A San Francisco Superior Court has granted a motion by City Attorney Dennis Herrera that will prevent landlords at Geary Courtyard from hiking rents on thirty-three low income tenants in excess of affordable rent levels required by a 1988 tax exempt bond agreement that originally financed construction of the apartment building. The order issued June 1 by Judge Harold E. Kahn is a key preliminary victory in a breach of contract lawsuit the City filed against the owners and operators of the rental apartment complex at 639 Geary Street last month.

According to the complaint Herrera filed in San Francisco Superior Court on May 4, 2012, Geary Courtyard Associates and its affiliated entities violated terms of the agreement under which the City issued $18 million in tax exempt bonds to finance the construction of the residential apartment project. The City made proceeds of its tax exempt bond sale available to Geary Courtyard's developer on the condition that at least 20 percent of the units be continuously occupied by low-income tenants at affordable rents. Yet in defiance of express contract provisions that affordable rent protections would apply until the resident's death or voluntary vacancy, Geary Courtyard's landlords notified low-income tenants in April of their intention to begin hiking rents incrementally to market rates beginning July 1.

"This ruling proves that the affordable housing protections San Francisco negotiates have teeth, and that City leaders are fully committed to enforcing them," said City Attorney Dennis Herrera. "I applaud Judge Kahn for his ruling, and I hope Geary Courtyard's landlords are appropriately chastened for pushing rent hikes that so clearly violate the deal that helped finance their development in the first place."

The lawsuit was initiated by the Mayor's Office of Housing, whose Director, Olson Lee, further noted: "In our efforts to work with developers and their affordable housing obligations, the City works hard to find an appropriate balance between the protections tenants need and the desire of developers to obtain an acceptable return on their investment. Judge Kahn's ruling sends a clear sign to Equity Residential, the corporate owner of Geary Courtyard, that San Francisco has no tolerance for their attempt to renege on this contract at the expense of the protected tenants, many of whom would have been displaced if Equity Residential's scheme was implemented. We look forward to a quick and final resolution of this dispute and reimbursement of the costs that the City has incurred in responding to Equity Residential's legal maneuvers."

With the preliminary injunction now in place to protect low-income residents from unauthorized rent hikes, the City's breach of contract lawsuit will continue on the merits for a judicial determination that defendants must offer affordable housing to each of the applicable tenants who resided at 639 Geary Street as of April 2, 2012, for as long as each tenant continues to occupy his or her unit as a principal residence in accordance with the 1988 agreement. The lawsuit additionally seeks to recover the City's attorneys' fees and costs.

City and County of San Francisco v. Geary Courtyard Associates et al., San Francisco Superior Court, Case No. CGC-12-520504, filed May 4, 2012.