Today, residential SRO (Single Room Occupancy) hotels represent one of the few remaining affordable housing options for low-income households and seniors in San Francisco. Housing market pressures, illegal conversions, and legal issues with defining tenancy have led to the loss of SRO rooms and the affordability of these rooms over time.
Background
What are Single-Room Occupancy hotel rooms?
Historically, SRO hotel rooms were populated by low-wage workers, transient laborers, and recent immigrants for long stays. SRO rooms are differentiated from tourist hotels in that they were meant to house a transient workforce, not tourists visiting the City for pleasure. A typical room in a residential hotel is a single eight (8) x ten (10) foot room with shared toilets and showers on each floor. Approximately 19,000 residential SRO rooms exist in the City, and increasingly many rooms house several people for long periods of time. Approximately 12,500 of those rooms are in for-profit SRO hotels and approximately 6,540 residential rooms are in non-profit owned SRO hotels.
What is the Residential Hotel Conversion Ordinance?
The Residential Hotel Unit Conversion Ordinance (HCO) was adopted on June 26, 1981 by the San Francisco Board of Supervisors. The purpose of this ordinance is to preserve affordable housing by preventing the loss of residential hotel units through conversion to tourist rooms or demolition, and to prevent the displacement of low-income, elderly and disabled persons. This is accomplished by maintaining units reported as residential units within SRO hotels as residential, regulating the demolition and conversion of residential hotel units to other uses, the requirement of a one-to-one replacement of units to be converted from residential use or payment of an in-lieu fee, and appropriate administrative and judicial remedies for illegal conversions.
Key Trends
This data is a self-reported snapshot of a single day (October 15, 2017) in the 2017 reporting period (November 1, 2016 through October 31, 2017) in the 2017 Annual Unit Usage Report (AUUR).
The highest concentrations of SRO hotels are found in the Tenderloin, Chinatown and Inner Mission neighborhoods (predominantly low-income census tracts).1
The total average rent for SRO rooms in San Francisco is approximately $890 a month.
Haight Ashbury, Hayes Valley, Pacific Heights, and Potrero Hill are the most expensive neighborhoods for renting SRO units.1
On average about 18 percent of residential rooms in for-profit SRO hotels are vacant.
For comparison, in 2015, San Francisco’s vacancy rate for residential units was at 9 percent.2 About 85 percent of all vacant residential rooms are within areas that are predominantly low-income and experiencing ongoing displacement.3
Out of the approximately 390 SRO hotels, 46 for-profit hotels self-reported that more than 50 percent of their residential guest rooms were vacant on October 15, 2017.
Of these, 17 SRO hotel buildings reported 100 percent of their residential rooms vacant and have occupancies only in hotel rooms designated for tourist use.
The two main self-reported reasons for vacancy are as follows:
1) The residential guest rooms are in a state of disrepair and are currently undergoing renovation; and, 2) There is little to no demand in the residential guest room market and that the rental amounts charged for these guest rooms was too high.
What’s Happening Now to Prevent the Loss of SRO Rooms?
The City and County of San Francisco in partnership with The Bar Association of San Francisco’s Bay Area Mediation Services Program funded the Conflict Intervention Service (CIS). The CIS program utilizes skilled mediators with diverse backgrounds in landlord-tenant law, psychology, addiction, mental health and housing conflict to resolve disputes in affordable housing that can lead to eviction or homelessness.
Without a Report of Residential Building Record (3R Report), agencies cannot confirm the legal number of units and/or rooms on the property. When put on sale, an SRO building might be misrepresented on multiple listing service (MLS) due to the inability to confirm the number of certified rooms without a 3R Report. Since 3R Reports were not required for hotel rooms of certain sizes, new legislation updating the 3R Report requirements was just passed by the Board of Supervisors in May of 2019. The Ordinance, as proposed by Supervisor Peskin, requires the completion of a report of residential hotel status and disclosure of the report to a buyer or transferee prior to the sale or transfer of an SRO hotel.
In addition, SFHOT (San Francisco Homeless Outreach Team) currently partners with non-profits to place homeless persons in SRO rooms. Brilliant Corners, a non-profit operating in the City, also places homeless persons in SRO rooms and helps provide social services to individuals living in these spaces.
In order to help provide further support and education, several organizations also currently facilitate SRO operator and/or owner trainings. The Tenderloin Housing Clinic (THC) currently holds ten landlord trainings per year. These trainings are usually conducted on a one-on-one basis with SRO operators or owners.
Issues with Preserving SROs
Some SRO hotels enter master leases with the City, thus ensuring that residential rooms remain at a specific affordability level. However, given the rising housing market, hotel owners have less incentive to enter into master leases and might make a higher profit from listing units at market rate. Some SRO owners have renovated their buildings into higher end group housing by displacing lower-income tenants through eviction or attrition. Units in SRO hotels are generally subject to the rent ordinance (as most were constructed before 1979), but do not typically have permanent price controls like deed-restricted affordable housing. This means that whenever there is a vacant room, prices can increase to market-rate (vacancy decontrol). SRO buildings also have a certain number of certified residential rooms and certified tourist rooms. However, instead of following the legal process of converting these residential rooms to tourist rooms, some SRO operators do not do accurate reporting or utilize underhanded methods of preventing tenants from establishing tenancy and changing the residential rooms to the more lucrative tourist room use.
Community organizations and tenant advocates discussed that SRO hotel owners have, in many instances, used renovating and upgrading residential guest rooms as a method of displacing long-time residential hotel residents. Hotels that are maintaining high vacancy rates with plans of renovating oftentimes signal the loss of residential guest rooms. Additionally, hotels with high vacancy rates due to a supposed “lack of demand” within the residential guest room marketplace may be holding guest rooms vacant to avoid rent stabilization and other tenant protections.
Harassment and habitability are less visible issues for SRO hotels. Community stakeholders revealed that SRO residents encounter many types of harassment, both from SRO operators and from other residents, and some eventually get pushed out of SRO hotels due to these cases. Community stakeholders shared that harassment forces residents to self-evict. The maintenance, safety, and habitability of rooms and buildings remain a big concern in SRO hotels as well. Especially in situations where more than one person inhabits an SRO room, habitability and safety can add further problems to an overcrowded unit. If SRO residents cannot safely live within their own homes, then pressures to leave and find housing elsewhere arise.
The legislative update of the HCO Ordinance in 2017 clearly defined tourist or transient use as the use of any guest room for less than a 32-day tenancy by any person other than a permanent resident, closing a loophole that allowed weekly tourist rentals and that made some landlords move tenants to different rooms weekly to prevent the establishment of tenancies. An unlawful conversion was defined as the rental of a residential room to any person for less than 32 days, instead of less than seven days as the Ordinance had previously stated. However, in late 2018, the City agreed to a stipulation enjoining the City from enforcing the 32-day provision of the 2017 amendment to the Ordinance until a lawsuit challenging this amendment is resolved. Accordingly, the minimum stay for a residential guest room is seven days. Frequently changing legislation prevents residents of less than seven days in SROs from establishing tenancy, and leaves the loophole allowing weekly tourist rentals open.
Issue at a Glance
The Bristol Hotel in San Francisco (56 Mason Street) was completely cleared in 2012 to make room for much needed repairs. Although the removal of tenants was meant to be temporary, the Bristol Hotel has remained vacant since. Permit history shows that permits were pulled to replace interior windows in 2012 but the work was never done. The former tenants filed several complaints following the lack of maintenance and work completed, and, in 2016, the Superior Court of California ordered the property owner restore tenants to their units no later than August 2017. Tenants were not restored to their units by the specified date, and the property experienced ongoing litigation. Meanwhile, the property owner began to pursue other opportunities, including beginning conversations with developers interested in converting SROs into group housing quarters for professionals. In late 2018, Mayor Breed created a plan to convert the property into “step up housing” for the formerly homeless. The plan was made possible through a philanthropic donation and will be managed through a partnership with the Tenderloin Housing Clinic.
For Future Consideration
The ideas for future consideration that have the potential to increase community stability in San Francisco are described below. They provide a starting point for agencies, decision-makers, and community members to explore stabilization efforts and identify critical pathways forward. Based on preliminary information, staff is qualifying these ideas according to the type of task, scale of resources and level of complexity to underscore that any of these ideas would require time and additional resources not currently identified. These are not City commitments or recommendations, rather informed ideas that will require careful vetting and analysis as to their reach, resource needs, feasibility, unintended consequences, legal implications, and racial and social equity considerations.
Strengthen tenant protections
Additional information on this can be found in the Tenant Protection Services summary.
Consider a penalty for SRO operators preventing residents from establishing long-term residency. The act of shifting residents to different rooms before the 30-day mark to prevent establishment of residency and associated resident rights is often called “musical rooming” and is illegal.4 Currently, the City Attorney’s office is the only agency that enforces this law and relies primarily on tenant complaints to address the issue. To prevent the issue, other methods of disincentivizing “musical rooming” could be engaged, such as proactive inspections and greater fines for repeat offenders.
| Type of Response | Prevention |
|---|---|
| Type of Task | Data, Regulation
|
| Resource | Generally only staff time and some program funding would be required
|
| Complexity | Complex – generally major legislation, and/or new program required, and more than three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Housing Inspection Services, community partners |
| Key Priority | Yes - Enhancements to Existing City Programs and Policies |
| Other Sections | Tenant Protection Services |
| Benefit | Stronger protections would could lower tenants’ risk of displacement. |
| Challenge | Granting city agencies enforcement oversight can take time. Proactive inspection can also be an expensive and lengthy process. |
Stronger SRO regulations and enforcement
Institution of fines for illegal conversions of SRO units
If an illegal conversion is uncovered during the process of inspection, or after receiving the completed AUUR data, HIS could be allowed to institute fines on SRO operators. The Housing Inspection Services (HIS) division of Department of Building and Inspection (DBI) currently lacks the ability to enforce on this issue and including enforcement as part of the Chapter 41.20 Administrative Code amendment would help prevent the illegal conversion of residential SRO rooms.
| Type of Response | Prevention |
|---|---|
| Type of Task | Data, Regulation
|
| Resource | Generally only staff time would be required
|
| Complexity | Complex – generally major legislation, and/or new program required, and more than three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Department of Building and Inspection (DBI) |
| Key Priority | Yes - Enhancements to Existing City Programs and Policies |
| Benefit | Encourages SRO operators to refrain from illegally converting an SRO residential room to a tourist use. |
| Challenge | Requires staff time and resources to administer and enforce. |
Stronger SRO regulations and enforcement
Evidence of advertising non-affiliated student housing or corporate housing in existing SRO buildings as a violation
Section 102.36 of the Planning Code defines student housing as being owned, operated, or controlled by an accredited post-secondary educational institution. However, there is ample evidence of SRO operators not affiliated with any educational institution renting out residential rooms solely to students and advertising their buildings as student housing on websites. By making evidence of the conversion of a whole building to student housing a potential violation, Department of Building and Inspection (DBI) could address this issue and implement potential fines to discourage SRO operators from converting all residential rooms to student housing.5 It is important to note here that the intent of this idea is not to remove SRO housing as a resource for students, but to limit the ability to market entire SRO buildings exclusively for student housing without being affiliated to an educational institution.
| Type of Response | Prevention |
|---|---|
| Type of Task | Regulation
|
| Resource | Generally only staff time would be required
|
| Complexity | Complex – generally major legislation, and/or new program required, and more than three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Department of Building and Inspection (DBI) and Planning Enforcement Teams |
| Benefit | Limits the ability to market an entire SRO building exclusively for student housing and maintains access to these buildings for low-income tenants. |
| Challenge | Requires funding and resources, and a regulatory change to impose fines on SRO operators for this specific reason. |
Stronger SRO regulations and enforcement
Vacancy fee
Additional information on this can be found in the Rent Stabilization and Eviction Protections summary.
Improved data collection on the status of SRO units
Enhanced tracking methods of SRO unit data
Adding a section to San Francisco Planning’s Property Information Map (PIM), a public tool that aggregates all permits, applications and complaints, for each parcel that contains an HCO property can help clarify what should be routed to Department of Building and Inspection (DBI) or HIS first when receiving a permit or application at the Planning counter.
| Type of Response | Early Intervention |
|---|---|
| Type of Task | Regulation
|
| Resource | Generally only staff time and some program funding would be required
|
| Complexity | Complex – generally major legislation, and/or new program required, and more than three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Planning, Department of Building and Inspection (DBI), community partners |
| Benefit | Could clarify permit process challenges and streamline conversion and other development applications. |
| Challenge | Requires additional staff time, resources, and a shift in existing permit routing processes that may be challenging to implement. |
Improved data collection on the status of SRO units
Additional data collection in AUUR
There is an opportunity to enhance data quality and accuracy of information collected from Annual Unit Usage Reports (AUURs). The types of data collected could be expanded to include important variables such as whether units have ADA accessibility or can support microwaves or refrigerators, which can help determine whether the SRO hotel meets resident needs. Clarifying average rent for SRO hotels also helps determine the affordability of these rooms. Since the AUUR is a publicly published resource, the report offers the opportunity to provide specific information about SRO rooms and hotels to the public.
| Type of Response | Prevention |
|---|---|
| Type of Task | Data
|
| Resource | Generally only staff time would be required
|
| Complexity | Complex – generally major legislation, and/or new program required, and more than three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Department of Building and Inspection (DBI), Planning, SRO operators, community partners |
| Benefit | Additional data would help preserve SROs as well as incentivize property owners and managers to address code violations as quickly as possible. |
| Challenge | It would require closer coordination between various agencies as well as coordinating department databases. |
SRO acquisition, master leasing, or rehabilitation
Pathway to contracts with an agency
A loan or grant program could help to modernize SRO hotels to enable acquisitions or master leases Some SRO hotels are unable to contract with the City or other agencies due to buildings not being up to code and/or poor maintenance. To prevent unintended consequences, further analysis could be conducted to ensure that existing tenants are not being evicted to make upgrades or that this program is not an incentive to ignore violations. One condition of the loan or grant program could be the prevention of passing the cost of maintenance or upgrades on future tenants through mark up of rent. By working with existing tools within the City, such as the Department of Building Inspection’s registry for vacant or abandoned properties, underutilized SRO buildings that could be brought up to code can be more easily identified and eventually contracted with an agency.
| Type of Response | Early Intervention, Prevention |
|---|---|
| Type of Task | Funding, Regulation
|
| Resource | Extensive funding (the kind typically required for capital investments) and staff time would be required
|
| Complexity | Complex – generally major legislation, and/or new program required, and more than three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Planning, Mayor's Office of Housing and Community Development (MOHCD), Department of Building and Inspection (DBI), community partners |
| Key Priority | Yes - Enhancements to Existing City Programs and Policies |
| Benefit | Improves habitability of SRO units and increases the master lease and acquisition options for City and nonprofit entities. |
| Challenge | Requires coordination and further analysis to ensure there are limited unintended consequences. |
SRO acquisition, master leasing, or rehabilitation
Acquisition or master-leasing opportunities of private hotels by the City or non-profit organizations
Exploring the master leasing of privately-owned SROs for sale that are not already under city or nonprofit management/master leases such as the Grand Southern could help stabilize those that could be converted to more expensive housing. In the short-term, an assessment and inventory of how many rooms and hotels are not under city or nonprofit management can help determine need and target supportive services and outreach to those private SROs. This assessment would help to stabilize and prevent tenants from becoming homeless and to address unmet needs, especially for smaller SRO hotels that may be difficult to master lease. Additionally, more information collected on privately owned SROs can help prioritize those SROs with tenants most likely to be displaced.
| Type of Response | Prevention |
|---|---|
| Type of Task | Data, Funding
|
| Resource | Extensive funding (the kind typically required for capital investments) and staff time would be required
|
| Complexity | Complex – generally major legislation, and/or new program required, and more than three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Department of Public Health (DPH), Department of Homelessness and Supportive Housing (HSH), Mayor's Office of Housing and Community Development (MOHCD), community partners |
| Benefit | SRO acquisition or master leasing and rehabilitation would help preserve the affordability of SRO units as well as improve the quality of life of existing residents. |
| Challenge | Acquisition in the current real estate market can be extremely expensive on a per-room basis. Given limited funds for affordable housing, SRO acquisition is not always a priority compared to constructing new units. Purchased buildings also must be brought up to code, which can be costly and displace tenants. |
Address overcrowding in SRO units
Families who are in overcrowded situations in the homes of family or friends, living in SRO units and in substandard or inadequate living spaces are considered homeless.6 Knowing the details of income levels and other household information on families in SRO units would help determine potential changes (legislative and funding) to existing affordable housing preferences. The information could also help create guidelines to prioritize the movement of families from unhealthy and overcrowded SRO units to affordable family-sized housing units in the city. This type of data collection could also be analyzed in conjunction with other data points, such as the number of violations per SRO building, to help better understand the need for prioritizing the transition of families, especially families with seniors and young children, to safer homes.
| Type of Response | Mitigation |
|---|---|
| Type of Task | Data, Policy Implementation
|
| Resource | Generally only staff time and some program funding would be required
|
| Complexity | Complex – generally major legislation, and/or new program required, and more than three agencies involved
|
| Timing | Long Term (more than 5 years)
|
| Geographic Scale | Citywide |
| Partners | Mayor's Office of Housing and Community Development (MOHCD), community partners |
| Benefit | Families living in overcrowded conditions would gain access to better living conditions. |
| Challenge | A trade-off to consider is that adding an additional preference for affordable units reduces the overall pool of units available to the general population. This is an acceptable tradeoff to some advocates if those families are the most vulnerable. |
SRO Collaborative Program
Visit Site »FOOTNOTES:
1. 2017 Annual Unit Usage Report (AUUR). After removing any data listing average rent above $3,000 per month, which are most likely data errors.
2. 2017 Annual Unit Usage Report (AUUR); American Community Survey (ACS)
3. UC Berkeley’s Urban Displacement Project
4. California Civil Code Section 1940.1
5. This opportunity discusses the block-leased scenarios that remove entire floors of SRO rooms from the housing stock for low-income households. Some students or corporate workers may be low-income and live in SRO rooms since they are more affordable, and this recommendation does not limit the use of SRO rooms in these situations.
6. A report from SRO Families United Collaborative - 2015 SRO Families Report Living in the Margins, An analysis and Census of San Francisco Families Living in SROs - finds that there are an estimated 699 families living in SROs, with a majority living in Chinatown SROs.
