Dennis Herrera Throws Down: Sues Short-Term Rental Scofflaws for Illegal Conversions, Unlawful Business Practices – Ellis Act, Baby!

[UPDATE: Direct link here and the full press kit with complaint here.]

City Attorney Dennis Herrera, The Happy Warrior:

“Herrera sues short-term rental scofflaws for illegal conversions, unlawful business practices

Two cases target ‘egregious offenders’—both involving Ellis Act evictions of disabled tenants to illegally convert residential apartments into tourist lodging

SAN FRANCISCO (April 23, 2014) — City Attorney Dennis Herrera today filed two separate lawsuits against short-term rental scofflaws for illegally converting residential apartments into commercial tourist lodging, which the property owners then marketed through such online platforms as Airbnb, Homeway.com and VRBO.com.  In both cases, the defendants had previously evicted long-term residents from their apartments under the Ellis Act, a state law that allows landlords to evict tenants and withdraw their properties from the residential rental market.  Two of the evicted tenants were disabled, according to San Francisco Superior Court and Rent Board records cited in today’s pleadings.

“In the midst of a housing crisis of historic proportions, illegal short-term rental conversions of our scarce residential housing stock risks becoming a major contributing factor,” said Herrera.  “The cases I’ve filed today target two egregious offenders.  These defendants didn’t just flout state and local law to conduct their illegal businesses, they evicted disabled tenants in order to do so.  Today’s cases are the first among several housing-related matters under investigation by my office, and we intend to crack down hard on unlawful conduct that’s exacerbating—and in many cases profiting from—San Francisco’s alarming lack of affordable housing.  I’m grateful to the city departments, including the San Francisco Planning Department, and community advocates who have worked with my office to help us pursue these kinds of scofflaws.  And I encourage tenants and neighbors to report housing-related wrongdoing online to my office through our Up2Code.org website or the Up2Code app, or by calling our Code Enforcement Hotline at (415) 554-3977.”

Herrera’s complaints filed in San Francisco Superior Court this morning detail pervasive violations of the city Planning Code and state Unfair Competition Law at three addresses: 3073-3075 Clay Street, owned by defendants Darren and Valerie Lee; and 734 and 790 Bay Street, which is owned or managed by defendants Lev, Tamara and Tatyana Yurovsky.  If successful, the litigation could result in permanent court-ordered injunctions; civil penalties of up to $200 per day for Planning Code violations; up to $2,500 for each unlawful business act; disgorgement of illegally obtained profits; and attorneys’ fees.  Though the Ellis Act itself does not preclude the commercial use of properties for tourists where long-term tenants have previously been evicted, Herrera’s litigation emphasized longstanding city policy that tourist conversions of residential properties be aggressively policed “in order to protect the residents and to conserve the limited housing resources.”

According to one of Herrera’s civil actions, defendants Darren and Valerie Lee purchased 3073-3075 Clay Street in 2004, and invoked the Ellis Act in 2005 to evict their tenants from both of the property’s residential units.  One of the evicted tenants was disabled.  Evidence presented in the complaint found that the Lees have marketed 3075 Clay Street, a four-bedroom, three-bathroom property, for tourist lodging on such vacation websites such as Homeaway.com and VRBO.com since 2009, describing it as an “exquisitely renovated home, in prime Pacific Heights.”  The Lees charged their guests between $395 and $595 per night for a minimum stay of three nights.  But in doing so, the owners flouted the city’s required conditional use authorization process—depriving neighbors and city planners of their role to first determine whether the conversion is necessary or desirable; compatible with the neighborhood; detrimental to the City’s housing stock; or consistent with the city’s Planning Code or Planning Department’s General Plan.  According to Herrera’s complaint, San Francisco’s Planning Department repeatedly cited the Lees for their illegal use of the property for commercial tourist lodging, even collecting penalties of as much $250 per day for violations.  The Lees—who at one point assured Planning Department officials that their illegal conduct had stopped—then defiantly resumed marketing and renting their property to tourists.  In 3073 Clay Street, the Lees evicted a disabled tenant who had lived in the unit for more than ten years and, until evicted, was paying $1,087 per month.  By invoking the Ellis Act, the Lees were legally restricted until August 25, 2011, from re-renting the unit at market rate.  But evidence presented in Herrera’s action shows that the Lees admitted to the Planning Department that they had, in fact, re-rented 3073 Clay Street and charged their new residential tenants between $5,000-$7,038 per month.

Herrera’s other civil complaint against Lev, Tamara and Tatyana Yurovsky notes that they, too, used the Ellis Act to evict long-term residential tenants — including one who was disabled — from one of their properties, at 734 Bay Street.  Together with a residential unit at another of their properties owned by Lev and Tatyana and managed by Tamara, at 790 Bay Street, the Yurovskys illegally converted their apartments into tourist use beginning in 2010.  They marketed the rentals to tourists on Airbnb.com and “greatsfvacation.com” for rates of between $165 and $320 per night, with three-night minimum stays.  Though the Yurovsky defendants boasted on social media that they had hosted several hundred tourists, according to evidence detailed in the complaint, they too flouted the city’s conditional use authorization process, violating the San Francisco Planning Code and state law.

The cases are: City and County of San Francisco and People of the State of California v. Darren Lee et al., San Francisco Superior Court No. 538857; and City and County of San Francisco and People of the State of California v. Tamara Yurovsky et al., San Francisco Superior Court No. 538854.  Additional documentation from the case is available on the City Attorney’s website at:http://www.sfcityattorney.org/.

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One Response to “Dennis Herrera Throws Down: Sues Short-Term Rental Scofflaws for Illegal Conversions, Unlawful Business Practices – Ellis Act, Baby!”

  1. Einstein says:

    Eat ‘em up, Dennis!

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