For $1,590 a month, all Anna Chase wanted was a room in a shared San Francisco home with six other young professionals, which would spare her the ordeal of commuting to her executive assistant job in SoMa from Santa Clara (oof) and living with family as a gainfully employed 34-year-old (double oof).
She got this. But the people at HubHaus, the third-party online platform that operated the sprawling 10-room house owned by a family trust, wanted more. They wanted to foster a community. In the lease for 255 Maywood Drive, in the exclusive Monterey Heights neighborhood — none too far from the tony St. Francis Wood — there’s actually a section titled “Be Good To Each Other.” The young professionals paying HubHaus a purported total of around $9,200 a month were expected to “be an active member of their community” and “encouraged to participate in, and help organize, house dinners, housemate hangouts, community events, etc.”
Chase says the company, to its credit, took this community-building ethos seriously. There were, indeed, house dinners, housemate hangouts, community events, etc. with HubHaus residents from this and other Bay Area cities. They took this more seriously, she bemoans, than fixing the oven, which was unusable for months, or repairing the heat, which was essentially on the fritz from November until April.
Complaining about maintenance problems actually became a bonding experience. But to really galvanize that community bond between Chase and her six roommates, HubHaus had to evict them.
In June, this happened. And, now, the tenants have banded together and lawyered up.
Monterey Heights is a realm of labyrinthine streets lined with stately stucco manses. It’s the sort of place where the neighbors would notice the installation of a garden gnome absent the proper permitting. They certainly noticed seven young people being shoehorned by a for-profit tech platform into a single-family home, in a neighborhood exclusively zoned for single-family homes.
Complaints were registered. Unnerving notices from the city were tacked to the home HubHaus christened “Ophelia Haus.” And it soon became evident that one group HubHaus had failed to foster a community relationship with was San Francisco’s planning and building departments.
After several months of inspections and written and verbal communiques, the city in May ruled that, whatever legerdemain a tech platform and its attorneys may employ, seven strangers paying above-market rent to a third party operator do not constitute a “family.” And, in this neighborhood, “Group Housing uses are not permitted.”
One month later, the residents of Ophelia Haus were informed by HubHaus, in writing, they would have to vacate the premises within 30 days. Planning Department officials confirm the home was subsequently “vacated” and is, apparently, vacant still.
But, says Joe Tobener, an attorney for all seven former Ophelia Haus residents, this isn’t over. HubHaus, he says, either cavalierly ignored or knowingly violated a bevy of legally enshrined San Francisco tenant protections in summarily ejecting Chase and her roommates. He objects to this.
But, more deeply, he objects to a corporate outfit “undermining the notion of roommates” and driving up the already parodic cost of housing in San Francisco. His fair market value expert, Gavin Coombs, pegs the rental value of this home at around $7,000 a month — at least $2,200 less than the cumulative total the Ophelia Haus denizens handed over each month to HubHaus.
HubHaus’ business model, it would seem, is dependent on exacerbating the already onerous cost of housing in San Francisco.
And, in this case, that’s illegal, Tobener says. HubHaus, he claims, is a de-facto master tenant. In this city, master tenants can’t legally profit off the arrangement.
Obviously we had many questions for HubHaus CEO Shruti Merchant, who surely must see things differently. But she would not consent to an interview without the ability to approve her quotes before publication.
While this is not an unusual ask in the tech, business, or celebrity press, it’s not something any self-respecting mainstream journalistic outfit would consent to. Mission Local would not grant this courtesy to any CEO, politician or Christ descended from heaven.
Merchant agreed to submit written answers to our written queries. On Thursday afternoon we sent nine questions. She subsequently responded with an anodyne statement that didn’t really address them. For full transparency’s sake, here’s the complete interaction.
Thursday was a busy day for HubHaus. At around the same time we emailed it our questions, Tobener’s firm sent a “demand letter,” the legally mandated precursor to litigation regarding alleged unfair evictions.
In it, Tobener’s firm requests HubHaus participate in mediation — as, he notes, requesting mediation prior to litigation was a stipulation in the leases between HubHaus and its former tenants.
Chase and her former roommates, the lawyer continues, are entitled to redress and moving costs and emotional distress and whatnot. If the company agrees on mediation, this will be hammered out there. But what Tobener seems to really want to do is put this highly capitalized tech company — with its $10 million in Series A funding — into a courtroom.
He talks like Conor McGregor spoiling for a fight — a fight he’s sure he’ll win (and bombastic moves may not hurt in a settlement chase, either).
“They really stepped in it in this case,” he says. “This is a slam dunk for us.” Noting HubHaus’ deep pockets, he adds, “You can see why we’re super excited about this.”
The erstwhile Ophelia Haus residents’ potential legal case comes at a time when this city’s tenant activists — and elected officials — are growing increasingly agitated over the proliferation of so-called “corporate rentals.”
“Corporate rentals convert housing that should be available for people who want to live in San Francisco as residents into housing for business travel or other uses basically for non-residents,” says Gen Fujioka, the veteran policy director for the Chinatown Community Development Center. “The scope and scale of it seems more significant now.”
Fred Sherburn-Zimmer, the director of the Housing Rights Committee, claims that, along with sub-30-day short-term rentals like Airbnb, lengthier “corporate rentals” are “spiking radically lately.” Monetarily, it’s not a complicated equation: Short-term occupants in de-facto company housing or Airbnb users are more lucrative than tenants who might live in those units for decades to come — with rent control in pre-1979 structures.
The recent revelation that a nearly complete 62-unit structure at Market and Church will nearly entirely be leased over to a company providing lodgings for extended-stay business travelers helped prompt Supervisors Hillary Ronen and Rafael Mandelman to order a comprehensive analysis of “the proliferation and impact of corporate rentals in San Francisco” from the city’s Budget and Legislative Analyst. Simply by combing through online rental sites, Ronen estimates at least 100 such units in the Mission alone.
“The threat is, we’re cannibalizing housing stock for something that isn’t truly housing,” explains Mandelman. “This isn’t housing for San Franciscans. It’s an amenity for businesses.”
HubHaus is, if anything, merely a cousin to these types of outfits. You can draw your own conclusions about what manner of renter will blithely fork over $150 or more for “heat” and “window screens” — the sort of thing a landlord is required to provide — or use of a microwave, which can be obtained for a pittance off Craigslist or from any thrift store.
But people like Anna Chase definitely wanted to live in San Francisco and be San Franciscans. Merchant writes that “we believe San Francisco and other communities will benefit from progressive housing situations such as we offer our members.”
And, to an extent, this is true. It’s hard to get too apoplectic about the introduction of density into the Westside. In some neighborhoods, informal boardinghouses and flouting of quaint single-family zoning are already commonplace. Your humble narrator, in fact, resides in the Excelsior, where there are so many people living in the house next door, they don’t even know the exact total.
This is, incidentally, our neighborhood polling place.
It’s safe to say, however, that the handyman and the Uber driver and the retired Navy vet who fixes his Trans-Am all day long and the hairstylist with the cute toddler who loves Batman aren’t paying $1,750 a month — as HubHaus dwellers are — plus extra for a window screen, WiFi and heat.
“We had an unfortunate issue in the City of San Francisco, where as you know, the City believed our housemates did not fit in their definition of a ‘family,’” wrote Merchant. “We disagree with the City’s position and appealed.”
She places the blame for Ophelia Haus tenants getting the boot on the city and the property owner.
A tech CEO attempting to disrupt the dictionary and legal definition of “family” with its own highly selected group of young professionals paying above-market rent is something that would be a bit too on-the-nose for even Silicon Valley. As would a tech platform professing to provide “progressive housing situations” using a business model that extracts profit by goosing the rental costs of the nation’s most expensive rental city.
You can’t make this stuff up. But why would you?
“Is this a way to provide housing?” asks Fujioka of HubHaus. “Or is it a way to extract more dollars and exploit the fact we’re in a housing crisis?”
The answer appears to be “Yes.”
Tobener’s legal strategy is multifaceted. As noted above, he claims HubHaus, the de-facto master tenant, was illegally “rent gouging” by charging the tenants more than it presumably paid the home’s owner. And, in dividing a single-family home into seven units — and signing seven leases with seven residents in seven bedrooms — Tobener says HubHaus inadvertently triggered rent control protections.
This would mean the Ophelia Haus denizens were covered by “just cause” eviction protection, and could only be given the heave-ho for one of 15 legally defined reasons. And, no, we failed to square our business model with the city and now you all have to leave is not one of those reasons.
And yet, this is only the case because the structure formerly known as Ophelia Haus was built in 1940; post-1979 structures are, by and large, not covered by rent control, and tenants there are entitled to far fewer protections and remedies.
“If this was a building built in, say, 2000, they wouldn’t have rent control,” says Tobener’s associate, Jim Lucey. “They wouldn’t have eviction protection.”
Merchant did not answer any of our questions regarding San Francisco tenancy laws. She did, however, concede that “We are working to revise our off-boarding policy based on feedback to create a better experience in the event something like this ever happens again.”
If Tobener has his way, it will.
Chase, meanwhile, managed to find another shared living situation. She now has six new roommates. And she’s now paying her rent (“about the same”) to a different third-party platform that acts has her de-facto master tenant.
She laughs at the ridiculousness of it all.
You can’t make this stuff up. But why would you?