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San Francisco sues BMR apartment owners

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City alleges that opportunist landlords buy subsidized units, rent them out at market prices

333 First Street, focus of one of the city’s actions against alleged subsidized housing cheats.
Courtesy Trulia

It was a busy day at the San Francisco City Attorney’s office on Thursday, as the city filed suit against not one but two alleged subsidized housing cheats, providing an object lesson in the do’s and don’ts of BMR ownership.

Suit number one named Catherine Bailey as owner of 888 Seventh Street, #231 and accused her of allegedly moving out of town just a few months after buying the one-bed, one-bath place in Mission Bay and renting it for a tidy sum of $2,400/month.

City Attorney Dennis Herrera cited some of Bailey’s correspondence with 888 Seventh’s residents when they complained about the renter:

“I own the unit, but rent it out…I live far away and I am in a very demanding program until May of 2017…If you can show me proof that my tenant is involved in illegal activity or has damaged anything in the common area, I will be happy to evict him…Sincerely Catherine Bailey 888 7th Street, Unit 231 OWNER!”

888 7th
David Baker Architects

As the suit reminds us, “Use is restricted to and conditioned upon owner occupancy by a low-income household. Treating the property as a rental is prohibited.”

City records show that Bailey bought the apartment in 2008 for a little more than $237,000.

Meanwhile, the office alleges a racket of a different sort in South Beach. Defendant Rita Zakhrabova bought an apartment at 333 First Street in 2005.

Problem is, Herrera alleges that Zakhrabova already owned another home at 400 Beale Street. “Zakhrabova was not a first-time homebuyer when she bought a second unit and was therefore unqualified to purchase,” Herrera’s office writes.

400 Beale, “Bridgeview.”
Courtesy Trulia

Zakhrabova’s name does appear on the deed of both homes. She bought 400 Beale #301 in 2002 for $300,000 and 333 First Street #1506 in 2005 for a little over $238,000.

The city recorder marks no subsequent sales of the Beale Street home, and it appears Zakhrabova still owns both apartments to this day.

But the city attorney’s allegations have not yet been proven in court. Attempts to reach Bailey and Zakhrabova were not successful, but Curbed SF will contact their respective attorneys for comment in the future.