Civil litigation seeks replacement of some 300 housing units that the for-profit university unlawfully displaced in its real estate buying spree
SAN FRANCISCO (May 6, 2016)—City Attorney Dennis Herrera filed suit today against the Academy of Art University and an interrelated web of corporate entities, alleging that the for-profit institution schemed to violate state and local laws in its aggressive acquisition and use of vast real estate holdings in San Francisco. The civil complaint filed in San Francisco Superior Court this morning details a decade-long pattern of lawlessness and defiance by AAU and a complex array of limited liability companies, which purchase and lease properties for the private educational enterprise’s use citywide. Apart from multiple unauthorized, unpermitted, and wholly disallowed uses of various properties, Herrera’s complaint references dozens of additional violations of zoning, signage, environmental, historical preservation, and building code requirements.
Herrera’s complaint contends that AAU has unlawfully deprived San Francisco of some 300 residential dwellings that are desperately needed in the midst of a severe affordable housing crisis. The suit also alleges that the AAU defendants’ unfair and fraudulent business practices have illegally denied San Franciscans their rightful role in neighborhood planning decisions, and disadvantaged honest competitors in the city’s real estate marketplace.
“Academy of Art University is one of San Francisco’s most egregious land use scofflaws, and its defiance persists at the worst possible time for our residents,” Herrera said. “For more than a decade, city officials have worked cooperatively with AAU to try to resolve its rampant violations. We extended every professional courtesy, and showed patience beyond what I was sometimes happy about, quite frankly. But no one can doubt San Francisco’s good faith in working with AAU. And yet—again and again—AAU met our good faith with bad faith. Again and again, AAU sought more time to address its violations, even while scheming to commit new violations, at newly purchased properties. Again and again, AAU set deadlines it missed; made promises it broke; and hired lawyers it soon after fired—simply to frustrate progress toward resolution. With our lawsuit today, the ‘again-and-agains’ end. On behalf of San Francisco and the People of California, I have sued to protect our affordable housing stock; to assure our residents’ rights; and to affirm the integrity of fair and even-handed land use regulation. As part of this suit, we will seek an appropriately large penalty to exact from AAU. In bringing this case, I’m extremely thankful for the tireless efforts of the San Francisco Planning Department, under the leadership of John Rahaim; Zoning Administrator Scott Sanchez; and our Planning Commission. I’m grateful as well to Supervisor Aaron Peskin, whose district includes most of the San Francisco properties where AAU is flouting the law, for his leadership and hard work. Thanks also to Supervisor Scott Wiener, for his leadership in authoring legislation that will avoid similar problems in the future.”
“Our Department has made significant progress toward completing the permitting process, and we look forward to continue working with the City Attorney to resolve this matter,” said John Rahaim, Director of San Francisco Planning.
“Academy of Art University has been playing San Francisco for a fool, and exacerbating our affordable housing crisis by illegally converting hundreds of residential units,” said Supervisor Aaron Peskin. “It is long past time to insist that AAU abide by the process that every other institutional property owner is required to follow. I commend City Attorney Herrera for his efforts in filing this litigation.”
“The whole point of my student housing legislation was to make it easier for universities to create their own student housing and stop them from converting rent-controlled units into dorms,” said Supervisor Scott Wiener. “Universities need to comply with our zoning and housing laws, and I commend the City Attorney for enforcing the law.”
Herrera’s suit alleges three causes of action against the AAU defendants: for “unlawful, unfair or fraudulent business practices” in violation of California’s Unfair Competition Law; for per se and general public nuisances under California’s Civil Code and Code of Civil Procedure; and for an array of violations under San Francisco’s Planning Code.
Among the 40 properties that AAU operates in the city, according to a March 10 San Francisco Planning Department memo to the Planning Commission, fully 33 fail to comply with permit, entitlement or authorization requirements. Herrera’s suit is currently pursuing civil adjudication for 23 of the AAU properties, at: 1916 Octavia Street; 1153 Bush Street; 2209 Van Ness Avenue; 1080 Bush Street; 1055 Pine Street; 860 Sutter Street; 2211 Van Ness Avenue; 601 Brannan Street; 2340 Stockton Street; 1849 Van Ness Avenue; 1069-1077 Pine Street; 58-60 Federal Street; 491 Post Street; 2295 Taylor Street; 466 Townsend Street; 620 Sutter Street; 2151 Van Ness Avenue; 817-831 Sutter Street; 1727 Lombard Street; 2225 Jerrold Avenue; 460 Townsend Street; 930-950 Van Ness Avenue; and 2801 Leavenworth Street. Other properties cited in last month’s Planning Department memo remain under review by Herrera’s office.
Herrera’s litigation seeks a permanent injunction compelling AAU to restore units that defendants unlawfully displaced from San Francisco’s affordable housing stock; to abate all violations and cease all unfair and unlawful business practices; penalties of no less than $200 per day for each violation of the San Francisco Planning Code; civil penalties of up to $2,500 for each act of unfair or unlawful business under the California Business and Professions Code; and attorneys’ fees and costs of pursuing the civil action.
The case is: People of the State of California, ex rel. Dennis J. Herrera, et al. v. Stephens Institute, d/b/a Academy Of Art University, et al., San Francisco Superior Court, filed May 6, 2016.