The owner of the Graywood Hotel, a single-room occupancy hotel damaged by a June 2016 blaze that displaced more than 50 people, has put the building up for sale amidst extensive renovations. The commercial leases in the building are now terminated, while advocates for the residential tenants are working to ensure they exercise their right to return.

“We just don’t have the bandwidth to put it back together,” said Dipak Patel, who owns the property at 3300-3308 Mission Street near 29th Street. Patel purchased the building in 2004 some for some $1.5 million, and is now asking $3.5 million.

“We’ve put the building in better shape than [it was when] we took it,” said Patel, explaining that it had been about 50 percent remodeled right before the fire. “I’m usually reinvesting in SROs and remodeling them but this is a much larger project because of the fire.”

The building is currently without a roof, and the interior is has been gutted to the studs. Patel said that the building’s water damage has been “cleaned up,” and that some of the building’s layout has been changed, but “the envelope of the building will be there,” he said.

Continuing the extensive renovation, Patel said, will be up to the buyer. Immediately after the fire, Ben Amyes, emergency services coordinator for the city’s Human Services Agency, had estimated reconstruction would take anywhere from six months to a year.

Concerns over the state of the building, Patel said, led him to offer a month-to-month lease to the owners of the 3300 Club, a bar that has operated in the building for 60 years. In the end, those negotiations fell through, and the bar’s lease was terminated. A taqueria that was in the building prior to the fire had already moved on.

“Our hope was to come back into that location because we had been there for 60 years,” said Theresa Keane, whose family owns the 3300 Club, upon learning that the lease would not be renewed and that she would need to find a new location to reopen. “The fact that nothing has been done to that building, they gutted the inside, but the fact they haven’t done anything made me think they weren’t trying to rebuild.”

Keane said she will likely look for another location to reopen. In the meantime, she said, her bartenders have found shifts elsewhere and her “customers are still wandering around, a bit lost.”

Keane’s father opened the family business in 1956, and it operated year-round, closing only on election days and for her father’s funeral.

“My entire life, that’s been what our family has done,” she said. Still, she sympathizes more with her displaced neighbors. “We lost a business, that sucks, they lost their homes.”

Residential tenants in rent-controlled units have, under San Francisco law, a right to return to buildings they were displaced from by disaster, at their pre-displacement rent. That right is retained even after renovation or sale of the building, said Tommi Avicolli Mecca of the Housing Rights Committee. And tenant advocates are getting ready to defend that right.

“As soon as we found out that this building was for sale, it automatically raised a red flag for us and for our community partners, because this is going along with the trend of this neighborhood, which is super gentrification and a huge amount of displacement from the neighborhood,” said Diana Martinez of the Mission SRO Collaborative, an organization that advocates for SRO tenants and serves as a link for them to the Department of Building Inspection.

According to Karoleen Feng, Director of Community Real Estate at the Mission Economic Development Agency, “there is always potential for displacement for any property that is purchased for speculation.” The agency may try to acquire the property, whose current listing describes it as a potential “cash cow” for a private buyer, as permanently affordable housing instead.

“MEDA stands behind all the tenants and their rights to return,” Feng said. “MEDA is interested in securing any properties along Mission Street and anchoring those properties as affordable housing for the neighborhood.”

Low-rent SRO rooms in particular are under significant market pressure to be converted into more profitable ventures. Despite regulations restricting conversions to tourist rentals, 11,000 SRO units have been removed from San Francisco’s housing market in about 40 years, prompting the Board of Supervisors to ban SRO rentals for periods shorter than 32 days.

But Martinez is more concerned with the SRO units being rented for high market-rate rents after renovations if the tenants are not able to return.

“I assume that if they’re going on the same path that the Graywood was on before the fire, they will be renting their units as market-rate as opposed to low-income, because they were already doing that before the fire,” Martinez said. A startup called Negev, which has a history of turning SRO hotels into more expensive housing, managed the property before the fire.

The three-story building has 28 residential units, six of which are licensed for tourist use, and two commercial spaces. Before the fire struck, Patel was in the process of remodeling the hotel rooms, had done work to the hotel’s hallways and heating system, and had installed sprinklers which ultimately saved the building from more damage, he said.

“We spent about $10,000 a room before fire, so about $200,000 total, and we did electrical upgrades,” he said. “Whatever happens to the building, it will be a 100 percent upgrade.”

But it can take a long time for tenants to return to a building after a fire – often, so long that they don’t exercise their right to return because they have been forced to find new permanent housing.

The 58 tenants displaced from the Graywood Hotel are currently housed under the city’s subsidized rent program, which covers their rents for up to 24 months, and most have a year and a half left – depending on when they signed their leases – under that program, said Amyes, of the Human Services Agency.