SAN FRANCISCO (CBS SF) — A San Francisco couple has been fined $2.25 million and ordered to not engage in listing their real estate properties on sites like Airbnb until 2025 for repeated violations of the city’s short term rental laws, the city attorney announced Monday.
City Attorney Dennis Herrera said landlords Darren and Valerie Lee have been running “an illicit hotel chain” during San Francisco’s housing crisis rather than lawfully renting the units to residential tenants.
Herrera first sued the Lees in in April 2014 after the couple evicted tenants from their property at on Clay St. using the Ellis Act and then unlawfully converted it into short-term rentals.
The Lees settled in May 2015, agreeing to pay $276,000 in fines and a court-authorized injunction prohibiting them from maintaining any of their San Francisco properties as short-term rentals.
The injunction covered 17 buildings with more than 45 units.
After a painstaking two-year investigation, Herrera’s investigation found in just the first 11 months of the injunction being in place, the Lees violated the court order more than 5,000 times, booking more than $900,000 in short-term rentals.
None of the units in question were ever registered with the city Office of Short-Term Rentals, making each short-term rental illegal and a violation of the injunction.
Herrera’s office alleged that the Lees use an elaborate scheme where friends, family and associates — none of whom lived at the properties — posed as straw tenants or Airbnb hosts to illegally advertise and rent 14 residential units for short-term stays.
The scheme included drawing up phony leases and even staging the apartments to look like they were being lived in — complete with dirty dishes and damp towels — before city investigators inspected them.
However, every apartment was staged in the same way.
“They had the same Costco food items scattered about, the same arrangement of dirty breakfast dishes in every kitchen sink, same personal products in each bathroom, same damp towels artfully draped over doors as though someone had recently showered,” officials said in a news release.
“The Lees are some of the most egregious, repeat violators of the City’s short-term rental laws,” Office of Short-Term Rentals Director Kevin Guy said in a press release. “They have taken units off of the market that should be reserved for long-term San Francisco residents. It is extremely gratifying to see them being brought to account for their actions.”
Herrera said the stiff fine and ban sends a message to others who are violating the short-term rental laws.
“It sends a clear message to those looking to illegally profit off of San Francisco’s housing crisis: Don’t try it,” he said. “We will catch you. Most importantly, we preserved more than 45 housing units to be used as homes, not hotel rooms.”
The buildings covered under the injunction are: 439 Broderick St., 645-647 Broderick St., 3073-3075 Clay St., 417-419 Clayton St., 1146-1148 Fell St., 1324-1328 Fell St., 1522-1524 Fell St., 140 Graystone Terrace, 150 Graystone Terrace, 1109-1123 Leavenworth St., 1925-1927 Lyon St., 822-828 Masonic Ave., 1145-1149 Mission St., 14 Surrey Ave., 543 Oak St., 831-833 San Jose Ave., and 1362-1364 Utah St.