Nearly four years after City Attorney Dennis Herrera filed suit against Frank and Walter Lembi and their dizzying array of companies affiliated with CitiApartments for "an outrageous pattern of corporate lawlessness," the powerful and notorious San Francisco landlords have watched their empire crumble.
The Lembi empire consisted of more 300 apartment buildings in San Francisco at its peak. Four Lembi subsidiaries that owned 16 buildings filed for Chapter 11 bankruptcy in February. Twenty Lembi properties were taken over by Lennar spin-off LNR in late May; another 24 buildings are slated to be foreclosed in early June; 51 were deeded back to UBS bank in lieu of foreclosure early last year; and still others are now held by court-appointed receivers and managed by Laramar, an unaffiliated property-management company.
CitiApartments still owns and manages a large portion of the buildings it controlled in its heyday, but it's had to either restructure loans or get payment extensions to hold onto many of them, according to general counsel Ed Singer. The Lembi Group staff has dwindled, and a team of 18 dedicated solely to relocating tenants is now long gone.
For many renters in foreclosed units who managed to ride out what San Francisco Tenants Union director Ted Guillicksen has labeled CitiApartments' "war of terror" against its occupants, the dust has finally settled. Gullicksen says that living in limbo is better than living under Lembi.
There are no more harassing phone calls pressuring them to move. No more sudden utility shutoffs. No armed agents showing up at the doorstep unannounced. No illegal construction projects clamoring away on the other side of paper-thin walls, destroying any hope of tranquility at home.
These are tactics CitiApartments used to drive people out, according Herrera's 2006 complaint and an award-winning Guardian series ("The Scumlords," March 25), in order to vacate units so they could be renovated and removed from rent control protections. A San Francisco Rent Board roster of 174 current and former Lembi properties as of May 25 lists no fewer than 1,890 cases associated with those buildings, the majority of them now settled.
While the sordid history of CitiApartments' strong-arm tactics has been well-documented, tenant-rights advocates say the untold story of the Lembis' rise and demise is that its entire business model hinged on evicting and relocating existing tenants — but that strategy failed, in large part because of a grassroots organizing effort that emboldened renters to stand their ground.
"The economic downturn played a role in it because the money stopped flowing," says Gullicksen, who helped form the CitiStop Campaign in 2004 in response to reports of outrageous tactics. "But if the money kept flowing, I think they would have failed anyway. The end result was inevitable, given the tenant resistance."
Darin Dawson moved into his apartment at 2 Guerrero St. in 1994 on a lease secured through the federal Housing Opportunities for People With AIDS program. Dawson, who was diagnosed in 1987, said things turned sour in 1998 when Trophy Properties I DE LLC — one of the Lembis' dozens of subsidiaries — snapped it up.
Their first contact was to inform him that he would have to move "because we don't allow those kinds of leases in our buildings," he recalled. He fought it with the help of the Housing Authority and managed to stay put. It was the first in a series of standoffs that ultimately stopped last September when the property was repossessed.
"Basically, I just dug my heels in and knew that I couldn't get evicted," Dawson said. Nonetheless, he spent years embroiled in conflict with the Lembi subsidiary while also battling AIDS-related illnesses.