Housing Startup Managed SRO Damaged in Fire

Up until the five-alarm fire damaged the Graywood single room occupancy hotel and left 58 tenants without a place to live, the SRO was managed by a housing startup that matches roommates and manages co-living spaces for young professionals.

Under its management, the Graywood’s tenants began to include tech workers and others able to pay up to $1,400 a month for a room, compared to the $681 a month the building’s traditional low-income tenants were paying.

After the fire, the Graywood’s landlord, Dipak Patel, ended the hotel’s lease with Alon Gutman and Danny Haber’s housing startup, Negev. The two-year-old company has a history of leasing SROs and renting some, if not all, of their rooms to young professionals, students, and entrepreneurs.

Patel said he took over management from Negev so that he could begin repairs, which are now underway.

Several tenants who rented through Negev said that the company’s management was unresponsive to their inquiries and confusion arose over access to units in the hotel.

“They are not talking to us,” said one younger, newer tenant,  who booked his room on a three-month contract through Negev. In San Francisco for an internship, the tenant declined to give his name, but said he only spent a week at the hotel before fire struck.

Attempts to contact Negev on Monday to gain access to the building led nowhere for the intern. He said he was told by a resident manager who lives on site and “moves tenants into the SRO rooms for Negev” that he would be let into the building at 9 a.m to retrieve some of his belongings.

But by 2 p.m., the displaced tenant was still waiting for the management to show. “I think the managers have as much info as we do — nothing,” he said.

Carlos Velasquez, the resident manager, on Tuesday that he indeed had been unable to reach Negev. “Many tenants are asking me if they will get their rent back. I don’t know what to tell them.”

Following multiple calls to Negev, a representative offered to put the intern up at one of the company’s other locations. The representative offered him a 20 percent discount on a $1,400 room that came with three roommates.

The intern, who was paying $1,200 for his own room at the Graywood, said he declined the offer.

The option to relocate was not extended to other Graywood tenants who rented with Negev. Instead, some said that they received emails announcing that they would be billed for June’s rent.

“I wrote them and said ‘don’t charge me because the building burned down,’” said a student who resided at the Graywood for less than a week and also requested to remain anonymous. “They emailed me back and said I had to write a more formal cancellation email.”

The confusion continued on Wednesday, when the SRO tenants were permitted to enter the burned building for the first time under the supervision of building inspectors.

Neither Gutman or Haber were present to answer questions about the tenant’s contracts.

Housing for Young Professionals

On its website, Negev offers five locations throughout the city with rooms renting between $900-$2,000. The hotels come with descriptions like “social, ambitious and driven interns,” aiming to match tenants with similar interests and personality types.

“People who are paying those prices are also being duped, believing that they are coming into  [tech or student] housing,” said Chirag Bakhta, who works for the Mission SRO Collaborative, a nonprofit that advocates for SRO residents.

Instead, the now burned-out SRO with 26 rooms housed a mix of long-term tenants, fixed-income renters, seniors, families and formerly homeless tenants.

The intern and the student said they stepped into a reality that was quite different from what was advertised.

“The way they promoted it, it sounded like it was was all students living together,” said the student.

Some longterm tenants of the Graywood who were “inherited” by Negev after the company took over the hotel’s management roughly two years ago said that they had been offered buyouts ranging from $2,000 to $3,000.

“They offered to buy me out several times,” said Kimberly Walley, a Graywood resident of five years. “I told them that [money] did nothing for me.”

Paul Miranda, a U.S. Marines veteran, and his partner, Michelle Thompson, were also offered a buyout two years ago. The couple had been living at the Graywood for some four years and paid $681 for their room.

“They were trying to be a co-op thing,” said Miranda. “The refurbished rooms come with bunk beds and futons. They don’t look like our rooms.”

Thompson said that the hotel is not the “cleanest,” and that she feels for the newcomers. “This place is run down, its not operated right. I wouldn’t pay $1,200 for a room here.”

In recent years, Negev has faced a lawsuit over attempting to buy out long term tenants after a fire. Negev has a second location in a former religious mission dedicated to serving and housing the homeless. That location became embroiled in more trouble when the city discovered the landlord and Negev had allegedly been renting the rooms at market rate, counter to the stipulations of an interest-free loan from the city that came with the condition that the hotel be rented to low-income residents only.

Earlier this year, Negev moved to purchase an Oakland SRO, where Haber told the Business Times he would do his best not to displace any low-income tenants.

Under city regulations, SRO rooms may be rented at market rate to tenants beginning new leases, just like any other rent-controlled apartment. But because many consider them a last resort resource for people either on the brink of homelessness or trying to escape it, some see Negev’s conversions as questionable.

“Ethically this company is taking advantage of the housing market by renting low income rooms at high prices,” said Bakhta, adding that companies like Negev are capitalizing on a trend of flipping SRO rooms by “fancying up” vacant rooms and renting them at market rate.

“They’ll put in a new fancy sink, a microwave, fresh paint and a flat screen,” said Bakhta, then rent the refurbished rooms “under the veneer of housing young professionals.”

When reached by phone, Gutman said that Negev aims to provide “places where you can live with friends.”

“We help them find people they want to live with,” he said about his service, but declined to comment further. Haber could not be reached for comment.
Graywood Owner Takes the Reins

In April of last year, Walley, who is formerly homeless and also paid $681 for rent, said Negev attempted to evict her for a late payment on her rent.

“They gave me a three days notice into the weekend. It was given to me on a Friday,” said Walley. “When I got there on Monday [I was told] they ain’t excepting my money because I’m four days late.”

Walley believes she and other long term residents were targeted by the company. “They didn’t want us here, I know that for a fact.”

Sanyika Bryant, a tenant counselor at Causa Justa, advised Walley and another long-term Graywood tenant facing eviction.

“What’s cold about [Negev] is they are using [SROs] to fill residential units with tourists and taking away from the housing stock.”

Patel, the property owner, said he is ending Negev’s lease and attempting to remedy the confusion among tenants about coordinating post-fire recovery efforts.

On Thursday, five days after the fire, Patel said he would begin repairs to the building and was actively reaching out to the tenants to prorate their rents. As is mandated by law , Patel said he would give Graywood residents who contact him with the desire to move back the right to return.
Patel owns several properties around San Francisco, at least one of them another SRO. He said he knew nothing about the attempted evictions of Walley or the other long-term tenant.