A group of young techies renting out 'sleeping pods' in downtown San Francisco received an unwelcome wake-up call when a team of inspectors came to document possible code violations they fear could shut down their fledgling operation, DailyMail.com can exclusively reveal.

It was just last week that the city announced plans for the investigation, after seeing media coverage showcasing the pod housing complex that opened in June in the city’s SoMa neighborhood.

DailyMail.com was there Monday when a three-member team from the Bay City's Planning and Building Department arrived at 10am armed with notepads and cell phone cameras. They headed up to the top floor where they poked their heads into the pods where several residents were still sleeping – one snoring aloud.

'Are these fastened to the floor or are they just standing?' one of the two male inspectors asked, referring to the rows of stacked bunks.

Officials spent about half an hour checking out the facility and left after warning the co-owners of Brownstone Shared Housing, which operates the startup, that they may be forced to kick out their tenants.

Kelly Wong, a senior planner, giggled as she quizzed the owners on what exactly the pod house is, and why they apparently haven't followed protocols to convert the former San Francisco Fire Credit Union building into this new use.

Brownstone Shared Housing co-founders Christina Lennox and James Stallworth gave DailyMail.com a tour of their sleeping pod complex in San Francisco charging residents $700 in monthly rent

Stallworth, who lives in the bunk below Lennox, started the business in 2021 based on their own prior experiences with 'housing insecurity'

The double-stacked row of beds occupy just the top floor of a three-story property, which provides about 5,500-square-feet of living space that's all theirs

'We're just going to have to figure out what kind of use it is to see if it is permitted,' Wong said, smiling.

'I mean, technically, because you didn't get permits for any sort of like conversion or changes from the bank to this new use, that technically is a violation of the planning code,' she explained.

After conducting an internal review, the city will decide whether to move forward with enforcement, order remedial action, assess penalties or force a mass eviction.

'This is show and tell,' Christina Lennox, the 29-year-old co-owner, quipped to a DailyMail.com reporter.

Lennox and her business partner are attempting to alleviate California's housing crisis with their new venture that allows techies to rent out 'sleeping pods' out of a former bank in San Francisco.

After the crew left, the co-owners were left anxiously awaiting the outcome of the internal review that could result in remedial action penalties and possible eviction.

The following day the city posted a ‘Notice of Violation’ at the entrance, citing them for ‘work without permit’ and ‘unsafe building’ for installing 30 sleeping pods constituting an ‘illegal change of use.’

The Notice of Violation was posted on Tuesday citing the company for working without a permit and illegal change of use among other violations

They were also cited for lesser offenses including replacing a toilet with a shower stall in the basement without the necessary permit. They were given 30 days to file an application for the change of use, 60 days to obtain that permit, and 90 days to complete any required work to gain compliance – or otherwise it could be shut down.

The complex is already near capacity, with 28 of the 30 pods full. The units rent for $700 a month.

The new pods, fitting no more than a twin sized mattress and just four feet high, may appear spartan, but DailyMail.com can reveal that the actual living quarters are quite cushy.

When they crawl out of their beds the occupants get free rein over a three-story building downtown.

DailyMail.com spoke with the co-owners and several of the residents at the site last week a few days before the inspection.

'This is our very own Pod Castle!' Christian Lewis, 26, said, kicking back on a couch in the lobby of a 5,500-square-foot pod complex he's called home for the past month.

Lewis, who founded the AI startup Spellcraft, drew widespread attention when he showcased his sleeping pod on X, formerly Twitter, garnering 2 million views.

The young entrepreneurs received a startling wake-up call on Monday October 2, when officials from San Francisco's Planning and Building Department dropped by for an inspection

Kelly Wong, a senior city planner, led the three-member team around the new pod housing complex to inspect whether the housing startup complies with building codes

One inspector is seen checking out a tiny sleeping pod, documenting their findings pictures and video

Co-founders James Stallwell and Christina Lennox are pictured looking on and answering questions as the team made their rounds

Brownstone Shared Housing, which has opened similar properties in Palo Alto, San Jose and Bakersfield, told DailyMail.com that they aspire to massively expand, eventually housing as many as 10,000 people in California.

They are also offering to sell their custom beds to the government to use in homeless shelters.

'That is my personal goal – to end homelessness in this city,' said Christina Lennox, who started the business with James Stallwell – now her fiancé.

'We can maximize their capacity and provide a more comfortable and private space for homeless people.'

But the media attention may have caused a hiccup in those plans.

The city Department of Building Inspection announced last Tuesday that they were t investigate whether Brownstone had the proper permits.

'We are aware of the issue and have opened an investigation to determine if there is a code violation,' Patrick Hannan, a department spokesperson, told The San Francisco Standard.

Last year, the Palo Alto operation, with 14 pods, was cited for multiple code violations including wiring issues, unpermitted remodeling and other concerns, The Standard reported.

But Stallwell seemed caught off guard when asked Tuesday about the new investigation, telling DailyMail.com that they're happy to work with the city to resolve any issues.

The new pods, fitting no more than a twin sized mattress and just 4 feet high, may appear spartan, but the actual living quarters are quite cushy

Lennox, who sleeps in one of the pods, directly above her fiancé, said she designed the pods herself with an eye toward comfort

The two entrepreneurs, who are engaged to be married, are currently shacked up in a separate bedroom that previously served as a master suite for a bank executive

'Hm, interesting,' he said when asked about the then breaking story. 'We did our due diligence, and anything they have an issue with, we can work with them and talk about it, make any fixes.'

Without even knowing what the issues were, Stallwell pointed out that there's a misconception that the sleeping pods were built into the structure. He said there was, in fact, no construction involved with the installation.

He also rejection the notion that their tenants are living in cramped conditions, noting that far more people worked in the credit union building when it was operational.

Lennox, who sleeps in one of the pods, directly above her fiancé, said she designed the pods herself with an eye toward comfort.

The pods, likened to coffins in some of the media coverage, look more like modern bunk beds, equipped with their own lights, outlets, and black out curtains, with dividers separating each unit to provide some privacy.

But the double-stacked row of beds occupy just the top floor of a three-story property.

Residents roam freely in a building that includes five bathrooms, two plush lounges, workstations, a kitchenette, and loads of storage space.

Residents get free reign over a building that includes five bathrooms, two plush lounges, workstations, a kitchenette, and loads of storage space

A dirty communal sink is seen at Brownstone Shared Housing

A leftover filing cabinet from the previous bank tenants has been converted into a communal dresser at a shared closet space

Co-founders Christina Lennox and James Stallworth gave DailyMail.com a tour of the communal closet area that formerly served as a storage room

And when they step outside, it's into a neighborhood that has some squalor but also prime dining, museums and nightlife.

Compared to the median $3,000 that local renters must shell out for a one-bedroom apartment, it's a serious bargain. And these folks don't have to sign a yearly lease or sweat a deposit or fees.

Tech entrepreneurs have swapped up many of the units, as they seek their own piece of the AI gold rush in the Silicon Valley.

A chalkboard shows where residents must sign up to use bathroom facilities at the shared housing facility

'There's a lot of talent here in this house,' Lewis, who moved from Chicago to start Spellcraft, marveled to DailyMail.com, as he stepped out into the California sun with his hair in a ponytail and computer stuffed in a backpack.

'A lot of us are working in tech, are super young and want to live as cheaply as possible.'

Stallwell, 31, and Lennox met a decade ago while working for the California State Auditor's Office. They say they started the business in 2021 based on their own prior experiences with 'housing insecurity.'

Stallwell, for his part, said he couldn't find affordable housing when he was a college upperclassman in Stanford, so moved into a 'hack house' filled with bunk beds where he lived rent free by working on the property's website.

Lennox told DailyMail.com that she nearly went homeless before she landed the state job, and then became a landlord for a hack house in Sacramento.

'I remember crying in my car just like wishing something like this existed,' she said, providing an emotional plug for her business.

Resident Farhan Gilani, who moved to the housing complex from New York City just last week, is seen working from the communal living room

With the medium rent at staggering $3,000 a month, tech entrepreneurs have swapped up many of the units, as they seek their own piece of the AI gold rush in the Silicon Valley

The pods, likened to coffins in some of the media coverage, look more like modern bunk beds, equipped with their own lights, outlets, and black out curtains, with dividers separating each unit to provide some privacy

The new spot, which opened in June in Mint Plaza, has already filled 28 of its 30 beds, with plans to be fully operational by October

'I was sobbing my eyes out. I didn't even care how awful the house was. I just needed a roof over my head. I would just want a bunk bed and a toilet.'

They opened the first pod house in Bakersfield in 2021. The new spot, which opened in June in Mint Plaza, has already filled 28 of its 30 beds, with plans to be fully operational by October. Their combined occupancy across their four properties now stands at 50.

And the working couple have made a point of living in each facility. In San Francisco, they're shacked up in a separate bedroom that previously served as a master suite for a bank executive.

They said they love it so much that they even hang out in their pods when they're awake.

A sign indicates a leaking sink at the Brownstone Shared Housing complex

Stallwell, who has the bottom bunk, said he curls up on his mattress to conduct video calls with prospective tenants, screening them personally.

'We screen people for their personality,' he explained. 'One of the things we look for in the interview is - Do you have a reason to be here? People are here for a reason, whether it's work or school. It turns out that here's been a lot of people in AI who have gravitated toward our house.'

Lennox told DailyMail.com that she spends hours just relaxing in her pod.

'For me it has a calming effect,' she said as she climbed inside.

'So whenever I feel stressed or anxious, I like to go inside and then just put on my headphones so I can listen to some music.

'Of course, it has a light so you can dim the lights and just chill out,' she continued. 'You can retrofit it any way you want because we have the hanger bars and mirror and everything. So I like to do my skincare routine in here.'

They sometimes crawl into each others pods – they say to watch movies on their laptops. But one thing they insist they don't do is bed together.

They think that would send a bad message to their housemates who sleep just outside their room and are discouraged from having overnight guests.

'I sleep in my own bed, so it's not like weird for anyone else,' Lennox said, sitting with her legs dangling from her mattress.

Palo Alto: The startup has similar properties in other parts of the Bay Area, including a 14-pod complex in Palo Alto that go for $900 a month

Bakersfield: Lennox and Stallwell opened the first pod house in Bakersfield in 2021. Pods at this location rent for $500 a month

'We definitely follow our own rules,' her fiancé echoed from below.

As with many of the residents, the job doesn't give them much time for their personal lives.

'We're engaged, but we actually put it (our wedding) off every year because we're always working on something,' Stallwell said.

'Our priority is making sure we're solving this problem and then our personal lives definitely come second.'

Their housemates, located outside their door, similarly don't seem to mind sharing a double-stacked row of pods with 28 people. Many barely sleep as they pursue their own AI tickets out of here.

'I'm focused on work,' said Farhan Gilani, 33, stretched out on a velour love seat, typing away on his MacBook as he reached out to investors for his AI streaming marketplace.

'Everyone's working on their startup and collaborating with each other,' said Gilani, who moved here from New York City just last week. 'There's quite a lot of creative, entrepreneurial energy here right now. It captures the Silicon Valley moment well.'

The residents couldn't help but recognize their own sweet deal, especially when they look outside to see the dozens of homeless people sleeping on the plaza and surrounding streets, many strung out on drugs or mentally ill.

Residents of the pod home tell DailyMail.com say that they feel for those folks, even if they aren't about to invite them inside - even if their rent was taken care of.

'They'd probably come in here and destroy the f*ing place and smoke crack,' Lewis told DailyMail.com.

Stallwell said tenants don't have to worry about that.

'That's not necessarily our goal with what we're offering here,' he said. 'Because people who are chronically homeless have needs that go beyond housing. Putting them with other people without the infrastructure in place, that's not our product.'

But doing their part to cure homelessness is still their ambition.

'Certainly our beds themselves can be useful to people doing that work,' he said of the pods, which sell on their website for $2,500 a piece.