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Power Failure 

A three-month electrical outage exposed a tenderloin apartment building as a firetrap. How did the nonprofit property manager let things get so bad?

Wednesday, Feb 28 2007
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It wasn't just the residents who were affected by the power outage. Four shops on the ground floor, including the Polk Valley Launderette, lost electricity, too.

"No power, no good," said Tony Chan, owner of the Launderette, while brushing clothes in his shop with a lint roller.

His wife added that three months was a long time to go without electricity. "In Hong Kong, one week," she said. "Very fast."

Earlier this month, Joseph Khalaf, the owner of J&D Grocery and Liquor, walked through the dark, cluttered aisles of his shop holding a flashlight, passing piles of food and supplies waiting to either be tossed out or restocked. He peered into warm coolers still full of beer and soda he feared had gone flat. And he pointed to a broken window and the front glass doors he says were smashed during the power outage.

He's run J&D Grocery and Liquor since 1997, and over the last 10 years, Khalaf says he and his brothers have worked from 6 a.m. until 2 a.m. seven days a week to avoid losing customers to the competition. He worries that many of his regular customers have started shopping somewhere else, and thinks that closing down for three months cost him more than $200,000 in sales.

Khalaf started keeping a binder stuffed with papers gathered during the power outage, or what the family calls his "stress vacation." He says that more than three years ago, Asian Inc. had been put on notice about the building's faulty wiring.

Back in May 2003 Khalaf had a power failure and hired an electrician to fix it. The electrician, he says, discovered that a previous contractor had botched the electrical work, posing a serious safety hazard to not just the store, but the whole building, including the 36 apartments above. The Department of Building Inspection issued a correction notice to the building's owner, a limited partnership that's owned the property since July 1992, the following month.

Records show that a contractor hired by Asian Inc. in 2004 took out a permit to fix the problem. However, there are no records showing whether the work was ever done. James Sanbonmatsu, coordinator of the code enforcement outreach program for the Department of Building Inspection, says the contractor never contacted the city to do a follow-up inspection to review its electrical work.

Sanbonmatsu says it's the responsibility of a contractor to arrange an inspection after obtaining a permit. "This contractor did not do the right thing," he said. "And the owner is responsible."

The Khalaf family also holds Asian Inc. and its partners responsible. "All of this would have never happened if the landlord did what he was supposed to do," said Saeed Khalaf, 26, who helps his older brother run the store.


Asian Inc. was founded in 1971 by the late Harold Yee, a Chinese community activist with political connections from the Avenues to Chinatown to City Hall. Over the years he earned the reputation as a relentless taskmaster, an eternal optimist, and an inspiration to others before dying in 2004 following heart surgery. "He really was a great man, one of those once-in-a-lifetime leaders who really devoted his whole life to the community," said Assemblywoman Fiona Ma, who cites Yee as one of the reasons she got into politics. "You don't find too many people like that today."

Yee was reputed to have started more than 100 charities, although Asian Inc. was his crowning achievement. By the year of his death, Asian Inc. reported $2.3 million in net assets. House Speaker Nancy Pelosi gushed in a memorial statement to the House of Representatives, "Asian Inc. helped launch many minority-owned small businesses in San Francisco, trained young professionals for the rigors of running their own businesses, and encouraged the development of trade associations."

Yee's charity also boasted creating more affordable housing in the city. Asian Inc. manages about a dozen apartment buildings including the market-rate apartments on Polk Street, says current President Michael Chan.

Asian Inc.'s Web site says that through public-private partnerships, the organization has mobilized more than $62 million in funds for affordable housing projects, assisted in the new construction and rehabilitation of more than 800 housing units, and directly manages more than 250 units.

Last year, one of those "public-private" partnerships attracted unwanted attention for Asian Inc. Back in October during a committee hearing, Supervisor Aaron Peskin railed against Asian Inc. for its involvement in what Peskin and others have labeled a "scam" at another Tenderloin apartment building at 1030 Post St. At the Post Street building, a profit-driven real estate developer used tax dollars earmarked for affordable housing to buy the place and make it less affordable. The developer, KDF Communities LLC, hired Asian Inc. for $50,000 to help with that property's renovation. (See "Rent to Evict," SF Weekly, Nov. 8, 2006.)

Peskin ended the hearing with a clear message to the nonprofit and its president: "And then finally, to Michael Chan and Asian Inc., I will remember that you guys aided and abetted this, and it is absolutely contrary to everything that you purportedly stand for, that Asian Inc. purportedly stands for," he said. "Which is to protect low-income tenants with affordable housing opportunities in San Francisco."

Peskin added, "For $50,000, to sell these good people down the river is unconscionable, Michael."

The Tenderloin building on Polk Street that lost power for more than three months was also one of Asian Inc.'s public-private partnerships. While Asian Inc. manages the building, it's owned by 1030 Polk Associates, a for-profit partnership that includes another local charity for which Chan is treasurer, the Neighborhood Housing Renewal Corporation, and a local contractor named Matthew Huey. Huey, who says he's a silent partner for 1030 Polk Associates, came under scrutiny in 2005 when under Mabel Teng he had more than $100,000 cut from the assessed value of a property he owns. Huey, Teng's personal contractor, had contributed $500 to her campaign. Teng later resigned.

About The Author

Mary Spicuzza

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