education should precede cooperative business. This is what made the difference between failure and success.”

This is why I ask all of you go attend the Town Hall Workshops.  Freedom West was a complete co-op failure and it was pre-destined forty years ago.  Everyone supposed to knew how to cooperate before moving in or admitted to be members.  Co-op members are special breed, not your regular folks.  Instead, all the regular Joe Schmo just got shuffled into Freedom West in its creation and we are still doing it the same way.  The way our co-op got put together was like putting the cart before the horse.

The theory was the Management was supposed to have taught all Freedom West shareholders how to be cooperators and have everybody practiced to be cooperators.  Well, we all knew not only those screwy managements didn’t teach us but together with those previous ignorant boards messed our co-op up big time. Our dismal history just showed that proposition didn't work.

Even the board we have now, as nice as the individual members are, is destined to fail, because no members have any knowledge of cooperative principles.  After got elected, the new board members had been fumbling along without themselves realizing it.  I proposed the entire board should go to St. Francis Square board and committee meetings and see how they run its successful co-op but none bothered.  Not too many attended Land Trust classes and take leadership to organize our community.  Board members still thought the Land Trust fifth column to infiltrate us and help the city to take over Freedom West.  I don’t think anyone on any Freedom West Boards, not now, not forty years ago, knew what the Rochdale Principles are and how they’re to apply to our co-op, not to speak of them teaching the rest of us.  I witness all too often in board meetings and buried my head in bewilderment.  Now you understand why I feel better on sabbatical because I don’t need to bury my head anymore.

I may be complaining about our present board members.  But that’s not personal because they were set up to be doomed from the beginning because of the original sin perpetrated from our creation forty years ago.  We all were made out to be doomed, and even more doomed now because of our endgame situation. 

In contrast to us, the St. Francis Square Cooperative was started by union members.  They already knew how to organize and cooperate before creating their co-op.  Cooperation was natural to St. Francis Square but “un-natural” for Freedom West.  For forty years they had worked for their fruit of labors and succeeded in their pursuit.

After seeing St. Francis Square co-op members’ success, we Freedom West residents always allude to their accomplishment and want to be just like them.  In reality we merely referred to their fruits of labor.  The fact is: It’s more like we want to pick the fruits but don’t want to labor.  It was true for forty years and it’s still true now.  It just won’t work.

I’m not saying Freedom West board and people are bad and beyond salvation.  We just never knew and never realize the need for working as co-op members, never gone into the habit of democratic economy and cooperative culture.  We were just stubborn and ignorant.  But that’s not a crime.  The crime is you know you are ignorant but deliberately do nothing about it.

Now you know.  That’s why you must go to those classes paid by generous city government funding to help us, to educate us, and to enlighten us.  If you don’t, HUD will have every right and moral reasons to terminate us as cooperators.  Later on it will have the Land Trust class attendance list to prove it if you don’t bother to show up in those classes and workshops.

Now you can say the Community Land Trust is really the fifth column out to assist HUD and the city to go after us.  After all, why should be they so nice?  These people are out to show our bad sides.
Even if that’s the case, they are here only to show we have no clothes.  Almost a year ago we promised HUD we will follow a set of milestones so Enforcement won’t foreclose on us.  Shareholders education class attendance was listed among these milestones.

Our record so far was dismal, especially the first few months.  But as far as the records showed, the total numbers were nothing to be proud of and the milestones missed.  Ask yourself, did you go to these different classes last year and how often you went?

But it got better recently like the pictures showed.  So from now on, let every class and workshop looking like this.

When we are naked, we better put on some coverings.  That’s why we should attend those free classes.  These classes can only help, especially since the city and the Land Trust have all those tasty foods dangling in front of us.  The very least thing we can do is to attend those classes learning how to be cooperators.

Committee and board members, you should set up good examples going to Land Trust classes.  You should be proactive leaders by taking other shareholders go along with you.  Everyone else, if you want to live in your house, go and put your name on attendance list this Saturday at the African-American Cultural Center.  You don’t need to attend the whole 5 hours.  Just go and enjoy!  Even just for the free foods.  The least you can do is to put your name on the lists.  I’m telling you.  HUD will look at them.

So Mohammed, take your kids to enjoy Chinese foods at the Cultural Center.  Gideon, William, and Sam got to work so they’re excused.  Khorla should go.  Haddis, if you do Bible studies, ask someone take your place.  Thomas, never ever seen you in Town Hall worshops, take your dear wife along too.

On top of this email, I will phone you residents to remind you even as I’m down in Southern California.  We have only six months to prove ourselves.  So everybody starts behaving like cooperators.

We may had had put the cart before the horse.  But it’s too late now.  The horse still got to push forward

 and hopefully in the future, the cart can be swung behind the horse’s rear end,

 but not end up like this. LOL

Tuesday, June 3, 2014

(06/03) Forty Years Gone By: Six Months to Go; MidTown Apartment Travail

Hi Freedom West Friends and Observers,

This year is the final year of Freedom West Home’s HUD mortgage.  At the end of the year we will know whether Freedom West will exist or die.  Six months passed already and we have six months to go.  For more than half a year you haven’t heard a word from me.  I apologize and feel guilty for this unusual lull and promise to make it up in the next six months.  What I say will have bearing not only with Freedom West Homes, about its ignominious demise or inspirational survival, but also with development in the Hayes Valley/Western Addition districts and urban planning and development in San Francisco itself.  I’m back!!  Click for the continuing saga.

David Tse
Freedom West Board Director
(on sabbatical leave of absence)  why do you think I haven’t been writing all these times?

My last blog was December of last year when I analogized Freedom West and Detroit.  After that blog I received flacks from the City for that comparison.  That chastened me a bit to keep mum.  But that’s not the only reason.  It was also a sensitive time for the new Freedom West Board leadership to get its act together mending relationship with Kalco Management, HUD, and the City and we don’t need any unnecessary voice roiling up matters.   Furthermore, even though I and the board leadership may have different perspectives on Freedom West policies and development, I generally feel comfortable with the direction we are going and placed unquestioned trust on majority board members decisions.

Nevertheless, if things hadn’t gone well with HUD during this lull, I was ready for a 10,000 name email blast all over the Bay Area and around the country to everybody and anybody who could have even some tangent connections with multifarious issues (such as environment justice, displacement, sustainable architecture, urban development, income inequalities, etc. to activists, former cabinet secretaries, lawyers, executives, etc.) associated with Freedom West and the destinies of its residents.  My catapult was taut and ready on the go.  Fortunately the crisis was averted during these seemingly quiet months.  HUD had not clamped down and Enforcement allowed us to solve problems at our own pace by the end of the year.

Now we’re in the end game.  With merely six months to go, Freedom West must come up with a plan that could at least carry us for another forty years.  I believe the Board is working on plans that you are not aware of but hopefully get to know soon because every Freedom West shareholders would have to vote on them so that we can send the final plan to HUD Enforcement in Los Angeles for approval.  If we couldn’t come up with a viable plan we have no one to blame but ourselves.

Since I’m on board sabbatical for months already I don’t know the latest status so I don’t want to speculate on what transpired since.  Nevertheless we should start our education process for everybody to be able to understand and to evaluate those alternatives when they come.  As I always contended, board members are not smarter than regular co-op members and collective intelligence is preferable to autocratic decisions.

Let me remind you what will happen if we don’t come up with a plan by December.  HUD will start the foreclosure/receivership proceeding right away and it can happen very fast.  HUD had worked out this process to clockwork because nationally they have done it many times already, whether to problem co-ops or regular Section 8 housings.  So Freedom West is just a spec in the many housing projects HUD put into transitions.

HUD’s policy is to get out of the housing business. Nationally hundreds of HUD properties were already subjected to shock treatments.  These recent years were times where 40-years HUD mortgages like ours come due or due soon.  Once declaring us under receivership they will declare our Bethel Housing Corporation non-operative, disregard any remonstrance by board members or shareholders, and appoint overseers to look over us, much like what the U.S. done to Iraq after we got rid of Saddam Hussain ten years ago.  By then Kalco Management would be answerable only to these overseers; or more likely, non-profit developers like Mercy Housing or John Stewart will take over as management just like they did for MidTown Apartment up Geary Street (see following article).

By then Freedom West will be under formal bankruptcy.  All shareholders equities (average $15,000 - $20,000 per unit) will be gone.  Fortunately, even under this situation all of us will still be able to stay in our dwellings.

With tongue in cheek, losing $20,000 is no big deal.  For those who have jobs they can all earn it back.  Looking from the bright side, that $20K for all these times have no bearing with our daily life anyways.  We can't take those money out to shop in Safeway.

Those are, in reality, fake moneys we imagined we still have.  Why am I saying that?  Because we won’t have the money to distributive the equities if all of us deign to move out and demand our money back.  It’ll be just like a run on banks during the Great Depression (not the 2008 Great Recession when the big banks have the U.S. government bailing them out; nobody will bail us).  I won’t be surprised even if 10 co-op members all of a sudden move out of Freedom West and demand their equity money within the stipulated 40-day period, Freedom West would go into bankruptcy on the spot.  The accounts under which our equity money resided have emptied out long time ago.  That may be an abiding factor one board director last year bailed out and got the full equity in her personal possession after moving out the co-op.  The rest of us won’t be that fortunate even if we try.  So we’ll live and die together.

I would like to touch on our 32 vacancies so many residents talked about.  Last week one resident complained to me that she couldn’t get to be a shareholder in spite of our 32 empty units.  She didn’t mind, on top the equity payment, to put her own money to renovate a vacant unit for herself.   In spite of the complaint, I told her she should consider fortunate for Freedom West’s incompetence to fulfill her desire.  Come December she could lose the $30,000 she didn’t mind plunking down.

Is it worth it?  All these years I had been telling people they would be very lucky to be able to move into Freedom West.  I’m not saying that now because the risk is just too great.  I wouldn’t recommend my cousins moving into our co-op unless each has $20,000 to burn.  We must disclose the risk of losing this equity for all new applicants to fill the 32 current vacancies.  If they move in regardless, we should all embrace them for making personal sacrifices and to have such confidence on the board and the rest of us for pulling out a magic trick.  They either win big or lose big – that’s the definition of high risk, the domain of heroes and fools.

What happen when HUD forecloses?  The City will take over Freedom West.  HUD will follow the City’s lead.  By that I don’t mean the Mayor’s Office of Housing or the SF Housing Authority will take possession of Freedom West.  Rather it will have its clubby tax-credit developers like Mercy Housing taking over Freedom West's management and we all will have to be renters.  Everyone will be income certified every year and many will pay the lesser of San Francisco market rate or 30% of our gross family income.  So go to the gross income line (not line 32) of your tax return to calculate your potential monthly rent for 2015 after we’d gone belly up.  When that’s the case, I won’t be surprise two of our present board directors will move out.  I’ll stay put because, basically, I’m a poor folk.  But I’m sure many of you will decide to move on as time goes by, lost equities et. al.

To see what one likely outcome to Freedom West come January next year one needs look no further than the travail of our Western Addition neighbors Midtown Apartments.  I am enclosing last week’s cover article from SF Weekly on that star-crossed housing project.  Be prepare for that eventuality!!
By Joe Eskenazi Wednesday, May 28 2014

The Complex: The City Falls Into a Housing Paradox
Marchell Johnson smiles at the memory. But it's not a pleasant smile. And it's not a pleasant memory. "To be honest with you," she says, "I just about thought my brain was going to explode."
Two days before Christmas, most people are doing two-days-before-Christmas things — and that was certainly the case for most members of the resident board of Midtown Park Apartments. The squat, six-structure campus has that half-dormitory, half-penitentiary appearance typical of so many concrete, mid-1960s residential developments. But the 139-unit complex's location is beyond ideal: At Geary and Divisadero, residents can hop onto major transit lines or amble to supermarkets, schools, ballfields, a library, a pool — all that one of San Francisco's choicest retail and residential corridors has to offer. Tech shuttles now glide by at regular intervals. But the residents here pay rents from an era when punch cards were the epitome of tech, when many of them settled here and never left.
In a unique arrangement, Midtown Park is the only city-owned apartment complex in San Francisco. Unlike a public housing project administered by the San Francisco Housing Authority and receiving federal funds to shelter the city's neediest residents, Midtown is, merely, a set of city-owned buildings, earmarked for low- to moderate-income earners, and not operated on the feds' dime. Opinions are mixed as to how this has worked out over the past four decades. Some people say it's been a bad way to run things.
Midtown residents, including resident board president Marchell Johnson (at the podium) make their case on City Hall's steps.
Natacha Yarbrough
Midtown residents, including resident board president Marchell Johnson (at the podium) make their case on City Hall's steps.
Midtown Park Apartments have been city-owned since 1968. It hasn't gone well.
Mike Koozmin
Midtown Park Apartments have been city-owned since 1968. It hasn't gone well.
The winds of change are blowing at Midtown.
Natacha Yarbrough
The winds of change are blowing at Midtown.
Natacha Yarbrough was surprised to find information online indicating her home will be "removed."
Mike Koozmin
Natacha Yarbrough was surprised to find information online indicating her home will be "removed."

Others say it's the worst way.
And so, on Dec. 23, Johnson, the president of Midtown's elected board, strolled into a meeting with the city officials who own the land and buildings where she and several hundred other tenants reside. Roughly 20 minutes into the proceedings, she recalls,Olson Lee, the director of the Mayor's Office of Housing, let it drop that he was unilaterally terminating the 45-year-old lease with Johnson's board — the entity that collected rent and, ostensibly, ran the place since 1968. Tenants will henceforth be subjected to income verification and made to pay rent at the level the city deems they should be paying. Those refusing to participate in the process will be stuck with "market rate": $3,000 a month for a two-bedroom flat.
And that pretty much broke up the meeting. "When you're done, you're done," says Johnson with a sigh.
But the Midtown saga is far from done. The residents, naturally, lawyered up. And, last month, attorneys representing 78 of them posited an intriguing argument before an administrative law judge: The city's gambit to "significantly raise rents" for tenants capable of paying them actually froze rents in place. Severing that lease, the attorneys claim, triggered rent control protection.
It's a Catch-22, a paradox of the sort associated with smoldering villages destroyed in order to be saved. Steps to augment rent may lead to decreased rent.
The city's move to save its development plan for Midtown may, in the end, destroy it.
Midtown Park is a quiet place. On any given day, residents escort their tiny dogs through its verdant, manicured atrium. A security guard with a soul patch and a smile seems to be around every corner. This isn't a dodgy, menacing housing project shunted to the city's mental and physical periphery but a centrally located low- to moderate-income community within an increasingly opulent San Francisco enclave.
This spot has been the source of simmering resentments for years. That has now escalated into an open conflagration.
Midtown's residents are largely minorities, many of whom are black. A number of them have lived here since the 1960s and '70s; these people endured the "urban renewal" that transformed the Fillmore from a thriving black community into an ersatz museum celebrating the culture of the people jettisoned from the neighborhood. For them, the city's steadfast assurances that no Midtown residents will be displaced and no one's rents will skyrocket inspire an ominous sense of déjà vu.
Much is at stake for the city, too. If Midtown's residents prevail in their rent-control petition, carefully laid plans to demolish portions of the archaic housing complex and create an ethereal new affordable housing development could be compromised. Rather than take advantage of millions of dollars in state low-income tax credit funding to develop the site, the city could instead be forced to funnel millions of dollars of its own into the deteriorating edifice, on the heels of the $4 million it claims to have already poured into "emergency repairs" in the last five years.
Two-and-a-half years ago, the city's nonprofit builders and activists championed Proposition C, a successful ballot measure pledging to set aside $1.5 billion over two decades and pitched to voters as a means to build affordable housing for the vast, neglected majority of middle-income San Franciscans: the people neither hopping Google's buses nor fare-hopping Muni's.
But that hasn't happened.
Instead, that money is now earmarked for resurrecting derelict San Francisco Housing Authority projects occupied by some of the city's poorest residents (these projects will, in the not-too-distant future, be divvied among private nonprofit developers to rebuild and manage). Mayor Ed Lee claims that a glut of new, affordable housing for the city's desperate middle class is on the horizon — but his tally is padded with thousands of units of this extant public housing, which is already occupied by low-income San Franciscans.
The costly rehabilitation of low-income residents' homes will come, in part, via the Prop. C dollars approved by voters to build new housing for the middle class — and pushed by the nonprofit builders and activists who were also assured that was the deal.
Midtown, again, is not a public housing project. But the city-owned property, too, may end up an unanticipated vacuum for funds intended to build new, middle-class housing. A measure sold to voters with the tagline "San Francisco Needs Homes!" stands to benefit San Franciscans who already have homes.
This was the political landscape Midtown's residents broached when they filed the city's largest-ever rent-control petition in February. And on this battlefield, allies would be hard to come by. City-funded nonprofits react with pitchfork-wielding zeal to the alleged misdeeds of private landlords.
They are, however, conspicuously silent when the landlord is their city benefactor.
If Dec. 23 marked a divorce between the city and Midtown, the 45-year marriage was troubled and unsought. It started, appropriately enough, with a shotgun wedding.
Nearly 2,000 units of federally funded cooperative apartments were constructed in Bayview and the Western Addition in the 1960s alone. Midtown was intended to be a limited-equity co-op — a collectively owned moderate-income community — like nine others dotting the city.
Then its developer went belly-up.
The city, in 1968, stepped in. It found itself — rather than the federal Department of Housing and Urban Development — in the property management business. So, a misbegotten development was dropped into the lap of city officials without the time, manpower, expertise, or, frankly, inclination to oversee it. And, on top of this, the transfer of ownership from the city to the residents — which makes a co-op a co-op — was never consummated.
Instead, the residents methodically paid off the city's mortgage for land and buildings they did not own and in which they held no equity. They remain renters, not owners.
A troublesome relationship festered for decades. An untrained, volunteer board of low-income residents with no experience in real estate or property management — and a built-in incentive to pull for keeping their rents as low as possible — was entrusted with long-term property management duties normally handled by city-funded housing nonprofits with paid, professional staffs. The city owned the land and structures, but accountability for managing the place was deferred to amateur volunteers and a succession of property management companies. For many years, even describing the city's oversight as "hands-off" would have been generous. As such, the system couldn't have been better executed to obscure accountability and ensure the complex's long-term needs went unaddressed.
"It was a day-to-day, month-to-month management process," says San Francisco Community Land Trust director Tracy Parent, who worked, abortively, to establish a co-op at Midtown. This was the case "for years. Without a plan for the future."
When the future arrived, it was expensive.
For generations, the city's de facto position on Midtown had been, in the words of one longtime housing activist, "everyone cross their fingers, close their eyes, and walk away. It has not been the proudest civic moment in San Francisco." But shortly after residents paid off the city's mortgage in 2006, officials from the Department of Building Inspection cruised through the premises. Their subsequent citations, charging a litany of violations, were delivered to the complex's landlord — the city.
Accusations of negligence and incompetence leveled at Midtown's volunteer board by city officials ensued; these only intensified as the city disgorged the aforementioned $4 million between 2009 and the present on faltering boilers, leaky roofs, mold removal, and crumbling staircases.
(These expenditures, directed toward Midtown over the course of five years, incidentally, represent the amount the city spends on homeless services in just over a week).
The Mayor's Office of Housing now estimates Midtown requires an additional $38 million in long-deferred maintenance.
Numerous calls and messages directed to the Mayor's Office of Housing either went unreturned, or were shunted to personnel who, subsequently, did not return calls and messages by press time. A source from within that office, however, accuses the city of "justifying 35 years of neglect," asking, "Why was no one at the Mayor's Office of Housing watching a $40 million asset?"
They're watching now. In a letter penned following the termination of the city's lease with the complex's resident board, Midtown dwellers were told "The City cannot spend money on emergency repairs to residents when the residents are not paying their fair share. ... Residents will receive rent increases based upon ability to pay. In no case will low income residents be asked to pay more than the standard affordable rent. Raising rents will bring in more income that will be used to pay bills and make some changes that will benefit residents. Raising rents is critical to the future major rehabilitation and new construction projects."
Midtown tenants' district supervisor, London Breed, has repeatedly called for "no displacement" of the complex's residents. This was also the crux of a 2007 board resolution stating no Midtown tenant should be evicted — even if "his or her income is too high or too low."
Numerous city observers have told SF Weekly, however, that this is a fanciful notion. Following an initial screening, Midtown dwellers' incomes are not monitored. A state low-income tax credit that the city hopes to use to enable the site's development, however, is bound by strict rules regarding residents' income levels. So, well-off Midtown residents aren't breaking any rules — but they are an impediment to the city's grand plans to stanch the bleeding on a money-losing property and develop it via an influx of outside funds.
The commitment to "no displacement" has not been offered in writing.
Instead, internal emails among staffers at the Mayor's Office of Housing gripe about intransigent Midtown residents having it too good. Tenants are accused of subletting rooms or whole apartments, and even using Midtown units as pied-à-terres.
A former longtime property manager at the site tells SF Weekly he believes perhaps 10 percent of the complex's residents were gaming the system in this way. "The parking lot," he marvels. "It looks like a car show!"
A quick jaunt around Midtown's parking lot does indeed turn up its share of Cadillacs. Some of the vehicles even sport Mitt Romney bumper stickers.
The city's contention that Midtown residents are locked into artificially low rents and ought to be "paying their fair share," undergoing income verification, and being made to contribute an appropriate sum to fund long-neglected rehabilitation and new construction on their own homes is difficult to argue against.
And yet, the city argues against it every day — with rent control.
Midtown dwellers' rents are low — paying well less than $1,000 for a three-bedroom setup is par for the course. Unlike residents at a public housing project, however, Midtown tenants' rents aren't calculated as a percentage of their verified incomes (as the city hopes to impose in the future). Rather, rates were established when denizens moved in, and raised incrementally in the years since — not unlike just about every other renter's experience in San Francisco. Per the contract nixed on Dec. 23, Midtown's rental rates were set by the Board of Supervisors.
Well, that's unique. But in Midtown — as is, again, the case with regards to the city's scores of thousands of privately owned rental units — residents living within the same four walls since the Nixon administration pay comically low rents inspiring bafflement and envy among younger city dwellers. This is a situation that can lead to its fair share of iniquities: A real estate broker tells SF Weekly that, at one of his recent listings, no fewer than a dozen would-be buyers told him they were seeking to purchase an investment property while remaining within their rent-controlled apartments.
That'd be galling for any landlord. And, in fact, city officials claim Midtown residents have pulled this stunt, too. So, the city's move to demand income verification and extract a "fair share" from tenants was applauded by landlords and pro-landlord advocacy groups — who wish they could do the same.
"The city wants to do what makes sense for the city on its property, but not on other people's property," says landlord attorney Paul Utrecht with a laugh. "The city's desires here — on their face, they seem to be justified. If you have a dilapidated building and you have tenants who can afford to pay more rent, it makes perfect sense. It's not inconsistent with the goal of keeping housing affordable. It's not inconsistent with the goal of helping poor people.
"What they're doing is very good public policy." But, here's the rub: It's "inconsistent with rent control."
According to a different set of lawyers — the Midtown tenants' lawyers — what the city is doing enables rent control. And that makes destroying villages, or saving them, or destroying them to save them, that much more complicated.
In a city where more than 60 percent of residents rent rather than own, it's hard to overstate the political taboo against even mild criticism of the Rent Control Ordinance.Leland Yee was known to critique rent control, former colleagues say — behind closed doors. The feds may have nabbed Yee on a wire conjuring up an arms deal with foreign jihadis. But they didn't catch him badmouthing rent control.
Rent control, in this city, applies only to structures erected prior to 1979. If the landlord of your brand new Mission Bay high-rise wishes to triple the rent at the conclusion of your lease to accommodate the tech bus hordes, she need only provide you with a 60-day notice. If you reside, however, in a pre-'79 structure, your rent can only be increased every year by 60 percent of the Consumer Price Index — a matter of, perhaps, several dozen dollars a month.
Regardless of one's inclinations, rent control is the only thing preventing many thousands of San Franciscans from being economically banished. Without it, San Francisco's population would turn over with a regularity fitting the boomtown this is. In a city of renters, this is a deeply mortifying prospect. Even temperate discussions addressing mere potential rent control tweaks are quashed out of fears they'll initiate a descent down the slippery slope to its weakening or out-and-out abolition. As such, only a fundamentalist adherence to the present iteration of rent control is acceptable in this city.
But not for this city. When the government finds itself in the role of landlord, it sees things differently.
The complaints leveled by the city against Midtown residents — insufficient rental money to properly maintain the site; longtime residents being locked into startlingly low rates; aging empty-nesters dwelling in underpriced, cavernous units — mirror the lamentations made by private landlords across San Francisco. Midtown residents' rents were set artificially low at the onset and have stayed low. But most any renter who's lived in San Francisco for even a few years is paying a pittance compared to the lessee who signs her papers tomorrow. Arguments that Midtown's residents are milking the city ring hollow to the city's landlords — who would argue the city has been milking them as a matter of civic policy.
Midtown's residents were, inarguably, unprotected by the Rent Control Ordinance for decades. There are specific exemptions for structures with rents "controlled or regulated by any government unit" — and when your rent is set by the city's Board of Supervisors, you can't get much more official than that.
This provision abruptly ceased, however, when the city terminated Midtown's lease. Its tenants' attorneys — Jaime Rush of the Aids Legal Referral Panel and Josh Arce and Eddie Ahn of the nonprofit Brightline Defense Project — claim government control was terminated, too. This, they posit, triggered rent control.
This, they claim, is what it looks like when the city catches itself in a Catch-22.
Counsel from the City Attorney's Office beg to differ. And yet, a source within the city tellsSF Weekly that, for years, the specter of inadvertently bestowing rent control upon Midtown residents stayed the hand of the Mayor's Office of Housing every time the suggestion was floated to sever the lease: "The reason that contract was not canceled was precisely because of that."
In an April 1 Rent Board hearing before Administrative Law Judge Peter KearnsDeputy City Attorney Evan Gross argued that, if you read the figurative fine print, the Midtown tenants' claims will crumble.
But don't read the literal fine print.
Gross noted that, following the city's termination of the lease with Midtown's volunteer board — but days before residents took legal action — a second lease was finalized with nonprofit developer Mercy Housing to administer the property. This, the city says, squelches residents' claims.
And yet, within that lease agreement is the following provision: "the Agreement will be null and void unless the Mayor and Board of Supervisors approve this Agreement."
This did not happen. This has still not happened.
So, in summation: The city's attempt to raise rents could lower rents unless it's agreed an agreement whose provisions render it null and void is not null and void.
But, per Gross, this text within a city contract rendering it "null and void" is, itself, null and void. It's just "boilerplate" — the prewritten verbiage cut-and-pasted into contracts as needed, or, in this case, as-not-needed-nor-wanted.
Month-to-month contracts, says Gross, do not require board or mayoral approval — even though this one contains language specifically stating it does. "It's not applicable, just like a lot of other boilerplate provisions are not applicable in city leases," he told the judge. "The validity of the Mercy lease is irrelevant, even under the scenario the Mercy lease is not valid. Which it is."
The legalistic notion that so-called "boilerplate" provisions within a contract are, somehow, less binding than non-boilerplate provisions is an intriguing one. SF Weekly relayed the City Attorney's argument to, perhaps, a dozen figures throughout San Francisco — lawyers, housing experts, technocrats.
The reaction was unanimous: maniacal laughter.
Over on the side of the nonprofit developers and affordable housing activists, however, there's more of a noticeable silence.
Virtually any group Midtown and its advocates would think to turn to for support is part of the "City Family" — the diverse range of politicos in this one-party town who can be expected to demonstrate remarkable political cohesiveness. Nonprofit development and affordable housing activism involve a family within that family. And no one wants to irritate their relatives.
"If you don't play by the family rules," explains a veteran city employee focusing on affordable housing development, "then you're out of the family.
"They have their debates within the family," he continues. "But when one of the family members is picked to do this development, everyone else lays off. Eventually, it'll be your turn at the trough."
Mercy Housing is the nonprofit developer tapped by the Mayor's Office of Housing to develop Midtown into "an oasis for this intergenerational community," per the plan's architectural firm. Mercy is a respected outfit — but, in a sign of this city's insularity, Mercy's executive director, Doug Shoemaker, was Olson Lee's immediate predecessor as director of the Mayor's Office of Housing.
This level of clubbiness typifies the city's affordable housing establishment. Mercy is, perhaps, the key member of the San Francisco Council of Community Housing Organizations (CCHO, pronounced, incongruously, "choo-choo"), the umbrella organization for most of this city's nonprofit developers and affordable housing activists. This group anoints itself "the voice of San Francisco's affordable housing movement;" many of its activist members are regularly observed shouting into bullhorns on City Hall's steps and bemoaning evictions and displacement.
But anyone bemoaning the fate of Midtown's tenants is running headlong into an affordable brick wall. Because anyone lining up with Midtown is crossing not only his or her city benefactor but some of the loudest voices within "the voice of San Francisco's affordable housing movement."
As such, CCHO and its members have every reason to remain above the fray. A written statement regarding Midtown it released earlier this year attempted to placate all sides. The four-paragraph missive called for "no displacement" and a "binding commitment" to affordable rents — but also acknowledged that low rents put Midtown in its current bind. This would, it said, explain Midtown's "long-overdue repairs of elevators."
But that left Midtown residents even more bewildered — because Midtown Park has no elevators. "I have been here 44 years, and we have talked about elevators," says tenantMary Watkins. "But we ain't never had none here."
Repairing nonexistent elevators ought to be a simple procedure. Deciding how many of the buildings they aren't in to knock down is not.
Earlier this year, Natacha Yarbrough, a 34-year Midtown resident and current S.F. State MBA candidate, logged onto the Planning Department website. And while the publicly disseminated plan for Midtown is to raze and replace two buildings and renovate the remaining four, the "Project Description" listed on the site stated all six buildings are to be "removed."
The Planning Department in January informed Midtown tenants this was the result of a clerical error. February emails exchanged between the city, Mercy, and a development consultant, however, bandied about the possibility of demolishing three or even four buildings.
Plans for Midtown, it seems, remain undetermined. Residents are currently undergoing income verifications; their future rents — and, they worry, their futures, period — also remain undetermined. And if the tenants win their petition — freezing rent in place — that will be all the more so.
The residents, however, lost their first battle. In his April 22 ruling, Kearns found that Midtown is not covered by the Rent Control Ordinance. Per the judge, the lease with Mercy fulfills the requirement of units "being controlled or regulated by a government agency" — but then he claimed he didn't have jurisdiction to determine the validity of this lease in the first place.
The tenants this month appealed Kearns' ruling: "It is paradoxical to conclude on the one hand that he cannot make a decision on the validity of the lease, while on the other hand concluding that a provision of that very lease renders Petitioners' tenancies exempt from the Rent Ordinance," reads their brief.
Winning this argument likely grew more difficult on May 5, however, when the city amended the Mercy lease to correct its "clerical error."
The "Lease inadvertently included boilerplate City language that is not applicable to the Lease," reads the amendment. "The parties now amend the Lease to remove the language."
The claim the city "inadvertently" included language rendering its contract "null and void" was never made by the city's attorneys during the April 1 Rent Board hearing. But they're making it now. In legal terms, the offending provision is now a mere "scrivener's error," notes Utrecht. If including it was truly a mistake, he continues, its removal will likely be permitted.
And, with it, Midtown tenants' hopes may well be null and void.
A ruling in their favor, Utrecht continues, will now require "some judge to call some official with the city and with Mercy a liar. And judges don't like doing that." He pauses, then laughs. "Judges look for ways to decide cases without calling someone a liar.
"And that's extra true when one of the parties is the city."