458 Broadway - Notice of Decision - 102315

SAN FRANCISCOOFFICE OF SHORT-TERM RENTALS

October 23, 2015

Corey Lau

218 Melrose Avenue

Mill Valley, CA 94941

Peter Herrmann

458 Broadway

San Francisco, CA 94133

SF Administrative Code Chapter 41A Short Term Residential Rental

Property Owner:

Site Address:

Assessor's Block/Lot:

Zoning District:

.Complaint Number:

Date of Notice of Complaint:

Hearing Officer:

DECISION

Francisco Gutierrez

M C Hall &Associates

605 Market Street, Floor 9

San Francisco, CA 94105

NOTICE OF DECISION

Corey Lau

218 Melrose Avenue

Mill Valley, CA 94941

458 Broadway

0144/013

NCD -Broadway Neighborhood Commercial

2015-005969ENF

June 30, 2015

Audrey Butkus, (415) 575-9129 or [email protected]

1650 Mission St.

Suite 400

San Francisco, CA

94103-2479

Reception:

415.558.6378

Website:

www.sfgov.org/OSTR

Inquiries:

415.575.9179

shorttermrentals~

sfgov.org

The Director's appointed hearing officer, Audrey Butkus, has determined that Corey Lau, the owner of

458 Broadway, and Peter Herrmann, the tenant of 458 Broadway, have violated Administrative Code

Chapter 41A for illegally offering a dwelling unit for rent as a Tourist or Transient use (a.k.a. short-term

rental). The details of the violation and decision are discussed below.

This decision is based on the entirety of the record before the hearing officer, including but not limited to

testimony of witnesses and the responsible party and information submitted by Planning Department

staff, the responsible party/ies, and other witnesses. The record may be found at 1650 Mission Street,

Suite 400, San Francisco. Although factual information from the record is summarized below, this

decision is based on the record as a whole.

Notice of DecisionDate: October 23, 2015

DESCRIPTION OF VIOLATION

Complaint No. 2015-005969ENF458 Broadway

The subject property, athree-story building, is authorized as four-unit dwelling with commercial spaceon the ground floors. On May 12, 2015, the Planning Department ("Department") received a complaintalleging that an unauthorized short-term residential rental ("STR") was operating from the dwelling unitat 458 Broadway, located on the top floor. On-line research, conducted by Department staff, found thatthe subject property was being advertised for rent on a nightly and or weekly basis through numerousSTR hosting sitesz. Based on this and other information, the Department has determined that the subjectproperty is in violation of Administrative Code Section 41A.

UNLAWFUL CONVERSION

Chapter 41A of the San Francisco Administrative Code prohibits the offering of residential units forTourist or Transient use (which is a rental for less than 30 days), unless the units are registered on theShort-term Residential Rental Registry. Under Administrative Code Section 41A.6, if the Hearing Officerdetermines that a violation has occurred, an administrative penalty shall be assessed as follows:

1. For the initial violation, not more than four times the standard hourly administrative rate of$121.00 for each unlawfully converted unit, or for each identified failure of a Hosting Platform tocomply with the requirements of subsection (g)(4), per day from the notice of Complaint untilsuch time as the unlawful activity terminates;

2. For the second violation by the same Owner(s), Business Entity, or Hosting Platform, not morethan eight times the standard hourly administrative rate of $121.00 for each unlawfully convertedunit, or for each identified failure of a Hosting Platform to comply with the requirements ofsubsection (g)(4), per day from the day the unlawful activity commenced until such time as theunlawful activity terminates; and

3. For the third and any subsequent violation by the same Owner(s), Business Entity, or HostingPlatform, not more than twelve times the standard hourly administrative rate of $121.00 for eachunlawfully converted unit or for each identified failure of a Hosting Platform to comply with therequirements of subsection (g)(4) per day from the day the unlawful activity commenced untilsuch time as the unlawful activity terminates.

COMPLAINT AND SUPPORTING DOCUMENTS

On May 12, 2015 the Department received a complaint for the subject property from the Office of JulieChristensen, San Francisco Board of Supervisor, District 3, alleging illegal short-term rental acfivity. OnJune 22, 2015, staff research produced at least 13 individual websites with listings advertising stays of lessthan 30 days for the subject property.

i Department of Building Inspection's Report of Residential Building Record and Office of the Assessor-Recorder's Record.

z In addition to VRBO, the following other STR hosting sites were identified: Rent-Holiday-Homes, Wimdu, HomeAway, VRBO,

Roomorama, Vakast, Zilyo and HouseTrip. In addition; it was noted that listings on social media sites including Twitter (first

tweet December 15, 2014), Facebook (first post April 10, 2015), Google+ (first post December 15, 2014), and Pinterest (58 pins) were

established to promote the STR use for the subject property.

SAN FRANCISCOOFFICE OF SHORT-TERM RENTALS 2

Notice of Decision Complaint No. 2015-005969ENF

Date: October 23, 2015 458 Broadway

NOTICE OF COMPLAINT AND APPARENT VIOLATION

On June 30, 2015, staff issued a Notice of Complaint to the property owner and to the tenant

by certified

and non-certified mail.

On July 1, 2015, staff posted a notice at the subject property notifying the property owner a

nd the tenant

of the hearing.

PRE-HEARING SUBMISSION

Pre-Hearing Submission for Hearing on August 12, 2015:

Evidence submitted by Mr. Cory Lau, Property Owner

Evidence presented from Mr. Lau's attorney, Mr. Francisco Gutierrez, .includes a

statement from Mr. Lau that he did not personally offer the subject property for STR use.

However, Mr. Lau did state that he gave his tenant permission to establish an STR use,

and permission was granted to sublease the property for two weeks. This was noted in

the lease agreement for 458 Broadway, entered into on October 18, 2013, by Mr.

Herrmann and Mr. Lau. More specifically this lease states that the tenant, Mr. Herrmann,

"is allowed to have paying guests no longer than 15 days at a time:'

Evidence submitted Robyn Reynolds, Complainant

Ms. Reynolds submitted two letters, dated June 1, 2015 and July 2, 2015, which were sent

by her to Mr. Lau in response to his owner move-in eviction notices. The first letter states

that Mr. Herrmann, the tenant in 458 Broadway, has not been seen for many years and

that there are many strangers staying at the apartment. The second letter explicitly stated

that 458 Broadway was being used as an illegal STR and included approximately 250

pages of screen shots, dated June 29, 2015, of various hosting sites and social media sites.

The listings advertised nightly rates for the subject property.

In addition, Ms. Reynolds provided the Department with an activity log and video

evidence to show that various groups of people with luggage came and went from the

apartment between May 12, 2015 and July 2, 2015.. These groups appeared to have stayed

for less than 30 days based on video evidence and visitor log.

As part of her submittal, Ms. Reynolds also provided text messages between her and Mr.

Lau, Mr. Herrmann, and an Amy Kee. Ms. Kee appears to be the caretaker of the

property for Mr. Herrmann. The texts messages, beginning in July 7, 2013, involve

complaints from Ms. Reynolds to Mr. Lau, Mr. Herrmann, and Ms. Kee regarding the

behavior of various guests staying in the upstairs apartment.

Evidence submitted by Mr. Peter Herrmann

On August 2, 2015, Mr. Herrmann submitted evidence that included a statement

regarding a sublease of Unit 458 for Mr. Marc Pa. In addition, per Mr. Herrmann, two

individuals, Mr. Nelson Castellanos and Mr. Pawel Wojcieszyn are currently staying in

unit 458 for more than 30 days. Although Mr. Herrmann did not specify the relationship

between Mr. Wojcieszyn, Mr. Castellanos, and himself or Mr. Pa, this stay of more than

30 days is collaborated by the visitor log and video evidence submitted by Ms. Reynolds.

SAN FRANCISCO 3

OFFICE OF SHORT-TERM RENTALS

Notice of Decision

Date: October 23, 2015


Mr. Herrmann goes on to state that Mr. Pa informed him that he "made some marketing

experiments on some sites' and states that the ad that was provided in the hearing notice

is not proof that short-term tenants have stayed at the apartment.

Mr. Herrmann also included a sublease between him and Mr. Pa; the sublease began on

January 1, 2015. He also included an email to Department staff asking whether PDF

evidence can be submitted via email, and an email to Mr. Pa, dated July 31, 2015, to

terminate their sub-lease effective on August 18, 2015.

ADMINISTRATIVE HEARING

On August 12, 2015, the hearing officer convened the administrative hearing. All testifying witnesses

were sworn in and the hearing was audio recorded. The hearing was attended by the following people:

• Ms. Audrey Butkus, hearing officer

• Mr. Binh Nguyen, staff planner

• Mr. Francisco Gutierrez, attorney representing the property owner, Corey Lau

• Ms. Robyn Reynolds, the complainant

• Mr. Tyson Redenbarger, attorney for the complainant, Ms. Robyn Reynolds

Mr. Nguyen gave the following testimony:

• On May 12, 2015 the Department received a complaint for the subject property from the Office of

Julie Christensen, San Francisco Board of Supervisor, District 3.

• On May 21, 2015 a Notice of Complaint3 was issued to the property owner, Mr. Cory Lau, after

the Department received a second complaint. Mr. Binh Nguyen, Department staff, did not receive

a response to this notice.

• From June 17, 2015 —June 22, 2015 Department staff contacted Robyn Reynolds, the complainant,

who lives in the unit below 458 Broadway at 456 Broadway, to request more information

regarding the allegation of STR use operating from 458 Broadway. Ms. Reynolds provided a list

of active short-term listings for the subject property.

• On June 22, 2015 Department staff confirmed 13 active STR listings and continued to monitor

these listings from June 22, 2015, until August 10, 2015.

• On June 26, 2015 Department staff conducted an interior inspection to the common area of the

subject property. During the inspection, Department staff was able to verify that the patio and

furniture pictured in the listings on Wimdu, VRBO, HomeAway, and Roomorama matched the

patio and furniture in dwelling unit at 458 Broadway. In addition, staff found that there are only

two dwelling units in the building.

• On June 30, 2015 A Notice of Complaint, detailing a hearing date for August 12, 2015, was issued

to Mr. Lau and the tenant of 458 Broadway, Peter Herrmann. Although Department staff issued

these notices via certified mail and regular mail (per the Departments standard procedure), only

' Notice of Complaint is a courtesy notice issued by the Department to alert property owners of a potential Planning Code

Violation and requests the property owner to contact the Planning Department.

SAN FRANCISCO

OFFICE OF SHORT-TERM RENTALS 4

Notice of Decision

Date: October 23, 2015.


the certified mail was returned. A hearing notice was later posted at the subject property

on July

1, 2015.

On July 2, 2015 During the monitoring period of the active listings, it was noted that the ho

sting

site known as "Rent-Holiday-Homes'.' was modified to include "a Minimum Stay of 30 n

ights."

Although the site advertised a new minimum stay, nightly rates of $150.OQ continue

d to be

advertised. . Other hosting sites, including VRBO, HomeAway, Wimdu, and Roomorama, also

continue to advertise nightly rates.

• On July 16, 2015 Department staff noted the listings located on the above hosting sites

were

deleted; including, the listings on the metasearch sites4 known as "Housetrip" and "Vakast"

. As

of 8/10/15, of 13 listings that were found, three are still active on the metasearch site kn

own as

"Zilyo."

• From July 31, 2015 —August 2, 2015 the Department received a response and evidence in reg

ards

to the Administrative Hearing from the following interested parties: Mr. Francisco Guti

errez,

attorney for the property owner, Ms. Robyn Reynolds, complainant, and both submitted evi

dence

to the Department and, on August 2, 2015, Mr. Herrmann submitted evidence.

Mr. Gutierrez, attorney for the property owner, gave the following testimony:

• The subject property is rented by Mr. Herrmann based on a lease that has been renew

ed each

year.

• In 2012 while rented out to Mr.. Herrinaiui, the lease allowed Mr. Herrmann to s

ublet for short

periods of time however; Mr. Gutierrez stated he believed this to not be against any k

nown law at

the time and additionally no lease provision was meant to allow Mr. Herrmann

to break any

known law.

• Mr: Lau informed Mr. Herrmann of the Notice of Violation and had asked him t

o comply with

the law.

• Mr. Herrmann has a greater ability than Mr. Lau to bring the property into comp

liance as Mr.

Herrmann is the person with the ability to either cease operation of the shor

t-term rental or

discontinue the activity, however Mr. Lau is limited in his ability to act in this ma

tter due to the

lease allowing subletting and rent control ordinance provisions preventing him fro

m evicting Mr.

Herrmann.

• A formal request was made to confinue the hearing to a later date. when Mr. He

rrmann could

attend the hearing.

Mr. Redenbarger, attorney for the complainant, gave the following testimony:

• A series of questions were posed to Mr. Gutierrez which are summarized below:

o You mentioned that you attempted to contact Mr. Herrmann, have you been in con

tact

with him? Do you believe he is currently in the United States?

Mr. Gutierrez replied that he had not been in contact with Mr. Herrmann, he bel

ieved

Mr. Herrmann to presently be abroad, and he did not know for how long Mr. Herrma

nn

had been abroad.

o Do you have any reason to believe Mr. Herrmann or Marc Pa are not real people?

4 A metasearch tool is tool that uses another search engine's data to produce their ow

n results from the Internet.

SAN FRANCISCO----~ ̂^++~+ ~ rTI~TT

A T C

5

Nofice of DecisionDate: October 23, 2015


Mr. Gutierrez replied that he had no reason to believe Mr. Herrmann was not a real

person and that he could not speak to any other person as he was not aware of anyone

else involved in the case.

o Why do you believe Mr. Herrmann needs to be at the hearing? Do you believe he could

respond to the violations in writing?

Mr. Gutierrez responded that Mr. Herrmann is the tenant in possession and is the

responsible party for the violation therefore he needs to be present to respond to the

violation. He believed Mr. Herrmann could respond to the violation in writing but he

believes the tenant should be present due to the severity of the measure at hand.

o Do you believe Mr. Lau knew the short-term rentals were occurring, and has he ever said

anything to you that would indicate he knew the short-term rentals were occurring?

Mr. Gutierrez replied "no" on both counts.

o Do you know where Mr. Lau works? Is it at 460 Broadway, the liquor store in the same

building as 458 Broadway?

Mr. Gutierrez stated he knew where Mr. Lau works. Mr. Lau bought the building

including the liquor store but he is not always present at that liquor store. He does work

at the liquor store pretty much all the time.

o Do you know if Mr. Lau has ever been involved in the key exchange for guests who stay

at 458 Broadway?

Mr. Gutierrez responded that Mr. Lau has not been involved in any of the allegations

involved in the complaint.

o Do you know who pays rent for 458 Broadway?

Mr. Gutierrez responded the rent should be paid by the tenant, Mr. Herrmann.

Ms. Reynolds, the complainant, gave the following testimony:

• She is the tenant at 456 Broadway which is the unit between 458 Broadway and the liquor store,

"Broadway Liquors" which Mr. Lau runs every day. She sees Mr. Lau daily.

• She believes Mr. Lau has multiple places in his lease with Mr. Herrmann wherein short-term

rentals are explicitly allowed but long-term subletting is not allowed.

• She has only met Mr. Herrmann one time when he first moved in three years ago. He told Ms.

Reynolds that he runs Airbnb properties all over the world and the subject property would also

function as one of these uses. He stated to her that he might be there from time to time however

Ms. Reynolds has not seen him since that day.

• Mr. Herrmann introduced Ms. Reynolds to Amy Kee who he stated was a friend of his. She

serves as the property manager for the short-term rental; taking care of trash, cleaning, etc. Ms.

Reynolds was instructed to contact Amy Kee with any concerns regarding the subject property.

• In three years there has never been a consistent pattern of long-term tenancy in the subject

property, and she believes there is no way that Mr. Lau could have failed to notice the type of

activity that was occurring.

SAN FRANCISCO


Notice of DecisionDate: October 23, 2015


At the conclusion of the administrative hearing held on August 12, 2015, for the above referenced

property, I closed the hearing but left the record open fora 14 day period to allow for the submission of

additional information by all interested parties. During the period of open record, Ms. Reynolds stated

she believed the illegal short-term rental activity may still be occurring at the subject unit. Additionally, I

found the open record period did not allow sufficient time to collect the necessary information from the

property owner and tenant to prove the subject property was in compliance. In the interest of providing

all parties adequate time to submit additional materials, and to review and respond to new information

submitted, on September 10, 2015 I re-opened the hearing and continued it to October 14, 2015 to take

place at 1650 Mission Street, Suite 400, Room 431. Additionally, staff conducted a full re-notice of the

hearing's continued date and time.

POST-HEARING SUBMISSION

Pre-Hearing Submission for Continued Hearing on October 14, 2015:

Evidence Submitted by Corey Lau

Francisco Gutierrez submitted into evidence the following:

• A signed lease modification to remove the clause that states, "Tenant is allowed to have

paying guests no longer than 15 days at a time." This was dated August 25, 2015.

• A Thirty-Day Notice to Cure or Quit was issued to Mr. Herrmann, dated August 14,

2015.

• Communication between Mr. Lau and Mr. Herrmann dated July 14, 2015, in which Mr.

Lau. stated that, "You [Mr. Herrmann] must remove your apartment from ALL websites."

• Emails from Cory Lau to Zilyo on August 22, 2015 requesting that the listing for the

apartment be removed from Zilyo's site.

Evidence Submitted by Robyn Reynolds

Robyn Reynolds has submitted into evidence the following:

• Active listings for the apartment on the site Zilyo.

• Screen shots of several social media accounts for the unit.

• A video from August 17, 2015, which shows a new tenant moving into the apartment.

Evidence Submitted by Peter Herrmann

Peter Herrmann has submitted into evidence the following:

• Emails for three cancelled bookings.

• One sublease for the period from July 2, 2015 to Augus# 18, 2015. This is accompanied by

records of rent payments made via PayPal and a copy of a subtenant's identification card.

• One sublease for the period from August 18, 2015 to. December 18, 2015. This is

accompanied by a record of rent payment to Peter Herrmann and a copy of a subtenant's

identification card.

SAN FRANCISCO 7


Notice of Decision Complaint No. 2015-005969ENF

Date: October 23, 2015 458 Broadway

CONTINUED ADMINISTRATIVE HEARING

On October 14, 2015, the hearing officer convened the administrative hearing continued from the original

hearing on the matter that took place on August 12, 2015. All testifying witnesses were sworn in and the

hearing was audio recorded. The hearing was attended by the following people:

• Ms. Audrey Butkus, hearing officer

• Mr. Binh Nguyen, staff planner

• Mr. Francisco Gutierrez, attorney representing the property owner, Corey Lau

• Mr. Alexander Rawitz, current subtenant of 458 Broadway

• Mr. Tyson Redenbarger, attorney for the complainant, Ms. Robyn Reynolds

Mr. Ngyen, staff planner, gave the following new testimony (See "POST-HEARING SUBMISSION" for a

detailed description of submitted documents)

• On August 14, 2015 Francisco Gutierrez submits new evidence to the Department on behalf of

Mr. Lau.

• On August 24, 2015 Mark Hooshmand, attorney for the complainant, submits new evidence to

the Department.

• On August 26, 2015 Francisco Gutierrez submits additional communication between Cory Lau

and Peter Herrmann.

• On September 9, 2015 the hearing was continued to October 14, 2015.

• On September 29, 2015 Peter Herrmann submits new evidence.

• On October 1, 2015 Francisco Gutierrez submits a lease modification signed by Cory Lau and

Peter Herrmann.

• Based on the new submittals, staff finds:

• 458 Broadway is currently in compliance with Chapter 41A of the San Francisco

Administrative Code.

• Staff could not find any active listings (where content can be controlled) advertising the unit

at 458 Broadway for short-term stays after July 15, 2015.

• As of October 13, 2015, the unit at 458 Broadway was listed on the metasearch site Zilyo,

however, the unit is not bookable from this site and both Mr. Lau and Mr. Herrmann have

made efforts to contact the site administrator to get the listing removed without success.

• Staff recommends that the subject property be found in violation of the short-term residential

rental of one residential unit for 16 days, from June 30, 2015 (the date of the NOC), to July 15,

2015, (the date nightly advertisement on all main hosting sites were deleted). However, if the

property owner continues to remain out of compliance, staff recommends the penalties

continue to accrue until such time that the property owner comes forward to correct the

violation.

SAN FRANCISCO


Notice of Decision

Date: October 23, 2015

Complaint No. 2015-005969ENF

458 Broadway

Mr. Gutierrez, attorney for the property owner gave the following testimony:

He emphasized Mr. Lau's non-involvement in the violation. He also stated that Mr. Lau

attempted to work with the tenant in order to cure the violation once he became aware of the

Notice of Compliant.

• He found the listings on the site "zilyo" are not active and are unable to be booked.

• Mr. Rawitz, current subtenant at 458 Broadway was available and present at the hearing for

questioning.

Mr. Redenbarger, attorney for the complainant, gave the following testimony:

The property owner knew that short-term rentals were occurring at the property, authorized the

short-term rentals to occur, and was not diligent in removing them or following up on them. It is

apparent that there were active listings advertising the subject property for short-term stays

available until at least July 15, 2015.

• The complainant requests that a determination of violation be made at this time.

FINDINGS

Based on the review of the record as a whole, the hearing officer finds as follows:

1. The dwelling at 458 Broadway was offered for Tourist or Transient use until at least July 15, 2015.

2. The tenant, (Peter Herrmann), submitted two signed leases along with proof of rent paid and

picture ID's of occupants purporting to show the dwelling at 458 Broadway was occupied with

long-term subtenants starting on July 2, 2015 and until December 18, 2015.

3. The dwelling unit at 458 Broadway is not currently being offered for Tourist or Transient use on

any known hosting platform where the account holder has control of the listing and/or its

content.

CONCLUSION AND ORDER

Based on the above findings and the evidence in the record as a whole, the hearing officer determines that

the dwelling unit at 458 Broadway was offered or operated as a Tourist or Transient use through at least

July 15, 2015 in violation of Administrative Code Chapter 41A. Because this is an initial violation, the

hearing officer may assess administrative penalties from the date of the Notice of Complaint (here June

30, 2015) until the date the violation is believed to be cured (here July 15, 2015) on both a per diem and

per unit basis. Thus, by this determination the hearing officer assesses administrative penalties against the

property owners for a total of 16 days at a rate of $484 per day. Accordingly, administrative penalties for

the total amount of $7,744.00, is now due to the Planning Department. Please submit a check for the

total amount of $7,744.00, payable to "Planning Department Code Enforcement Fund" immediately.

Sincerely,

G~Z~~~

CC:r

Audrey Butkus

Hearing Officer

SAN FRANCISCO


Binh Nguyen, Planner, San Francisco Planning Department

Christine Haw, Planning Department

Adrian Giannini, Office of the Treasurer and Tax Collector

Margarita Rodriguez, Office of the Treasurer and Tax Collector

458 Broadway - Notice of Decision - 102315

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