Pedestrians walk past the building at 1049 Market St. on Wednesday, Dec. 12, 2018. (Kevin N. Hume/S.F. Examiner)

Settlement expected in long-running Market Street tenant eviction fight

A settlement agreement is expected as soon as next month in a years-long legal dispute over a landlord’s attempt to evict tenants living illegally in units designated for office space, the San Francisco Examiner has learned.

Residents living at 1049 Market St. received eviction notices in 2013 from the building’s owner, who had received a notice of violation for allowing tenants to live in units designated as commercial space only, as had been the practice for years.

Rather than try to legalize the residential units, the building owner obtained a demolition permit to convert the units back to office space, but the permit was suspended by The City as tenants and city officials fought to block the evictions.

Multiple lawsuits were filed and the legal wrangling has dragged on to this day. The San Francisco Examiner first reported the evictions in October 2013.

SEE RELATED: Market Street building evictions could be largest San Francisco ouster in decades

Five years later, a proposed settlement agreement is now in the works between The City, the building’s owner, 1049 Market Street, LLC, which includes John Gall, and the affordable housing nonprofit the Tenderloin Housing Clinic, whose staff attorney Steve Collier represents the remaining residents living in the building. The settlement would require approval by the Board of Supervisors.

Public documents from the Mayor’s Office of Housing show that The City is planning to fund the purchase of 15 units within the building through the Tenderloin Housing Clinic, as part of a city program that funds the purchases of properties to prevent displacement.

Tenderloin Housing Clinic executive director Randy Shaw confirmed that the transaction is related to the settlement and the non-profit is planning to buy the building’s second floor. He said tenants in the building currently living on multiple floors would move to the second floor.

“It’s one of the most remarkable legal victories,” Shaw told the Examiner. “It’s just fantastic we saved those tenants.”

SEE RELATED: Residents protest Ellis Act evictions of mid-Market building

The City Attorney’s Office declined to comment, but confirmed a settlement was expected next month.

Collier was not available to comment, while Andrew Zacks, Gall’s attorney, declined to comment, citing “ongoing negotiations.”

The six-story 1049 Market St. building dates back to 1907, when it was built as an office building with ground floor retail. In 1991, the then-owner of the building converted the sixth floor units legally to live/work units, while floors one through five have remained designated commercial use.

Around 1996, those with leases for the spaces on floors one through five started to live in there as well. “Due to the extreme blight of the area and a lack of police presence at this time, burglary became common in the building and some tenants began to reside in their commercial units to limit these crimes,” according to one of the lawsuits filed by Zacks in federal court in 2015. That lawsuit said there were 77 units on the first five floors, of which 32 were “currently occupied illegally as residential spaces.”

The City had issued notice of violation in 2007 for the illegal residences on the first five floors. When new ownership bought the building in 2012, including Gall — two of the three members of 1049 Market LLC are the children of one of the prior owners of the property, a court opinion noted — discussions on how to legalize the units continued with The City.

Gall attempted to evict the tenants and obtain a demolition permit to return the space back to office space. The demolition permit was initially granted by The City then suspended. The dispute has remained subject to litigation ever since.

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