S.F. Goes After City's Cruelest Landlord, Snatching Away Her Rent Payments

Monday, February 5, 2018
Joe Eskenazi
Mission Local

Dale Duncan is trying to be a nice guy. He’s trying real, real hard. But, sometimes, it’s just too much. Anne Kihagi is just too much. And not just sometimes.

“I’m not a big schadenfreude guy,” says the former Kihagi tenant who, last year, won a $3.5 million ruling against his erstwhile landlord after a fraudulent eviction from his family’s longtime Mission District flat — purportedly the largest such judgment in state history. “But,” he continues after a thoughtful pause, “It’s hard not to feel some schadenfreude right now.”

That’s because the city, which has already secured a $5.5 million judgment against Kihagi regarding her mountain of tenant harassment and unpermitted construction violations, this month has commenced collecting on that debt. It is doing so by collecting Kihagi’s rents.

“I just got the letter from the City Attorney,” affirms Sheila Hembury, a decades-long resident at 1135-1139 Guerrero, whom Kihagi has attempted — and failed — to evict on multiple occasions. “It said that now we should send our rent checks to the City and County of San Francisco.”

She has: Deputy City Attorney Peter Keith confirms that, even by late January, the rent checks were trickling in. Now those funds — which he estimates as upwards of $100,000 a month and perhaps more than $123,000 a month — will no longer go toward Kihagi hiring a small army of attorneys to fight every last legal move from the city or funding various illegal construction projects. They’ll go toward paying off her heaping fine. Or, more accurately, they’ll begin to pay off the interest on that fine, which has been accruing at 10 percent yearly since mid-2017. That’s more than half a million dollars a year. That’s about $1,500 a day.

“I don’t trust her as far as I could throw a piano,” notes Hembury. “I am sure she has something else up her sleeve.”

That’s understandable. For years, Kihagi and her family members, employing a tangled web of LLCs, bought up building after building in this city and, particularly, the Mission. Harassment of tenants, especially long-standing rent-controlled tenants, many of whom are elderly and disabled, followed thereafter, as did evictions and new, market-rate rentals. “The paper value of the building skyrockets, so there’s more to borrow against to make the next down payments on the next buildings,” Keith told me last year. It’s a lucrative business model — in the short-term. More to the point, it sounds an awful lot like a Ponzi scheme.

With the city now elbowing in and taking the rental income from the seven buildings covered by its litigation — five of which are in the Mission — Kihagi may have reached the capacity on tricks one can store in one’s sleeve. No Ponzi scheme lasts forever. The question always is: who’ll be left holding the bag? It looks like it may well be Kihagi.

Anne Kihagi has turned out to be the Sandy Koufax of bad San Francisco landlords. There are many who worked at it longer. There are many who owned more properties and ruined more tenants’ lives. But Kihagi put together an explosive, electric run, defined by manic energy and overall brevity; it was barely five years ago when she bought her first San Francisco property, followed in short order by at least 10 more — a $30 million whirlwind of acquisitions.

These days, billionaire venture capitalist Ron Conway is being portrayed as the living embodiment of all the destruction tech and money have wrought on San Francisco. In much the same way, one could install Kihagi as the poster child for the rapaciousness that has expelled long-standing tenants from this city (and, particularly, the Mission, her base of operations). But say what you will about Ron Conway, he’s no Anne Kihagi.

The cartoonish excess of her behavior at times feels too on-the-nose for even a parody. But this is no parody. It wasn’t enough for Kihagi to attempt to hound elderly people out of her buildings or cut off their electric or water or leave the front door busted so vagrants could amble in and befoul the foyer. It wasn’t enough to point “security” cameras at residents’ doors and windows reducing life in a Kihagi building to time served in the panopticon; it wasn’t enough to wander, uninvited, into tenants’ dwellings; it wasn’t enough to disable the mailbox so that elderly renters had to travel miles to the post office on the off-chance they were given a three-day eviction notice.

Kihagi did all that, but she also had to be theatrical. She accused the city of West Hollywood of discriminating against her because she is a heterosexual. She made protection-racket-like threats regarding a tenant’s pet and how “it would be a shame” if anything happened to it. She posted a notice — in writing, mind you — on the door of Guerrero Street tenant Sylvia Smith accusing the septuagenarian of operating a “900-SEX-TALK” line out of her house (a judge later noted that there was “not a scintilla” of evidence of this, but it did leave Smith mortified, with neighbors shouting, “Sylvia! Give me your number!”).

That theatricality spilled into the courtroom, with onlookers describing Kihagi as blatantly micromanaging her attorneys. She sued three of them after failing to evict Hambury and her husband, Leonard Johnson, pinning the outcome on their “professional negligence” — and not her own unnerving behavior and testimony (or the facts of the case).

This continued in 2018, when Kihagi made a somewhat surreal Jan. 18 appearance in bankruptcy court. To stave off the city’s plan to collect her rents starting on Jan. 1, she had declared four of her LLCs to be bankrupt simultaneously. She failed, however, to hire an attorney — or complete the necessary paperwork disclosing her holdings. Judge Hannah Blumenstiel was not amused.

“This is federal court, not a parking garage,” the judge lectured Kihagi. “When you seek relief in bankruptcy court, you get significant protections. The price for that protection is transparency.”

Blumenstiel dismissed Kihagi’s case in a mere 20-minute hearing. The city then moved to collect her February rent and has employed a debt-collection attorney to pry away January’s.

A mere five days later, Kihagi skipped a court appearance for, her attorney claimed, medical reasons. And yet, Keith alleges, there she was “looking fit as a fiddle” when he walked out of the courtroom. Her attorney spirited her away and Keith hasn’t seen her since.

Kihagi’s creditors are smelling blood. Umpqua Bank wants its pound of flesh, and litigation with the city over the diverted Kihagi rents seems imminent. Kihagi claims she’s paid her mortgages, but the bank — which ought to know such things — claims she has not. Meanwhile, Duncan and his family are owed $3.5 million, and other wronged tenants also have their pending days in court (Kihagi is also due back in court: The city, on Feb. 1, filed contempt charges, claiming she not only failed to fork over January’s rents but is actively instructing her tenants to not pay the city).

“There is a special place in the abusive landlord hall of shame reserved for Anne Kihagi,” says City Attorney Dennis Herrera. “She has tried every trick in the book to subvert tenant protections and the rule of law. Predatory landlords should take note: She is not getting away with it, and they won’t, either.”

It required a tremendous amount of time and effort and legal costs, but Anne Kihagi’s reign of terror has been checked. But remunerations have not yet materialized; Duncan, for one, hasn’t seen one cent. And plenty of landlords slightly less cavalier and demonstrative — and theatrical — slip beneath the city’s radar altogether.

“I just keep saying that we have to trust the process,” affirms Duncan. “Three years ago, Kihagi was driving around town with that big smile, buying up buildings and sending out eviction notices. Now she’s driving around town from trial to trial and losing. That’s the process.”

Still, it’d be nice if the process paid him some money for his troubles. “We have justice, and that does feel good. But if we could get not even 10 cents on the dollar, man, that’s a down payment.”

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