San Francisco Targeting Below-Market-Rate Housing Cheaters
SAN FRANCISCO (CBS SF) -- Cheaters have long been taking advantage of San Francisco's affordable housing program and now the city is finally taking action.
At a recent open house for a condo in San Francisco's trendy Potrero Hill district, potential buyers found it to be a relative bargain in the city - priced at just half a million dollars. Known as a Below Market Rate unit, or BMR, the 770 square-foot, one bedroom is on sale through San Francisco's affordable housing program for first-time homebuyers, like Silvia Cordero.
"I'm a native San Franciscan, so for me it feels like it's really become a struggle," said Cordero. She's a school principal, but still can't afford to buy a home in the city.
Snagging a BMR won't be easy. "It's not unusual to have 50 to 70 applications for a condo being sold," the realtor showing the place said.
But what apparently is easy is abusing the program once you get your foot in the door, as we uncovered in our investigation.
Take Rita Zakhrabova. She managed to buy two BMRs even though you're only allowed to have one. "It was a lottery and I won a studio," said Zakhrabova. She's owned both for over a decade though she claims she gave the first one to her ex- and their daughter.
BMR owners are supposed to live in their units. But we found Caroline Novak miles away, at a home she purchased two years ago for $2.25 million in the exclusive Redwood City community of Emerald Hills.
"So this is not your house?" we asked her.
"I am just staying here for a couple of days," said Novak.
A small alley off Jackson St. in Chinatown, Rose Pak's Way was named for the community activist who did so much for her community. Neighbors say she lived right above the sign on Stockton Street in Chinatown, not in her BMR on Beale Street. A year after Pak passed away, it's still in her name, even though upon death the unit is supposed to be sold to another qualified BMR homebuyer.
Then there's Amy Gussin. The investment banker was illegally renting her BMR unit on Airbnb for $149 a night for several years without getting caught, while living in a multi-million dollar condo she owns in the Millennium Tower.
We created a list of 28 complaints about BMR owners most of which were obtained through a public records request. In a random, door-to-door survey we found cheaters in almost every building, months after anonymous neighbors ratted them out.
In an earlier interview, Maria Benjamin, the director of the city's BMR program admitted: "We've had our eye on these for many years." Later the Mayor's Office of Housing told us Benjamin was the wrong person to talk to, but ignored repeated requests for a follow-up interview.
So we took our questions to the city attorney's office. "I think in any instance where you have someone gaming the system, when we're talking about affordable housing, it's substantial, it's wrong and it shouldn't happen," said spokesman John Cote.
Cote claims the city is cracking down. It has filed three lawsuits and just reached a settlement with Gussin. "Ms. Gussin agreed to sell the unit to a qualified buyer and to pay the city $210,000 dollars to cover the cost of the unlawful proceeds from renting out the unit, as well as enforcement costs," said Cote.
But all the action has come in just the past six months.
"We know of complaints that go back decades. Why now?" we asked him.
"I can say our office worked diligently on every case referred to us," said Cote. "I can't speak to complaints from decades prior. I know as cases are referred to us we move swiftly to thoroughly investigate."
And we wondered why Rita's case was even filed, since the Mayor's Office of Housing could have checked its own database to see she already owned a BMR before she bought the second one. ""The city doesn't want to accept that they are also wrong, because if I am not eligible, then why did they give it to me?" said Zakhrabova.
"Here we have the city allowing her to break its own rules. Should that be something the city attorney has to prosecute?" we asked Cote.
"In this particular case we had a situation where she lied on her application it didn't contain correct information," said Cote.
Back on Potrero Hill, Silvia Cordero wasn't happy to hear cheaters are making her chances of owning a BMR even harder. "Why are you taking away from someone who already is struggling?" said Cordero.
Despite the high odds, she hopes she'll get a fair shake. "So do you have your fingers crossed for this one?" we asked her. "Yeah yeah," she said.
The administrator of Rose Pak's estate says her BMR will be sold to another first-time homebuyer at a below-market rate as the city requires. But settling the estate is still months if not years away.
Meanwhile the city attorney wants help. If you know of a BMR cheater you can call the city's housing hotline at 415-554-3977 ... and let me know at ssteimle@cbs.com.
