Medjool Owner Failed to File SRO Reports

By SABRINA SHANKMAN and EMMA BROWN

Restaurant and hotel owner Gus Murad is already facing allegations that the rooftop deck at his popular restaurant, Medjool, is illegal. Now, his next-door hostel, Elements, is also being scrutinized—this time for possible violations of a city housing ordinance, according to building department officials.

Nine of Elements’ 33 rooms are designated “residential” by the city, which means the owner is prohibited from booking them out nightly to tourists and instead must make them available longer term to low-income residents.

Since Elements opened in 2004, however, Murad has never submitted the required documentation to show he is living up to that agreement, a document search uncovered. Each year, the city has notified him of his delinquency by certified mail, but it wasn’t until Tuesday that Murad went to the Department of Building Inspection to pay $3,600 in late-filing fees. At that time, he promised to submit the documents as soon as he can, according to Rosemary Bosque, the building department’s chief housing inspector.

In the meantime, Department of Building Inspection officials said they would work to ensure that Murad is complying with the city’s Residential Hotel Conversion Ordinance, which prohibits landlords from converting residential rooms to higher-cost tourist rooms.

“We’re going to inspect to verify that there’s no illegal conversion,” said Bosque. She said the department is short-staffed and added that Murad could be one of a number of owners out of compliance.

PJ Johnston, a spokesman for Murad, said the rooms were rented as residential rooms, and that will be demonstrated when Murad turns in the forms within the week.

Johnston blamed “staff oversight” for Murad’s failure to submit the required documentation. The problem came to Murad’s attention, he said, during a recent building department inspection. “Whatever the city requires a business to file, he will file.”

The problem with the nine rooms surfaced as Mission Loc@l examined documents related to Medjool’s rooftop deck, which the San Francisco Chronicle reported on Feb. 7 was illegal.

The four years of missing paperwork that Murad has promised to submit must show building inspectors which rooms in the hostel are designated as SROs, and explain who has been staying in each room and for how long. Once those are turned in, Bosque said, inspectors will perform an unannounced inspection of the hostel, to ensure that what Murad claims on paper is what’s practiced at Elements.

Commonly called “SRO” or single-residency occupancy rooms, residential hotel rooms number more than 19,000 in San Francisco, according to Bosque. About 2,000 of those rooms are in the Mission. Rented by the week or month, they are generally among the least expensive and most accessible housing for the city’s very poor—a last resort for those who might otherwise be homeless.

Elements, at 2516 Mission St., was a nine-unit residential hotel before the building was destroyed by fire on Aug. 27, 1998.  Murad renovated it, adding 24 hotel rooms and Medjool, the popular restaurant and bar. The latter is known as a watering hole for politicians and as the occasional site of political fundraisers.

Elements is now a hostel where visitors either pay $60 for a two-person private room or $25 to stay in four- or six-person dorm room described on Yelp as “slick + modern.”

When Murad began to renovate, he ran into the city’s Residential Hotel Conversion Ordinance, designed to maintain San Francisco’s low-income housing stock. It requires there be no net loss of SRO rooms.

Murad’s permit to develop the property clearly states that some of Elements’ rooms would be reserved for low-income, long-term renters. “The project would re-establish nine residential hotel rooms thereby adding to and enhancing the city’s supply of affordable housing,” reads the planning commission’s permit approval, issued Feb. 10, 2000.

A landlord can legally convert residential hotel rooms to tourist units by building an equal number of residential rooms elsewhere, or paying 80 percent of the cost of building new rooms into a residential hotel preservation fund.

The latter can cost a landlord between $20,000 and $35,000 per room depending on the hotel’s location, said Bosque. Using those figures, legally converting the nine residential rooms at Elements would cost between $180,000 and $315,000.

Murad, however, never paid that amount and never secured a “permit to convert,” which would allow him to rent his hotel rooms to tourists. He has also failed to submit the annual “unit usage” reports that he said on Tuesday would be forthcoming. Those reports, required of all private SRO-unit landlords, demonstrate to city officials and tenant advocates that the rooms are not being rented nightly to tourists.

The report is due every year on Nov. 1, and letters are sent to landlords who fail to turn them in. Murad failed to submit the reports from 2005 to 2008. The only report submitted by Murad is from Nov. 1, 2000, when the property’s nine SRO units were all vacant because the hotel had not been rebuilt.

However, there is no record that anyone in the city with the authority to enforce the ordinance has checked to see whether Murad made good on that promise.

The building department is understaffed, Bosque said, so while workers examine the annual reports each November when they come in, complete, historical audits of SRO landlords’ usage reports are performed only every few years. The last one was done five years ago, before Elements opened. And the Mission’s SRO tenant advocates have not kept track of rooms at 2516 Mission because they weren’t aware that they were designated residential.

“I’ve only been working here since March,” said Josh Vining at the Mission SRO Collaborative. No one informed him that Elements contained SRO units when he was hired, he said.

Vining uses a list of landlords provided by the city to determine where SRO units are located in the Mission. That list, however, is based on the annual usage reports and since Murad has never submitted a report, he doesn’t show up on Vining’s list.

It’s the building department’s responsibility to enforce the SRO ordinance. But Craig Nikitas of the Planning Department said he looked into a complaint that Elements was not abiding by its residential hotel requirements several years ago. [Mission Loc@l found documents related to investigations into complaints at Elements, but none regarding SRO rooms.]

Nikitas said that when he looked at the guest registry while he was there, it appeared to him that the nine rooms were, in fact, being operated as residential hotel rooms.

And then he noticed the roof deck.

“We’ve had an enforcement case against the roof deck for years,” he said, adding that a letter saying the bar was illegal and needed to be removed was sent recently to Murad, who has about two weeks to shut it down or appeal.

It’s not the first time Murad has had a problem with outdoor permitting.

In 2000, Murad applied for and was denied permission to use a ground-floor outdoor area for Medjool. “Outdoor commercial use at this location is not desirable for nor compatible with the nearby residential uses due to potential noise generation and the need for peace and quiet in the mid-block area,” reads the planning commission decision.

District 9 Supervisor David Campos said Wednesday he was unaware that the Department of Building Inspection was examining SRO units at Elements. But no matter what, he said, there should be “no special treatment.”

“Irrespective of who you know in city hall,” he said, “you have to follow the law.”

Johnston, the spokesman for Medjool, said all the recent attention from the press and seemingly sudden interest in enforcement is “unusual” and “curious.”

“It sure seems like Gus is being singled out all of a sudden,” he said. “Nothing has changed on our end, but it all of a sudden appears to be a problem in some quarters.”

He continued, “Gus doesn’t want to do anything but run a healthy, successful business. He doesn’t want to be treated any better or worse than anyone else.”