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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 audrey.butkus@sfgov.org
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
Complaint No. 2015-005969ENF458 Broadway
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.
Complaint No. 2015-005969ENF458 Broadway
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
Complaint No. 2015-005969ENF458 Broadway
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
OFFICE OF SHORT-TERM RENTALS 6
Notice of DecisionDate: October 23, 2015
Complaint No. 2015-005969ENF458 Broadway
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
OFFICE OF SHORT-TERM RENTALS
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
OFFICE OF SHORT-TERM RENTALS 8
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
OFFICE OF SHORT-TERM RENTALS
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