San Francisco settles lawsuit against Academy of Arts Unversity

SAN FRANCISCO (KGO) -- The city of San Francisco has settled a lawsuit against what the city attorney says has been the most notorious landlord - the Academy of Art University.

And the deal is being called a landmark because it not only includes money, but housing.

On Monday, the city attorney said that this proposed $60 million settlement is the largest the city has ever received in a code enforcement case.

The Academy of Art University was founded in San Francisco in 1929. In the past 10 years or so it has rapidly expanded to nearly 9,000 students, gobbling up real estate for classrooms and dorms. The city attorney says it's done so by breaking the rules. "Earlier this year fully 33 of the academy's 40 properties failed to comply with permit entitlements authorization or related requirements," San Francisco City Attorney Dennis Herrera said.

In May, Herrera sued the university and on Monday he announced what he calls a landmark $60 million settlement. It includes penalties, but the biggest award is the $40 million that will be spent by the academy to transform two of its sites on Pine Street into 160 units of affordable housing for seniors. That's designed to make up for the unauthorized properties the college has amassed during the city's housing shortage. "This company has agreed to be part of the solution rather than a major contributor to the problem," attorney James Brosnahan said.

RELATED: Academy of Art University accused of violating San Francisco planning codes

Brosnahan says the school has been working with the planning department since 2007 trying to comply. "Those who do business with people in the city government of San Francisco understand very often it takes a long time, in this case it took nine years," he said.

He says they made three settlement offers before the lawsuit. "We would have settled on these terms without the city attorney doing the whoop dee do," Brosnahan said.

The planning commission and the city supervisors must now approve the plan.