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Academy of Art agrees to settlement

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POSTED December 19, 2016 7:02 p.m.

SAN FRANCISCO (AP) — One of the nation’s largest for-profit art schools has agreed to a $60 million settlement after amassing a real estate empire that officials said flouted the law and contributed to San Francisco’s housing crisis.
The deal announced Monday ends a city battle with the Academy of Art University in San Francisco, which is one of the city’s biggest landlords.
City Attorney Dennis Herrera sued the academy in May claiming at least 33 of the school’s 40 buildings throughout the city were out of compliance with zoning codes, signage laws or historic preservation codes.
“The academy and its land-use affiliates behaved for more than a decade like the rules didn’t apply to them,” Herrera told a news conference. “We’ve ensured those days are over.”
The university owns buildings scattered around San Francisco, including former hotels, retail and industrial spaces and residential buildings, many of which were illegally converted into student housing and academic buildings, Herrera said. “This was housing that San Franciscans desperately needed in the midst of an affordable housing crisis,” he said.
As part of the settlement, the school will pay the city $20 million in penalties and fees and provide at least 160 units of affordable housing, valued at $40 million, to low-income senior citizens, Herrera said. The housing must be ready for tenants to move into in 18 months and will go primarily to low-income senior citizens, he said.
Herrera called the deal a landmark settlement resulting in the largest award the city has ever secured in a code-enforcement case.
Academy of Art President Elisa Stephens said in a statement that the academy, which has 8,700 students and 2,000 employees, was “very pleased to reach this agreement.”

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