image image

United States

San Francisco homeowners want city to give back their street after selling it to a Chinese investor

Wealthy residents lost the road for a second time after failing to pay taxes and are using powerful political connections to try to reverse the sale

PUBLISHED : Tuesday, 28 November, 2017, 6:10pm
UPDATED : Tuesday, 28 November, 2017, 9:43pm

After the wealthy residents did not pay property taxes for years, an investor scooped up one of the swankiest private streets in San Francisco. But now the well-connected homeowners want city leaders to reverse the sale.

By taking up the issue, officials have sparked criticism that the city is not as fair and equitable as it claims, but a playground for the rich who do not have to play by the same rules as everyone else. San Francisco has some of the most exorbitant property prices in the country and has become increasingly unaffordable for many people.

But those who live on Presidio Terrace said the city should never have sold their street without properly notifying them. They claim the annual tax bills of US$14 and auction notice were being sent to the wrong address.

City Treasurer Jose Cisneros said the association representing some three dozen homeowners was responsible for updating its address and should have paid its taxes on time.

He has backed new owner Tina Lam, a Silicon Valley software manager from Hong Kong who bought the street, pavements and common areas for US$90,000 in 2015.

The oval-shaped street in upscale Presidio Heights is lined with leafy palms, lush landscaping and multimillion-dollar mansions. Previous residents of the gated neighbourhood include Congresswoman Nancy Pelosi and Senator Dianne Feinstein, who wrote a letter accusing the city of bureaucratic bungling.

The San Francisco Board of Supervisors is expected to hear the case and decide whether to rescind the sale or leave it alone. The issue is unprecedented in San Francisco, although supervisors in other California counties have reversed sales as allowed under state law.

Homeowners learned about the sale earlier this year and petitioned the board for a hearing.

The issue is giving at least one supervisor voting pains. Aaron Peskin said he would side with the new owner in a “hot second” if he could because of the way the association has behaved.

However, he said that the homeowners make a reasonable argument that the government should not take property without better notice. Still, he was annoyed by Feinstein’s letter.

“That was another damning piece of evidence to vote with the buyer, who bought it fair and square,” Peskin said.

It marks the second time the association has defaulted, but it won back the street in 1985 after paying up.

Amanda Fried, a spokeswoman for the treasurer, said the group has not paid taxes since 2000, which is as far back as records go. In 2015, the office posted for auction a lot that owed less than US$1,000 in back taxes, penalties and other charges.

Fried said the office sent certified notices to nearly 1,500 addresses that properties were being auctioned off and more than half were returned as undeliverable, including for Presidio Terrace.

Homeowners say at that point, the treasurer’s office was required to do more to notify them that their property was for sale.

“It’s a constitutional issue,” said Matt Dorsey, spokesman for the homeowners association. “If the process of that sale was constitutionally impermissible, it settles the question. It should not have been sold.”

Michael Kirkpatrick, a lawyer with US consumer-rights organisation Public Citizen who won a similar case before the US Supreme Court in 2006, supported the homeowners. The court held that when a notice of a sale is returned undelivered, the government needs to strive further to alert property owners before selling.

“The government has to do more if there are reasonable alternative efforts available, and here, I think there are,” he said.

Shepard Kopp, lawyer for the new owner, argued in a scathing court brief that San Francisco should not give politically connected homeowners an out for failing to do what is expected of every other property owner in the city: pay their taxes on time.

He said the Supreme Court case might not apply because it involved a house and not vacant land.

“When people learn that this isn’t the first time the homeowners association did not pay taxes and lost title to the street, there’s not a whole lot of sympathy for them after that,” Kopp said.