The owner and operator of a warren of illegally constructed rental units discovered in the basement of the Clean Wash Center building at 4680-4690 Mission Street, on the border of Mission Terrace and the Excelsior, have agreed to pay over $3.2 million in penalties and restitution.

Built in the building’s former garage and constructed of wood-framed partitions – with two communal kitchens, three shared bathrooms, exposed wiring, and no windows, heat nor hot water throughout – the roughly 20 units had been rented for between $300 and $900 per month in cash over the past decade, with the only access to – or exit from – the subterranean units by way of a single gated door at “5 Persia” Avenue.

Sued by the City Attorney last year, the building’s owner (who lives in a five-bedroom home with hot water and heat in Hillsborough) and the warren’s apparent operator (who lives in a home in Daly City and collected all the rents) have agreed to a $620,000 settlement with the City, the terms of which include bringing all property owned by the landlord up to code and governing future rental activity for the next ten years.

In addition, the owner and operator have agreed to settle a lawsuit filed by former tenants of the warren, whom were displaced by way of an emergency order to vacate last year, with a combined payout totaling nearly $2.6 million.

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Comments from “Plugged-In” Readers

  1. Posted by Sabbie

    Similar in-law units are all over the city and encouraged in public decree due to “housing crisis”. I’ve seen small SFR with four illegal inlaw units and plenty of safety hazards. This owner just had bad luck with whatever “emergency” you mention.

    • Posted by SocketSite

      As we originally reported and linked above, “an anonymous tip directed the San Francisco Fire Department to the door at 5 Persia Avenue shortly after the deadly Ghost Ship fire [at the end of 2016].”

      • Posted by Sabbie

        Ok, make that bad luck with one anonymous tipster. Meanwhile street parking in that area has become worse than Russian Hill and it’s not hard to figure out why.

        • Posted by Notcom

          I don’t think I would call it “bad luck”…more like “(over)due process”

    • Posted by S

      “Built in the building’s former garage and constructed of wood-framed partitions – with two communal kitchens, three shared bathrooms, exposed wiring, and no windows, heat nor hot water throughout”

      Can you please let us know where units like those described above have been encouraged and who encouraged them?

      • Posted by Sabbie

        The City knows about many of these units and turns a blind eye, and neighbors too. Now they encourage owners to legalize them, but who is going to do that and pay the extra taxes, and cost to bring them up code, if that is even possible given the crazy configurations of some.

        • Posted by SFrentier

          Me! I’ll take illegal and otherwise zone-less space worth ~ $100PSFand turn it into $1000PSF legal space/new legal units any day of the week! It’s a classic “only in San Francisco” win-win.

          It allows the city to “count” as new units already existing inlaw units (so of course we’re not really adding “new” units to the market) while allowing smart landlords and developers to take existing low value spaces behind garages, storage, etc. and legally monetize it.

          Of course you have to jump through bewildering and often pointless DBI bureaucracy traps, but that’s par for the course in owning investment properties in this city; the journey is often worth the reward.

  2. Posted by goodmaab50

    They should all move into the home in Hillsborough…. (owner of that place should lose [her] home and flip to the basement here) or is that too nice?

    • Posted by Brisket

      Or sentence the owner to be their butler. Unfortunately the US legal system doesn’t generally allow for such creative sentencing.

  3. Posted by Pablito

    Report it to San Francisco Fire Department and something might get done. Report it to San Francisco Department of Building Inspection and you expect exactly zero response. The Hillsborough owner should get a suspended sentence if they name all the DBI inspectors that took a bribe on this building and looked the other way….

    • Posted by SFMichael

      Why would a building inspector have known to look at it at all? It’s not like the owner got a permit, hired a contractor, and veered just a bit from their plans.

  4. Posted by bachman_erlich_overdrive

    So over $200k per unit in relocation fees for the units they were renting voluntarily.

    Hmm. Landlord is the bad actor here, but that money should be going to the city for future enforcement imho.

    How much did the tenants attorneys take of the $2.6mm?

    • Posted by bachman_erlich_overdrive

      $130k per unit I mean. Close to 10x the legal max for an OMI/legal no fault.

    • Posted by Brahma (incensed renter)

      Well anyone anywhere that’s paying rent is paying it “voluntarily”, so you’re not saying anything, now are you? The tenants likely had low-paying service jobs in the tourism industry that forced them into these living conditions.

      The point is that the slumlord had 20 blatantly illegal units on the market and collected in the ballpark of $12k monthly for about 10 years, in cash! So that’s roughly $1.4 million total over 10 years, not counting interest or capital gains, in exchange for a settlement after the fact of paltry $620k with the City (the $2.6 million to the former tenants is going to be paid by insurance, let’s be real here). Likely tax free (why would the landlord insist on being paid in cash if not to avoid taxes?). I don’t call a that much of a deterrent or a penalty.

      • Posted by SFrentier

        I’m not sure at all that his insurance company will pay out. This was blatant and deliberate misuse of the property, not a single, already pre existing inlaw unit. Deliberate and wrongful acts are probably excluded from the policy.

        Any attorneys, etc. care to chime in on this?

        • Posted by Brisket

          Well I don’t practice real estate law, but as a general matter insurance policies most definitely do not cover you for illegal acts. Highly unlikely that an insurance company paid any of these penalties. They probably covered the litigation costs but beyond that who knows.

    • Posted by Mystery Realtor

      You don’t know they were renting “voluntarily”. Many exploited Chinese are here working in virtual slavery as modern day indentured servants until their “debt” is paid off. It’s not uncommon for them to be “housed” like this and “rent” deducted from their “wages”, involuntarily.

  5. Posted by SFRealist

    I don’t know how the law works, but I hope they got every dime they could out of this landlord.

  6. Posted by SFrentier

    Yeah this landlord and that Kigali woman are both real pieces of work. Give a bad name to landlords in this city, many of them decent and hard working folks, like me. Well, not really hard working in my case, but certainly decent to my tenants. You can still be decent to tenants and do well in this city. You just have to ignore the local political noise animus out there.

  7. Posted by Brian M

    Sounds like my very first post-grad school rental in the student slum near University of Tennessee in Knoxville. 🙂 Old Victorian owned by a dentist (dentists make the worst slum lords) with no heat in common areas, exposed wiring, etc. Of course, (and this was DECADES AGO, as I am old!) the rent was like $150 per month, so… 🙂

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