The Family Dispute Behind Infamous Bernal Heights Rent Hike

In March 2015, the owner of this Bernal Heights residence raised her long-term tenant's rent from $2,145 to $8,900 a month, with a $12,500 security deposit.  (Google Street View)

Deborah Follingstad says she knows she's had a good deal as a tenant, living in a rent-controlled apartment in a San Francisco neighborhood she loves.

"I knew that one day something was going to happen," Follingstad says. "I understand that. I just wasn't expecting this."

By "this," Follingstad is referring to the Rent Hike Heard 'Round the City.

The week before last, her Bernal Heights landlord sent her a letter telling her the rent on her two-plus bedroom flat on Bocana Street would be rising from $2,145 a month to $8,900 a month. The landlord, Nadia Lama, said Follingstad's security deposit would be going up, too, from $1,500 to $12,500.

A page from the landlord's letter informing Bernal Heights tenant Deb Follingstad her rent was rising from $2,145  to $8,900 a  month.
A page from the landlord's letter informing Bernal Heights tenant Deb Follingstad her rent was rising from $2,145 to $8,900 a month.

Even in a place that's gotten kind of used to stratospheric prices for all sorts of housing, Follingstad's fourfold rent increase and the circumstances surrounding it have struck a nerve. Her situation, which she publicized in a Facebook post last Saturday, has triggered a fevered debate on social media, in her neighborhood and even from the San Francisco Board of Supervisors.

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"By raising the rent 400 percent and demanding a five-figure security deposit, the landlord is effectively evicting this tenant," Supervisor David Campos, who represents Bernal Heights, said at Tuesday's board meeting. He said he's asking the city attorney's office whether there's any way to stop Follingstad's de facto eviction, which would circumvent ordinances requiring formal notice and relocation payments when an owner wishes to occupy or change the rental status of a property.

Attorney: Landlord Offering More Space

Nadia Lama did not respond to a call seeking comment, but her attorney, Denise Leadbetter, says the outrage from Campos and others is misdirected. She says the higher rent would include more space -- specifically, a downstairs area from which an apparently illegal in-law apartment was recently removed.

"The rent increase that has generated this controversy is actually an offer by the owner to rent a substantially larger home than was originally rented," Leadbetter said in an email statement Wednesday.

She also cited the fact that Follingstad has listed a guest room on Airbnb and says the tenant would be free to use the additional space "to offset the rent increase through her existing Airbnb business."

Follingstad, an acupuncturist who treats cancer patients at a San Francisco oncology practice, acknowledges that she's listed a guest room on Airbnb to occasionally help cover her rent. But she also says the landlord's original notice of a rent increase made no mention of Airbnb. Furthermore, she says the letter stated the vacant space in question is not to be used as a living area.

The in-law unit that Lama removed earlier this year had been in place since the early 1990s. City property records do not show a building permit for the recent work on the space that Leadbetter suggests can now be used as part of an Airbnb rental.

Other public records suggest that Nadia Lama made plans to evict Follingstad several months ago.

A Dec. 31, 2014, document filed in San Francisco Superior Court outlines the distribution of a number of Bernal Heights properties among Lama, her three brothers and two sisters. As her share of assets acquired by her late parents, Lama was to receive the Bocana Street residence and more than $750,000 in cash. The distribution also earmarked $7,500 "to attorney of Nadia's choosing for eviction of tenant or tenants" at Follingstad's address.

To unravel how Deb Follingstad and Nadia Lama became the leading players in San Francisco's latest drama of tenant displacement, you need to go back a little further -- to revisit a little bit of the history of the building that Follingstad has called home since 2004 and to dip briefly into the saga of the Lama family, which has owned the building since 1991.

City property records list the Bocana Street address as a one-unit residence. But, in fact, the building contained an in-law unit that the Lamas rented for about 20 years to a painting contractor named Wayne Moore.

"It was an illegal apartment that they schlepped in there," Moore says. "Probably no permits, no nothing."

Family Patriarch's Legacy

Moore says he initially rented from Shukry Lama, known to tenants and friends as Chuck.

Lama was a native of the town of Bethlehem -- the one in Palestine -- and as a young man emigrated to Chile. There, he met his wife, Vera, with whom he had six children. The family left Chile in 1973, the year a military junta deposed President Salvador Allende, and came to San Francisco.

Lama bought a store in Bernal Heights and over the years built a neighborhood real estate portfolio of about 10 properties and a dozen units. Lama eventually placed his holdings in a trust to benefit his wife and six adult children, some of whom became involved in managing the properties.

"I'd paint a picture that the Lamas were not the world’s greatest landlords," Moore says. "They didn’t repair anything. I needed a new refrigerator and they wouldn’t buy one – I had to buy it. If a faucet leaked, I fixed it."

He also says he wasn't happy with annual rent increases that he said exceeded those allowed under rent control.

"They were raising the rent every year -– every damn year," Moore says. "I didn’t have the time or energy to fight it, so I just paid it."

After Moore moved out, the Lamas removed the in-law unit.

Follingstad, too, says her flat wasn't in great shape when she moved in in 2004. She recalls doing a walk-through with Chuck Lama before signing a new lease in 2006.

"He was like, 'Ach, you know, it's all falling apart anyway. Don't worry about anything,' " Follingstad recalls. The apartment's wooden window frames are in bad shape, she says, and the apartment has had a consistent mold problem.

However, she insists she's enjoyed a friendly relationship with Nadia Lama, who lives in another family-owned building two doors away, and with the rest of the Lamas.

"I've actually always had a nice relationship with all of them," Follingstad says. "... Their father -- he was a good man."

For her part, Follingstad says she's tried to be a good tenant. In addition to addressing the unit's mold problem, "I've restored a lot of stuff, I've painted, I've taken good care of my apartment."

An Earlier Rent-Increase Case

After she was notified of the 315 percent rent increase, Follingstad said she was advised by friends and even by a city building inspector that she should get a lawyer. In searching for one, she contacted Joe Tobener, who runs a tenants' rights practice in San Francisco, Oakland and San Jose.

Tobener represented tenants who in 2013 sued two of Nadia Lama's sisters -- Antoinette Lama and Claudia Lama-Parakka -- over a rent increase that appears strikingly similar to the one confronting Follingstad.

Tobener declined to discuss the case, which was settled in January. But Superior Court filings show that Nina Gelfant and Gayle Worrell alleged they were forced from their one-bedroom, one-bathroom, 720-square-foot Cortland Avenue apartment after the Lamas raised the rent from $1,650 to $4,250 -- 157 percent.

The suit argued that the rent increase was far above market rate and designed to get Gelfant and Worrell to leave so that the Lamas could sell the property.

That sale, Tobener suggested in a trial brief that outlined more than $1 million in potential damages, was triggered by a battle among Shukry Lama's heirs over the property he'd left behind when he died in 2012.

"Chuck Lama's heirs were fighting over their share of the inheritance which demanded selling properties or having the heirs occupy them as residences," Tobener's brief says.

That alleged squabble also appears to have played a role in Nadia Lama's dramatic increase of Deb Follingstad's rent.

In September 2013, she filed a probate petition in Superior Court seeking to compel her sister, Claudia, the overseer of several family trusts set up by Chuck Lama, to account for the family's assets. Assets named in the petition and exhibits include a small Cortland Avenue market, Chuck's Store, the store's liquor license, eight residential properties in San Francisco, one in Burlingame and unspecified real estate in Chile.

The court proceeding resulted in an agreement last Dec. 31 in which the three Lama sisters and their three brothers, along with some of their children, agreed to close the family trusts and distribute their assets.

The property Nadia Lama was to receive includes a 2006 Toyota Avalon; $25,000 to pay the legal bills she'd incurred; a little more than $750,000 in cash due upon the sale of two of the family's properties; and finally, the Bocana Street residence occupied by Deb Follingstad and the $7,500 to hire a lawyer to evict her.

The agreement also requires Nadia Lama to vacate her current home, a couple of doors up from Follingstad and still owned by her siblings, by the end of April. If she doesn't, the document says, she'll have to pay $4,000 a month rent to four of her siblings who will continue as owners; and if she does anything to interfere with their renting out the home she's supposed to vacate, she'll owe her siblings $10,000 in damages.

Problems With City's Tenant Protections?

In her statement defending Nadia Lama's rent hike, attorney Leadbetter suggests that her client is caught in a bind because of the widely acknowledged housing crisis in the city.

She faults the city's rent controls and says "this kind of dramatic increase" would be unnecessary if landlords were allowed modest hikes over time. She says rent control "unfairly burdens small property owners with a societal problem that should be shared by all residents" and that the city needs an "economically sound housing policy" to deal with the current crisis in rents.

Joe Tobener, Follingstad's attorney, is focused on the issue at hand. Addressing the possibility that Nadia Lama may want to move into the property his client occupies, he says, "She needs to handle it in a principled way."

"You can't endeavor to remove a tenant from a unit by raising the rent way above market rate with the intent of moving in," Tobener says. "You have to go through the proper owner move-in eviction proceeding" -- a process he says would give Follingstad a minimum $8,700 moving allowance, among other benefits.

Follingstad herself says she posted Lama's rent-increase letter not to create a furor but to give friends a heads-up that she's looking for a new place to live. So far, she says she's had offers to couch-surf until she finds a place.

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"I realize I haven't looked for an apartment in 11 years," she says. "But I pay attention to the news, and I know what's going on here. It's just been a long time, so the prices are quite shocking."

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