S.F. sues major residential rental firm

SAN FRANCISCO (Map, News) - One of The City’s largest residential rental companies has been slapped with a lawsuit alleging it intimidates renters, illegally refurbishes apartments and cheats The City out of fees.

San Francisco City Attorney Dennis Herrera filed suit Wednesday against Skyline Realty and its subsidiary company, CitiApartments, along with eight limited liability companies and several individuals, for threatening renters, illegally evicting them, renovating apartments without proper permits and failing to pay fees for flipping residential apartments into high-end corporate suites.

“What happened here was essentially that Skyline paid too much for its buildings and the only way it could recoup its investment was to intimidate tenants and get them out, then raise the rents and convert buildings to units of a different character, many times corporate executive suites, which enabled them to raise the rent, sometimes in the course of a year,” Herrera said Wednesday.

The Gaylord Suites, formerly the Gaylord Hotel, “reaped a substantial windfall” for the defendants, according to Hererra’s office. The 77-year-old building’s units, The City alleges, were all converted from residential rooms to short-term corporate executive apartments, in violation of the Hotel Conversion Ordinance. The monthly rent for a room at the Gaylord went from an average of $990 in 2004 to $3,972 once renovation was completed in 2005.

The lawsuit comes on the heels of an April lawsuit filed by 23 tenants, claiming Skyline, CitiApartments and eight other subsidiaries used tactics such as questioning tenants’ immigration status and sending armed men to the apartments of rent-controlled tenants. Many of the alleged victims are old, disabled or speak limited English.

The City’s action takes a broader scope and calls for higher penalties than the lawsuit filed by tenants. It alleges that Skyline and its subsidiaries conducted construction without permits and as a means by which to harass tenants, shutting off utilities and generally making buildings unpleasant. The lawsuit accuses the defendants of skirting city building codes and illegally removing residential units from the market.

Under the San Francisco Hotel Conversion Ordinance, a property owner cannot remove residential units from the rental market without paying a mitigation fee to The City. The lawsuit alleges that the defendants did not pay those fees.

“I think that what you’ll find is that the conduct that was engaged in by Skyline is so pervasive and so widespread that the litigation filed today was the only way in which we would be able to stop that conduct,” Herrera said.

Calls to John Seigel and Edward Singer, attorneys for the defendants, went unreturned Wednesday, as did multiple calls to managing partner David Raynal.

Seigel has said previously that the company engages in no illegal activity. It does, he said, offer to buy out tenants living in rent-controlled apartments, which is legal. But he said the company does not engage in intimidation.

In a June interview, Raynal told The Examiner that his companies conduct a lot of construction work on its buildings, which are often old. He said Skyline and its subsidiaries had spent more than $50 million on construction work in the last five years.

The City is seeking an immediate injunction against “further lawlessness by the defendants.” It also seeks disgorgement of profits and restitution, as well as civil penalties that could include $1,000 per day per housing code violation, starting from the first day the violation is found to have begun. It also seeks an additional $2,500 per day per violation for each “unfair and unlawful business act,” as well as another $2,500 for each unfair and unlawful business act perpetrated against a senior citizen or disabled person. The City also seeks attorney's fees and costs.

amartin@examiner.com