The Balmoral was the subject of a lawsuit in the late 1980s, in which a jury awarded tenants more than $1 million in damages. The landlord, feeling strapped by a building full of long-term tenants who were cozy in their rent control, began a program of harassment-by-construction-work that included turning off the water, and that, the jury decided, was designed to drive the tenants out. The owners of Hotel Astoria on Bush Street near Grant were socked with a nearly $500,000 judgment in a similar case.
Those two lawsuits essentially halted attempts to evade rent control restrictions on the entire-building scale. For a while.
But San Francisco's real estate market is booming again. The economy is good. Vacancy rates are low. And because of the city's extensive rent control legislation, long-term tenants are paying as much as two-thirds less in rent than their newer counterparts.
To increase the return on their properties, many landlords now are looking toward the short-term rental market. In places like the former Gotham Hotel, now Vantaggio Suites, that market consists of foreign students who stay in San Francisco only a matter of months. In other cases, apartment building owners are wooing corporate tenants, who often are willing to pay high monthly rents, on a short-term basis, to avoid the cost of renting hotel rooms for weeks or months at a time.
"This is a decade of business," says Paul Wartell, whose West Bay Law practice has successfully sued several landlords. "The corporate dollar is what people are after now. Twenty-five hundred dollars for a month is a lot better for the company than paying for a hotel room [for a month]."
Tenant associations have begun to fight the conversion of apartments to short-term suites all over San Francisco.
Since investors purchased the Marina Cove Apartments on Bay Street last year, for example, about a third of the units have been renovated and made into "executive suites" targeted at short-term corporate tenants. The property's owners argue that the renovation was needed to remove asbestos from the apartments and make long-needed repairs. Tenants call the renovation an excuse to raise the rent, which the law allows when major capital improvements are made.
A similar argument continues at Northpoint Apartments near Fisherman's Wharf. And Wartell is representing tenants at Trinity Suites on Pine Street who are complaining, essentially, about the same issue.
"It seems to me that the trend, long term, in San Francisco is to eliminate housing for the poor and the modestly middle-class," Wartell says. "That's a disturbing trend. It's the constriction of the housing market for single, middle-class people. San Francisco is becoming a city of the affluent. This is certainly a piece of that.
