Mission restaurateur and hotel owner Gus Murad has failed to show he is abiding by the law and renting nine rooms at his Elements Hotel to long-term residents, according to a Mission Loc@l review of records Murad recently submitted to the Department of Building Inspection.
City officials said they would conduct a full audit of Elements’ daily rental receipts to determine whether Murad, a San Francisco small business commissioner appointed by the mayor, is violating the city’s Residential Hotel Conversion Ordinance.
Elements, which is located next door to Murad’s popular restaurant Medjool, has 33 rooms; nine are designated “residential” by the city. This means the owner is prohibited from booking them out nightly to tourists, and instead must make them available longer term, usually to low-income residents. Converting residential rooms to regular tourist rooms is an expensive proposition that could cost up to $315,000, according to city officials.
The owner of a hotel with residential rooms must submit annual “usage reports” showing that the rooms are indeed being rented for at least seven nights. Murad had failed to submit those reports since Elements opened in 2004, Mission Loc@l reported Feb. 26. Last week, on March 4 and 10, he turned in records for 2007 and 2008.
As required, they include daily logs of room rentals for four months of each year: February, May, August and October.
Murad’s apparent failure to abide by the residential housing ordinance raises unique questions because of his position as a small business commissioner and as a business owner known for his close relationship with city politicians.
Asked whether city commissioners have a particular responsibility to abide by city ordinances, Supervisor and longtime SRO-tenant advocate Chris Daly said, “Everyone has the responsibility to know and follow the rules.”
Mayor Gavin Newsom agreed, said his spokesman Nathan Ballard. “Mayoral appointees should be treated no differently than any other business owner—no better and no worse.”
Rosemary Bosque, the building department’s chief housing inspector, said that at this point it’s too early to conclude that Murad is violating the rule on residential units by renting to tourists instead. He may just be filling out his paperwork incorrectly, she said.
Bosque is still waiting for Murad to turn in his 2005 and 2006 reports.
Once she receives those, Department of Building Inspection officials will begin a full audit of Elements to determine whether Murad has illegally converted the rooms to regular hotel rooms.
The annual reports “are only part of the picture,” she said. “We have to look at their rental receipts—those will help.”
Murad’s spokesman PJ Johnston said the rooms have been rented legally, and the paperwork problems boil down to a misunderstanding. “We have followed up with the building inspection department and have indeed learned that the daily logs are incomplete,” he said. “Our staff had misunderstood the requirements of the filings, specifically the need to log into the reports the name of each resident—not just the date of check-in, but for each ensuing day.”
The logs, however, are clearly marked “vacant” for those ensuing days. And Murad signed the report below the statement, “I declare that the foregoing is true and correct and that I am aware of the Daily Log, Weekly Report, Rent Receipt and posting requirements to the best of my knowledge.”
In the logs, rooms 201 through 209 are identified as residential: “Rental for seven days or more, not used for tourist/transient use.”
Yet none of those rooms was rented for seven days or more, Murad’s records show. Room 204 was rented twice for two nights in a row in February 2008, but such consecutive-night rentals were rare. The rooms were almost exclusively rented for only one night, and the following night were either vacant or rented to a different person.
A section of the annual report that asks the owner to explain if more than 50 percent of the residential units are vacant Oct. 15, 2008 was left blank. Only one room—Room 206—was rented that day, according to the report.
Murad will continue to be fined monthly until he turns in reports from 2005 and 2006. Already he has paid $3,600 in late fees. When Mission Loc@l reported on Murad’s failure to file the reports on Feb. 26, his spokesman said the rooms had been rented as residential all along, and that would be proven when Murad filed.
Murad is also facing problems at his popular restaurant, Medjool, where a rooftop bar has been deemed illegal by the city’s planning department. Unless Murad can convince the department’s board of appeals that the bar is in fact legal, it will have to be closed, according to City Planner Craig Nikitas. A hearing before the appeals board is likely within the next several weeks, Nikitas added.
“The Department of Building Inspection is working with Gus Murad to ensure that he is in compliance with all city codes,” Ballard said.