A startup offering $700-per-month sleeping pods in a downtown building is locked in a standoff with the city, which says the cheap digs don’t meet its standards for affordable housing.
Although Brownstone Shared Housing said in October that its Mint Plaza complex had won the necessary approvals to rent out pods to new tenants, The Standard has learned that the city revoked its rubber stamp until the firm pays a fee of more than $300,000, among other concessions.
From the beginning, Brownstone Shared Housing pitched its bed pods in an old bank as a salve for SF’s sky-high rental prices, appealing to techies, artists, students, and service workers. But the company didn’t seek city approval for its plans.
Shortly after it began renting out pods in 2023, the tiny dwellings went viral, prompting the city’s Department of Building Inspection to investigate. The agency quickly deemed the residence an illegal, unsafe conversion.
Brownstone and the city have been working to legalize the dwellings for more than a year. During that time, the company agreed not to take in new tenants as it worked through zoning and safety requirements. At the end of October, Brownstone took a victory lap, citing approval from the Planning Department that allowed it to start welcoming additional residents.
However, that approval was soon rescinded, said Dan Sider, the Planning Department’s chief of staff, because the company “misrepresented project details.”
“In short, no, this is not approved,” Sider said. “We expect Brownstone to honor their agreement with the city and not rent to new tenants until such time as they receive all approvals.”
Brownstone is noncompliant with San Francisco’s inclusionary affordable housing program, which requires new residential projects with 10 or more units to either pay a fee or offer a percentage of units at below the market rate.
Brownstone’s sleeping pods don’t meet the space requirements necessary under the program — they’re too small — so the city wants the company to pay a fee of $306,058.19.
“We’re not going to do that,” Brownstone CEO James Stallworth told The Standard, describing the fee as “massive.”
To get around the impasse, he’d like to work with the Mayor’s Office of Housing and Community Development to find a way to make the pods fit the city’s requirements.
Alternatively, Brownstone could limit itself to nine units at the complex so that the affordable housing rules would not apply, he said. Its residence currently has 30 bed pods and has been limited to 13 existing tenants while the company works on securing approvals.
“Ironically, this project cost about $60,000 to physically set up, so the affordable housing fee would be five times what we paid to even set up this affordable housing,” he added.
But there is hope for Brownstone. Outgoing Mayor London Breed in September proposed legislation that would waive inclusionary housing requirements and other fees for office-to-residential conversions. If it passes, Brownstone plans on expanding to another building next year, Stallworth said, though the company will nix those plans if it doesn’t have a workaround to the space requirements or fees.
“We have investors lined up and a lot of people wanting to move in,” he said, but “it just won’t make sense” without that rule change.
In addition to the affordable housing stipulation, Brownstone has several open cases with the Department of Building Inspection related to unpermitted work and expired permits, and the Planning Department said it has safety concerns.
“Our concern remains that significant changes to the building may yet be required – for example, additional fire sprinklers or a larger fire escape,” Sider said. “We remain hopeful that Brownstone will not delay any further.”
Meanwhile, Stallworth blames the delays on the city, which he previously described as “the sloths from ‘Zootopia.’” The city recommends scheduling a consultation with DBI, but he said he has talked with DBI representatives during inspections.
“To make it seem like we’re just sitting on this is inaccurate,” he said. “We’re going through the process, and we have to get through this Planning approval first.”
San Francisco has made the process “unnecessarily frustrating and long” at a time when it desperately needs cheaper housing options, he said. The city, on the other hand, cites resident safety as its main concern.
“At the end of the day, we’re all-in on new housing so long as it is constructed safely,” Sider said. “Is there a place for pod living in San Francisco? Alongside every other type of housing, it seems that the answer is yes.”