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City Sues Academy of Art University for Alleged Real Estate Racket

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For-profit school allegedly snapped up 33 buildings, 300 residential units illegally

After years of bad blood, the city finally told the ubiquitous Academy of Art University today that it would see them in court over their shopaholic habits when it comes to San Francisco properties.

City Attorney Dennis Herrera officially filed suit against the 87-year-old, $300-million, for-profit college. Herrera also let the academy have it in a press release and morning press conference that included the phrases "real estate buying spree," "decade of lawlessness and defiance," "egregious land-use scofflaws," and "unauthorized, un-permitted, and wholly disallowed use."

In a 60-page court filing, the city accuses AAU of a sprawling enrollment racket, in which the university increased its student body (and therefore its profits; AAU accepts every students who graduated high school and can afford the $20,000 tuition) nearly quadruple-fold in 25 years by illegally converting residential properties into dorms.

The city alleges that 33 of the university’s 40 buildings in the city are illegal conversions. All 33 properties (or more precisely, the Limited Liability Companies behind them) are listed as separate defendants in a laundry list of accusations that stretches for 151 paragraphs.

The city's planning code expressly forbids using residential buildings as student housing. The suit estimates that AAU has scarfed up and is sitting on over 300 residential units.

Of top of that, the city says that AAU habitually violates every other type of real estate and housing law in San Francisco, most notably shutting neighbors out of the planning process during their constant expansion.

An AAU spokesperson was not available for comment, but we will update you if and when they reply. None of the city's allegations are yet proven.

Academy of Art University was founded in 1929 as the Academy of Advertising Art. In those days it was based in a Kearny Street loft and had 45 students. Today it’s one of the largest single landowners in the city, with a student body of roughly 18,000. It counts Dreamworks director Vicky Jenson and makeup artist Rick Baker (both Oscar winners) among its alumni.

The city is threatening AAU with fees "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." Herrera promised today to pursue an "appropriately large penalty."

The press release included heated jabs from Supervisor Aaron Peskin of district three, who said that the university "has been playing San Francisco for a fool for years." Scott Wiener, supervisor for district eight and notably more mellow and moderate than Peskin, said that he "applauded" Herrera's action.

If the city's accusations are true, it would take a board action amending the planning code before AAU's properties could even stop being in violation.