The ongoing battle between the remaining residential tenants of the seven-story Sterling Building at 1049 Market Street, which was illegally converted to “live-work” spaces over a decade ago, back when Mid-Market was a lot less desirable, and the building’s owners, who have been trying to evict the rent-controlled and mostly artist tenants since 2013, is back in front of San Francisco’s Board of Appeals this evening.

While the City had issued a permit for the conversion of 1049 Market Street from its non-compliant residential use back to office space, the permit was suspended “to enable the City to obtain additional details about the building’s historic and current occupancies,” and a high-profile and highly politicized (gentrification, displacement, etc.) battle with the tenants ensued.

When the owners of the building subsequently dropped their appeal of the permit’s suspension, an advocate from the Housing Rights Committee claimed victory from the steps of City Hall and vowed the tenants, who are predominantly artists and each pay around $700 for loft-style units with kitchenettes and shared bathrooms, would “never, never, never” be evicted. And the City subsequently passed additional legislation to further restrict the removal of any existing residential unit in the city, regardless of whether said unit was legally permitted or not.

But the owners have since filed three lawsuits against the City, seeking damages, a court-ordered reinstatement of their permit and clearance to legally proceed with their evictions and office conversion. To which a federal court has essentially sided with the City and the State’s Superior Court has effectively returned the case to San Francisco’s Board of Appeals.

The Superior Court further held that Appellant has no vested right in the Permit, and that Appellant had failed to establish the City had taken its property without compensation under any of the tests for an unconstitutional taking. Instead, the Court specifically found that the Appellant continues to generate income from the live-work units on the sixth floor and the street level commercial units, [and] that the City had placed no limits on the rents that Appellant could charge for those units.

In addition, Appellant had admitted that it continued to rent vacant units on floors 1 through 5 to tech businesses despite the suspension of the Permit, and that Appellant had chosen not to accept rent from its residential tenants as a result of its litigation strategy in its eviction lawsuits, not as a result of any City conduct.

The Court also held that the 2015 Controls were not a “project” for CEQA purposes because they do not authorize or permit any specific construction, and do not compel property owners to illegally convert office units to residential rental use. Nor, after such illegal conversion did the 2015 Controls forbid property owners from converting such units back to their legally permitted use as offices.

And while the building’s owners have appealed the Superior Court’s ruling, they will be back in front of San Francisco’s Board of Appeals this evening, arguing a vested right to their previously issued permits, seeking to have the revocations overturned, and appealing an active notice of violation and penalty for having been caught moving forward without a valid permit and (newly) required Conditional Use Authorization.

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Comments from “Plugged-In” Readers

  1. Posted by Notcom

    If Uber ever gets into property management – or maybe that’s “when” given the footage they’re stockpiling – I can’t help but think this would be an example of the results.

  2. Posted by sassySFboy

    Owners of this building justifiably need BIG compensation from the city as this is an outrageous egregious longstanding example of SF at its politically-correct worst. Evict them ASAP!

    • Posted by SocketSite

      And yet, as noted above: “The Superior Court further held that…Appellant had failed to establish the City had taken its property without compensation under any of the tests for an unconstitutional taking.”

    • Posted by Sabbie

      Compensation for what, they’ve been raking in illegal income for years while the city turned a blind eye, probably saved them from going bankrupt.

  3. Posted by sassySFboy

    And yet…as example, 9th Circuit also has recurringly ruled IN ERROR many many many times, as demonstrated by highest overturn rate in nation by US Supreme court rulings. Yep, errors in SF Gov occur routinely.

    • Posted by Anonymous

      Good work parroting that debunked talking point.

    • Posted by Notcom

      What does the reversal rate of a FEDERAL court – even it were to have meaning on its own – have to do with the ruling of a STATE Superior Court? (We’ll get to a charter city’s Gov not having to do with either or them, later)

  4. Posted by SFMichael

    Am I reading this correctly in thinking that the owners illegally turned the building into lofts and are now suing The City to avoid being stuck with the results of their own actions?

  5. Posted by Hancock

    @SFMichael you are correct.

    • Posted by Kraus

      No that is not correct. When the current owner bought the building, part of it was already being used as non-permitted, ersatz dwelling units. Furthermore, a number of these so-called “dwelling units”are neither Planning or Building Code-compliant as they have no exterior windows, natural lighting, or mechanical ventilation – nor do they have fire separations that would currently be required by Code. Accordingly, they constitute a life-safety danger and put both the occupants and the building owner at risk.

      • Posted by North Beach

        Are you saying they didn’t know that there were tenants and shoddy wiring? If they knew, then all that was certainly included in the price of the building.

  6. Posted by Neighborhood Activist

    So the current owner knowingly took on the risk of buying a building with illegal residential units, in a city where it’s near-impossible to eliminate residential units (legal or not.) Sounds like he rolled the dice and lost. I don’t know what he paid for the building, but I’m thinking that (in retrospect) it was too much.

    Now as for the tenants, who are knowingly living in sub-standard and perhaps unsafe conditions and doing their best to screw their landlord, who is seemingly trying, in relatively good faith, to return the building to being legally compliant—I hope they have a Plan B, because one way or another, I’ll bet their days are numbered.

  7. Posted by Brahma (incensed renter)

    Regardless of the merits of the tenant’s case, the advocate from the HRC should NOT have proclaimed victory from the steps of City Hall and predict that the tenants would “never, never, never” be evicted. That was just bad form, and the lawyer for the tenants should have advised that person to not do that (in the absence of a P.R. person, who would have advised the same thing) if they were at all versed on how things like this go down in S.F. You don’t wave red capes in front of the bull.

    Similarly, the lawyer who was representing the owner(s) should have them to avoid all of this, suck it up and do a buyout of the tenants back in 2013, because once all the costs of this litigation gets added up, it would have been cheaper and faster.

  8. Posted by Drew

    I lived at 1049 Market in 1999-2000. Fond memories — great neighbors, beautiful reinforced brick, 15-foot ceilings, abundant light and ventilation, immaculate bathrooms — all for $775 a month. I miss life there in some ways, but the neighborhood did then and still does creep me out. I’ve moved on, both literally and metaphorically, but always thought it a great place for working people. I will miss having the option of living there in the future should I ever need it again.

    • Posted by DrElefun

      A friend of mine was a tenant at 1049 Market and his place didn’t have any windows or any source of outside light, so not all of the units had abundant light. I stopped visiting my friend at night because he couldn’t buzz me in the front door and I didn’t have a cell phone to call him in advance to meet me on the street. Like you, I got creeped out waiting at the dark doorway on that part of Market with a bag of party refreshments in my arms.

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