Will these 25 newly renovated SRO rooms be low-income housing — or tech dorms?

Brand-new individual bathrooms with showers. Newly painted walls. Crown molding. By all appearances, the 25 rooms at 3061 16th St., a 103-year-old single-room occupancy (SRO) hotel that long housed the Mission’s indigent, now appear primed and ready for young tech transplants. 

“This place is ideal for something like that,” said the building’s owner, Sam Devdhara. 

But Devdhara insists he’s going another route: These rooms, he said, will very likely go to low-income tenants — as envisaged in the 1981 legislation that protected the rooms for the city’s low-income population. 

Devdhara said he plans to rent them to the city at market-rate prices, while the city contracts with nonprofits to, in turn, rent the rooms to low-income tenants at dramatically reduced rents. This would be through the “master leasing” program, which has housed upwards of 4,000 people in more than 40 hotels in the past two decades and change. 

“From a business standpoint, I see it as a long-term deal — a win-win situation,” Devdhara said. “It works for the city. It works out for me.” 

Still, Devdhara stopped short of committing. He said that option “may” work better. “Right now, all our options are open.”

The single-occupancy hotel units — each with its own bathroom, a luxury in the SRO world — will come online in the next two months.

Illegal Construction 

But while low-income tenants may well occupy the pristine new units, Devhara’s renovation of 3061 16th St. was problematic and, at times, illegal. 

“When I took over, I was able to get rid of the troubled, mainly non-tenants hanging [around] in the building and creating nuisances in the area,” he said. 

That’s one way of putting it. 

According to records with the Department of Building Inspection, Devdhara began to renovate the building without the proper permits while several tenants were still living there.

During a February 2015 visit, building inspectors discovered “demolition materials from the walls scattered around the public hallways and stairways” and “no containment in place … to protect the occupied units at the time.” 

Those demolition materials — found in piles on the residential floors of the building — showed “the presence of asbestos and lead,” according to tests by the Department of Public Health conducted around the time of the inspections. 

Moreover, inspectors discovered “raw sewage” in an “open sanitary facility on the occupied floor.” 

“The fire safety systems, including but not limited to central alarm, fire-resistant passageways, and sprinklers were not in working order with live/exposed wires noted throughout the property,” reads an inspection report. 

The illegal construction forced at least one tenant living at the hotel — William Reynoso — to leave, a departure he claimed was effectively an illegal eviction, according to a February 2015 rent board complaint. 

“The tenant contends that the renovations made the building uninhabitable and that he was forced to vacate on February 3, 2015,” reads the Feb. 25, 2015 complaint. “Nevertheless, the tenant reports that the landlord has refused to pay the relocation payment required by [the law].” 

Sanyika Bryant, an SRO services organizer with Causa Justa: Just Cause, a tenant advocacy organization, said that he worked with Reynoso, who has purportedly left California. Bryant said he and other tenant organizers believed Devdhara was renovating the building to be “tech dorms.” As is his right.

“There’s nothing in the law that says he can’t rent out to whoever he wants,” Bryant said. 

Making it pencil

Indeed, according to the 1981 city ordinance, the so-called “The Residential Hotel Unit Conversion and Demolition Ordinance (HCO),” as long as the units are for residential use, SRO rooms can be rented out to anyone, at any price. However, the intent of the law was quite different. It reads, “The purpose of this ordinance is to preserve affordable housing by preventing the loss of residential hotel units through conversion or demolition, and to prevent the displacement of low-income, elderly, and disabled persons.” 

The average rent of the remaining units has increased by 74.5 percent, due partly to prevalence higher-priced SRO units, according to Department of Building Inspection data. Some SROs in the Mission rent as high as $2,000 a month. Average rent in 2013 was $536 and it is now roughly $935. 

In 2013, there were 19,008 units in the city, according to the Department of Building Inspection, and in 2018 that had increased to 19,119. 

As the competition for living space has increased, many a low-income, elderly or displaced person has been pushed aside by the higher rents now sought by SRO owners. That’s what happened at 2072 Mission St., where Starcity Coliving, a developer that specializes in “co-living” spaces, renovated a 16-unit SRO and started charging $1,900 to $2,100 a month, per room.    

In recent years, this has allowed so-called “tech dorms” to proliferate. 

The newly renovated rooms at Devdhara’s 3061 16th St. building, formerly the Eula Hotel, look pristine, each with its own bathroom and shower. They could go for $1,900 to $2,100 a month, but that doesn’t seem to be in Devdhara’s plans. 

He does have a record of successfully operating within the master lease program. In 2014, he was among the developers who renovated the “horror show” SRO at 250 Kearny, which created 130 renovated SRO units for veterans. 

In addition to refurbishing SROs, Devdhara and his hotel group, Core Hotels LLC, owns 18 guest hotels throughout California.  

Devdhara “has been an honest partner and offered his buildings to house homeless and formerly homeless people and other people often discriminated against in our housing market,” wrote Sam Dodge, formerly the deputy director of the Department of Homelessness and Supportive Housing, in an email.  

Dodge said, however, that the city might not take 3061 16th St. for the master lease program because the hotel is only 25 rooms. “To me it is never a good master lease option because it is too small,” Dodge said. 

The city master-leases 45 buildings throughout San Francisco, all of which are residential hotels. 

Master leasing, Dodge said, works better when the buildings are larger and can be operated cost-effectively in serving more people. Smaller buildings like 3061 16th St. work best for the city’s so-called “Step-Up Housing,” for tenants who have stabilized and no longer require the supervision of desk clerks.

But: “I don’t think the Eula works exactly on that level,” Dodge said, referring to the hotel on 16th Street. “Clearly, 16th and Mission and Julian (Street) are both areas still very active and may need a desk clerk if it was Step-Up Housing.” 

He said the building could still be desirable to the city. “But that had been my thinking previously when talking with Sam about this building,” Dodge said, “it would have to be a very affordable lease.” 

Luckily, Devdhara has options.