Politically connecte Democrat developer caught cheating

S.F. developer ducked fees on house that collapsed

The former president of the San Francisco Building Inspection Commission saved himself at least $15,000 in permit fees when his business partner provided a lowball estimate of the construction costs for renovating an aging Twin Peaks home that collapsed last week and slid down the hillside, city documents show.

The construction costs for a major expansion of the modest hillside home were initially listed at one-tenth, and then half, of what city officials say was the actual price of the work, documents show.

It's the second time this year that Mel Murphy, a politically active friend of MayorEd Lee's who now sits on the city's influentialPort Commission, has performed major construction work without paying thousands of dollars for proper permits, city documents show. The controversy comes even as the Department of Building Inspectiontries to shed a reputation for cronyism and insider dealing that has plagued it for years.

'Where's the fairness?'

"Where's the fairness here? This has to be fair and equitable," a visibly flustered Angus McCarthy, president of the Building Inspection Commission, said at last week's commission meeting as he questioned staff about the price discrepancy for Murphy's permit.

"Everybody who applies for permits has to be treated the same here," McCarthy said. "I'm trying to get my head around how this permit was so low."

Murphy declined to comment on the most recent allegations Friday but has said his earlier permitting problem was "an unfortunate oversight" and not the result of preferential treatment.

The valuation of Murphy's permit is part of an internal investigation that Tom Hui, director of the Department of Building Inspection, ordered last week. City AttorneyDennis Herrera is conducting a parallel investigation into how the modest, unoccupied home at 125 Crown Terrace collapsed in the midst of a controversial renovation project designed to triple it in size and convert it into a modern home for Murphy and his family.

House sent sliding

The accident took place after the 72-year-old building was raised off its foundation in a metal cradle that may have partially given way, city building officials said.

The collapse at about 10:30 p.m. on Dec. 16 sent part of the home, timber and other debris sliding down the steep slope and forced the evacuation of at least one neighboring house. No one was hurt, which McCarthy called "amazing."

Murphy's plan to "remodel" the home, expanding it from 1,400 square feet of habitable space to at least 4,200 square feet, came after the Planning Department denied him a demolition permit for the house in 2007. The expansion plan had been challenged by a number of neighbors.

Estimated construction costs are important in San Francisco, since permit fees are based on the cost of the work being done - the more expensive the work, the higher the fee.

The original October 2011 application for Murphy's plan to add 1,448 square feet of new ground-floor area and two new stories put the cost of the job at $60,000, records show.

Low initial estimate

That number was provided by the permit applicant, a building inspection official said. According to the document, the applicant was Luke O'Brien, a partner with Murphy in Murphy & O'Brien Real Estate Investments, and currently a member of the city's Small Business Commission. O'Brien could not be reached for comment.

A revised construction cost wasn't provided until more than a year later, when a city building official on Nov. 20, 2012, wrote the cost as $300,000, records show.

That updated estimate was still less than half the $610,500 cost building inspectors now say should have been listed on the permit. Even that figure may be too low.

"I'm not sure that $600,000 is correct," McCarthy said. "I'm really concerned that a permit was issued for such a low cost for such a big job."

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