Academy of Art's old SF dorms rent $2,000 beds to founders

The four-story beige building at 1916 Octavia Street, half a block from Lafayette Park, has been a tourist hotel, a residential hotel, an Academy of Art dorm called Coco Chanel Residence Hall and a line item in a city lawsuit. Now it houses about 20 startup founders and researchers, who pay from about $2,000 a month.

The tenant is The Residency, a founder housing program that leases three former Academy of Art buildings, the San Francisco Standard reported on October 9: 1916 Octavia and 2209 Van Ness Avenue in Pacific Heights, and 1153 Bush Street on Nob Hill. All three were named when the city sued the school in 2016 for turning apartments and hotel rooms into dorms without permits. Houseberry scores Pacific Heights 5 out of 5 for amenities, the only perfect mark among San Francisco's 92 ranked neighborhoods, and its typical home ran about $3.01 million in August 2026.

So the rooms the city fought to put back under the rules have a new kind of occupant, and nobody at City Hall has said in public which rules now apply.

What these buildings were before the dorms

City Attorney Dennis Herrera filed suit on May 6, 2016, against Stephens Institute, the company behind the Academy, and the web of LLCs that bought buildings and leased them to the school. The complaint alleged the Academy had displaced some 300 homes. Herrera called the school "one of San Francisco's most egregious land use scofflaws" in the office's announcement, which lists all three of these addresses among 23 properties under civil adjudication.

The city's own files show what the rooms are on paper. A 2013 grab-bar permit at 1153 Bush counts 15 residential hotel rooms, the single-room units that San Francisco protects as its cheapest private housing. At 1916 Octavia, permits from the 1980s call the building a tourist hotel, later ones a residential hotel or apartments. 2209 Van Ness is the International Institute, a 1901 Classical Revival house by architect Moses J. Lyon, and the Board of Supervisors voted on March 24, 2026, to start landmarking it.

The bed counts come from the Academy's institutional master plan filed with the Planning Department. Add them up and the three buildings hold 145 beds in 60 rooms. The Octavia permit, number 202009305585, describes 48 beds and keeps the building's designation under the city's residential hotel law. The Bush permit caps that building at 42.

How the $58 million settlement ended

The first deal, announced in December 2016, was valued at more than $60 million and promised 160 affordable senior apartments at 1055 and 1069 Pine Street. The Academy could not meet some of those terms, ABC7 reported, so the city negotiated again. On January 14, 2020, the Board of Supervisors voted 11 to 0 for a $57,960,000 settlement, including a $37.6 million affordable housing payment and about $8.2 million for the city's Small Sites Fund, plus a 25-year development agreement.

The Planning Department's fact sheet lays out what the school gave up. It had to bring 34 properties into compliance. It cannot convert any housing to student housing. It must give the city 30 days' notice before a change of use, a sale or vacating a property.

The Academy has been shrinking since. In September we covered the default at 2300 Stockton Street, an office building it sold with its own financing. Another lawsuit property, the Commodore Hotel at 825 Sutter Street, sold in 2025 and was rebranded as the Superhero Hotel, marketed to startup founders, the Standard reported.

Is a founder cohort student housing?

This is where the paper trail runs out. The city's definition, as SF Planning summarized it when the law passed, is housing "occupied by students of an accredited post-secondary educational institution" and owned, leased or controlled by that school. The Residency pitches its cohorts as a cross between college and an accelerator. Its residents are founders and researchers.

We searched the city's open building permit data and the Planning Department's records for all three lots. Nothing filed since early 2021 changes the use, and the two 2020 legalization permits still show as filed, though the city last refreshed those rows in August 2025. The Standard reported no comment from the City Attorney or Planning, and the Academy declined to comment.

We think the city should say in writing whether a founder program counts as student housing. Six years and $58 million after the settlement, nobody should have to guess what 145 beds in Pacific Heights and Nob Hill are legally for.

There is a fair case for the lease. A school losing students can either leave rooms dark or fill them, and a bed rented for 12 weeks at a time is housing, not a hotel stay. But 36 of these rooms at Octavia and Bush were residential hotel units, the city's lowest-cost private housing, before they were dorms, and the price has moved.

What $2,000 buys on the same blocks

A $2,000 bed is 45 percent of the city's $4,400 median one-bedroom, which Zumper's September report puts at an all-time high, up 25.4 percent in a year. Owning costs more. The cheapest of the 15 recent sales on Houseberry's Nob Hill page is a 600-square-foot one-bedroom at 10 Miller Place that closed at $645,000 on September 10. With 20 percent down at Freddie Mac's 7.40 percent rate, principal and interest alone come to $3,573 a month.

The neighborhoods have been climbing. According to Houseberry data, the typical Pacific Heights home rose from about $2.58 million in October 2025 to $3.01 million in August 2026, up 16.5 percent. Nob Hill rose 7.2 percent, to about $1.42 million. Both pages show a September jump to $9.08 million and $4.25 million, which we read as a data error and leave out.

A block north of 2209 Van Ness, a two-bedroom condo at 2315 Van Ness sold for $1.095 million on October 8. Houseberry ranks Nob Hill 34th and Pacific Heights 35th of 92 on the San Francisco ranking, both at 4.1 for safety, and Nob Hill's 4.4 for amenities trails only Pacific Heights and ties Presidio Heights.

The math that matters is per room. At 2.6 beds a room, a single room at 1153 Bush, in a building the city counted as 15 residential hotel rooms in 2013, now brings in $5,250 a month at The Residency's starting price. To see how those two neighborhoods stack up against the other 90 on amenities, safety and price, start with the Houseberry amenities ranking for San Francisco.

Sources

• San Francisco Standard, artist dorms turned into startup hubs, October 9, 2026
• San Francisco City Attorney, lawsuit announcement, May 6, 2016
• San Francisco Board of Supervisors minutes, January 14, 2020, files 191137 and 191125
• SF Planning, Academy of Art University settlement page, property list, fact sheet and institutional master plan
• DataSF building permits, permits 202009305585 and 202002144581
• Board of Supervisors Resolution 171-26, March 24, 2026
• Zumper National Rent Report, September 2026, and Freddie Mac PMMS, October 8, 2026
• Houseberry Pacific Heights and Nob Hill price histories and recent sales, October 2026