Firm transforms distressed Oakland buildings for well-off tenants

The Negev plans to carve 63 apartments into a former artist warehouse in West Oakland that was red-tagged by the city and vacated of its tenants in January. It will also convert an empty building in East Oakland into town houses and renovate one of downtown’s last single-room-occupancy hotels — the Hotel Travelers — into housing marketed as “a new way for people to live in cities.”


“I think Oakland is a much cooler city than San Francisco,” said the company’s co-founder, Danny Haber, who manages several properties in San Francisco. “It’s got that urban grit. It’s 10 degrees warmer.”

But the manner in which the Negev is changing housing has landed the company on a tenant rights advocacy group’s list of most despised property managers. The Anti-Eviction Mapping Project in San Francisco says the company eliminates scarce low-income housing as it strives to increase the stock of housing for tech workers.

“They’re taking away housing from poor people and creating dorms for wealthy newcomers, which is emblematic of what we’re seeing all over the city,” said Erin McElroy, co-founder of the Anti-Eviction Mapping Project. “The fact that they’re working on both sides of the bay is pretty significant.”

The Negev, however, says the work it is doing is filling a void.

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“We’ve taken dilapidated, burnt-out buildings — buildings that were firetraps,” Haber said. “We turn them into housing that is not quite affordable but still low-priced for people in the neighborhood.”

Haber said the company uses software algorithms to match people with like interests, and then place them in “theme houses.” To date, the Negev has tried a Burning Man theme, a geek theme, a sports and outdoors theme, and even an introvert theme.

Within months, the Negev will revamp the Hotel Travelers, a 113-year-old edifice with cigarette-smoke-stained walls and scuffed aluminum cornices that has long provided affordable housing for the poor, senior citizens and veterans.

Haber said that once he finishes the renovation, the erstwhile hotel will consist of small, chic apartments with a restaurant or bar on the ground floor.

“We’ll try to get local artists moving in there,” Haber said of the Hotel Travelers, where construction crews are tearing through the walls. “It’s a great place to live in a good location.”

The practice of transforming distressed properties that house the poor and remodeling them to attract younger, well-heeled tenants isn’t unique, McElroy said, noting that other entrepreneurs have also taken over single-room-occupancy hotels in gentrifying San Francisco neighborhoods. Even so, she said, the Negev stands out for being particularly unapologetic.

Haber said his company is simply trying, in its own way, to solve the Bay Area’s affordability crisis.

“I think we’re running into criticism because we’re focused on the middle class, and that’s who we’re trying to bring down the price for — not low-income people,” he said. “And because we’re young and we’re new, we’re taking on projects that most (developers) in their right mind wouldn’t want to touch.”

Some of their tenants say the concept of housing like-minded young adults together works well. Nathaniel Essex, a business graduate student who pays $1,200 to rent a room in a mixed-use building that the Negev operates at 4500 Mission St., said he is happy with the arrangement.

“It’s nice to move into a community of people,” Essex said.

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Haber and his partners, Yaniv Lushinsky and Alon Gutman — all fledgling entrepreneurs in their late 20s — say they’ve run up against politics in San Francisco and Oakland, where rents are escalating rapidly and thousands of people are facing displacement.

Haber said the idea for the company sprang from a communal housing model that he and Gutman cobbled together in 2013, when they began subletting a live-work space on 12th and Howard streets in San Francisco.

The space belongs to the Tenderloin Neighborhood Development Corp., a nonprofit affordable housing group that had leased the building out to another tenant and said it had no knowledge that anyone was subletting. Haber said he advertised the space on Airbnb and Craigslist, looking for roommates to stay long term. A spokeswoman from San Francisco’s Planning Department said that setup violated the city’s short-term rental laws.

Don Falk, who heads the Tenderloin Neighborhood Development Corp., said he learned of the arrangement when neighbors complained about noise coming from the building. He said he persuaded Haber to clear everyone out.

Haber declined to say why he and his tenants left. He said that in 2014 the partners officially began their business.

Over the next year, the company leased other properties in San Francisco, including two single-room-occupancy hotels at 1040 Folsom St., and 219 Sixth St. Records from San Francisco’s Department of Building Inspection show that in December 2014 both buildings racked up code violations for un-permitted construction — such as turning storage spaces into bedrooms — shortly after the Negev took over.

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In 2014, six former tenants of 1040 Folsom sued Haber and the building’s owner, Nasir Patel, for wrongful eviction. The tenants had been displaced by a fire three years earlier and alleged in their lawsuit that Haber and Patel would not let them move back in after the building was repaired. Instead, the tenants said, Haber advertised the building as a “tech co-op” and rented out rooms to newcomers for up to $1,500 a month. The two sides settled this year for $475,000.

Now single rooms go for up to $1,800 a month at the Negev’s Folsom building, which includes communal bathrooms, a large shared kitchen, a movie theater, bike racks, a pingpong table, and free weekly yoga classes. Residents stow their skateboards, yoga mats and soccer balls in the downstairs lobby area.

In July, six tenants of the Hotel Travelers sued Haber, hotel manager Dion Ross and NDO Group — a limited liability company that lists Gutman as its registered agent — saying they stopped operating the elevator and supplying heat to the building to drive the occupants out.

Ross denied those accusations, saying that when the Negev team first arrived, most of the rooms were infested with bedbugs and roaches, the floors were water-damaged, and the elevator cables were “rotten to the core.”

“It has been rumored that we’re trying to turn this place into a tech palace,” Ross said, rolling his eyes in exasperation while standing in the hotel’s lobby on a recent weekday afternoon. “We’re just trying to bring this place up to code.”

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com Twitter: @rachelswan

Article source: http://www.sfchronicle.com/bayarea/article/Firm-transforms-distressed-Oakland-buildings-for-9228760.php

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