Google maps shows what 739 Valencia St. looked like before tacolicious moved in.

Three times in the last 18 years, Edwin Ortiz, 48, has survived the threat of eviction from his rent-controlled studio at 739 Valencia St.

Once again he hopes to prevail as restaurateur Jack Knowles threatens to evict him and two other tenants using the Ellis Act, a state law that allows landlords to take rental units off the market. To do so, they must pay tenant relocation costs and keep the units vacant for five years.

Ortiz said he received a letter in October from Daniel Bornstein, a lawyer acting on Knowles’ behalf, informing him that the landlord was going to file for an Ellis Act eviction. So far, Knowles has not made an official request to the city.

“I have to decide what’s best for the building,” Knowles said in a telephone interview. He declined to explain exactly what that meant. “You want to work things out. I am trying to do what’s best in a difficult circumstance.”

When pressed, he said, “Nothing is off the table. I do have the right to do [the Ellis Act].”

While Ellis Act evictions have decreased dramatically since the height of the dot-com boom in the late 1990s, the circumstances surrounding the proposed eviction are a painful reminder for Ortiz and other tenants of those years when thousands of tenants were displaced across the city.

At their high point, the fiscal year ending in 2000, 208 petitions were filed to take 879 units of the market.

Today, Ellis Act evictions are at a low point citywide but are picking up in the Mission, with the neighborhood recording the highest number of petitions during the last fiscal year, ending in 2011. During that period, seven petitions were filed for 28 units to be taken off the market.

“In our office we joke that they are they are the last working-class tenants left in the area,” said Maria Zamudio, the Just Cause staff member handling Ortiz’s case.

Much of the decline in the Mission’s working class population took place in the decade after the 1998 boom. The number of households in the Mission District earning less than $22,000 has declined by four percent, from 13 percent in 2000 to 9 percent in 2010, according to the 2010 Census.

The legacy of that earlier boom was evident on a recent Saturday, when tenants marched to protest evictions and ended up in front of Knowles’ building, where Tacolicious, one of many new restaurants in the Mission, is thriving thanks to an influx of young professionals.

The restaurant, not Knowles, became the focus of tenant anger, and when a frustrated chef came out to defend the restaurant, few would hear anything of it.

Joe Hargraves, the owner of Tacolicious, said in an interview that he tries to be a good neighbor, buying and hiring locally. By Ortiz’s account, he is.

Hargraves said Knowles has always been responsive to him and appears to be acting in good faith.

“I don’t think he’s the bad guy everyone makes him out to be,” he said. “I totally get the protesters, but there are other ways of handling it.”

It’s likely there will be further negotiations between Knowles and the tenants.

Many tenants who have lived in the city for a long time cannot afford to pay market rates, but landlords who have recently purchased property are looking for a profitable return.

In 2009, after New College closed, Knowles paid $3.7 million for the building and two adjacent properties. He leased the ground floor to Tacolicious, but it’s not clear what he plans to do with the rest of the building.

Ortiz and his roommate pay a little less than $500 for their one-bedroom studio. They were offered $11,000 each to vacate, according to Ortiz. Knowles said that he’s offered much more, but declined to say how much more.

Whatever the offer, it’s unlikely that tenants like Ortiz could move elsewhere in the city at a time when the vacancy rate is 3.7 percent and the average rent is $2,572.

Ortiz and his roommate are both disabled, but declined to discuss their disabilities. According to the Ellis Act, seniors and disabled tenants must be given a year’s notice to vacate.

Ortiz doesn’t want to leave gay-friendly San Francisco, where he has a support network of family and doctors. If Knowles files for an Ellis Act eviction, Ortiz said he will fight it.

“Like good Latinos, we always stay quiet,” he said, referring to Mission tenants before him who have been displaced. “I won’t be.”

New College, the building’s previous landlord, tried twice to evict Ortiz, once in 2000, when the now-defunct school bought the property. That attempt never went beyond a letter. In October of 2004, the college filed for an Ellis Act eviction, only to rescind its petition in January 2005.

In that case, New College rescinded because, according to the form, “One of the tenants has AIDS and another tenant is HIV-positive, to move would be unhealthy. Additional alternative space became available for owners use so that the owner does not have to remove the residential units from housing use.”

In 2009, Dewolf Realty, the company that managed the property after New College defaulted on its loan, wrote Ortiz that it was taking the units off the rental market, but that didn’t happen. Instead, the bank sold the property to Knowles in “as-is condition.”

“I inherited a lot of headaches,” Knowles said. “When New College closed the building they really let it go downhill. I’ve done nothing but work on that building.”

The tenants don’t blame Knowles for the state of the building when he bought it, but do hold him accountable for conditions after he took it over.

A recent incident has further complicated matters for Knowles. Martin Vargas, one of the tenants, sued him in July 2011 for an incident that occurred on September 29, 2009. On that day, Vargas was climbing the fire escape ladder when it “detached from the other sections of the ladder causing him and the ladder to fall and causing him serious injuries,” the complaint alleged.

The suit also alleges that the landlord “failed to regular inspections of the fire escape ladder in the building to insure they were safe to use and in good working order.”

Vargas’ lawyer did not immediately return calls requesting comment.

Ortiz too filed complaints, the most recent on Dec. 9, 2011. In it he complained that the fire escape and ladder were inaccessible, and the circuit breakers and gas shutoff and cable boxes were only accessible in the commercial space.

Ortiz said that Tacolicious has been a good neighbor, but poor planning makes those areas inaccessible when the restaurant closes.

Knowles said he has worked hard to fix the violations, but access to the building has been an issue. The two notices of violation show that the inspector could not get into the building several times.

Neither side is currently talking to the other.

Rigoberto Hernandez

Rigoberto Hernandez is a journalism student at San Francisco State University. He has interned at The Oregonian and The Orange County Register, but prefers to report on the Mission District. In his spare...

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31 Comments

  1. Thank you for covering this, and thank you VERY MUCH for fixing most of the very glaring and distracting typos/grammatical errors that riddled this piece earlier. The report appears to be well-researched and covered, and it would have been a shame to sully an important neighborhood issue.

  2. Is there a public housing option available for these tenants? Is there some kind of city sponsored rent subsidy similar to Section 8?

    The current system depends on private individuals to provide subsidized housing to those in need, but really the entire community should bare the cost. A city-wide, means tested system similar to Section 8 would help pay for required building maintenance and reduce the incentive for owners to remove their properties from the rental market.

    1. Agreed.

      If the city wishes to subsidize housing for those in need (which I am all for) then the city should do that in the form of taxes.

      What shouldn’t happen is private individuals being forced to do so.

      No doubt rent control helps people in need, but it also ‘helps’ people who can afford to pay market rates for housing.

      Rent control needs to be scrapped and a rent subsidy for qualified tenants should be put in its place.

  3. Rent control is incredibly unfair to property owners… I hope this tenant takes a reasonable settlement and moves on.

    1. Rent control was almost-certainly IN PLACE when someone bought the property. Whats so incredibly unfair? That someone who probably moved here from elsewhere is whining? I hope this landlord takes a reasonable gesture to move on. And elsewhere.

      1. Rent control for small buildings didn’t go into effect until 1994, so many owners bought before rent control and now are stuck with tenants paying less than an amount that covers basic repairs.

        1. This unit was bought in 2008 so the owner had full knowledge of the situation and should have priced that into his calculations. No pity for the landlord here.

  4. Yeah, the landlord should just have to buy the building and fix it up for the guy but only get 1994 rents for the place, right? This is a sham and seems to have been written by someone who has obviously ZERO clue what it truly means to be responsible.

    Also, does it strike anyone else as curious that the rent is only $500 a month? I lived in SF in 1994. My 1 bedroom apartment in the outer Sunset was $950. How is that this guy managed to procure such a favorable lease? 18th/Valencia was not cheap in the mid-90’s. I smell a rat.

    1. Just because you ‘lived in SF in 1994’ gives you very little perspective. I lived here 40 years before that and still do. I have seen decades of shams by wealthy ones degrade the quality of life here by over-inflating properties because that’s what they paid back east somewhere. The native species have been marauded by an invasive species.

      1. i said i lived here in 1994 simply because that was when this lease, in question, was signed (18 years ago). this is not to say that i am also not a native (as my father and grandfather before me).

        nativity – yours or mine – isn’t the point. the point is, that mr. knowles needs to have more rights than being reported as some ind of slum lord or capitalist bad guy when it sounds like he’s trying to find a correct solution. from what i’ve read, he’s evicted nobody and in fact not even enacted his ellis rights.

        have you ever thought, even for a second, that his tenants might be the problem? sounds like the restaurant tenants like him. it also sounds like he’s acknowledged that it’s a tough situation and that he’s trying to find the right solution.

        and ortiz’ comment about most latinos staying quiet, what does that even mean? sounds like he’s trying to rally uninformed support for his cause by playing the race card, from where i’m sitting.

        is anyone else in this town tired of our communities seemingly blind support for causes like this? i mean wouldn’t it be more responsible of mission local to do some research into the actual lease? to find out how the building got to this point? to better explain knowles perspective?

        it seems very one sided to me.

  5. The number of households in the Mission District earning less than $22,000 has declined by four percent, from 13 percent in 2000 to 9 percent in 2010, according to the 2010 Census.

    This is actually a decline of 30%.

  6. See, that’s one of the many problems with rent control. People moved in and they DON’T move out! It removes housing units from the market, drives down vacancy, and in turn, drives up rent. It’s hurting people like me, who’s relatively new to the city, and has to pay skyrocket rent so subsidize those earlier tenants. And when a building has to invoke the Ellis Act, well, that basically removes the units from the market FOREVER. Further decreasing the vacancy rate.

    1. “People moved in and they DON’T move out!”
      Um, I think that’s exactly why rent control was created, to protect existing residents from being displaced by the whims of the market. Of course, I doubt anyone envisioned the dot-com boom and its effects when this went into place.

  7. What Mr. Ortiz should do is to take the buyout from the owner and just move on. He’s not going to win this. The law is not on his side. Instead of forcing the owner to Ellis Act, he should move out voluntarily and preserve the units in the rental market; so that it is available to the rest of us and help stablize an out of control vacancy rate. No on wins by fight this – not the landlord, not Mr. Ortiz, and certainly not the rest of us who needs housing.

  8. I agree with the comments above about how rent control increases rents for most people in the city. A $500 studio is a scam on new residents who pay triple that in rent… I know many people with HIV and having HIV does make you a disabled victim, so please don’t play the victim just to protect your sweet rent deal.

  9. A better job is needed to vet incorrect information, the video contains untruthful statements regarding the Ellis Act. From the video: “When units are Ellis Acted, usually they get turned into condos. Really it’s flipping for profits.”

    NOT TRUE. Mompletely FALSE. After a building is Ellis Acted, the law PREVENTS it from ever turning into condos. In fact, it cannot be rented at market rate for the next 10 years! The only thing allowed under the law is for personal use by the owner or to sell it either as a whole or as TIC, which has a limited market and often times not profitable.

  10. I’m one of those “lucky” people who live in a rent controlled apartment in the Mission. I live in 400 square feet with another person who was the original tenant. Together we pay half what the going market rate is. It’s a tremendous gift for us because it allows us to do things without worrying so much about making enough money. Yes – it is unfair. But it is also unfair that San Francisco is becoming a city that only the wealthy can afford to live in. Heck, I used to be an engineering supervisor at a large medical device company and I still couldn’t afford to buy a house in the city and the average rent for a 1 bedroom apartment would eat up half my income.

    Doesn’t anyone in this country question why we allow housing to be used as an investment and a method for concentrating wealth instead of a basic need? Rent control is problematic, but so is the economic system itself that makes slaves out of all of us just so we can have a roof over our heads. When the Baby Boomers got here in the Summer of Love, they could work part time and still pay the rent. That left plenty of time for other things. Now the city is nothing but boring “professionals” who work too much and trust funders.

    1. Yes! thank you: “Doesn’t anyone in this country question why we allow housing to be used as an investment and a method for concentrating wealth instead of a basic need? Rent control is problematic, but so is the economic system itself that makes slaves out of all of us just so we can have a roof over our heads.”

  11. My boyfriend and I have lived in the Mission for about 2 years- we are a new couple who was lucky enough to find housing in the Mission on an income we can afford. During the past few years, we’ve endured the opening of a slew of new bars, boutiques and restaurants open in the neighborhood. We were witnesses to the “Valencia-fying” of this neighborhood and that street being voted one of America’s hippest streets. During our VERY brief time living in the Mission, the “value” of our apartment has gone up hundreds of dollars. We live at Valencia and 25th. Granted what we pay is outrageous by most standards ($6/ square foot anyone?), we feel lucky now to even pay that. We know that even over the course of 2 years, costs have gone up and there is a new line of people waiting to swoop in a grab a place in our neighborhood, willing and able to pay more than us. It is a disgrace that the Mission is becoming a place that only the privileged and wealthy can afford, and lower income residents live with a certain insecurity about their place and their home.

    1. There are still plenty of neighborhoods in SF that don’t have the blight of nice shops, good restaurants, and cool bars that you and your boyfriend can move to.

      I suspect you don’t really want to live in any of those places, you want to still live where you are, but just pay below market rent.

  12. I love the Mission but I’m leaving it. I can’t afford the rent here for a big enough place to raise a family in. What kills me is that we’re probably moving to Noe Valley where we can find affordable spaces for families. Go figure.

    The Mission is simply becoming a rich man’s ghetto. Another Marina coming up with slightly hipper stores.

  13. I don’t sympathize with the landlord. I experienced the Ellis Act shenanigans as a subletting tenant back in ’97 as the rents soared. It’s not pleasant. I found another rent controlled apartment and years later the building was sold. The new owners harass long term residents and neglect maintenance. The Ellis Act payout can be a good chunk of change to get started elsewhere but it won’t be enough for someone that’s low-income to stay in SF. Housing is scarce and way overvalued in SF. It’s really only affordable if you have disposable income of at least $70K as a renter and over $100K if you want to buy. Owners like the one here are all about profits and opportunity costs/benefits. Community means nothing. Individuals mean nothing. So, Ortiz should just take a page from that playbook and squeeze him til it hurts. The city gets tax revenue from people like this and renters though maligned and vocal, often lose in these disputes.

  14. This is not so black and white, as people are arguing. It’s tough to appreciate someone’s position when they don’t offer up realistic alternatives.

    How do you propose allocating scarce resources? Like housing, parking, etc.

    Then how do you pay for it?

    People sue because their fire escape ladders aren’t working. How do you expect a landlord to upkeep a degrading building on < $500/month rent (no profit margin for expenses)?

    People demonize the new restaurants and boutiques. But they create jobs, and some would argue, a nice place to live.

    It's not an easy solution, but what do you propose? Not another vacant, boarded up building like La Rondalla or New College, please. It takes capital and investment to pay for improvements.

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