A San Francisco supervisor questioned the credibility of one of The city’s largest commercial real estate firms at a hearing Wednesday sparked by allegations of health and safety violations and targeted displacement of rent-controlled tenants at properties owned by the firm.
Justin Sato, chief operating officer of Veritas Investments, a private firm with a portfolio of over 250 rent-controlled buildings throughout the City, told the Board of Supervisors Public Safety and Neighborhood Services Committee that any displacement of tenants was due to “natural attrition.”
The statement prompted Supervisor Jeff Sheehy, who called the hearing, to question the company’s ethics. Sheehy, who is running for reelection, said that he recently had to remove a representative of the company he had contacted to discuss the tenants’ allegations from his office for “name calling.”
“When I called [your office] this representative of yours yelled at me and called me names. When I met with you, the same individual yelled in my office and called me names,” said Sheehy.
“Your credibility as being good actors is undermined by actions that were taken,” he said, adding: “You can’t vouch for the people you hire, so how can you vouch for the practices of a construction company that makes these people’s lives unlivable?”
The tense exchange came after San Francisco tenants on Wednesday called for an investigation into the rise of so-called corporate landlords in San Francisco and a resulting loss of affordable units.
Sheehy said “many conversations with tenants revealed a deep pattern of erosion of rent controlled housing stock since a number of buildings have been taken over by certain companies.”
Dozens of tenants from buildings owned by San Francisco’s biggest landlords called for greater enforcement of existing tenant rights at the hearing and the creation of laws to hold corporate landlords accountable for violations.
Most said they were impacted by their landlords’ “unlawful business practices” that include failing to adequately protect tenants’ health and well being during construction projects. They also said displacement at Veritas’ properties was rampant due to a practice of “turning apartment buildings into construction zones for long periods of time” and enacting legal “pass through” rent increases while violations persist.
Landra Tankha, a long-term tenant of a Veritas-owned building at 520 Buchanan St., said that her home was turned into “a major construction project” for nearly five years that included the “complete gutting” of some nine apartments and other capital improvements.
Other tenants alleged that complaints of “lead poisoning” and exposure to unsafe construction conditions went unaddressed.
“We want to create a construction monitoring program within the Department of Building Inspections, because no one is overseeing these projects,” said Tankha.
Moreover, the tenants said that they often find themselves footing the cost of repairs, as San Francisco law allows landlords to petition the City’s Rent Board to pass on some of these expenses to tenants.
Supervisor Sandra Lee Fewer, who manages properties herself, took up the issue in March by introducing legislation to block debt service and property taxes from being passed to tenants after a building’s purchase. That legislation will be heard at the board’s Rules Committee on Friday.
Though Sheehy and Fewer did not call for action on the tenants’ demands for an investigation into Veritas and other corporate landlords, Sheehy said in a statement published after the hearing that he is a proud co-sponsor of Fewer’s legislation.
Sato said he was disappointed that the company’s character and motivation were called into question. He said the firm has reached out to Fewer and other supervisors to “talk about ways that we can amend the legislation to address the concerns we’ve heard.”
Sato said the company’s business model is to “acquire rent controlled, classic buildings and address the work that they require,” but not to “force turnover.”
The “culmination of this work and the deadlines that we have to manage” result in “a lot of projects that have to be taken care of upon acquisition,” he said.
“We address the required repairs that are needed,” said Sato, noting the city mandates “required capital improvements, like soft story retrofits.”
“There is nothing we are doing that is illegal by any means,” he said, adding that the company in recent months has “stepped up” its communication with tenants.