Triumph of tenacity

The Lembi empire teeters after tenants resisted a business plan based on forcing them out
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Darin Dawson fought a CitiApartments eviction
GUARDIAN POTO BY LUKE THOMAS/FOG CITY JOURNAL

rebeccab@sfbg.com

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.

Comments

Great article Rebecca! Those file folders that I’m holding in the photograph represent the paper trail of ten years of struggle with CitiApartments to maintain my home. When I see those files in a photograph, it’s quite shocking. When people ask me to tell them about my experiences with CitiApartments I literally don’t know where to begin, there was so much over so many years. I simply exercised my legal rights of quiet use and enjoyment of my apartment and stood by the rent control ordinance’s short list of just causes for eviction. The injustice of CitiApartment’s greedy reign of terror has a human side. Not just a theoretical ‘below market rate’ tenant who is standing in the way of a business plan, but a real live person. I moved into my then market-rate rent apartment in 1994 and watched the rents skyrocket around me and realized that if I wanted to stay in an apartment I could afford, I would have to be diligent. My only ‘crime’ was that I was paying below market rate rent when CitiApartments took over management in 1998 after buying the building for a now-bankrupt L.L.C. (Now who’s in court??? Baa, haa, haa!) They tried everything to move me into a shopping cart under an overpass, but when a tenant is doing nothing wrong and in fact is a model tenant as Citi’s own ‘relocation staff’ told me numerous times when they tried to sweet-talk me into just going away, the tenant has to struggle but ultimately can prevail. Various resident managers of this building also were deeply offended at what CitiApartments was trying to do to me and kept me well informed and protected as much as they could. I pay my rent on time, I follow every term and condition of my leases to the letter and err on the side of complying too much, actually take pride in my place of residence, and am a contentious, considerate and friendly neighbor. Gee, who would want somebody like that living in their building? The poor renter of a studio apartment on the other side of my kitchen wall is paying $1,500/month because he moved in last year and my base rent is $635 because I’ve been living here for 16 years, so scumlords like Citi have to try and harass and wear otherwise excellent below market rate tenants down until they finally just can’t take any more. Only it didn’t work, heh, heh, heh. Just a minor clarification, I initially rented my apartment in 1994 and for three years as a private tenant before I qualified for a HOPWA lease in 1997. A third-party lease has been helpful in protecting me from harassment because I have various annual housing inspections and eligibility/income certifications, free referral lawyers to write cease and desist letters to criminal landlords, advocates and inspectors who appreciate and know me and are dedicated to keeping me and my home safe and secure, rights of lease abatement that protected me when Citi pulled stuff, etc., but I initially rented my apartment competitively on the open market. We can only hope there won’t be another CitiApartments in San Francisco’s future.

Posted by Darin Dawson on Jun. 02, 2010 @ 4:59 am

Rebecca,

I appreciate the article but have some decency. If you did more research you'd find that one of the Lembi's is terminally ill.

Posted by Guest on Jun. 02, 2010 @ 8:33 am

Guest, what does Lembi's illness have to do with anything mentioned in this article? Does it excuse his decades of poor treatment of his tenants? Does it excuse his refusal to refund tenants' security deposits? Does it mean we shouldn't talk about how his misdeeds have hurt so many tenants in this City?

Posted by Guest on Jun. 02, 2010 @ 11:14 am

And so just because a Lembi might be ill we can excuse them for all they did? Please. And what about all the ill people who were caught in Citi schemes? I know from personal experience that CitiApartments, i.e. The Lembis, viewed and treated tenants facing life threatening illness who weren't paying market rate rents as being less able to protect and defend themselves and therefore easier to force out of their homes. 'A little research' indeed. A little research about what CitiApartments did to the terminally ill in their buildings would most revealing. Maybe another article on just how wretchedly the terminally ill were treated in Citi buildings. Aside from myself, I can name three other terminally ill tenants in this building who Citi harassed, subjected to random utility shutoffs, conducted extensive and invasive construction on units adjacent to their apartments, tried to assess illegal fees and rent increases while they were desperately sick and threatened them with eviction unless they paid the unlawful amounts, etc., etc., etc. What a hypocritical double standard to say it's OK to forget those victims, but to say all's forgiven when something happens to the tormentor. Wow, no wonder these crooks got away with it as long as they did...

Posted by Darin Dawson on Jun. 02, 2010 @ 12:24 pm

I wish ALL the scumbag Lembis were terminally ill! I'll be dancing on those f**kers graves! Enjoy Hell, Walt!

Posted by Guest on Jun. 03, 2010 @ 5:22 am

What you have written is beyond the pale.

Posted by Guest Christine on Aug. 12, 2010 @ 2:27 pm

I've been apartment hunting for a couple months and keep coming across First Apartments properties as being in the area and having the amenities I want. I also have a dog, which most landlord don't want, but First Apartments is OK with it. These units and buildings seem well-kept, but I know it's an affiliated company with CitiApartments. My question is: Is it over? Is it safe to rent from them now? They seem to take care of their high-end buildings, so are those OK? Or should I avoid First Apartments at all costs (even if it means paying more in rent)?

Posted by SF Renter on Jun. 16, 2010 @ 12:47 pm

Rebecca, you have written a one sided article without a full understanding of the landlord/tenant situation in San Francisco. When a property is bought, most new owners want improve the units and the building and it costs money. It is all about supply and demand. What tenants do not seem to understand is that it costs money to own buildings: property taxes, taxes, improvements, maintenence, property management, etc. Most tenants who are paying absurdly low rent think that they have rights above and beyond the landowner. There are plenty of places to live that are less expensive than S.F so they should move to these places. Further, we all have sympathy for those down on their luck or aflicted with illnesses, but there are programs for that, e.g. section 8 which will pay market rent for apartments. I am not saying that there are some legitimate cases in some instances, however I am very familiar with the overblown DRAMA created by these tenants. This just shows how these tenants milk system portraying themselves as Victims. Come on people grow up and take control of your lives. You do not own the property. Those of you who criticize ought to be ashamed of yourselves. You have no idea of the reality of what it is like to be a lanlord in San Francisco. Those dreadful comments lofted above are beyond the PALE.

Posted by Guest Christine on Aug. 12, 2010 @ 2:25 pm

We horrid renters do have legal rights, and when those rights are violated, we have recourse. Just like the banks had recourse to foreclose and repossess the buildings back from CitiApartments and their LLCs when they failed to pay their mortgages after months of continuing to collect rents. Just like the S.F. Department of Building inspection has recourse to issue notices of violation for code violations for illegal, non-permitted and dangerous 'renovations' performed for years in Citi buildings. Just like the City Attorney has recourse to file a lawsuit. Just like the many vendors and creditors who Citi failed to pay for goods and services have recourse to sue them. Just like tenants who didn't get legally owed security deposits have a right to their security deposits. Etc., etc., etc. If anything the whole CitiApartments melt-down should teach us, it's that hopefully there is such a thing as justice. There are good landlords who are honest, abide by the laws, and respect their tenants. These landlords are still in business, CitiApartments and their LLC's are not.... The truth about CitiApartments has been revealed and if you don't like to hear these truths, well, that's your failure, not ours.

Posted by Darin Dawson on Aug. 28, 2010 @ 5:10 am

My dear Christine,

You obviously have a vested interest in property, otherwise why would you care or take the time to take those who care so much, to task?

You wrote: "There are plenty of places to live that are less expensive than S.F so they should move to these places." How sanctimonious of you! You know what is best for each person and that those folks have the means or the ability to do this?

The Lembis preyed on folks who had disabilities. They never counted on the fact that some of these "victims" had the fortitude or the intelligence to fight back. Who cares if they had an incurable disease? Ethics are ethics, regardless of the context. Seems you should check yours and if they do not check out against your credentials as a landlord... maybe you should reconsider the business that you are in....

You. my dear, are beyond the pale of common decency, law abiding citizens, and those who are worthy of the community of men who value the individual right of people to have a home without harassment. Get over your ego and your inflated bank account...

Posted by Guest codiferous on Sep. 14, 2010 @ 3:37 pm