The strange and terrible saga of Harlan and Naomi Kelly’s home

The feds: They’re not a subtle bunch. They’re even unsubtle when attempting to be subtle. 

Take this offhand mention on page four of the Oct. 19 indictment of connected real-estate broker Victor Makras and ex-PUC general manager Harlan Kelly for alleged bank fraud: “Building Inspector ‘BC’ signed a Certificate of Final Completion and Occupancy” at Kelly’s home.”

This is a reference not to the troglodyte comic strip but to Bernie Curran, the disgraced senior inspector and accused federal criminal with a penchant for gallivanting around the city and signing off on dodgy projects. Which happened here. Repeatedly.

It’s also an unsubtle hint that the feds may have been poking around to find more dodgy goings-on at Harlan and Naomi Kelly’s Inner Sunset residence than the alleged fraud they used to obtain a refi loan and funnel it into paying other debts.

Kelly resigned from his position in November, 2020, after being arrested and federally charged for alleged bribery. His wife, former City Administrator Naomi Kelly, has not been charged. She resigned in January. 

There remains much for the feds (or others) to sift through regarding this home, on which some 4,000 square feet were added a few years back. Among other things, the feds note that disgraced permit expediter, contractor and confessed federal criminal Walter Wong did $90,000 worth of construction work here, and no permits for that are readily available. 

Assessor/Recorder records reveal that a plethora of construction contractors filed liens on the property, which may help explain why the Kellys needed that refi loan.  

The numbers don’t always add up here. But, in the end, the equation always comes out the same: The Kellys, connected members of the City Family, were able to move ahead repeatedly, for transgressions that would enter a regular Jane or John Q. Public into a world of pain. 

Funny thing: The Oct. 19 indictment makes a reference to the “hand-written description” on the Certificate of Final Completion signed off by Curran. That indicates the feds obtained the actual document. 

Because if you look up this transaction on the Department of Building Inspection’s publicly accessible computer system, you’ll find another inspector’s name. To know Curran signed off here, you’d do well to obtain the actual document. 

For whatever reason, the feds saw fit to do this. And, indeed, Curran was on this project a lot. He seemed to pop up magically whenever things went wrong. 

Things went wrong a lot. 

In barely over a week during December, 2012, alone, this project managed to suffer a collapse and undermine two neighboring homes via an ill-advised and cavalier excavation, it was nabbed for dangerous electrical wiring, and it was reported for purportedly illegally demolishing the structure. 

Well, that’s a hell of a week. 

But while the ground may have literally collapsed beneath the Kelly family’s feet, it never did so on paper. Because it helps to have Curran et al. on the scene. Overseeing and signing off on the remedial steps related to the collapse conveniently fell to Curran; he cleared these permits and Notices of Violation as well as other matters on this site, even though someone else is sometimes listed as doing so on the DBI’s publicly accessible system. 

Less than a week after a reckless excavation triggered a collapse that threatened not just the Kelly home but two of its neighbors, hazardous wiring was flagged on the property. DBI abated that matter within days. 

The complaints of an illegal demolition came in only days later. And this issue was not abated quickly. On Dec. 28, 2012, the notes on DBI’s permit-tracking system state “ordering plans.” It was not a rush order: It ought to have taken days if not hours to obtain and check those plans, but it wasn’t until Dec. 12, 2013 — nearly a year later — that Curran ruled “demo appears to be consistent with plans” and closed the case. No corrective action was taken.

A connected inspector — aka a “specialist” — shelving a complaint on a connected project until the heat dies down is nothing new. Put it off, put it off, blow it off: It’s not complicated. But the demolition issue is. 

In San Francisco, the Department of Building Inspection and the Planning Department have differing definitions of a demolition, because of course they do. And, in fact, Planning determined that the Kelly’s remodel was drastic enough to be categorized as a demolition. 

That triggered a mandatory hearing, in which the Planning Commission approved the project. 

But here’s another funny thing: The plans listed in the document package for that hearing state that 69.25 percent of the interior elements of the home would be ripped out during construction. The Department of Building Inspection definition of a demolition is triggered when 66 percent is removed. 

If DBI had declared this project a demolition, it would have come under greater scrutiny, incurred more project costs, and been hit with a total reassessment — inflating its property tax base. It would have been a costly and major decision. But DBI saw fit to allow a 4,000 square foot addition, sextupling the size of the building, with plans to remove 69.25 percent of the structure’s interior elements, to be categorized as a renovation. 

It turns out that there’s room for interpretation in the building codes, and the interpretation seems to take into account whose building it is. By the letter of the code, shouldn’t DBI have defined this job from the get-go as a demolition instead of a mere remodel? “Not when you’re special,” answers a longtime DBI observer with a chuckle. 

But here’s another another funny thing: A few months later, in May, 2014, Kelly was issued a revision permit for this project. A revision permit is, essentially, the permit you apply for when you deviate from your plans. Of course, Curran handled that permit as well. 

Well, which one was it? Was it, as Curran signed off, “demo appears to be consistent with plans?” Or was it, as Curran also signed off, that there were revisions to those plans?

You’d think it couldn’t  be both, but it was. It helps to be special. 

The numbers on this project — well, they’re special too. 

Planning Department documents state that the “existing building area” of Harlan and Naomi Kelly’s home would go from 825 square feet to 2,841 square feet. And yet, the actual plans included in the same packet show an increase from 1,718 square feet to 4,772 square feet (there are semantic differences between square footage and “gross habitable square footage,” but not enough to account for a discrepancy of this magnitude). 

Assessor’s records, meanwhile, indicate the home grew from 763 square feet to 4,772 square feet. 

This led to a reassessment of the structural value from $279,038 in 2013 to $652,393 in 2014 and $842,085 in 2016. That’s a steep increase in the property tax base, but it still seems out of whack for a 4,009-square-foot addition. And had this project been unambiguously categorized as a demolition — meaning the home would be considered new construction — it’s hard not to see that assessment being even higher, along with the resultant property tax bill.

There are many unanswered questions here. But, apparently because of whose home it was, they were not asked. And, while all these shenanigans were taking place on the ground, Kelly was purportedly being guided through a bank fraud scheme by the deeply connected Victor Makras, a man described as being “tied into the inner sanctums of San Francisco politics.”   

In the end, Kelly, a connected city politico and pillar of the City Family, was enabled and deferred to. Repeatedly. 

It wasn’t subtle.