The strange and terrible saga of Anne Kihagi, the city’s cruelest landlord, hit an inflection point Wednesday when the California Supreme Court spurned her appeal. This relegates her case back to Superior Court, and enables the city to take steps to begin collecting on massive penalties that had been on hold during the course of her appeal. It also means an injunction will belatedly go into effect, placing a third party in charge of Kihagi’s many city properties and keeping her at an arm’s length from her put-upon tenants.
Between 2013 and 2016, Kihagi-controlled LLCs scooped up at least 11 San Francisco buildings for some $30 million. She made a habit of buying up rent-controlled structures often inhabited by elderly or disabled tenants paying well below-market rates — and then systematically emptying those buildings, and bringing in market-rate tenants. In May 2017, Judge Angela Bradstreet found for the city and against Kihagi in a jaw-dropping 163-page ruling. Bradstreet wrote that Kihagi and her family members engaged in an “egregious and ongoing” pattern of unlawful conduct, and levied $2.7 million in fines upon them for 1,612 separate violations. The judge also held the defendants responsible for legal fees and costs that should more than double that amount, and ordered them to abate voluminous code violations.
Much of this work — and payment of these fines — was in limbo during the appeals process.
But that process has now come to its ostensible end.
“Ms. Kihagi apparently thought she could treat the justice system like a pawn. She continually violated court orders and was even convicted of contempt of court during her appeal. This defeat couldn’t be clearer,” wrote City Attorney Dennis Herrera. “It’s time for Ms. Kihagi to end her games. This decision will allow the trial court’s full injunction to go into effect, which prohibits Ms. Kihagi from contacting tenants and requires that an independent property manager oversee these properties.”
The $2.7 million, meanwhile, is just the tip of the iceberg. Kihagi owes the city about that much in legal fees for the initial case as well. And that roughly $5.4 million figure has been gathering interest at 10 percent yearly for the better part of two years. Additionally, City Attorneys have been tabulating costs for each and every motion and filing Kihagi has forced them to make in a campaign several have called “legal trench warfare.” City Attorneys are billing for the time they spend filling out forms to tabulate their billing totals. It’s Inception-like. And they’re billing at something like $500 an hour — market rate, more than they earn from the city.
In the end, Kihagi may be out some $7 million.
Or someone will. One rabbit hole she and the city went down (all billed by the City Attorney’s office to the tune of several hundred thousand dollars), was a battle to force Kihagi to take out an $8 million bond in the event of non-payment. The city won that fight, and a bond was, in fact, taken out by Kihagi. And bonding companies do not operate on a charitable basis. If Kihagi is unable or unwilling to pay the price and the city instead recoups what it is owed from the bonding company, then Kihagi’s collateral will, presumably, be forfeited.
It remains to be seen if this is the coup de grâce for Kihagi, who has been cut off from the lucrative income streams that enabled her to leverage purchase after purchase — and, additionally, she will be forced to take a back seat to her wronged tenants Dale Duncan and Marta Muñoz in collecting proceeds from the liquidation of her assets.
Kihagi’s response to all of the above has been to disseminate literal fake news assailing her tenants and the city as her real situation has grown ever more dire.
She will, likely, keep fighting and fighting. It’s all billable hours. Someone will pay.
“This is a fight for justice,” said Peter Keith, the chief of the City Attorney’s code compliance unit. “The attorneys in this office and the folks in the building department have been on this for many years. We’re going to keep going until these buildings are safe and the tenants are secure.”