The city of San Francisco has won a Superior Court order temporarily blocking a rent raise for low-income tenants of a downtown apartment building constructed with the help of bond money.
Superior Court Judge Harold Kahn issued the preliminary injunction on Friday, saying the city “is likely to prevail on the merits” of a breach-of-contract lawsuit it filed last month against Geary Courtyard Associates and its corporate owners.
The courtyard is a 14-story, 164-unit apartment building built at 639 Geary St. with the help of a loan of $18 million in tax-exempt bonds issued by the city in 1988.
One condition of the loan was that 20 percent of the apartments must be rented to low-income residents at affordable rates.
The corporate parents of the project are Equity Residential of Maryland and ERP Operating Limited Partnership of Chicago.
In April, the owners completed repaying the bond money to the city and then sought to raise the low-income tenants’ rents. As a transition measure, they offered the tenants a one-year lease with a 15 percent increase before going to full market rates.
The companies contend its contract with the city provides that the agreement to provide affordable housing expired when the loan was repaid.
The city claims the contract requires that the low-income tenants be given the affordable housing for life.
In an example given in the city’s lawsuit, one very-low-income tenant who now pays $889 per month was offered a one-year lease at $1,022 per month. The lawsuit alleges that after one year, the tenant’s rent would be double what it is now because market rates advertised for units in the building range from $1,829 to $2,440 per month.
Kahn’s preliminary injunction, issued after a hearing on Friday, freezes the low-income rents and bars the owners from raising them until the case is resolved by a full trial or in some other way.
A case management conference on the suit is scheduled for Oct. 3.
City Attorney Dennis Herrera said, “This ruling proves that the affordable housing protections San Francisco negotiates have teeth, and that city leaders are fully committed to enforcing them.”
Marty McKenna, a spokesman for Equity Residential, said, “We respectfully disagree with the court’s decision but we’ll abide by it while we continue to evaluate our options.”
Julia Cheever, Bay City News