Each of the three Negev tech communes in San Francisco has run into problems ranging from code violations to a lawsuit, and it all started at a small property on 12th Street in South of Market.
Danny Haber, 26, and Alon Gutman, 27, first became involved in their communal housing setups last year with a live-work property at 200 12th St. called The Negev Twelfth. The property became a model for at least two other tech-infused dorm-style housing projects in SoMa that have recently sparked a series of investigations and a lawsuit.
The duo started The Negev Sixth at 219 Sixth St. early this year. It has been cited for possible habitability, hotel-conversion ordinance and room-count violations. They also have The Negev Folsom at 1040 Folsom St. that opened this past summer and is facing the same issues along with a lawsuit from displaced tenants.
Haber and Gutman championed The Negev properties as an innovative way of living amid scarce and expensive housing in The City. For $1,250 to $1,500 a month, tenants can rent a spot on a bunk bed in a single-room-occupancy unit or a single unit for about $1,700. Tenants also have access to common areas with a kitchen, games and a fratlike hacker-house atmosphere. The rents — targeted at tech workers and newcomers mostly in their 20s — overall are much higher than the rates at the properties before Haber and Gutman leased the buildings.
To create The Negev Twelfth, Haber and Gutman subleased a live-work space from the owner of an attached restaurant. The restaurant leased the entire building from the Tenderloin Neighborhood Development Corp., a housing and services provider for low-income San Franciscans.
The organization, through a donation from the St. Anthony Foundation in 1996, was gifted the parcel that includes the live-work space, restaurant and 12 units of below-market-rate housing at an adjacent space on Howard Street, which were renovated with a loan from the Mayor's Office of Housing.
When the organization took over the property, one lease covered the live-work space and restaurant, and it was never separated so the restaurant had to lease the whole thing.
HISTORY OF COMPLAINTS
A complaint filed by a city resident in May about the number of people living at 200 12th St. led Donald Falk, the Tenderloin Neighborhood Development Corp. executive director, to discover what had become of the live-work space.
Brian Fernando, owner of the Sri Lankan restaurant 1601 Bar and Kitchen, had subleased it to Haber and Gutman.
“They pay the rent all the time. I mean, that's kind of all you want in a tenant,” Fernando said. “They've had some issues with the neighbor next door with noise late at night but … apart from that, they've been fine.”
The sublease, Falk said, was done “without our permission or knowledge.”
“As soon as we found out, we issued a notice to our tenant to cure or quit,” he added.
The Planning Department launched an investigation in July after receiving complaints that there were a dozen tenants living at the live-work space zoned for only four people, and that the place was being advertised as a short-term rental on Airbnb.
During the summer, Falk said the Tenderloin Neighborhood Development Corp. worked with the Planning Department to rectify violations. He said that Haber — who takes the lead on the business side while Gutman fronts the technical side — was “extremely cooperative in every respect from the moment that we brought the parties together to tell them that the status quo needed to change.”
The Planning Department closed the case Oct. 29 because Haber proved that the remaining tenants were staying more than 30 days, said Gina Simi, spokeswoman for the department.
“A number of people left because their lease was up and it just wasn't renewed. Some were already leaving. There's no way to really pinpoint who was doing what, but nobody was evicted,” Simi said of the reports that more people were living at the property than zoning allowed.
Falk said he hired an architect to inspect 200 12th St. to ensure the electrical, plumbing, chemical and physical elements were up to code, and explore what would be required to separate the live-work space from the master lease with the restaurant.
“If we were going to do that, we would have to do some renovation work to make that legal,” he said, adding that he has not heard complaints since the investigation closed.
Rent from the live-work space and restaurant allows the Tenderloin Neighborhood Development Corp. to keep the Howard Street apartments affordable to low- and extremely low-income residents, Falk said.
“It helps us keep the rents lower at the 12 units next door because it's all one property,” he said. “The money all goes into one pot.”
But on Nov. 6, the Department of Building Inspection received a new complaint that 200 12th St. was being operated as a hostel with up to 15 people, that the makeshift bedrooms had no egress or windows, and plumbing work was done without permits.
Haber could not be reached for comment.
'AN AWESOME IDEA'
Jared Smith moved to The Negev Twelfth to participate in a coding boot camp and serve as an intern at the payroll company ZenPayroll. He said about 22 people were living there while he stayed from June 2013 to February of this year.
The ground floor was an open space with couches and a kitchen, while the upstairs had a main room with seven bunk beds divided by sheets, a large walk-in closet with two bunk beds separated by a curtain and two more rooms with two bunk beds each, Smith said.
Smith said he found The Negev Twelfth on Airbnb and paid Haber $2,186, which included cleaning and service fees, for 65 nights.
Eventually, Haber stopped using the Airbnb platform to find tenants. Smith said he was charged for the entire month of February while living there only two weeks.
“In the beginning, The Negev was an awesome idea because housing is too expensive and you really meet new friends,” Smith said of the living quarters. “But towards the end, it seemed more like just a way to make money.”