The revelation earlier this week that a large, prominent new residential project at the edge of the Castro and Duboce Triangle would not be standard rental housing but would be more akin to an extended-stay hotel with 30-day minimum stays has inspired some anger from the district's supervisor and at least one Planning Commissioner. But given that it's technically legal, there may not be any recourse for the city at this point.
At issue is the fact that technically any rental with stays over 30 days does not qualify as "short-term" under the city's existing short-term housing law. So developers and companies like Sonder, which is going to be operating the property at 2100 Market Street, can exploit this loophole to maximize the revenue of a rental property without adding to the regular rental housing stock — and thereby worsening the city's ongoing affordability crisis.
"San Francisco neighborhoods never signed up for corporate hotels masquerading as rental housing," said District 8 Supervisor Rafael Mandelman, writing earlier this week on Facebook. "Since learning about the developer’s plans to operate 2100 Market as an extended stay hotel earlier this week, my office has been in contact with the Planning Department and the City Attorney’s office to determine whether these units are allowed under existing law. If they are, we need to change the law and close this loophole."
It appears that the units are legal, as Planning Department Director John Rahaim confirms to the Examiner.
But Planning Commissioner Dennis Richards had some short words of scorn for the project, speaking to the Ex. "I feel like we are being played. This is an Extended Stay America, this is not a housing project." Richards adds, referring to some other newly constructed residential projects where Sonder and other companies have been renting out units one month at a time, "There’s a lot of this going on in all the projects we approve. This whole idea that we are solving the housing crisis — really we are solving a hotel crisis... It's legal but it's not right."
Developer Brian Spiers tells the Examiner that it's "unfortunate" that the word "hotel" has been attached to his property. He and a Sonder PR rep are wanting us to use the term "boutique residential service." But I'll refer you back to Sonder's homepage, which has a check-in module just like a hotel's website does. And yes, there's also reportedly towel service.
And while Spiers stresses that he believes most leases in the 52-unit Sonder property will be rented for six to 12 months at a time, it's less likely that anyone moving to the city — or anyone who already lives here — would seek out something like this if they were paying for it themselves. At around $240/night for a one-bedroom, as some of Sonder's other SF rentals are priced, that means they're renting one-bedroom units for $7,200/month, or about what some people are paying for three- or four-bedroom apartments these days. So the likeliest renters will be big corporations who want to give new hires a soft landing in their new city for a few months. (Eight units of the building's total of 60 will go into the affordable BMR lottery, and will not be managed by Sonder.)
So, call this development whatever you want, it still doesn't qualify as standard market-rate housing — which in this current market is unaffordable to many even at half the price of these Sonder rentals. And it appears that such "corporate rentals" aren't yet a separate category from apartments in the current planning code, so we'll see whether or not that changes.