Judge refused to block Pigeon Palace auction — but in the end, the SF Community Land Trust outbid the speculators to take the property out of the private market forever

Tenant Carien McKay holds a check for the down payment that will take a Folsom Street building forever out of the private market
Tenant Carien McKay holds a check for the down payment that will take a Folsom Street building forever out of the private market. Photo by Khaled Sayed

By Khaled Sayed

JUNE 18, 2015 — In a dramatic victory for community-based housing, the San Francisco Community Land Trust and the tenants of a Mission District building outbid speculators yesterday and  won the right to buy their home and take it forever off the private market.

The property at 2840 Folsom was up for sale because the longtime landlord, Frances Carati, who by all accounts was close to her tenants and wanted them to be able to take over the building when she died, was declared mentally incompetent and her assets taken over by a conservator.

The conservator insisted that the place be sold at auction.

The tenants tried to block the auction in court this morning, but Judge Peter Busch denied all of those attempts. He said that the parties seeking to void the plan had no standing.

He proceeded to take bids on the place – and in the end, the San Francisco Community Land Trust came out on top with a $3,280,000 offer.

The Land Trust is a membership-based nonprofit organization that seeks to remove property from the private market to create permanently affordable housing for low and moderate income tenants.

The current tenants will be able to live in the building as long as they want, but under the terms of the Land Trust, the property will never again be sold for profit and will remain affordable housing forever.

Attorney Matthew Marule, who represented tenant Carien Mckay, told me that the right thing happened today. “The judge didn’t agree with our objection, but the land trust came through and made good on their mission to maintain affordable housing in the Mission,” Marule said.

The Land Trust had previously offered to buy the property, but the group’s offers were rejected.

“The tenants wanted the land trust to purchase the building and provide Miss Carati with the highest possible sale price,” Marule said. “What was most confusing about the whole thing was that the trustee wasn’t considering their bids. They wouldn’t allow them to make any bids with financing contingencies, and when you work with public entity like the San Francisco Land Trust, it is hard to make stuff like that happen. But they did today.”

Kirk Raed, a tenant at 2840 Folsom, was in shock after the land trust won the auction. “It is an example of the right thing happening. That is not occurring in San Francisco that much these days,” Raed said.

According to Raed, for the last two years the tenants have been cooperative, having meetings, and working together on the garden. “We have been fixing our own apartments for the past ten years anyway, so it will be more official that are going to be making our decisions together and working on the building together,” he said.

The owner of the building, Frances Carati, is being cared for in Buena Vista Manor. “We would love for her to come home and live with home health services,” Raed said, “but we doubt that her current conservator would allow that.”

“It was the biggest roller coaster that we ever been on,” according tenant Carien Mckay said. “We came in this morning and we needed more time for the Land Trust to get more money, because it is like a bank loan. It takes like 30 days to get your money together, and the trustee, Nancy Rash, and her attorney weren’t allowing us this 30 days. They were insisting that the cash be available that day. And you know for three million dollars, that is a lot of cash.”

“They really didn’t want us to buy the building,” McKay Said. “It was very confusing.”

“Today we came with two objections from our attorney,” McKay said. “The judge overruled these objections, and I was pretty sure that it was over. I thought we were going to settle there and watch our home being bid away.

“But my attorney turned to me and said that the Land Trust has gotten it together and would be bidding in the auction. So then in a very harrowing, exciting, dramatic end,the Land Trust persevered with buying the Pigeon Palace for $3,280,000.”

The tenants were able to put down a ten-percent deposit, and now the Land Trust, which in part leverages city money, will have a chance to settle the financing and close the deal.

The bidding went far beyond the $2 million the trust and tenants had originally offered, showing the danger of allowing Mission property onto the speculative market. But in the end, this one place, it appears, will be affordable forever.