The $38 million sounds like a lot, but considering that they’d previously blown off paying a $58 million settlement, it seems like the Academy of Art is getting off pretty easy.
The dirty little secret of the Academy of Art University, which has really been not much of a secret for at least five years, is that they are more of a student-loan-fueled machine with a previously dismal graduation rate, and a serial code-violating landlord at more than 40 properties across the city. A 2015 Planning Department study found that 75 percent of the school's buildings were illegal conversions into student dormitories, and 48 Hills has described them as San Francisco’s “worst planning scofflaw.” But the Academy of Art is not really an academy, they’re a for-profit corporation called the Stephens Institute that enjoyed enormous enrollment growth in the 1990s and 2000s, before the illegal land-use chicanery and shady enrollment tactic lawsuits started catching up with them.
The school was ultimately nailed by the city and agreed to pay a $58 million settlement in 2016 for, among other issues, taking substantial affordable housing off the market and turning it into for-profit dorms. Yet they never actually paid up, and the Chronicle reports that on Tuesday the Board of Supervisors approved a $37.6 settlement that the city and Academy quietly agreed to over the summer.
The Board approved the settlement with a mere three-minute, 17-second discussion and a quick gavel-bang from President Norman Yee. Sup. Aaron Peskin said the City Attorney’s office and other city personnel had “dogged [the school] for a generation” (he meant that in a good way) and that he hoped “to bring this very tortured chapter to hopefully an end in the City and County of San Francisco, where one institution behaved unlawfully in a way that impacted low-income tenants.”
This time, the Academy of Art does appear ready to pay up. Mission Local reported in October that the school sold off $9 million worth of vintage cars from the 1920s, 30s, and 40s. (This was only part of a large personal collection of Academy President Elisa Stephens and her father, Academy founder Richard Stephens, and the school has operated the collection's home as a public museum with some odd hours. The collection contains a rare Tucker 48 worth over $2 million.)
According to the legal settlement approved in December, the Academy is not just paying one lump-sum check. In cash terms, they’ll pay $20.4 million in back fines and fees. They also have to perform renovations they’d dodged on 12 historic buildings the Stevens Institute owns. And of the staggering 43 properties the company owns, they must cease all operations at nine of them, and convert them back to their legal use as affordable housing. (Socketsite has the list of those here.) And their other properties, well, they need to be brought up to code compliance.
Photo: Andy Melton