Parker Yesko Archives — San Francisco Bay Guardian Archive 1966

Rights and wrongs

Michael Redmond

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October 1, 2013

news@sfbg.com

On a February evening in 2011, Derrick Walls ran into a friend at a bus stop near Third Street and Palou Avenue in the Bayview. Walls was headed to view a used car he thought he might be interested in buying. The men chatted briefly and, as the 44 bus rolled into sight, Walls shook his friend’s hand to say goodbye.

Seconds after they parted ways, a police cruiser passing on the other side of the street pulled a U-turn, screeched to a halt, and discharged police officers who quickly apprehended both men.

“I guess they thought they saw something,” recalled 43-year-old Walls. “I was just talking to my friend. I was going to leave because the bus was coming and I shook his hand to say ‘see you later’ and I guess the cops saw that and thought it was a transaction.”

The officers searched both men at the site. Their discovery of cash on Walls and drugs on the other man seemed to confirm that they had just witnessed a drug deal. The $1,680 Walls had saved up for a new car was alleged to be the sale’s proceeds and confiscated on the spot as evidence.

Later on at the station, a strip search of Walls yielded no evidence of drug possession or intent to sell. His friend copped to the drug charge but confessed that he’d purchased his stash elsewhere — not from Walls.

Three days later, Walls was released from custody and all charges against him were dropped. Two and a half years later, however, the city still has his money.

“I never went to court or anything,” recalled Walls. “You would think they would just give my money back right then. But they told me to go to [the civil courthouse on] McAllister Street to some other people.”

TWICE WRONGED

How assets seized in a criminal investigation migrate from the jailhouse to the civil courthouse — and how those wrongfully accused of crimes can get their money back — is not always clear.

“The state has such incredible power to wield and people have very little recourse,” says attorney Nick Gregoratos with Prisoner Legal Services, a division of the San Francisco Sheriff’s Department that helps the accused assert their rights.

San Francisco Police Department spokesperson Gordon Shyy would say only that the police follow the Department of Justice’s Asset Forfeiture Policy Manual and that they “don’t seize assets on the street, they take things as evidence.”

But that “evidence” often stays in the bank accounts of police or prosecutors, subsidizing their operations. DOJ guidelines say that when assets from a criminal investigation cease to have evidentiary value, they can be returned through an administrative or civil process.

“Approximately half the time, people contest the amount or contest it in its entirety,” said Assistant District Attorney Alex Bastian, who estimates that the San Francisco District Attorney’s Office handles 200 to 250 asset forfeiture cases per year.

“There are certain situations where if a charge is dropped, there is still, in fact, a forfeiture proceeding that goes forward,” Bastian explained. “There’s a criminal proceeding beyond a reasonable doubt and the civil [case] is a preponderance of evidence and the burden of proof is on the party contesting the forfeiture.”

Contesting an asset seizure can be difficult if the claimant is incarcerated or poor. Regulations seem designed to induce fatigue and resignation in those without a lawyer and the costs associated with retaining a lawyer often exceed the amount of money seized in the first place. In some cases, claimants have a right to court-appointed counsel, but they aren’t made aware of that fact.

Gregoratos represented Walls and has, over the years, worked with many others like him who have been deprived of their property without due process.

Gregoratos described another client who had cash seized by police as she was on her way to purchase a money order in SoMa to pay her rent. She was arrested on suspicion of drug sales, but there wasn’t enough evidence to support any charges against her.

The woman was instructed to file a claim within a month to get her money back. But she filed at the criminal rather than the civil court and administrators there waited until just before 30 days were up to notify the woman of her error.

The following morning, her $1,500 was considered officially forfeited because she had statutorily defaulted on her right to file claim.

“There would have been no way that they could have taken her money other than that she couldn’t figure out how to navigate the system and didn’t know her rights,” said Gregoratos, who later filed a motion opposing the default. “Essentially, she’s being precluded from having any judicial review.”

STACKED DECK

Many forfeiture cases unfold similarly, with the government capturing assets through a series of bureaucratic mechanisms stacked against individuals. Claimants are faced unexpectedly with the burden of proof that assets were lawfully obtained, even when law enforcement wasn’t able to meet that burden against them.

Often “the case is handled completely by the [prosecutorial] agency. There’s no judge, no hearing, no evidence, no appeal. So many people still lose by default,” commented Brenda Grantland, a Marin attorney who has fought government seizures for more than 30 years.

Civil asset forfeiture has a long and controversial history in the United States. In the Revolutionary War era, the British were known to impound the property of colonists who had fallen out of favor with the crown, without proof of guilt.

In the War on Drugs, forfeiture gained popularity as a way to strangle the financial channels underlying trafficking operations while providing a funding source for the law enforcement agencies that waged that war.

“The law is so complicated and the agencies are motivated to win these cases because it brings in money to their bank accounts. And they’re hooked on the money now. And the more money they get, the more corrupt they get,” said Grantland, who is president of the Forfeiture Endangers American Rights (FEAR) Foundation.

In 2010, the most recent year for which the California Department of Justice reported asset forfeiture statistics, San Francisco seized $391,643 in 115 separate actions completed in the city. Between 2002 and 2010, it seized nearly $6.5 million.

In most states, asset forfeitures follow federal regulations. In California, the Health and Safety Code dictates that 65 percent of assets forfeited are distributed to the local law enforcement agency responsible for the seizure, while 10 percent go to the prosecuting agency that processed the action and 1 percent go to train those who profit from forfeitures in the ethical application of related laws.

But Grantland says that training has done little to deter a “grab first, ask questions later,” approach. Critics have argued that the practice presents challenges to both the Fourth and 14th Amendments.

SCAMMING THE POOR

Police “don’t have to find any evidence of crime,” Grantland told us. “They have dogs that pretend to be clairvoyant. It’s all a hoax. I don’t care how much they’ve tested and trained those dogs, they can’t possibly know that’s drug money.”

Contrary to its original purpose, civil forfeitures at the local level tend to disproportionately target small-time offenders. Of the seizures completed in San Francisco in 2010, nearly half yielded under $1,000 and one as little as $242. More than three-quarters of forfeitures involved less than $2,000.

“They’re getting money from the weakest, poorest class of people,” Grantland said. “When you seize $500 or $600 every few minutes, it adds up pretty quickly.”

Though the San Francisco Police Department was the beneficiary of $254,568 in 2010 alone, SFPD’s Shyy denied that revenue from forfeitures — which funds equipment purchases, education, and training — influences its policies or tactics.

“If someone has a large amount of cash, we can’t just take it from them. That’s considered robbery,” Shyy said. But that’s pretty much what happened to Walls. “If I did that to somebody on street like that, I’d be in jail,” he said. “But they can just do it to me.”

In the last two years, Walls has complied with all the court’s discovery requests to prove the cash taken from him was lawfully obtained. He has provided paystubs from a longshoreman’s job he has held for eight years at the Port of Oakland.

Gregoratos said that the court “has people over a barrel” and will likely hold Walls’ cash for a full three years. The District Attorney has the option of re-filing a notice of forfeiture until the statute of limitations on the original criminal action is up.

“How are you going to re-file on something that was thrown out? That’s just an excuse to keep my money for a whole ‘nother year,” Walls argued. “I did everything I was supposed to do and they still haven’t given back my money.”

Smartphones trigger rise in crime rate as new iPhone features a fingerprint lock

Sasha Cuttler

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September 10, 2013

10

Smartphones trigger rise in crime rate as new iPhone features a fingerprint lock

Violent crime is on the rise in the Bay Area and the San Francisco Police Department chalks it up to smartphone snatchers, a trend that is being countered by an initiative from the District Attorney’s Office and today’s announcement by Apple of a new iPhone that requires the owner’s fingerprint to unlock.

The FBI’s 2012 Uniform Crime Report, released in June, documented surges in crime in cities across the Bay Area, including Berkeley, Oakland, San Jose, and Richmond. In San Francisco, violent crime increased 7.5 percent in 2012 and property crime spiked 18.3 percent. In 2013, those figures have climbed another 10 and 12 percent, respectively.

Asked for an explanation of the recent trend, SFPD spokesperson Tracy Turner told us that it’s due in large part to “increases in the theft or robbery of cell phones.”

“I can’t think of any other expensive item that people walk around with in their hand in public,” she said. “They’re more available to everybody and yet they’re slightly more expensive.”

Turner also cautioned that it’s not just iPhones that thieves go after, but all types of smartphones and also, more recently, tablets. “Those are the kind of items that people are absorbed in while they’re in a public place and they’re easy targets,” she explained.

Nathan Rapport, a resident of the Lower Haight, had his iPhone, iPod, and wallet stolen shortly before midnight last Wednesday as he approached the intersection of 14^th and Sanchez on foot.

“I sent a text probably a block away. Who knows if they saw the light down the street,” he speculated of the pair of thieves who drew a gun on him and demanded his possessions less than a minute later. The responding officers remarked that similar altercations often escalate, ending in physical harm to the victim.

“They said that they were surprised that it wasn’t more violent based on what they’ve been seeing lately in the neighborhood. It’s not usually just a snatch. You get pistol-whipped or there’s something else attached to it,” commented Rapport, who felt fortunate that, in his case, the incident “was strictly a business transaction.”

In San Francisco, “over 50 percent of daily robberies have to do with smartphones and up to 67 percent of robberies include mobile devices of any sort,” said SFPD Officer Danielle Newman.

District Attorney George Gascón has taken these statistics to heart in a newly crafted crime reduction strategy. He is co-chair of the Secure Our Smartphones Initiative, which has been endorsed by law enforcement agencies in 17 states.

In a June press release, the coalition wrote, “It’s time for manufacturers and carriers to put public safety before corporate profits” and he called on them to implement a “kill switch,” which could remotely disable phones reported stolen.

“Unlike other types of crimes, manufacturers and carriers have the ability to end the growing number of smartphone thefts with a technological solution,” the statement continued. A purloined phone’s value “would be equivalent to that of a paperweight. As a result, the incentive to steal them would be eliminated.”

At a hotly anticipated product launch this morning in Cupertino, Apple unveiled two new iPhone models. One, the 5C, is a budget design developed mainly for distribution in overseas markets and the other, 5S, includes fingerprint scan technology in the home button as a security measure. Industry analysts have been abuzz for weeks with speculation as to whether the newly impregnable button would be an innie or an outie.

As expected, the flashy new feature resulted in a minor anatomical change to Apple’s most popular product. Its rollout will have an even broader impact, however, as it alters the distribution of security across different countries and socio-economic classes. In its next major product development, perhaps Apple will take a cue from Gascón and put as much effort into democratizing safety as it does to democratizing its brand.

Mission eviction leaves activists without a home base

Sasha Cuttler And Mary Magee

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August 28, 2013

101

Mission residents who abruptly lost their battle against eviction Aug. 27 were given one last chance to retrieve belongings from their loft before their locks were changed by the landlord and sheriff.

The group of artists and activists occupied a 5,300 square foot space on the second floor of what’s known as the 17 Reasons Building, located at 3265 17th Street. They had been tipped off that the eviction might take place yesterday afternoon, after a request for a stay was denied during a morning visit to the courthouse. They headed straight home from there.

When they reached their loft, tenants Chema Hernández Gil and Alisha Pelton encountered an eight-officer sheriff escort with the building’s owner and a locksmith. “Do we have a chance to take our stuff out?” Hernández Gil asked the sheriff’s deputies, as he photographed the scene.

An officer permitted the pair to enter the unit for one minute to collect essentials. For everything else, they would need to contact the landlord within 15 days to arrange a time for pick-up.

Pelton’s sixty seconds were spent retrieving a small bench, a pot, and kitchen utensils. Gil emerged with a bicycle fork and a wooden poster for Food Not Bombs, a volunteer movement that provides free vegetarian meals to the hungry. Hernández Gil feared that much of the food left behind in the space, which served as the organization’s cookhouse, would spoil in his absence.

The eviction has been pending since the building was purchased by Rick Holman, head of Asher Insights, for approximately $16 million in early April. Not a week passed, according to Hernández Gil, before Holman made moves to evict the group, comprised of several collectives including Food Not Bombs, In the Works, and Rincon. “He’s told other tenants that the square footage is worth three times what we’re paying,” explained Hernández Gil.

Chris Cook, an organizer with tenant-activist group Eviction Free Summer, said “from the start, since [Rick Holman] bought this building, he’s made it clear that his intention was to get rid of folks that stood in the way of making this the profit center that he was hoping for.” Holman did not respond to the Guardian’s requests for comment.

Holman’s eviction notice cited breach of lease for “unpermitted subletting,” but Hernández Gil said the building’s previous owner had authorized the arrangement for two years. At its peak, roughly 16 tenants were using the space, half of which was available as a venue for free community events.

In the months following the filing, however, the tenants’ ranks had dwindled. Over the summer, they faced harassment from their landlord, who changed exterior locks without notice and posted security guards requiring a California ID for access to the building, effectively blocking entry to residents from out-of-state.

“What’s infuriating to many of us in the community,” argued Cook, “is that many landlords are seeing that it is okay to just uproot people and totally disrupt their lives … This is something that has a concrete human impact.”

Eviction Free Summer activists held a rally on Tuesday night in support of building tenants. A Facebook posting for the event, which floated the question “Is Thrift Town Next?” caused a bit of a stir online, prompting a response from Thrift Town’s President and CFO, Lane Steinmetz.

In an August 28th letter posted to the group’s Facebook page, Steinmetz said the store had “just signed a renewal agreement for five more years,” and that it has “been very pleased with the actions by our new building owner to improve the safety and security of [the] property.”

“We don’t have any problem with [Eviction Free Summer’s] message. We just don’t want to be looped in on it because our lease is secure. The landlord’s been fair and good to us,” co-owner and Vice President of Marketing for Thrift Town, Wendy Steinmetz replied when the Guardian asked for clarification. She said references to Holman’s improvements were not related to the eviction.

Hernández Gil asked sheriff’s deputies at the scene why he hadn’t been served with the advance notice mandated by law. Officer Miramontes said he didn’t know the specifics of the case, but commented that evictions like this have been on the rise. The Sheriff’s Department, he said, oversees 20-25 actions of this sort per week.

The only formal 5-day notice came on August 7, but that eviction was postponed when a September 18 hearing was scheduled for the tenants’ relief of forfeiture action. Gil didn’t expect another attempt before then. The group’s legal team has been particularly concerned with minimizing disruption to one tenant who has advanced AIDS and is unemployed. As of yesterday, he is also homeless.

“By evicting tenants for profit, speculator landlords like Rick Holman and his wife/associate Toby Levy are playing a truly destructive role in the community. There has to be a social and economic price for landlords who do this,” Cook said. “Holman, Levy and others cannot pretend to care about this city and this community and then uproot people like this and effectively boot them out of the city altogether given how utterly insane rents have become.”

Several other tenants met up with Hernández Gil and Pelton as they exited through the rear of the building onto Capp Street. The group, lead by Hernández Gil, wheeled two shopping carts of possessions southbound to the San Francisco Tenants Union headquarters, where they planned to evaluate their options.

Meanwhile, Pelton loaded her few salvaged items into a ZipCar and wondered how she’d gain access to the rest of her belongings. “We’ve been locked out for months and months at this point, why should we believe the landlord will let us in now?”

When asked where she was headed, she offered up what’s becoming an all-to-familiar last resort for displaced San Franciscans. To find something affordable, she said, “we had to move to the East Bay.”

A pair of Spades wins

Michael Redmond

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August 27, 2013

8

A strong showing by small businesses and activists concerned about chain stores and gentrification in the Mission won over a 3-2 majority on the Board of Appeals on Aug. 21, but their appeal of a city ruling that Jack Spade isn’t a formula retail business was denied anyway because it needed four votes.

The Valencia Corridor Merchants’ Association challenged the Planning Department’s June decision to issue a building permit to Jack Spade, a men’s clothing chain moving into the old Adobe Bookstore location on 16th Street. Officials ruled that chain has fewer than 11 locations, so it wasn’t required to go through the conditional use hearing required of “formula retail” businesses.

Though it indeed has only 10 locations, Jack Spade “has a complete imbalance of power and resources, which is exactly what the formula retail legislation aimed to remedy in the first place,” Mission activist Kyle Smeallie told the Guardian. Jack Spade is owned by Fifth & Pacific (aka Liz Claiborne), which also owns the Kate Spade women’s clothing chain. “We’re going to make the case that, since it’s named Spade, it has benefitted from the association with Kate Spade,” Smeallie explained. “Legally, we have a case to say a Spade is Spade and they should be considered one and same.”

Local business owners fear that an influx of chain stores will drive up commercial rents in the Mission and force them out of business. “I’m strongly opposed because of its potential to destroy the culture of this area,” Michael Katz, owner of Katz Bagels across 16th Street from the site, told the Guardian. “If they start allowing chains to come, it will be one chain store after another.”

Activists say they’re considering their options and not yet ready to give up.

Activists say a pair of Spades could beat culture and small business in the Mission

Sasha Cuttler

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August 20, 2013

94

[UPDATE: The Board of Appeals last night voted to 3-2 that Jack Spade should be considered a formula retail business, short of the four-vote supermajority that activists needed to sustain their appeal.]

Progressive activists and small business owners in the Mission are trying to draw the line against the creep the of corporate chain stores — with their homegeneity and tendency to drive up commercial rents — and they’re drawing that line at the old Adobe Bookstore where the Jack Spade corporate clothing chain was trying to quietly sneak in.

“I’m strongly opposed because of its potential to destroy the culture of this area,” Michael Katz, owner of Katz Bagels across 16th Street from the site, told the Guardian. “If they start allowing chains to come, it will be one chain store after another.”

Katz has already been experiencing the flipside of these economic boom times, recently forced to close his shop on Mission Street near 2nd in SoMa because of rising rents and competition from both food trucks and corporate-backed competitors. Now, he’s fighting to defend his Mission District turf against deep-pocketed competitors.

“This will change the special personality of the 16th and Valencia corridors,” Katz said. “It’s turning it into a commodity.”

Katz is among the dozens of people planning to show up tomorrow for the San Francisco Board of Appeals’ hearing (Wed/21, 5:00 PM, City Hall Room 416) on the Jack Spade store. The Valencia Corridor Merchants’ Association is organizing the challenge to the legal standing of a building permit issued to Jack Spade by the Planning Department in June.

Last week, that same group of activists experienced a minor setback when the Board of Appeals denied a late filing request. Tomorrow, however, they’ll get the opportunity they were seeking to argue that the store is “formula retail” and needs to submit to a public hearing before being sanctioned by the Zoning Administrator to open a new Mission location.

Mission resident Kyle Smeallie has been working with the VCMA to oppose the mens’ clothier’s advances on 16th street. In the case of Jack Spade, the Planning Department has enforced only the narrowest definition of “formula retail” as a business with 11 or more locations, while failing to defend the broader spirit of the law.

Since Jack Spade is owned by Fifth & Pacific (aka Liz Claiborne), according to Smeallie, it is a corporate chain store. Though it indeed has only 10 locations, Jack Spade “has a complete imbalance of power and resources, which is exactly what the formula retail legislation aimed to remedy in the first place,” said Smeallie.

Fifth and Pacific also makes clear on its website the Jack Spade is an expanding chain: “Under Fifth & Pacific, Jack Spade has begun to spread its wings and is now poised for broader expansion. Although management would not disclose a precise volume breakdown, Fifth & Pacific’s CEO William L. McComb said on an earnings call last year that Jack Spade ‘can be a $100 million men’s business with very high margins.’”

That’s “margins” as in profit margins, meaning that this corporate chain can has an economies of scale that allows it to buy goods for cheap and sell them for whatever people will pay, which is an ever-increasing amount in the rapidly gentrifying Mission.

Experts have advised the activists that their best approach is to argue that Kate Spade and Jack Spade are essentially the same store, with well over 11 locations nationwide, since corporate parentage is not explicitly prohibited in the formula retail legislation approved by voters in 2006.

“We’re going to make the case that, since it’s named Spade, it has benefitted from the association with Kate Spade,” Smeallie explained. “Legally, we have a case to say a Spade is Spade and they should be considered one and same.”

In the past, this strategy was successful in thwarting an effort by “Black Fleece by Brooks Brothers” to open a neighborhood location by claiming that it was, effectively, just another Brooks Brothers. In that case, however, the full name of the large-scale retailer was present in the subsidiary’s label.

America’s Cup organizers sell small-scale naming rights at Pier 27 to pay their debt to the city

Sasha Cuttler

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August 16, 2013

0

The Port Commission has approved a proposal by the America’s Cup Organizing Committee (ACOC) to sell bricks, benches, and other assets at Pier 27 to offset budget shortfalls, but community activists fear that corporate naming rights are undermining plans for a public recreation space.

A presentation at the Tuesday meeting by Kyri McClellan, the former city staffer who now serves as CEO of the ACOC, and Mike Martin of the Office of Economic and Workforce Development outlined the sale of up to 1,000 bricks to be set in pathways and 72 benches to dot the Northeast Wharf Plaza, which will bear the names of donors. Benches will be priced at $25,000, which McClellan cited as the going rate at other high-profile locations throughout the city.

McClellan emphasized that “none of what we’re proposing today as a pilot program includes what may previously have been alluded to as naming rights for this particular park, the piers, or the buildings.”

Milo Hanke and Alex Walker of San Francisco Beautiful, a local advocacy organization, didn’t have a problem with the smaller scale elements of the ACOC proposal. “The tiles and the bricks that are being offered here for $150, $300, for instance,” Hanke told the crowd, “that’s a gratifying opportunity for ordinary citizens who have already invested in our port to volunteer to express additional support for this proud port.”

But Hanke and Walker expressed concern about bigger ticket items that McClellan addressed with less specificity. “We want to make sure that this is a thing that’s going to be place-making and not place-taking,” commented Walker.

In addition to bricks and benches, the wharf’s lawn and adjacent walkway, an open plaza area, and a point at the pier’s end are earmarked for recognition of donors. So too are an event space and an exterior concourse on the second floor of the James R. Herman Passenger Cruise Terminal, slated to open at Pier 27 next spring.

“Corporate naming rights,” explained Hanke, “come with an intangible cost and I think that, given San Franciscans’ historic aversion to excess commercialization of our public realm, corporate naming rights are well worth taking a bypass on.”

Diagrams presented by ACOC did not include detailed renderings of larger donor fulfillments or clarification as to whether recognition would be restricted to individual and foundational donors and off limits to more commercial interests. “There is concern,” said Hanke, “of a creeping naming rights program if large areas are named for corporations.”

Pulling in $500,000 to $2.5 million a piece, however, bigger structures may be the revenue drivers ACOC is desperately seeking. As part of its host agreement with San Francisco, the organization is obligated to help offset the city’s expenses incurred in event preparations and operations.

Luckily, the race’s outsized budget is expected to be less than the $32 million originally projected, due to the paltry number of teams competing (four at last count) and the resulting decrease in spectatorship. Still, the ACOC needs to come up with as much as $20 million – a debt burden that’s got Mayor Ed Lee personally stumping in the fundraising effort. The fundraising flop belies early promises that the city would make money hosting the event.

San Francisco voters approved Proposition B last November, authorizing the city to apply public funds towards repairs and redevelopment of recreational spaces. The fact that the Northeast Wharf Plaza was a named site in that bond measure isn’t the only reason community activists are demanding to know what assets on its piers are being auctioned off and who’s buying them.

According to Jon Golinger, a spokesman for the Northeast Waterfront Advisory Group, the San Francisco Waterfront Special Area Plan limited development on the Pier 27 plaza until a 2000 amendment lifted port restrictions in exchange for guarantees of public recreation areas.

Since then, “we’ve been paying close attention to this park. It’s particularly needed and a long time coming,” explained Golinger, who said there’s been no citizen review of the ACOC’s donor recognition program proposal.

Neighborhood organizations hope ACOC’s tag sale of infrastructure doesn’t torpedo use plans for land long ago promised as a public recreation area. Golinger would like to see features like a kids’ play area, a dog run, and exercise equipment for seniors included in the final design – whether or not they are lucrative to race organizers now.

“After the Cup is done in October, it should look, feel, and be used like a true public park,” Golinger said of the plaza. “This corner of town is the most densely packed part of San Francisco with the fewest recreation areas per capita…. [the plaza] should be part of the neighborhood as opposed to a corporate event venue.”

The promise of infrastructure improvements was one reason the city of San Francisco agreed to host the America’s Cup race in the first place. Residents are now left to hope that ACOC won’t forgo investments of lasting civic value for single-use vanity projects intended to float its budget deficit.

Concluding the discussion of the ACOC’s proposal on Tuesday, Port Commissioner Leslie Katz offered assurances that, “we’ll definitely oversee and be mindful of the aesthetics of anything going forward… This is not a selling off of the port, but really an opportunity to thank and acknowledge those that have allowed us to move forward.”

This opportunity, of course, assumes that donors actually surface. Mayoral spokesperson Christine Falvey said, “We will learn from [this] effort about how we can raise private dollars to improve our waterfront and engage city residents in the effort.”

If ACOC’s efforts to court private dollars from city residents aren’t fruitful, however, taxpayers-turned-debt-collectors may have no option but to sign former District 3 Supervisor Aaron Peskin’s online petition and to demand that America’s Cup billionaire defending champion Larry Ellison pick up the tab for his boat race all by himself.

Prison hunger strike enters month two

Sasha Cuttler And Mary Magee

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August 12, 2013

10

As a hunger strike staged across California prisons enters its second month, inmates and their advocates are mourning the loss of Billy “Guero” Sells, a Corcoran State Prison inmate who committed suicide on July 22 after 14 days of fasting.

Advocates with the Prison Hunger Strike Solidarity Coalition counts Sells as the first casualty of the mass protest. Donna Willmott, a member of the coalition’s media committee, told the Bay Guardian that “people who knew him believe that [suicide] was very uncharacteristic of him. As a coalition, we’re not saying, ‘no he didn’t commit suicide,’” Willmott added, “but we still think that the CDCR is responsible for what happened to him.”

State Assembly Member Tom Ammiano noted in an Aug. 1 statement that “although the death of a prisoner who had participated in the hunger strike has been ruled a suicide, I can’t be comforted by the knowledge that conditions in taxpayer funded institutions have led to unusual rates of suicide instead of reasonable rates of rehabilitation.”

Ammiano said he “remain[s] concerned about the hundreds of prisoners still participating in a hunger strike to protest conditions. These are not minor prisoner complaints; they are violations of international standards that have drawn worldwide attention. To keep anyone in severe isolation for indefinite amounts
of time does not meet norms of human rights that civilized countries accept.”

On August 8, the California Department of Corrections and Rehabilitation (CDCR) released a tally of 349 inmates in seven prisons who had skipped the last nine consecutive state-issued meals, including 193 who hadn’t eaten at all since the strike began on July 8.

Strike leaders at Pelican Bay State Prison have demanded reforms surrounding solitary confinement. They have asked the CDCR to address the unreliable method by which inmates are flagged for segregated housing, conditions in confinement, indeterminate and long sentences, and the lack of clear and fair guidelines on how inmates can work towards being released back into the prison’s general population.

Activists have organized a number of recent events to demonstrate support for the inmates. Demonstrators picketed outside of San Quentin State Prison recently. On Aug. 5, seven protesters were arrested after locking themselves to the front doors of the Elihu M. Harris State Building in Oakland.

The loss of Sells spurred a renewed sense of urgency amongst prisoners’ rights advocates. Danny Murillo, a formerly-incarcerated student at UC Berkeley, told the rallying crowd in Oakland that “as time progresses, we do need to put pressure, because we’ve already seen one of our brothers fall.”

Sanyika Bryant, a Civic Engagement Organizer at Causa Justa, added that “when people are going to go on a hunger strike, that’s really a last stand. The conditions are just so bad that you have to take your life on the line to stand up.” He added, “this is for real life and death.”

District 11 Supervisor John Avalos participated in a day of action on July 31 by forgoing meals. “I’m fasting today in solidarity,” he told the Guardian on that day, and went on to describe long-term solitary confinement as “completely inhumane. You take away so much liberty. You shouldn’t take away their humanity. People should have the ability for self-actualization.”

So far, a team of mediators has made little progress in reaching an agreement with state prison officials that could put an end to the strike. In the meantime, California Correctional Health Care Services (CCHCS) says it’s adhering to a care guide crafted by CDCR, outlining the protocol for dealing with inmates who reach the point of starvation.

Care providers are required to conduct body-mass index (BMI) determinations, and after 14 days of striking, fasting prisoners receive informational notifications from CDCR staff, informing them of their options if they reach a critical medical condition. Some inmates have reported not receiving BMI determinations, and being subjected to increased isolation or excessive heat or air conditioning, to the point of severe discomfort.

Ron Ahnen, Associate Professor of Politics at St. Mary’s College and President of the human rights non-profit California Prison Focus, expressed concern about “the coming tsunami of people collapsing and having serious medical issues. Especially all at the same time.”

Inmates have the right to refuse medical treatment, explained Joyce Hayhoe, Director of Legislation and Communications for CCHCS. “We cannot force them to eat or take measures to force them to eat without a court order. We do have inmates that fill out advance directives. If, for some reason, an inmate lost consciousness and there was not an advance directive, doctors would take whatever steps were necessary to preserve their life.” This could include feeding tubes, she said.

Melissa Guillen, who is 22, said her father Antonio Guillen is a strike organizer who has spent a decade in solitary at Pelican Bay. She’d heard from his counselor that “he’s doing okay. That he’s strong. He’s not planning on stopping anytime soon. But, you know, they’re getting weak.” She added, “We know he’s strong. I hope he gets what he wants out of this.”

Jack Spade tries to sneak into a beloved Mission spot, triggering a community backlash

Sasha Cuttler

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August 7, 2013

16

The Stop Jack Spade Coalition is throwing an impromptu fundraiser tonight (Wed/7) at the Make-Out Room to help support local business and oppose chain store blight in the Mission.

Jack Spade, an upscale men’s clothing chain owned by Liz Claiborne, has plans to set up shop at 3166 16^th Street, once home to Adobe Bookstore. The community bookseller of 25 years moved south to 24^th Street in June, having been ousted from the space by two consecutive rent hikes. The second time, Adobe General Manager Chris Rolls tells us, “the landlord rejected continuation of the lease, which was outrageously expensive and, for this neighborhood, a bit alarming.”

Opponents of the deal say the men’s clothing retailer signed a $12,000 per month agreement on the storefront shortly after Adobe failed to meet its landlord’s exorbitant demands. (Note: A Jack Spade representative contacted the Guardian after this story was published to say this figure was “exaggerated,” but would not disclose any other financial details.)

Jack Spade has gotten this far by failing to apply for a conditional use permit, a pesky little measure imposed by voters in 2006 to thwart corporations chomping at the bit to turn San Francisco neighborhoods into sanitized strip malls.

Turns out Jack Spade is a subsidiary of one such corporation, Liz Claiborne, a fact downplayed in the chain’s original application to the Planning Commission. Even a modest 10 storefronts nationwide, sadly, doesn’t confer small business cred on a menswear line owned by a company with a $2.88 billion market capitalization.

Conveniently, the Jack Spade label has just one too few stores to be formally defined as “formula retail” by Proposition G. But the Valencia Corridor Merchants Association has been hot on the case, circulating a petition that Jack Spade play by the rules of other big businesses and submit to a public hearing anyway.

A similar effort was successful in preventing an American Apparel store from opening just up the street in 2009 and in slowing the insatiable gentrification that has steamrolled local culture in many other once-unique and affordable cities.

Tonight’s event will feature live music and stand up comedy. Chicken John Rinaldi promises to host an auction and “talks about what we can do to stop this bullshit.” Doors open at 7pm and $5-$15 will be collected at the door, with proceeds to benefit the campaign for a public hearing next week.

Into thin air

Sasha Cuttler

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August 6, 2013

97

By Steven T. Jones and Parker Yesko

Airbnb is an audacious corporation, particularly in San Francisco, the city where it’s headquartered and where its business model works best. This city is tech-savvy and popular with tourists, but hotels here are expensive, while rent-controlled apartments are still affordable, creating a strong incentive to rent those rooms at a profit through Airbnb.

The problem is that its business model is basically illegal. Its users violate five different sections of laws in San Francisco, from planning codes to tax laws to rent control. Disrupting complex regulatory systems developed over decades, Airbnb has managed to unite traditional adversaries against it: both the Hotel Council of San Francisco and the hotel workers of UNITE-HERE Local 2, both the landlords from the San Francisco Apartment Association and the renters from the San Francisco Tenants Union.

But Airbnb and its young founders just don’t seem to give a fuck about any of that. Sure, most of its hosts in San Francisco are violating their leases and land use laws, and a string of them have gotten evicted as a result. But Airbnb is rolling in cash, with Forbes now valuing the company in the billions, with a B, thanks to the double-digit percentage it takes from every transaction, low overheard costs, and venture capitalists who can’t seem to throw enough money at the company.

When the San Francisco Tax Collector’s Office last year held hearings on whether Airbnb and similar companies must collect the city’s transient occupancy tax (TOT), the surcharge of up to 16 percent that hotels charge to guests, the company rallied dozens of its local hosts to oppose the taxation and even enlisted the support of Mayor Ed Lee, who shares a financial benefactor with Airbnb: venture capitalist Ron Conway.

It wasn’t enough to overcome the clarity of city tax laws and the equity arguments made by the hotels, and the city ruled that Airbnb and/or its hosts are responsible for collecting the TOT. So what did the company do? Nothing. It just kept making money and stiffing the city, and when the Guardian wrote about how it appears to be shirking that annual tax bill of nearly $2 million (see “Airbnb isn’t sharing,” 3/19/13), the company and its consultants simply refused to answer our calls or questions — then and now, for months.

As this story was going to press, the company did finally send us a prepared statement that was more self-promotional than responsive to our questions, but it included the line, “Airbnb is committed to working with the City on policies that make San Francisco stronger, promote innovation, and ensure the sharing economy continues to grow.”

Really, you almost have to admire these guys’ chutzpah. Except for the fact that Airbnb and similar companies — VRBO, Roomorama, HomeAway, countless new upstarts, as well the DIY option of Craigslist — are exacerbating the city’s housing crisis by taking thousands of apartments off the rental market, driving up rents, and causing evictions in the process.

Board of Supervisors President David Chiu stepped in to mediate this mess early this year, trying to create legislation that would legalize and regulate the activities of Airbnb and other so-called “shareable housing” companies. But hopes of introducing something in the spring turned into a goal of midsummer, then by the August recess, and now sometime this fall, hopefully.

In the meantime, the money keeps rolling into Airbnb, complaints against it mount (here and in other big cities), its tax bill goes unpaid, and the landlords and tenants, the hoteliers and the workers, are all left to wonder why the city can’t or won’t enforce its own laws.

CHIU’S CHALLENGE

Chiu may have met his match with Airbnb. He has forged compromises on some of the toughest legislative challenges that City Hall has wrestled with this year — including condo conversions, CEQA reform, and the CPMC hospital deal — each time finding the acceptable middle ground between the progressive and moderate supervisors and constituencies.

His approach to this one sounds similarly centrist, with Chiu supporting the concept of shareable housing but understanding the myriad problems that Airbnb is presenting in complex cities. He neither sounds Lee’s unqualified boosterism of Airbnb nor does he fret about its impact on the housing market as much as its critics.

“I do not think shareable housing is either the cause or the solution to the housing crisis,” Chiu told us.

He’s striving for something between New York City’s total ban on tenants renting out their apartments while they’re away and the laissez faire approach of other big tourist cities. He sees some merit in Chicago’s requirement that Airbnb hosts register with the city to regulate it, but that’s not quite what he wants to do either.

“It’s a much less materialistic way to live and that’s a good thing,” Chiu said of the basic shareable economy concept of making more efficient use of existing resources, whether it be housing, cars, or consumer goods.

But he’s equally clear in identifying the problems and overhyped claims, acknowledging that “it takes away housing from permanent residents, driving up the cost of housing.”

While he says it’s good to spread visiting tourists and their money around the city — a regular claim of Airbnb and its advocates — that also creates problems when apartments become virtual hotel rooms, disturbing neighbors and upsetting the dynamics of landlord-tenant relations.

“Shareable housing is used and abused in ways that displace permanent San Francisco residents,” Chiu said. “Those are the excesses that need to be reined in, in a serious way.”

So he’s trying to create legislation that will set fair and clear standards, ensure compliance with city laws, improve the city’s enforcement of those laws, and generate “tax revenues to cover the city’s expenses in hosting hundreds of thousands, if not millions, of visitors every year.”

But Airbnb has only complicated Chiu’s goals and his reputation as the legislator who solves tough problems, largely because knowledgeable sources tell us the company has been unwilling to really compromise — perhaps emboldened by support from the Mayor’s Office and the city’s apparent impotence to enforce its own rulings — and is dragging out the negotiations.

Chiu wouldn’t comment on that, but he did acknowledge that these negotiations have been difficult. How can you allow renters to make a little extra money while recognizing the rights and concerns of their landlords and neighbors? How can you protect rent control and still allow tenants to profit from their units? Can you prevent landlords from using Airbnb or VRBO to bypass rent control? If you create a registry to ensure only permanent residents are playing host, what’s to stop landlords from using that list to evict those on it?

“We want to carve out a reasonable opportunity for people to do this,” Chiu said. “This is tough partly because of these complexities, and the laws are on the books for a reason….The more we pull these strings, the more this unravels.”

LANDLORDS AND TENANTS TOGETHER

San Francisco Tenants Union Executive Director Ted Gullicksen has been involved with the Chiu-Airbnb negotiations — from which he hopes to strengthen enforcement of rent control and apartment conversion laws while still allowing limited use of shareable housing sites by tenants — and he told us, “It turned out to be a very slow process.”

“Airbnb has just been balking and wanting more and more,” Gullicksen told us. “This process has been frustrating, but Chiu has hung in there.”

Gullicksen said the goal has been to limit short-term hosting to fewer than 90 days in a 12-month period, with only permanent city residents allowed to host, but Airbnb wants people to be able to rent out their apartments for eight months. And Gullicksen said he wants to see tenant laws and the rental stock protected from conversion to vacation rentals.

“We’re most concerned about the impact on the housing stock and evictions, because there’s so many of these…We have entire buildings that have been on the tourist market for years,” Gullicksen said. “It added a huge new way to remove units from the rental market.”

Gullicksen said that conversions of apartments became an even bigger problem than conversions to condos when the financial crisis hit in 2008, and that could become an even bigger problem now that the condo conversion lottery has been suspended for 10 years under legislation approved earlier this year (“Supervisors approve condo legislation,” Politics blog, 6/11/13).

In fact, he said that there has been a rash of unusual Ellis Act evictions in recent months, with buildings that have six or more units being cleared of tenants even though they are ineligible for condo conversions, raising suspicions that they’re being used for vacation rentals.

Hotel Council Executive Director Kevin Carroll told us Airbnb and similar companies should be paying the TOT, as the city ruled, and he doesn’t understand how they’ve gotten away with it for so long.

“A visitor to San Francisco, whether they are staying with Airbnb or a hotel, they’re using city services,” he told the Guardian, dismissing the arguments that shareable housing companies should be treated differently. “They do compete with hotels.”

Janan New, executive director of the San Francisco Apartment Association, expressed frustration that city officials have let this situation drag on as long as it has.

“I don’t know why [Tax Collector Jose] Cisneros isn’t collecting the tax. I don’t understand it,” New told us. “They certainly have the money.”

Cisneros told us that his office has the power to audit companies, “and we can bring taxpayers into courts of law,” but because of taxpayer privacy laws, he can’t discuss what’s happening with Airbnb.

“I cannot confirm or deny or discuss what is or isn’t being done,” Cisneros said, even refusing to offer an off-the-record assurance that something is being done to back up his ruling last year and address the perception that companies are free to flout his authority with impunity.

Attorney James Parrinello, representing SFAA and Coalition for Better Housing, sent a letter to top city officials on Jan. 14 “to discuss the fast-growing practice of illegal short-term/transient rentals for profit and request the City take immediate action to address the problem.”

New said they never got a response, although she tells us, “We did have a candid dialogue with [Chiu] six months ago.”

“All of these tenants in San Francisco are using their units as pieds-a-terre for out-of-town tourists and they’re doing it in ways that jeopardize their rent control status and the safety of their neighbors,” New said.

She told stories of visitors being loud, disrespectful, even committing an assault. She said one tenant placed a lockbox on his door to facilitate a rotating series of guests, while another rented out a second apartment in his building exclusively for Airbnb guests.

And she confirmed that her association has worked with landlords to search Airbnb and other sites to identify tenants who are illegally renting out their apartments and to serve them with three-day “notice to quit” warnings, otherwise they would be evicted.

“Under rent control, some tenants are making more money than they pay in rent,” New said, noting that landlords are essentially underwriting the rentals. “It’s stealing.”

Gullicksen expressed concerns that landlords are doing that kind of research to try to evict tenants, but he said the Tenants Union is doing similar research to ferret out landlords who are using these services to illegally turn apartments where evictions have taken place into vacation rentals and de facto hotels, focused mostly on VRBO because “they have a greater landlord emphasis.”

“The homes that we’re talking about are owned by the person that’s renting them out. It’s not people that are basically subletting their homes,” VRBO spokesperson Victor Wang told us, refusing to comment on local apartment conversion laws or other issues specific to San Francisco.

Chiu told us he takes the rent control issues seriously: “Our rent control laws are in place for very important reasons and we need to make sure it stays affordable.”

DISAPPEARING APARTMENTS

In a city experiencing what politicians and activists of all stripes have called a “housing crisis,” it might come as a surprise that US Census numbers indicate 8.3 percent of San Francisco’s rental stock was vacant in 2010 — about 31,000 units — up from 4.9 percent a decade earlier.

Scott James, homeowner and small-time landlord advocate, would have us believe that rent control is to blame, arguing in a recent New York Times op-ed (“King of My Castle? Yeah, Right,” 6/11/13) that “San Francisco’s anti-landlord housing laws and political climate make [renting] untenable.”

Faced with a bad tenant at his home in the Castro, James said he “joined the ranks of thousands of other small-time landlords here who will never rent again, adding to the city’s housing shortage.”

Yet the San Francisco Rent Ordinance confers broad authority to evict tenants for a plethora of “just causes,” including late payments, breach of lease (such as, ahem, illegal subletting), nuisance or damage to property, and owner move-in. Since the law dates back to 1979, it probably doesn’t explain the steep rise in vacancies. And with evictions now hitting an 11-year high, it’s hard to paint landlords as helpless victims.

San Francisco Rent Board Executive Director Delene Wolf told us the eviction rate has actually mimicked bullishness in the real estate market rather than beefier tenant regulations. She said it “really spiked around the dot-com years, for obvious reasons went way down during the recession, and it’s back up now because the market heated up.”

Some embittered landlords may indeed live atop empty units for decades but, given a median rental price of $2,764 per month for a one-bedroom unit, there’s an enormous opportunity cost to being disgruntled.

But perhaps that’s what “shareable housing” is really about: getting around the rules to make some money. Short-term rentals have become so lucrative that it’s financially possible, and easier than ever, for a homeowner to exit the long-term rental market for good.

Airbnb is so unregulated that even a homeowner who has used the Ellis Act to supposedly get out of the rental business could easily and anonymously monetize an officially vacant space for higher profit margins and with less oversight as a “vacation” rental.

Annette Fajardo has made clients out of people like James. She started her business, SF Holiday Rentals, just after the first dot-com boom, when she began managing short-term rentals in the homes of her friends. When she had nine properties in her roster, the business became a full-time job.

Over the last decade, demand for her management services has increased so much that she says she’s now “very picky about who she works with.”

Fajardo currently manages more than 40 furnished units that guests can book on her own website, as well as Airbnb, Roomorama, VRBO, HomeAway, Trip Advisor, and Craigslist. Her clients are all owners offering full homes or apartments and all the units she manages have been permanently withdrawn from the long-term rental market.

Quite often, her guests stay for a month or longer. Some are international tourists, but the majority are new corporate transplants to San Francisco. The demand for units like hers keeps growing: She gets 100 inquiries on her properties each day, about half from Airbnb.

“There’s always been corporate furnished rentals,” Fajardo told us in the dining room of a Castro flat that she lists for $350 per night on Airbnb. “That market has always been there. It’s just that there’s so much more business now. We got Google, Apple — you’ve got the busses running here all the time. I get Google people all the time and they spend big bucks.”

And she’s been through it all — battles with the tax collector in three municipalities, catastrophic fires in two properties, fraudulent guests, drunk guests, pornographers, and, worst of all, meddlesome neighbors.

“Your neighbors are a problem,” Fajardo emphasized. “In the Castro, you have to do a 30 night minimum cause the neighbors fink on you.” And when they do, the Planning Department can step in. They “send a letter stating the residential code and to cease and desist. If you don’t stop less than 30 night rentals, then they can fine you.”

COMPLEX LAWS, SIMPLE SITE

City tax and zoning laws ban apartment rentals of less than 30 days, labeling it “illegal hotelling.” Dwellings in residential areas repurposed as tourist housing have, in the eyes of the Planning Department, essentially been commercialized without proper permitting or payment of the TOT.

Rentals for more than 30 days aren’t regulated as commercial properties, but the tenants in those homes have rights under the 1979 rent ordinance, which protects any tenant who, according to Rent Board spokesperson Robert Collins, “pays rent and inhabits a unit for two days. You don’t have to sign a lease to be a tenant — you just have to pay rent and occupy the unit.”

This presents a number of challenges to both tenant- and owner-hosts. Tenants who gouge tourists on nightly rates are often in violation of a rent ordinance ban on “charging upon additional occupancy more than the rent that the tenant pays to the owner,” explained Collins.

Tenants who rent out their apartment for a few days can even lose their rights to reclaim their homes. Collins cited multiple cases where subletters refused to leave and returning tenants had little legal recourse because “they would not have a just cause to evict the subtenant because, if they’ve rented the entire unit, they aren’t themselves a resident in the unit.”

Owners who offer their units on Airbnb assume the same risk of unwanted, long-term guests. But they hedge against it by charging exorbitant nightly, weekly, and even monthly rates. On the off chance that a guest does demand a lasting lease, Fajardo reasons, “if I’m getting $5,500 a month for a two-bedroom, you can stay for the next 10 years.”

Fajardo knows where laws limit her opportunity for gain and to remain within their bounds. But most hosts, the ones Airbnb advertises as offering “unused space to pay your bills or fund your next vacation,” aren’t running a sophisticated business. And Airbnb offers them little help or support.

Airbnb just lists the rentals then mediates the payments. And the company collects revenue at both ends of transactions, charging guests a 6-12 percent service fee upon booking then taking another 3 percent before remitting payment to hosts.

Anyone can create a guest or host profile and Airbnb conducts no user verification, although both can leave online reviews. “We do not attempt to confirm, and do not confirm, any Member’s purported identity,” Airbnb states in its terms of service. “You are responsible for determining the identity and suitability of others.”

The company advertises a $1 million “Host Guarantee” backed by Lloyd’s of London, but warns that it “should not be considered as a replacement or stand-in for homeowners or renters insurance. The Host Guarantee does not cover: cash and securities, collectibles, rare artwork, jewelry, pets, personal liability.”

The site also does not vet the content of property listings for legality. Hosts can set their rates and even add on a cleaning fee or refundable security deposit, but it offers no functionality for hosts to itemize and collect the TOT, now more than a year after San Francisco required that it be collected.

Tax issues are only vaguely addressed in an FAQ section for hosts, noting that “some hosts are required by their locality to charge a tax.” Hosts ambitious enough to attempt compliance must essentially become amateur tax specialists. Few, however, have the experience to decipher the code correctly and even fewer are likely to seek it out in the first place.

A search for the word “tax” across the site’s roughly 4,750 San Francisco listings yielded a mere 174 hits and myriad approaches to the issue. Several hosts mentioned collecting the TOT in cash on arrival or required credit card information in advance — a clear incursion into the secure nature of the transaction. A host named Jesse with 85 listings told the Guardian that he just rolls the TOT up into his daily rates, despite the city’s requirement that it be listed separately.

Fajardo isn’t alone in creating a full-time business of short-term apartment rentals. Casa Buena Vista Rental lists 76 properties on its website, many of which overlap with Jesse’s 85 Airbnb listings. A host named Bernat has 48 listings that also appear on Come2SF.com. Gaylord Suites, a Tenderloin apartment complex, markets at least seven different apartments in the same building on the site.

Fajardo said she’s pushed Airbnb for a dedicated TOT field “until [she’s] been blue in the face,” but she feels strongly that the company should not be held responsible for the collection of tax itself. “It’s not their burden,” Fajardo argues in defense of Airbnb. “They’re a booking agent. They funnel the money and they expect you to do the taxes.”

OTHERS CAN DO IT

The New York- and Singapore-based Roomorama was founded in 2009 and has a nearly identical payment model to Airbnb’s. But it has a formal host verification process and a higher price point that CEO Jia En Teo told us helps to filter out bad guests.

“Our host verification is very tight,” explained Teo. “When a host is listed on our site, they don’t go live immediately. They go through a quality control and validation process. We have a team that will call the host and ask for utility bills and ID. We do due diligence.”

Teo said a TOT field has been included in Roomorama’s price template from the beginning since the vast majority of the site’s listings are “professionally managed properties, people that are actually licensed to run short-term rentals. They’d already been paying and collecting these taxes….One of the first things that was requested was a way to collect.”

Teo also said that if Roomorama, as an operator, was deemed responsible for collection and remittance of taxes, it wouldn’t be “difficult from a logistical standpoint. It would add more work to our load but, to be honest, most of it is automated anyway. Once we put in the mandatory tax field, it would simply be paid the same way a consumer pays when they eat at a restaurant.”

She’s unsure why Airbnb has been so reluctant to address the tax issue head on, but “if I could venture a guess,” she said. “I’m guessing it’s because they work more with the occasional host, and that makes their value proposition a little bit less appealing.”

Other industry competitors include Craigslist and VRBO, both founded in 1996, and VRBO’s parent company, HomeAway. All three share a similar business model and one that’s considerably different from Airbnb’s — they are not financial gatekeepers in the transaction between guest and host. At their essence, these sites are little more than digital classified ads.

No competitor comes close to the market share that Airbnb has captured in San Francisco and globally. In New York, Roomorama has 2,688 listings compared with Airbnb’s 25,724, despite its questionable legality there. In San Francisco, Roomorama hosts 303 properties and VRBO features 1,123 — and Airbnb has about 4,750 throughout the city.

Airbnb’s statement to us touted that financial impact: “We are proud of the $56 million that Airbnb’s users generated for the San Francisco economy last year. The vast majority of Airbnb hosts share the home where they live, and more than half directly use their Airbnb income to pay their rent or mortgage.”

THE CITY’S SHARE

When the San Francisco Tax Collector’s Office discussed the matter last year and issued “Tax Collector Regulation 2012-1: Tax on Transient Occupancy — Multiple Party Transactions; Occupancy of Private Residences,” it made clear Airbnb should be collecting the tax as it processes the transactions.

“A website company, or any other person acting as merchant of record who receives rent in connection with an occupancy transaction, is an ‘operator’ who is responsible for collecting the TOT owed by the occupant and for remitting the TOT to the City. Any person receiving such rent shall provide a receipt to the occupant. Such receipt shall include a separate line item specifically identifying the TOT,” reads the regulation.

While it’s also true that the city tax codes make Airbnb and its hosts jointly liable for the tax debt — which the company’s apologists have used to accuse the Guardian of unfairly picking on the company in an avalanche of online comments —it would be a regulatory nightmare for the city to go after thousands of individual hosts, most of them small-time tenants who don’t even have business licenses.

Fajardo is diligent about compliance, but she can afford to be. She works with a team that includes assistants and an accountant and she does it full-time. She is not the casual homeowner supplementing her income (and it’s unlikely many of her clients are either) — she is an entrepreneur. And even she admits to having found the TOT difficult to interpret.

Fajardo contacted the Guardian in June in response to our coverage of Airbnb, citing the city’s complicated tax system and the difficulty that small users have in paying the TOT, which has varying fees tacked onto the base rate of 14 percent. (Although she also wrote, “We collect and pay sometimes as much as $10,000-20,000 per quarter.”)

“Don’t blame Airbnb, blame the SF Tax Collector for a shoddy website, incompetent workers, and their inability or lack of desire to chase individual lessors. It is not the responsibility of Airbnb to collect taxes; it is the responsibility of the lessor to collect the taxes, just like a hotel,” Fajardo wrote.

It’s certainly true that TOT rates aren’t simple — the 14 percent base rate gets another 1.5-2 percent tacked on it, depending on where the host is located, to fund the Tourism Improvement District proposed by hotels and approved by the city. (That fee just went up again July 1 to fund an expansion of the Moscone Convention Center.) The TOT also isn’t simple for Airbnb hosts to collect and pay.

We forwarded Fajardo’s criticisms and concerns to Greg Kato, the policy and legislative director for the Tax Collector’s Office. He acknowledged that the system is complicated — particularly for Airbnb hosts who aren’t legally allowed to operate as a hotel — but he said they try to simplify it as much as possible.

To pay taxes, a business first needs to register with the city by paying a $26 fee and filling out an application, which includes a line indicating whether transient occupancy is part of the business. “There are few, if any, barriers to initially register as a business,” Kato said.

The problems come when that business applies to the city for its “certificate of authority” to collect the taxes, and applicants are asked whether they have the relevant licenses and proper zoning to conduct that kind of business. And most Airbnb hosts don’t have that because they are actually violating a variety of city codes.

“In a residentially zoned area, this type of use is at least a conditional use [which requires a permit obtained after giving neighbors notice and going through a public hearing] if not a banned use,” Kato told us. “Those land use issues are what Sup. Chiu is trying to address with his legislation.”

Although Kato said such legislation is beyond the scope of his office, those issues can interfere with a host’s ability to receive a certificate of authority to collect the taxes.

“There are a lot of other parties interested in this issue that might have other issues that would break that authority,” Kato said, citing landlords, homeowners associations, and neighbors as parties that might object to someone essentially turning his or her apartment into a hotel room, which was banned decades ago by the Apartment Conversion Ordinance.

It’s pretty easy to see on the Airbnb website that it isn’t charging the TOT or making it easy for its hosts to do so (see “Airbnb isn’t sharing,” 3/19/13). Using Airbnb’s own stated figure that its San Francisco hosts collect about $12.7 million in rents each year, that would amount to nearly $2 million annually that the city should be collecting on these transactions.

When Airbnb’s 31-year-old founder and CEO Brian Chesky spoke at a hospitality conference organized by USF in April, he didn’t acknowledge any complexities or downsides to his business model, instead casting his company as saving the world.

“It’s like the United Nations at every kitchen table. It’s very powerful,” Chesky said of the social benefits of his company. “I think we’re in the midst of a revolution.” He wasn’t talking about revolution in the sense of challenging the authority or legitimacy of San Francisco, its laws, or its elected leaders, although that seems to be implicitly what he’s doing. And he certainly didn’t seem to be taking into account his evicted hosts, their upset neighbors and landlords, or the city’s disappearing apartments and rising rents when he said, “For us to win, no one has to lose.”

Building on progress

Michael Redmond

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July 30, 2013

0

news@sfbg.com

A month-long labor standoff at the Hunters Point Shipyard redevelopment project has been put on hold as the city steps in to provide workforce mediation and oversight. But community-based organizations are left wondering how their workers will actually benefit.

Aboriginal Blackman United (ABU), a Bayview organization representing roughly 300 construction workers, announced on July 15 that it was calling off demonstrations at the construction site that had begun just before a June 26 groundbreaking ceremony (see “Lennar finally breaks ground amid controversies,” July 10).

ABU President James Richards suspended the protests after the Successor Agency to the San Francisco Redevelopment Agency informed him that Young Community Developers (YCD), another neighborhood nonprofit, would no longer exclusively manage job placements at Lennar Urban’s shipyard project.

The Hunters Point construction is expected to create 1,500 jobs annually, over the course of a 15- to 20-year build out. But critics have taken issue with local hiring guidelines hashed out in a 2003 development agreement with Lennar Corp. that are limited to good-faith promises rather than binding quotas.

Since then, community-based organizations have urged Lennar and the Building Trades Council to formalize their commitment to hiring from within the Bayview-Hunters Point community.

Building Trades Secretary-Treasurer Michael Theriault has so far been resistant to these efforts. “There is no inherent flaw in good faith,” Theriault said of local hire promises by Lennar. “Like any system, you have to enforce it.”

Until last week, Young Community Developers (YCD) was tasked with meeting local hire goals by recruiting and training tradespeople from the neighborhood and facilitating their placement on the project.

But Richards and other community advocates were skeptical of this arrangement because Theriault is vice president of YCD’s executive board. “How can [Theriault] be against mandatory hiring and be on YCD’s board?” asked Richards, who viewed it as an obvious conflict of interest.

ABU’s protests finally prompted Lennar and the Building Trades Council to seek the involvement of CityBuild, a workforce-training program and centralized referral network administered by the San Francisco Office of Economic and Workforce Development.

YCD Executive Director Shamann Walton said a meeting between the two organizations produced “a gentleman’s agreement that there will be an MOU in place between YCD and CityBuild,” designating CityBuild, rather than YCD, as the primary recruiting coordinator on the project.

YCD will be just one of a handful of community-based organizations that will assist in training and placement — others will include ABU, Anders & Anders, and the A. Philip Randolph Institute (APRI). APRI San Francisco Executive Director Jacqueline Flin says she supports a switch to CityBuild because it provides “a very good prospect of goal delivery. They have a fair process that’s been proven to work and the city’s invested in the effort.” Flin added, however, that she hadn’t yet heard any real details of the new arrangement with CityBuild. SFOEWD did not respond to the Guardian’s requests for comment. Terry Anders, director of the Anders & Anders Foundation, expressed disappointment that negotiations were taking place behind closed doors. Anders wants to see all the stakeholders brought to the table. He was quick to point out that, though CityBuild promises to be above board, “it is not a neighborhood organization.” “Somebody is making backroom deals,” Anders asserted, “and I am not for it. I don’t like being left out of the process.” He demanded an inclusive and transparent discussion, but a week after bargaining seemingly began and ended, it was unclear whether he would get one. “Lennar’s main concern is getting the buildings up, and they don’t care who does it,” he said. And though Richards is hopeful that CityBuild will be an improvement over YCD, he too was measured in expressing full confidence in the municipal agency just yet. For a lasting solution, CityBuild will need to work very closely with ABU and others. “We stopped all traffic ongoing to the shipyard and coming out for about a month,” to get this far, explained Richards, “the only way we guarantee that our people get jobs is that we are involved.”

Inmates on hunger strike win support from California legislators

Sasha Cuttler And Mary Magee

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July 15, 2013

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The largest prison hunger strike in California history officially began on July 8, and though some California legislators have voiced support for state prison inmates, the California Department of Corrections and Rehabilitation (CDCR) won’t cede an inch. Prisoners are in for a long battle.

Estimates indicate that over 29,000 inmates have joined ranks to refuse meals in 24 of the state’s 33 prisons and all four of the private, out-of-state facilities where California sends offenders. Additionally, thousands of inmates have declined to attend work and educational assignments since the strike commenced a week ago.

The CDCR released its own tally July 11, stating that there were only 12,421 participants. Asked about the discrepancy between numbers, CDCR Deputy Press Secretary Terry Thornton said, “we have inmates who skip a meal here and skip a meal there,” and clarifying that the estimate included only inmates who had met the CDCR’s official metric of nine consecutive missed meals up to that point.

State Assemblyman Tom Ammiano, who authored a 2012 senate bill aimed at increasing media access in prisons which was vetoed by Governor Jerry Brown, issued a statement last week “join[ing] the protesters in urging prison officials to make more progress in establishing fair and humane policies in the prisons paid for by California taxpayers. We should not be the focus of international human rights concerns.”

This hunger strike, and an earlier pair that took place in 2011, was orchestrated by the Short Corridor Collective, a group of four inmates confined to security housing units (SHUs) at Pelican Bay State Prison, a supermax facility 15 minutes south of the Oregon border.

A network of legal advisers and prisoners’ rights advocates facilitated communication between participating inmates, and the Prisoner Hunger Strike Solidarity Coalition is serving as the main conduit for information traveling from prisons to the public. The Coalition has summarized the goals of the strike in this video and mobilized support across the state. This past Saturday, July 13, several hundred activists participated in a rally at Corcoran, a California State Prison in the Central Valley.

In the Guardian last week, Toshio Meronek reported on the motivations behind the strike. The Short Corridor Collective’s five core demands include ending group punishment and long-term solitary confinement, abolishing a “debriefing policy” that encourages prisoners to exchange information about other inmates in return for favorable treatment, providing more nutritious food, and allowing for weekly phone calls and annual photographs. Inmate groups outside of Pelican Bay have documented separate sets of grievances, also published on the Solidarity Coalition’s website.

The 2011 strikes ended when the CDCR promised to create a formal “step down” process, through which SHU inmates could be vetted and prepared for reintroduction into general prison populations.

That program got underway last fall and, by all accounts, progressed slowly with limited success. In a press release issued Thursday, the CDCR disclosed that “since last October, [it] has conducted 382 case-by-case reviews of [gang] validated inmates housed indefinitely in SHUs. As of June 28, 208 inmates housed in SHUs have either been transferred or are approved for transfer to a general population facility and 115 inmates were placed in various phases of the Step-Down Program.”

At this rate, it would take nearly 20 years to conduct reviews of the over 10,000 inmates presently held in solitary confinement in California. Completion of the step down process, meanwhile, could take an additional four years for inmates enrolled in the first phase.

In a statement circulated shortly after the CDCR’s on Thursday, State Senator Mark Leno wrote, “I have concerns that this review process is moving too slowly and I would like to see it accelerated.”

Leno stated “grave concerns about the Department’s over-reliance on the use of solitary confinement and in particular on a policy in which suspicion of gang affiliation is sufficient grounds for keeping an inmate in solitary confinement indefinitely.”

In a KALW radio interview Thursday morning, Thornton asserted that the CDCR doesn’t “negotiate with people who are trying to hold the prison system hostage. We don’t condone these types of disturbances. We will keep the lines of communication open. And we will manage the prisons as safely as possible with as little interruption to normal programming as possible.”

Also on Thursday, Corrections Secretary Jeffrey Beard’s confirmation was pushed through after being in limbo since Governor Brown appointed him in December 2012. Almost immediately, Beard declared all step-down reviews suspended, in what may well be the first official retaliatory action by the state against the hunger strikers.

Beard inherits not only the hunger strike, but a prison system long plagued by severe overcrowding, high recidivism rates, gross mismanagement of inmate health services, and a Supreme Court order to release close to 46,000 low-risk offenders.

“The prisoners are complaining about indeterminate solitary sentences not based on findings of misbehavior, but on alleged gang associations,” explained Rachel Meeropol, a Senior Staff Attorney at the Center for Constitutional Rights (CCR), which filed a class action lawsuit against the state and CDCR last May alleging inhumane treatment of Pelican Bay prisoners through the use of security housing units. “California is an outlier in the number of prisoners that it holds in indeterminate solitary confinement.” In the CDCR system, inmates can spend decades in SHUs, sometimes without ever understanding what landed them there in the first place.

The hunger strikers seek a binding, written agreement from the CDCR that commits to a maximum sentence of five years in solitary confinement. Given the UN Human Rights Council’s recent judgment that “any imposition of solitary confinement beyond 15 days constitutes torture or cruel, inhuman or degrading treatment” and “should be subject to an absolute prohibition,” the Short Corridor representatives think their demand is reasonable.

In his statement last week, Ammiano indicated that he “continue[s] to be concerned about the policies being used to segregate prisoners who are deemed – often on weak public grounds – to be gang leaders.”

Donna Willmott, a member of the media committee for the Prison Hunger Strike Solidarity Coalition, said the vast majority of inmates in SHUs are there because they have received validation of gang affiliation from the CDCR. She described a “fundamentally flawed and corrupt” process, in which validating evidence is often scant.

“People have been sent to the SHU for indefinite terms for having Aztec art on their walls or a George Jackson book in their cells. And there’s no appeal process,” Willmott explained. “The way you get out of the SHU is parole, snitch, or die.”

Community awaits benefits as Lennar finally breaks ground in Hunters Point

Sasha Cuttler

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July 1, 2013

26

More than five years after San Francisco voters approved a massive redevelopment plan for the Hunters Point Shipyard and much the southeast part of the city — giving Lennar Corp., the country’s biggest home builder, the largest tracts of open land in the city — that project is now finally, slowly, getting underway.

But activists who have been following the project say the city is getting played by Lennar because of an agreement that lacks performance standards and has allowed the company to drag its feet to maximize its profits despite an affordable housing crisis in the city. And some community members say Lennar hasn’t lived up to promises of jobs and other benefits.

“The modus operandi of Lennar is bait and switch and delay,” Saul Bloom of Arc Ecology, who consulted on this development deal for the Redevelopment Agency before his contract was dropped in 2010 after publicly raising concerns, told us. Bloom and his firm have decades of experience analyzing complex development deals, and he has been tracking Lennar’s pattern of behavior around the country.

Bloom said that when Lennar cut its initial deals with then-Mayor Willie Brown and other local officials in 1997, the company said it needed no external financing and that it would build housing affordable to Hunters Point residents, including rentals. Since then, the deal has gotten steadily better for the company and worse for San Francisco, and the groundbreaking date has been repeatedly pushed back.

“The city was not smart enough to build in liquidated damage and a performance schedule and that kind of thing,” Bloom said. “Lennar tells them what they want and the city tends to roll over, and there’s been no pushback.”

When Lennar ended up needing financing after all, the project stood by while a $1.7 billion deal with the China Development Bank Corp. was structured in 2012. Despite Mayor Lee personally participating in the quest for capital in China alongside the developer, the deal quickly collapsed. It is yet to be seen how Lennar will satisfy its commitments in the Bayview and at its separate Treasure Island site since the plug was pulled on the loan deal.

Lennar Urban Director of Community Affairs Cheryl Smith referred our questions to communications consultant David Satterfield of G.F. Bunting, who said that he passed them on to Lennar officials and, “They don’t have anything to say.” The Mayor’s Office also has not responded to our request for comment on the issues that Bloom is raising.

With a weak agreement and a lack of political will to push the company to expedite construction of affordable housing, Bloom said Lennar has simply waited for housing prices to increase and for other developers to lead the way in gentrifying Bayview Hunters Point before moving forward on the nearly 1,400 acres of land it controls in San Francisco — an area equivalent in size to the Presidio.

“Their incentive is to wait for the property values to rise…Lennar understands how much this land is worth,” Bloom said. “What Lennar has done is crafted a strategically smart box that the city is in.”

Yet after years of delays, the project did officially get underway last week (Wed/27), with a well-attended hilltop ceremony. Mayor Ed Lee, former Mayor Willie Brown, District 10 Sup. Malia Cohen, and Cohen’s predecessor, Sophie Maxwell, joined Lennar Urban President Kofi Bonner to speak at the long-anticipated event.

Lennar’s local subsidiary, Lennar Urban, unveiled a master plan to convert the land to a brand new mixed-use community. At the ceremony, Brown remarked that “there is no other piece of soil that is as lucrative” as the Bayview Hunters Point peninsula and that it promises to be the “ideal place to live.”

The Hunters Point Shipyard, occupies roughly 500 acres of southeastern San Francisco and when taken together with neighboring Candlestick Point and parts of Bayview, it is the largest single tract of land in San Francisco designated for redevelopment. The other big redevelopment site in the city, Treasure Island, is also controlled by Lennar and its partners.

A former naval base, the shipyard was transferred to the city in 2004. Most naval operations there had ceased in 1974 and commercial uses declined in the 20 years that followed, steadily displacing black workers employed on the premises.

Affordable housing and job creation for neighborhood locals were two major stipulations in the ballot measure San Francisco voters approved in 2008. The “Bayview Jobs, Parks, and Housing Initiative,” however, entrusted that goal fulfillment almost wholly to Lennar and Bloom now questions whether that trust was well placed.

Phase 1 of the project will consist of construction of 1,400 new residential units in the shipyard, approximately 30 percent of which will one day be affordable housing. But Bloom said that Lennar has delayed construction of the affordable units until after much of the more lucrative market rate housing is done.

At the event, Bonner enthusiastically outlined the goal of having 800 of 1,100 market rate homes in this first phase constructed and occupied within 36 months time and Mayor Lee opened his remarks with the celebratory chant “Welcome to The Bayview! We need housing for everybody!”

But Bloom said that the city is rapidly gentrifying as Lennar waits to meet its affordable housing obligations, noting that the city was 11 percent African-American when Lennar cuts its first deal to develop Hunters Point in 1997, and that population is now 4 percent and falling.

Reconstruction of the Alice Griffith Public Housing Project will help Lennar to satisfy its affordable housing quota. Announcements of these plans garnered large applause from community activists in attendance, though they are slated for the project’s second phase, which likely won’t begin for years.

“They could build all of Alice Griffith on Parcel A, but they’re not going to do it,” Bloom said. “When is this community going to get what was promised to them?”

A group of picketers from Aboriginal Blackman United (ABU) was contained by SFPD at the bottom of the hill during the afternoon’s proceedings. As black town cars chauffeured officials to the event site, the protesters’ cries were drowned out by the music of Miles Davis playing from stage speakers.

ABU was protesting non-inclusive hiring practices at the shipyard site. Members, who were outnumbered by police 2-to-1, argued that they were being wrongfully barred access to the ceremony above and by the event’s conclusion, they had been relocated from the main intersection at Innes Avenue and Donahue Street to a side access road.

Job creation was trumpeted generally in the afternoon’s speeches, with Sup. Cohen applauding the public-private partnership between Lennar and Bayview organizations and Mayor Lee praising the project for “honoring labor and honoring local residents.” However, ABU’s founder and president, James Richards, said “we’re not getting the jobs or the contracts that the community people are supposed to get and that’s why we’re out here.”

Though ABU wants to see local residents of color placed in many of the new positions opening up, workers in the community have only been promised good faith consideration rather than actual job guarantees by the San Francisco Building and Construction Trades Council, which is in charge of staffing the project. Attempts to reach Michael Theriault, Secretary-General of the Council, were unsuccessful.

Bloom said Lennar has insulated itself from community criticism with an agreement that promises money to community groups that refrain from publicly criticizing Lennar or the project. He said Lennar has followed a similar pattern here as it has elsewhere, using its clout and political contacts to get lucrative redevelopment deals, then using delay and bait-and-switch tactics to make those projects more lucrative. He cited Lennar’s Mare Island project, which is now in bankruptcy, and its massive Newhall Ranch project north of Los Angeles.

In that latter deal, the California Public Employees’ Retirement System lost the $970 million it paid Lennar in 2007 for part of its stake in Newhall Land Development Co., which went bankrupt when the housing market crashed the next year. But Lennar built in an option to reclaim the shares, which a bankruptcy judge allowed Lennar to do in 2009 for just $138 million.

Bloom said that deal is typical behavior for a manipulative company that has a history of acting contrary to the public interest, but in which local political officials have given tremendous control over the city’s future.

“We remain skeptical about their commitment to getting it done,” Bloom said of the affordable housing that Lennar has promised. “What we’d like to see is some real action on the promises that were made to the public.”

Dede Wilsey re-elected prez of Fine Arts Museums board with little fanfare

Sasha Cuttler And Mary Magee

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June 11, 2013

11

Dede Wilsey re-elected prez of Fine Arts Museums board with little fanfare

At a quarterly meeting on June 6, Diane “Dede” Wilsey was summarily re-elected as president of the Board of Trustees of the Fine Arts Museums of San Francisco (FAMSF). The election marks her sixth consecutive term in a post she’s held since 1998, a tenure made possible when the board eliminated term limits in 2009.

She ran uncontested, and her unanimous endorsement by the board’s Nomination Committee was granted, in the words of Committee Chair Lisa Zanze, to be “mindful of the need for continuity” at FAMSF.

Earlier this year, Wilsey was the subject of harsh criticism by former and unnamed current employees at FAMSF, who anonymously submitted information to the Bay Guardian demonstrating that, among other things, Wilsey was directing staff members to assist with the maintenance of her personal art collection on museum time. Curator Emeritus Robert Flynn Johnson was even quoted in the New York Times as saying the museum was in a state of “Orwellian dysfunction” under Wilsey’s leadership.

Other allegations of mismanagement have included the ouster of several well-regarded, veteran members of the museum’s staff, such as European art curator Lynn Orr. Eyebrows were also raised over the exhibition of Wilsey’s son Trevor Traina’s photography collection at the deYoung last summer. Incidentally, Traina was re-elected to the FAMSF board last week after briefly retiring in April 2012, just before his show opened.

Despite the controversy, Wilsey’s position was never questioned at last week’s meeting. The need for “continuity” ostensibly stems from a gap in leadership at the museum following the death of Director John Buchanan in December 2011. The protracted recruitment effort for Buchanan’s replacement finally came to an end earlier this year, in the wake of the controversy, with the appointment of Colin Bailey, former deputy director and chief curator at The Frick Collection in New York. (On Thursday, Wilsey likened working with the selection committee to “herding cats.”)

It’s true that Wilsey has an extensive record of arts patronage in San Francisco. But with Wilsey retaining her post as president of the board, it’s unclear whether the “points of great concern amongst a broad range of professional staff” highlighted in an anonymous note sent to the Guardian this past February have been adequately addressed. The outcome of Wilsey’s re-election, perhaps, was the quiet dismissal of an ugly period in an institution otherwise concerned with beauty.