Update: An earlier version of the chart in this story misstated the overall number of eviction notices in the city. This error has been fixed.
Just as Paul Mooney and his neighbors thought they’d have to fight an Ellis Act eviction in court, a Mission nonprofit came to their rescue.
In an unusual case, landlords of a 12-unit rent-controlled building by Dolores Park dropped evictions against their residents at the last minute, and sold the building to the Mission Economic Development Agency for $7.48 million. Now those units will become permanent affordable housing.
“I am so relieved,” said Mooney, who in 2003 moved to San Francisco for its queer-friendly environment. “The stress of having to worry about where I’m going to live, and whether I have to move and leave the city that I love — that’s gone.”
Mooney’s building at 3661 19th St., a stone’s throw from Dolores Park, was sold to the Mission nonprofit as part of the Small Sites Program, a city initiative that loans nonprofits money to buy a property when its tenants are at risk of displacement. In exchange for the loan, the nonprofit promises to keep tenants in their homes, renovate the aged building, and keep rents affordable in perpetuity.
It’s the happy ending Mooney and his neighbors wanted after weathering two Ellis Act eviction attempts in the last five years. But it only happened after new policies and funding bolstered the recently suffering program.
How it happened
Mooney and his neighbors received eviction notices in 2020. They organized against Ryan Fong, Jeff Pollack, and Pierre and Tracy Malak, who bought the property through their LLC for some $6 million in 2018.
The notices were part of an Ellis Act eviction, a state law that allows property owners to get out of the rental business by removing the building from the market and evicting everyone in a building. But the Ellis Act is often used by speculators who purchase a building at a price based on its rental rates, and then turn around and evict tenants and sell the units as condominiums or Tenancies in Common.
Disability and age concerns pushed the evictions to 2021 but, despite public rallies condemning the owners, the tenants found themselves facing court proceedings by early 2022.
Fate stepped in again: A backlog of court cases caused by Covid-19 kept delaying their court date, buying tenants time to launch more campaigns against the owners.
“The longer the people fight and hold out, the greater the chance to get [landlords] to the table,” Mooney said.
Evictions crashed during COVID,
but now they are creeping back up.
Eviction notices
2,200
2,000
1,800
1,600
1,400
1,200
Nuisance
1,000
800
Non-payment
600
Breach
400
Owner move-in
Ellis Act withdrawal
200
Late payments
Capital improvement
Other
0
’10
’11
’12
’13
’14
’15
’16
’17
’18
’19
’20
’21
’22
Year
Evictions crashed during
COVID, but now they
are creeping back up.
Year
2010
2011
2012
Other
2013
2014
Breach
2015
Late payments
2016
Non-payment
Capital improvement
2017
Nuisance
Ellis Act withdrawal
2018
Owner move-in
2019
2020
2021
2022
0
400
800
1,200
1,600
2,000
Eviction notices
Chart by Will Jarrett. Data from the Rent Arbitration Board.
In November, Mooney and about half a dozen neighbors joined the tenants’ rights group West Side Tenants Association and staged protests at Fong, Pollack and Malak’s Bay Area homes. Later, the group learned that Pollack had previously bought two San Francisco buildings and flipped them into Tenancies in Common. (One was on Albion Street near 16th Street in the Mission.) During an open house for the TIC, the 19th Street residents showed up and approached prospective buyers. “Did you know this is the situation you’re getting into?” They’d say.
By summer, 2022, MEDA caught wind of the property through Mooney’s eviction lawyers and Supervisor Rafael Mandelman. Negotiations started. Karoleen Feng, MEDA’s director of community real estate, said they ensured legal proceedings didn’t jeopardize tenants’ housing.
“We had to be careful when approaching the sellers,” Feng said.
But it wasn’t clear if they had the money. Two years ago the Board of Supervisors directed $64 million to support Small Sites, but Mayor London Breed refused to spend it, citing the program’s financial troubles and problematic policies. But by November, 2022, after a program revamp, funds were added and the money became available. That influx helped MEDA buy Mooney’s building, its first Small Sites acquisition since pre-pandemic 2020.
Now 3661 19th St. is no longer rent-controlled, but it is income-restricted. Thanks to November Small Sites program revisions, there’s more flexibility on tenant income and some of the higher-earning tenants will help subsidize the lower-income tenants.
For example, units can now be rented at or 20 percent below market rate of comparable units.
While the tenants of Small Sites projects generally average 80 percent of the area median income, this property’s residents sit at around 110 percent of that. In 2022, that’s $106,700 a year for one person, or $152,400 a year for a family of four.
Mooney said his rent increased, but is pleased that higher-income tenants will cross-subsidize the building’s lower-income tenants. “If that’s what I need to do to help me and my neighbors stay in our building that’s fine.”
To date, 10 of the 12 units are occupied, housing nearly two dozen tenants who are senior, LGBTQ, Asian American or working class.
Small Sites was originally touted as a way to prevent displacement from speculators. About one-third of MEDA’s 35 Small Sites properties — the most in the program — came about from tenants who heard their landlord was selling the building. That shifted when the city passed the Community Opportunity to Purchase Act in 2019, enabling nonprofits to scoop properties straight off the market.
On Thursday, Mooney and neighbors will celebrate the win. Mooney loves that he can continue enjoying his tree-lined view, and close access to Dolores Park. “This experience has taught us that there are different ways you can win,” Mooney said. “Winning and defeating an Ellis eviction doesn’t mean defeating it in court. The Small Sites program can help people stay in their homes.”
What a scam. It’s a building full of people making 6-figure incomes who could afford to rent (or buy) another place almost anywhere in the city. Instead, they suck at the government teet getting free lawyers paid with our tax money, MEDA buys the building with our tax money, and now the City subsidizes them in perpetuity with our tax money. The sense of entitlement is staggering.
Some these properties that are owned by “non profits” are running into dilapidated, disrepair, worst condition than they took over, and has their rents jacked up to “market rate”, helping out low income tenants is one thing, provided these “non-profits” know what they’re doing, not just creating an income stream for themselves under the shadow of “non-profit”.
Those are false assumptions. The city committed $9.9 million in permanent financing for the building, including acquisition and rehab. “The building is now preserved as permanent affordable housing and will undergo rehabilitation to address seismic, electrical, plumbing, elevator, and roofing upgrades.”
Yes, the irony is that when a non-profit takes over a building it loses rent control, which can mean higher rents and easier evictions!
The other odd thing is that a successful lawsuit for wrongful eviction typically gets the tenant an award of 50K-150K, less legal fees and taxes of course. Agreed payoffs are similar or less. But this is costing the city at least five times that amount, just for starters. Could end up costing a million per tenant “saved”. Stunning.
Let me get this straight: the city is paying $650k per unit up front and who knows how many operating subsidies into the far future to bail out a bunch of high income tenants and this is a cause for celebration? The owners made $1.1m on the sale during a period where multi family properties have plummeted in price. This is a huge waste of city funds that could have been spent on new subsidized housing if only that were legal and feasible to build.
Moreover, since the higher income tenants are forced to subsidize the rent of the lower income tenants, over time the higher income tenants are more likely to get fed up with that and move out. And that means higher deficits and operating subsidies forever.
If no private landlord could make this building work with those tenants and rents, then the city cannot either. The property tax alone will be about $90,000 a year.
Those are false assumptions. Many tenants forgo relocation payments and accepted higher rent. In addition, one of the benefits of being affordable housing is the building forgoes property tax.
Forgiving property tax _is_ an ongoing subsidy! That’s $90k/yr the city could have been spending on something else instead of subsidizing apartments for above average income earners! Pretending that this is good while new development is gentrification is mind boggling.
If no property tax is due on such a building then it costs the city even more because of the lost revenue.
Am I the only one who cringes when I read this sentence?
“To date, 10 of the 12 units are occupied, housing nearly two dozen tenants who are senior, LGBTQ, Asian American or working class.”
It is emblematic of the corruption in SF’s affordable housing apparatus that the small sites program fought for by the San Francisco Community Land Trust 15 yr ago (opposed vigorously by CCHO at the time) has been hijacked from democratic coops by politically connected nonprofits that expanded their portfolio to hold small sites in their authoritarian corporate model.
“Ryan Fong, Jeff Pollack, and Pierre and Tracy Malak”
Remember these names.
These folks are the worst of the worst serial Ellis evictors and TIC flippers.
3661 19th St. is one of many victims and only the scope and size of the mass eviction got their names in the press. They’re spreading havoc all around town.
It boggles the mind. What do they tell there kids they do ?
“Well, daddy throws old and poor people out into the street so he can make some easy money.”
It’s also amazing rich folk are so desperate to live in San Francisco that they would purchase an Ellis’d TIC with all the encumbrances going along with that.
Never mind the moral issue of supporting a process of kicking people out of their homes.
Private property rights are one thing.
Using this right to systematically de-house people is the devil’s work.
The average income of the tenants in this building is above median so the proposition is: daddy makes a living paying well off professionals $100k a piece to find a different apartment and then coordinates the immense amount of labor to renovate a neglected building in order to make a modest profit in a city where idiocy and NIMBYism has made new housing a rarity.
I could live with that! There’s certainly less honorable pursuits. You could work for Calle 24.
Luckily, it didn’t work out for these speculators Jeffrey Pollack and Edith Wong. Between this property and other properties where they tried to evict seniors through the Ellis Act, they lost millions from their mortgage at Conventus LLC, legal fees, and maintenance cost. I doubt they will attempt this in San Francisco ever again.
Sad the city kept someone from making an honest living renovating its depleting housing stock. Now it has foisted that responsibility on tenants and MEDA. Fast forward 20 years and you’ll have SF Chronicle articles talking about the plight of tenants in poorly maintained, nonprofit operated buildings a la Chinatown SROs.
Koutsos, are you claiming to have seen their financial statements and tax returns? If so, how, as those are confidential.
Magical thinking.
I would not be happy being told that I had to subsidize other tenants in my building just because I make more than they do. But I guess these purchases of buildings with low-rent tenants cannot pencil out financially otherwise. And the owners still made a nice 25% profit on the deal, so is everyone happy?
These CLT purchases don’t pencil in general. The city is constantly having to bail them out with operating subsidies. That’s one of the reasons the mayor paused the program.
Ron, it sounds like you don’t have the same values as others, which is your right of course but other people, making well over 100k a year don’t seem to care if they can help others stay in their homes.
Its a small price to pay to have a vibrant city full of all sorts of people.
Interesting that you equate “vibrant” with “low income”.
But that aside isn’t the real problem here rent control? Ellis evictions are a state-wide resource and yet they only happen in towns with rent control. A policy that punishes those who provide rental housing must inevitably lead to less offered housing and so higher rents.
Rescuing your friends and co-tenants may require a shift in your values. That is, towards a willingness to prioritize community wellness. Moony is smart. If his sentiment were the norm, and if housing was regulated in this small sites MEDA model, we wouldn’t be stuck in our dystopian universe of homelessness.
I’d say that’s optimistically naive at the minimum. There is WAY more at play when it comes to homelessness than just expensive rent and do-gooder property owners and co-tenants helping each other out. This is coming from a person who has, in more than a few instances, helped friends and family try to catch up or get ahead.
An unpopular but wholly objective take is that paying rent at a heavily subsidized or grossly undervalued rate in a world where inflation is very real and housing is competitive requires a lot more than regulation or subsidy to fix. It just kicks the can a lil further down the road at best.
What’s the alternative ? The low income tenants becoming unhoused ? It’s more expensive to shelter the unhoused than to keep them from being evicted in the 1st place. It’s also a mixed income bldg now.
The Landlords borrowed around $5M at nearly 10% interest. They did not make a profit, but took a huge lost. Do the math.
You overlook the rent received, as did I for that matter.
Not sure how you can claim to know the terms of their mortgage since that is private information. But anyway all their expenses are tax deductible.
The owners were under no obligation to sell. I am familiar with another building that sold this way and the city had to out-bid all other buyers. In this case the city paid $650,000 a unit for what look like small units in bad condition, with rents that can surely barely cover the outgoings.