Herrera settles with landlords who crammed veterans into illegal and unsafe housing

Landlords will pay $2 million, make buildings compliant with safety codes and fund housing placement for tenants who would have been displaced

SAN FRANCISCO (Feb. 12 2018) — City Attorney Dennis Herrera announced today that he reached a settlement agreement with a pair of Bayview landlords who had illegally cut up existing homes into multiple unsafe units to maximize profit from vulnerable veterans, endangering tenants and neighbors in the process.

Under the terms of the settlement reached Feb. 5 on the eve of trial, Judy Wu and her husband, Trent Zhu, agreed to pay the City $2 million to cover enforcement and other costs. They also agreed to bring their 12 properties in question into full compliance with city building, fire, planning and other codes.

For years, Wu, also known as Xiaoqi Wu, and her husband, also known as Chuan Zhu, made a handsome profit off federal housing vouchers for veterans by cramming the former service members into small, unsafe living quarters that the couple had illegally carved out of primarily single-family homes in the Bayview District.

“There is a reason we have building codes,” Herrera said. “They exist to prevent dangerous situations, like an improperly installed stove exploding and starting a fire that tears through a neighborhood. Ms. Wu and Mr. Zhu trafficked in substandard housing that endangered their tenants and neighbors alike. They repeatedly claimed they would fix the problems but never did. That ends with this settlement. Their evasion and foot-dragging stops now.”

The living spaces contained makeshift, dangerous and unpermitted natural gas and water lines that were used for stoves and sinks. For instance, a single-family home at 1351 Revere Ave. was illegally chopped into seven units, with gas lines rigged to stoves in each unit. The couple was collecting federal housing vouchers for each makeshift unit. The vouchers pay a specified amount based on HUD guidelines. The current amount for a 1 bedroom apartment from a veteran housing voucher is $3,132, for example. Wu and Zhu had 12 total properties with similar illegal housing conversions.

The settlement requires Wu and Zhu to bring their 12 properties up to code. Part of the $2 million will cover contracting with a nonprofit housing provider to find alternate housing for 10 households that would have been displaced by making the buildings safely habitable.

“This settlement ensures that no one is put out on the street,” Herrera said. “These veterans have sacrificed a lot for all of us. Those who would be displaced by legalizing these buildings are being relocated to alternate housing with the City’s assistance. I want to thank the Mayor’s Housing Policy Advisor, Jeff Buckley, and the entire Department of Homelessness and Supportive Housing for their hard work to ensure that these veterans have safe, stable homes. I also wanted to commend the Department of Building Inspection and the Planning Department. Their assistance was vital in achieving this outcome.”

Wu and Zhu had illegally converted 12 buildings — 10 single-family homes, one duplex and one three-unit building — into 49 makeshift housing units. Bringing all of the buildings up to code will require reconfiguring the buildings and result in 37 total units.

Ten tenants will have to be relocated to new housing. Half of those 10 already have either moved into their new home or have new units identified for them. Supportive housing nonprofit Brilliant Corners is working with the City to provide the tenants with appropriate housing placement.  Part of the settlement funds will cover that work. No tenants will be displaced until they have a suitable home to go to.

The 10 relocating tenants all qualify for federal HUD-Veterans Affairs Supportive Housing vouchers, which provide a competitive payment to property owners.  As of Jan. 1, 2017, the HUD-VASH vouchers paid $3,132 a month for a one-bedroom apartment.

The settlement was reached after Wu and Zhu employed stall tactics, including trying to secretly sabotage their own Planning Department submission to buy themselves more time and hiring a lobbying firm in a failed effort to get city law changed to benefit them.  The settlement includes a stipulated injunction to ensure compliance or face financial penalties and contempt of court.

“I’m pleased the Planning Commission saw through the games these defendants were playing,” Herrera said. “This settlement has real teeth to ensure that these veterans, their neighbors and the taxpayers are protected.”

The case is: People of the State of California v. Xiaoqi Wu et al., San Francisco Superior Court Case No. CGC 16-553981, filed Aug. 31, 2016. Additional documentation from the case is available on the City Attorney’s website at: sfcityattorney.org