Sent on February 12, 2019

San Francisco – Today Mayor London N. Breed and City Attorney Dennis Herrera announced a settlement agreement with the owner of 1049 Market Street that will preserve 15 units of existing housing in mid-Market and make these homes permanently affordable.

Due to the efforts of the tenants, the owner, the Mayor's Office, the City Attorney, and Superior Court Judge Anne-Christine Massullo, the parties and the City reached a comprehensive resolution and settlement that, upon completion of the City’s permitting and approval process, would legalize and preserve fifteen units in the building as permanently affordable housing prioritized for artists. Additionally, it would permit the owner to return the remaining floors in the building to office use.

The settlement agreement, which Mayor Breed introduced at the Board of Supervisors today, resolves all outstanding legal issues including the pending Ellis Act evictions field against the tenants and over a dozen lawsuits between the parties filed in state and federal courts.

“Our arts community is such an important part of San Francisco and our culture, but artists, like so many others, are finding it difficult to survive in our increasingly expensive City,” said Mayor London Breed. “I want to thank City Attorney Dennis Herrera and his office as well as all our City staff for their work on this creative solution to preserve artist housing in the heart of our city. As we grow and build the housing we so badly need, we also have to work to preserve the housing we already have to keep people stable in our communities.”

“The property owner illegally converted this building into residences,” said City Attorney Dennis Herrera. “Then almost 20 years later they tried to kick everyone out in the middle of a housing crisis to illegally convert it back to offices and capitalize on the tech boom. You just can’t do that. The tenants were mostly artists, teachers and other working class San Franciscans. In crafting a solution to this complex problem, our focus was on stopping further displacement. Through some creative lawyering and years of hard work, we have been able to ensure that the remaining tenants get to stay and that 15 residences will endure as permanently affordable homes for artist households. That’s something that will benefit all San Franciscans.”

Though principally permitted as office space, 1049 Market was illegally converted decades ago to apartments. At one time, there were approximately 80 occupied residential units in the building along with six lawfully permitted units. In 2013, the owner began illegally reconverting the units back to office use without identifying and addressing the needs of the existing tenants. The Mayor’s Office and other city departments then attempted to work with the owners to find a path to legalize the entire building for residential use. Instead, the owners decided to evict the residential tenants using the state Ellis Act and pursue conversion of the building back to commercial use, and they obtained a permit for that purpose. This permit was revoked by the City, and eventually led to the owners filing six lawsuits against the City.

The City Attorney’s Office, the Mayor’s Office and various City departments have been involved in discussions with the present owner and a number of third parties seeking possible methods of retaining some of the units in the building as residential units for the last three years. Previous attempts by the owners to sell the property, with a portion of the building retained for residential use, failed.

“We’d like to thank all our City partners who collaborated on this effort to preserve essential affordable housing, especially the City Attorney’s Office and the Planning Department. We’re so grateful that this settlement will allow 15 households to continue calling 1049 Market home,” said Kate Hartley, Director of the Mayor’s Office of Housing and Community Development.

Under the supervision of Superior Court Judge Massullo, a settlement agreement between the tenants, the owner, and the City and County of San Francisco will allow for 15 currently unpermitted units, most of which house artists, on the second floor of the building to be made legal and permanently affordable, with $2.4 million in funding from the Mayor’s Office of Housing and Community Development. The Tenderloin Housing Clinic will own and operate the residential units. The units in the future will be prioritized for artists. As part of the agreement, the owner of 1049 Market will dismiss the existing lawsuits filed against the City and the current tenants.

“The diverse group of tenants at 1049 Market, after more than five years of hard work and negotiations, have stopped their evictions. We are thrilled that affordable housing in Mid-Market has been saved,” said Xi’an Chandra Redack, who has lived at 1049 Market for nearly 15 years.

After the Parties execute the Settlement Agreement, the current building owner will work with the City in the coming months to obtain the approvals necessary to subdivide the property into a commercial and residential parcel, obtain conditional use authorization to convert the remaining floors back to commercial use, and obtain necessary permits for the tenant improvements. It is expected that THC will purchase the residential parcel from the current owner in approximately July 2019, and making improvements to the second floor at that time. Supervisor Matt Haney is co-sponsoring the settlement.

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