The Community Land Trust's Richard Hurlburt and Director Tracy Parent present the down payment check for the Pigeon Palace with Carin McKay

Residents of the so-called Pigeon Palace, who have been resisting its sale for fear of a massive rent increase or eviction and out of respect for what they say are the wishes of its owner, scored a huge victory today when the Community Land Trust won the $3.28 million auction for the property in probate court.

Judge Peter Busch, presiding over the proceeding on the multi unit, three-story building at 2840-2848 Folsom Street, called the case “probably the most spirited I have seen.”

That’s because tenants and neighbors have been objecting to the sale of the property for more than a month. They say its owner, Frances Carati, never wanted the building to be sold and planned for it to go to her tenants. When approached by the tenants, Carati even signed an Intent to Sell form. Unfortunately for the tenants, she did so within 30 days of failing a mental aptitude test, making the document legally worthless because she has been deemed incapable of understanding her legal and financial situation.

Busch dismissed all objections against the sale, saying the tenant and neighbor objecting had no standing in the case and that a 2006 care directive indicating her unwillingness to sell the building had already been superseded.

He also quickly dismissed a continuance to allow the Community Land Trust time to raise more funds and guarantee their ability to offer the highest bid.

Instead, he started taking bids at $2.35 million.

A terse bidding war followed, with bids going up in quick volleys between one or two interested parties, then switching to an exchange between other pairs as the amounts surpassed $3 million.

Margaret Cooley, who described herself as a friend of the Land Trust, said later that the crowd tenants had managed to draw to the courtroom had been to their advantage. Standing was prohibited in the courtroom, and all the seats were filled.

“I think a couple bidders were barred because we filled the seats,” Cooley said.

At one point, a man whose representative was bidding for him asked the judge to confirm that the buyer would have to present a check for 10 percent of the price immediately — an apparent warning to the Community Land Trust, whose ability to pay top dollar was in question from the beginning of proceedings.

But at $3,280,000, Community Land Trust broker and tenant rights attorney Richard Hurlburt was indeed the last to make an offer.

“Nobody else wants to jump in?” Busch asked the court. He was met with a brief, tense silence before announcing the property was sold to the Land Trust. Tenants and their supporters burst into applause.

The down payment check did turn out to be a close call. It was the tenants, according to McKay, who had pooled their resources and would be writing the check. McKay’s fellow tenants are prominent figures in local arts, AIDS activism, community organizing, and alternative culture. They had managed to gather almost exactly the required $328,000.

“I’m so pleased the Land Trust was able to do this” McKay said. “It was terrifying to sit there in court. ”

Now, it’s up to the Land Trust to work out the final details and pay for the property. Cooley expressed some doubt that the Land Trust would be able to raise funds for the full sale price.

“I’m concerned that they put in the top bid no matter what,” Cooley said. “I won’t be resting until the deed is done.”

Nonetheless, the relief was palpable in the halls outside the courtroom.

“It’s an incredible vision,” McKay said of the Land Trust’s mission. Once the organization owns the building, it will remain affordable housing indefinitely. Some local stakeholders have suggested that such a strategy is key to protecting the city’s affordable housing stock.

For McKay, “This feels really right.”

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7 Comments

  1. This is such a victory not just for Pigeon Palace, but for all tenants at risk: work together, support alternative ownership models and take heart in today’s win. Things can be different.

  2. Good for them, but let’s think for a minute… If someone (anyone) increases the price they are willing to pay for something, then that likely inflates the price others will be willing to pay for a similar item. (Witness our condo and home sale market.) It’s classic inflation and another example of a bidding war, except some less-fortunate people won this particular purchase.

    So I guess this victory probably just increased land/home prices in the mission. We saved Pigeon but probably hurt more people in the future.

  3. I am all for affordable housing. However, I wonder if this is money well spent ? over $3M to support affordable housing for just few tenants. Will the affordable rentals enough to cover mortgage, insurance and tax etc? The Pigeon is such a beautiful architecture & building but it’s seemed to be deteriorating badly and need fixes soon. Who will do this?

  4. A great victory for all involved. A few questions, if anyone knows:

    1) How many units (and bedrooms) are in the building?

    2) What is the process for finding replacement tenants (or owners) when an existing tenant (or household) leaves?

    3) Will any of the units be “ownership units,” or only rentals?

    4) Will an organization like the land trust (or city) provide operating funds to cover any mortgage, insurance or other operating costs if they are higher than existing rents?

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