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San Francisco: Wealthy Residents Sue City, Buyers After Their Tax-Delinquent Street Sold

San Francisco: Wealthy Residents Sue City, Buyers After Their Tax-Delinquent Street Sold

Exclusive, gated street on which Pelosi and Feinstein once lived

https://sf.curbed.com/2017/8/7/16107160/presidio-terrace-sf-street-auction-lawsuit

The wealthy residents of San Francisco’s exclusive, gated Presidio Terrace haven’t paid a $14/year tax bill for three decades. This led the city to auction off the tony street that boasts among its former residents House minority leader Nancy Pelosi (D-CA) and Senator Diane Feinstein (D-CA).  The auction was an attempt to recoup its delinquent tax losses valued at less than a thousands dollars (including penalties, interest, etc.).

Officials hit the jackpot when a young couple purchased the street at auction two years ago for $90,100. The new owners are reportedly toying with the idea of charging residents and even outsiders (gasp!) to pay to park on their shiny new street.

Now the current residents of the street are outraged and have filed formal complaints and even a lawsuit in an attempt to rescind the sale.

The San Francisco Chronicle reports:

Thanks to a little-noticed auction sale, a South Bay couple are the proud owners of one of the most exclusive streets in San Francisco — and they’re looking for ways to make their purchase pay.

Tina Lam and Michael Cheng snatched up Presidio Terrace — the block-long, private oval street lined by 35 megamillion-dollar mansions — for $90,000 and change in a city-run auction stemming from an unpaid tax bill. They outlasted several other bidders.

Now they’re looking to cash in — maybe by charging the residents of those mansions to park on their own private street.

Those residents value their privacy — and their exclusivity. Past homeowners have included Sen. Dianne Feinstein and her financier husband, Richard Blum; House Democratic leader Nancy Pelosi; and the late Mayor Joseph Alioto. A guard is stationed round the clock at the stone-gate entrance to the street to keep the curious away.

So imagine the residents’ surprise when San Jose residents Cheng and Lam wound up with the street, its sidewalks and every other bit of “common ground” in the private development that has been managed by the homeowners since at least 1905. That includes a string of well-coiffed garden islands, palm trees and other greenery that enhance the gated and guarded community at the end of Washington Street, just off Arguello Boulevard and down the hill from the Presidio.

“We just got lucky,”said Cheng, a real estate investor.

. . . . The couple’s purchase appears to be the culmination of a comedy of errors involving a $14-a-year property tax bill that the homeowners association failed to pay for three decades. It’s something that the owners of all 181 private streets in San Francisco are obliged to do.

Two years ago, the city’s tax office put the property up for sale in an online auction, seeking to recover $994 in unpaid back taxes, penalties and interest. Cheng and Lam, trawling for real estate opportunities in the city, pounced on the offer — snatching up the parcel with a $90,100 bid, sight unseen.

The homeowners apparently only found out about the sale earlier this year, and they are moving to retake their street.

The San Francisco Chronicle continues:

The homeowners, however, are crying foul and want the Board of Supervisors to negate the sale.

. . . .  They didn’t learn that their street and sidewalks had been sold until they were contacted May 30 by a title search company working on behalf of Cheng and Lam, said Emblidge. The title search outfit wanted to know if the residents had any interest in buying back the property from the couple, the lawyer said.

“I was shocked to learn this could happen, and am deeply troubled that anyone would choose to take advantage of the situation and buy our street and sidewalks,” said one homeowner, who asked not to be named because of pending litigation.

Last month, the homeowners petitioned the Board of Supervisors for a hearing to rescind the tax sale. The board has scheduled a hearing for October.

In addition, the homeowners association has sued the couple and the city, seeking to block Cheng and Lam from selling the street to anyone while the city appeal is pending — a move residents fear could complicate their efforts to reclaim the land.

The residents say the city had an obligation to post a notice in Presidio Terrace notifying neighbors of the pending auction back in 2015 — something that “would have been simple and inexpensive for the city to accomplish.”

Treasurer-Tax Collector Jose Cisneros’ office says the city did what the law requires.

“Ninety-nine percent of property owners in San Francisco know what they need to do, and they pay their taxes on time — and they keep their mailing address up to date,” said spokeswoman Amanda Fried.

“There is nothing that our office can do” about the sale now, she added.

Fried said that as far as she knows, the Board of Supervisors “has never done a hearing of rescission” — and that because it’s been more than two years since Cheng and Lam bought the property, it could be tough to overturn the sale now.

Curbed San Fransisco has more details on the suit filed.

In the complaint, homeowners note that the association has owned and maintained the O-shaped avenue since 1905. So why’d they drop the ball paying the tax man? According to the suit:

“The Association has not paid those taxes because the City has been sending the property tax bills to the Association at the following address: 47 Kearny Street. […] Which is not the address of the association or any member.

“After research, the Association is informed and believes that this address was associated with an accountant who last performed work for the Association in the 1980s. […No] member of the Association was aware that property taxes has not been paid.”

Neighbors hope the court will rescind the 2015 sale and return ownership to them. Meanwhile, a spokesperson for the city’s Treasurer-Tax Collector told the Chronicle’s Matier and Ross that the office did everything required under the law and that everyone else in the city manages to keep their property taxes straight.

Curbed San Francisco continues, reporting on the couple’s stated plans for the street:

In the meantime, the street’s new owners are considering instituting a parking fee in the neighborhood. But if neighborhood residents aren’t keen on paying a parking fee, that’s no problem for the street’s new owners.

Matier and Ross note: “[I]f the Presidio Terrace residents aren’t interested in paying for parking privileges, perhaps some of their neighbors outside the gates—in a city where parking is at a premium—would be.”

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Comments

Funny how the first thought these rich people have is to sue the new street owners. My first thought would be to get together with my neighbors and buy it back from the owners.

    Olinser in reply to rdmdawg. | August 8, 2017 at 3:31 pm

    Seriously. They only bought it for $90,100

    180 residents. Kick in $750 each and offer to buy it straight for $135,000. Instant $45,000 profit for the couple involved, they’d probably jump on it to avoid the legal problems.

    But no. That would be the sensible solution. With corrupt pieces of shit like Pelosi and Feinstein on their street I’m sure they’re 100% confident that they can get it before a friendly judge and win without having to actually pay anything.

      MadisonS in reply to Olinser. | August 8, 2017 at 8:17 pm

      This case is worth far more to Cheng and Lam than $135k (net $45k) who did not do anything illegal or unethical. They simply took advantage of public notice of tax liens which anyone could have done.

      When I first moved to the SF Bay Area nearly 40 years ago this was a public street just like any other public street, but with prestigious homes. I lived just a few blocks away and would take my morning run through Pacific Heights and included this street on my route. I would drive my out of town guest around this and other city streets to allow them to gawk at the homes.

      At one time the homes on this street had a racial covenant that forbade selling any home to a Negro. St. Francis Wood, another SF neighborhood with homes of equally impressive stature, had a similar covenant After the Giants baseball team moved from NY to SF in the mid 1950s, Willie Mays, who attained superstar status with a salary to match, was not able to purchase a home in St. Francis Wood. The Supreme Court has since ruled that racial covenants are unconstitutional.

      IMHO for the facts of this case to develop as they have, at the time the residents or any existing HOA voted to turn the street into a private street, the residents or HOA would would have needed to partition the existing common areas into a new taxable parcel.

      In the early 1980s, parking lots were being converted into parking stall “condominiums” complete with a HOA, dues to maintain the structure and an assigned stall. Purchase price for single stall was #50-60k. Given the change in SF real estate prices since 1980 and the “more cars than residents” on any given day, it is not unfathomable that those stalls could now fetch ten times that amount.

      Cheng and Lam may have paid $90k for the common areas, but the value of the parking spaces alone far exceeds their purchase price of the parcel. For them the cost of litigation will be initially minimal. It will first be the homeowners that will spend the big bucks for legal research and attorneys, and that is before any complaint seeking judicial rescission of the sale is filed. Even if the homeowners prevail at trial, I doubt the judge would award attorney fees to the homeowners. This case may be bizarre, but it does not appear to be exceptional within the standards under which fess are awarded to the prevailing party. To reach an early settlement at this phase, the Homeowners would need to make an offer of settlement far exceeding $135k.

        Olinser in reply to MadisonS. | August 8, 2017 at 8:33 pm

        Sure, they wouldn’t necessarily accept the offer, but if they had made the offer BEFORE running to a lawsuit they might have at least gotten public opinion on their side.

        ‘We tried to be reasonable but they didn’t want the deal so we sued’ sounds a heck of a lot better than, ‘We were so incompetent we couldn’t pay less than $1k in taxes on the street so we’re filing a lawsuit to cover our stupidity’.

    YellowSnake in reply to rdmdawg. | August 8, 2017 at 4:00 pm

    Funny, isn’t that what Trump does? According to USA Today, a notoriously prejudiced publication, between 1986-2016 Trump and his businesses were involved in 3500 legal cases.

    Trump’s companies have been involved in more than 100 tax disputes, and on “at least three dozen” occasions the New York State Department of Taxation and Finance has obtained tax liens against Trump properties for nonpayment of taxes.

    Ha, ha, ha, ha – Isn’t it funny

      It’s so great that DJT is your president. To think we almost got the hildabeast instead.
      Best. Election. Evah!

      Too bad you were too stupid to profit from it.

        YellowSnake in reply to SDN. | August 10, 2017 at 1:01 pm

        Just curious. Do you win a lot of arguments with insults? Before you retort that you don’t have to because you are winning the elections, you might want to consider that elections are cyclical and Trump is fighting a reactionary rear-guard action. Just 8 years ago, Democrats swept the field. If Trump continues as he is, he will be the Jimmy Carter of the right.

        Meanwhile, you did a very poor job of deflecting.

        The actual situation in question is not without irony. But in the end, it will be settled for a pittance. Only the lawyers will profit.

        Please don’t bother to respond with another attempt at insult. Being insulted by you is an honor, but I am unsubscribing from this thread. So I won’t see it.

        I can’t stop you from adding your comment to another thread. But I will only respond to something germane.

the HOA & its officers F’d this up… and now, typical lieberals, it’s someone else’s fault.

suck it up, snowflakes.

meahwhile, could someone pass me the popcorn?

The new owners should sell rights to a company to rename the street.
“Monster Energy Drink Circle” has a nice ring to it!

I am so glad I got out of that hellhole.

impeach obama | August 8, 2017 at 3:08 pm

just love how the gated LibRules cry when they screw up and blame EVERYONE BUT THEMSELVES.
SANCTUARY CITY THE NEW OWNERS SHOULS MAKE THIS STREET A SQUAT FOR THE ILLEGALS.

😉

    YellowSnake in reply to impeach obama. | August 8, 2017 at 4:25 pm

    Trump must be a liberal. He hasn’t taken blame for anything that has happened in his administration. The AHCA – not his fault. The Special Prosecutor is Sessions fault. Losing the popular vote – illegal aliens.

    By deduction, Trump must be a liberal – especially and he and his companies have had at 3 dozen tax liens on his properties.

    When has Trump ever taken blame for anything? That should be easy to answer. Please find me 1 unambiguous statement where Trump admits he was wrong about something and isn’t actually criticizing someone or something else.

      Milhouse in reply to YellowSnake. | August 8, 2017 at 5:59 pm

      Yes, Trump is a liberal. Does this surprise anyone? He was an open Democrat until about five minutes before he decided to run as a Republican.

        YellowSnake in reply to Milhouse. | August 8, 2017 at 6:09 pm

        So r u a never-trumper?

          Milhouse in reply to YellowSnake. | August 8, 2017 at 6:13 pm

          Did you come down in the last rain?

          healthguyfsu in reply to YellowSnake. | August 8, 2017 at 6:59 pm

          Yeah, he’s still around. Gets embarrassed on the regular, comes back for more, and seems fairly ignorant of the proverbial asskicking.

          YellowSnake in reply to YellowSnake. | August 8, 2017 at 7:51 pm

          Hey, Milhouse I didn’t think you were a never-trumper. You would need to have to have an original thought first. I thought you had one for the 1st time.

          Hey healthguyfsu, “ignorant of the proverbial asskicking” I guess you ain’t actually given any or you would know they don’t happen online. Maybe your speed is to sit around thinking you a big, tough he-man who can give a thumping with your fingers. I guess you are the snowflake.

          Milhouse in reply to YellowSnake. | August 8, 2017 at 11:15 pm

          Wow, the stoopid is strong in this one.

          YellowSnake in reply to YellowSnake. | August 9, 2017 at 12:19 am

          @Milhouse You are unoriginal and juvenile. Being unoriginal is worse – much worse.

          Milwaukee in reply to YellowSnake. | August 9, 2017 at 12:46 am

          Hey Milhouse: You that thing about ‘this is how you get more Trump’? Yellowsnake is working on me, a never-Milhouse. After reading posts by YellowSnake, while I disagree with you on many items, I am becoming more of a fan of yours, in disagreement. He is making you look even more reasonable and sensible, and consistent than you already are.

          Dennis Praeger says he values clarity over agreement. Mil- you speak with clarity.

Perhaps a toll booth is in order…

Paul In Sweden | August 8, 2017 at 3:24 pm

The looped street looks like a great place for the new owners to rent out to various ethnic societies and clubs for street festivals. So many possibilities for the real estate investing couple that might wish to purchase prime properties at a discount on their own street.

I hope the new owners put up lots of Trump signs.

“…’Ninety-nine percent of property owners in San Francisco know what they need to do, and they pay their taxes on time — and they keep their mailing address up to date,’ said spokeswoman Amanda Fried.

‘There is nothing that our office can do’ about the sale now, she added…”

All kidding aside, how can an entire street be tax delinquent? Someone on that street must have paid their taxes. It’s practically impossible that no one on the entire street paid their taxes.

“…Officials hit the jackpot when a young couple purchased the street at auction two years ago for $90,100. The new owners are reportedly toying with the idea of charging residents and even outsiders (gasp!) to pay to park on their shiny new street…”

They now get to pay to park on their own street, too, along with the deadbeats?

Don’t get me wrong. This sounds exactly like an idea that the libs would dream up, and if you live in SF you deserve exactly what you’re going to get.

    Milhouse in reply to Arminius. | August 8, 2017 at 6:06 pm

    All kidding aside, how can an entire street be tax delinquent? Someone on that street must have paid their taxes. It’s practically impossible that no one on the entire street paid their taxes.

    The residents all paid their taxes, which is why none of them have lost their houses. But nobody paid the taxes for the street, because the HOA hadn’t bothered to update the address the city had for it, which was its responsibility. “Ninety-nine percent of property owners […] keep their mailing address up to date.”

    They now get to pay to park on their own street, too, along with the deadbeats?

    Sure, why not? It’s not their street any more. Owning a house on a street gives you a right of way through it, but it doesn’t give you the right to park in it.

    Don’t get me wrong. This sounds exactly like an idea that the libs would dream up,

    How else should it work? How do you think it works anywhere else?

      Arminius in reply to Milhouse. | August 8, 2017 at 8:33 pm

      I belong to a HOA in Texas. It’s not possible for me to lose my street. The way it works here is that if the HOA doesn’t pay its taxes they will lose the property that it owns. The playground, the club house, the swimming pool. But they don’t own the streets. The developer put in the streets when it built the houses, and then turned the streets over to the city.

      My property taxes pay for, among other things, street maintenance. I suppose if the city were to go bankrupt I might have to pay to park on my street. But if the HOA were to go t**s up I’m still not going to have to pay to park on my street. The streets will remain public property, and my taxes will still maintain them.

        Milhouse in reply to Arminius. | August 8, 2017 at 11:19 pm

        That’s why it’s relevant that this is a private street. It belonged to the HOA, which should have been paying the $14 a year tax on it. And would have, had it got the bill. Which it would have, had it kept its address current with the city. If it were a public street then of course no taxes would be owed for it in the first place. And they couldn’t put up a gate or prevent the public from parking there.

          Milwaukee in reply to Milhouse. | August 9, 2017 at 12:32 am

          I am a renter. I expect to receive a statement about 10 days before the end of the month for my rent and water and some utilities. If it doesn’t come in the mail, I ask about it, as I owe the rent. Once they had a computer glitch, and didn’t send the statements out. I still owed the rent.

          So the HOA wasn’t getting the tax bill. Did they all of a sudden think they didn’t owe taxes any more? Why didn’t somebody say “hey, where is this year’s tax bill?” Gross negligence on somebody’s part. Didn’t some homeowner ask, or have their accountant ask, why they weren’t paying street tax?

          Set up Port-a-potties, and throw block parties. Include kegs, with unlimited drinks for a fee. Didn’t we just have ‘take back the night’ night, or something? Who isn’t up for a block party? Free hotdogs and a Beatles impersonation band would be cool.

If the auction cleared more than the tax arrears, the city is supposed to give the remainder to the ex-owners of the delinquent property.

So who got the money?

And the only way they’re going to get $90k for anything at auction is if several buyers were very interested. Which makes it all even weirder.

    Milhouse in reply to tom swift. | August 8, 2017 at 6:12 pm

    Who wouldn’t be interested? If I were the new owners I’d follow Paul in Sweden’s suggestion above. Seems like they could make a killing.

      YellowSnake in reply to Milhouse. | August 8, 2017 at 6:35 pm

      The only ones who will be making a killing are the lawyers. The investors may be able to make a reasonable profit or the sale may be voided, but the courts won’t stand for extortion or harassment.

      I would think the investors might also find that having a whole bunch of rich people angry with you is not a good business plan.

        Milhouse in reply to YellowSnake. | August 8, 2017 at 11:20 pm

        What extortion or harassment, your honor? We’re just having a street fair. People do that on ordinary streets, you know. So why not here?

          YellowSnake in reply to Milhouse. | August 9, 2017 at 12:17 am

          Best you stick to writing comments in your own little insular world. Ever heard “Doesn’t pass the laugh test”? You can try that argument on a judge, but then you better duck as the TRO comes flying back.

          Besides, it is just your wet dream that they want to f**k with the owners. Maybe, being from the Bay Area, they are liberals as you suppose the owners on the block are. Maybe they just want to make a buck. After all, they employed a “title search outfit wanting to know if the residents had any interest in buying back the property from the couple”. Now you can pull the covers back over your head so that mommy won’t know what you are doing – at least you think she doesn’t know.

          Milhouse in reply to Milhouse. | August 9, 2017 at 9:42 am

          The “laugh test” is not evidence. The owner of a street is entitled to use it as they would any other street they owned, in some other part of the city. Nobody would raise an eyebrow if they held weekly street fairs on their street in some other neighborhood, so there is no legal reason why they shouldn’t do so here, and no judge could legally find it to be harassment or extortion.

          Basically the owners would simply be withdrawing from the residents an amenity to which they are not entitled, and which artificially raises their property values. Withdrawing it would of course lower those values, but that is none of the law’s business.

          Where did you get this bizarre idea that politics would enter into it? Their purpose is profit, and Paul in Sweden’s idea seems to me the best way to make that profit. So if I were them that’s what I’d do. Lower the property values, buy up as many of them as I could, and then raise them again. Profit.

          olhardhead in reply to Milhouse. | August 9, 2017 at 10:09 am

          maybe the new owners could have the local BLM hold a “rich whitie” march on the street wid some dinn do nuffin’s…jus sayin..

* GRIN *

What about a toll?

They should have their lawyer get the lawsuit in front of Judge Orrick. He’ll do whatever a group of DemocRats want him to do.

Just maybe the homeowners will have to sue the city, not the new street owners.

PersonFromPorlock | August 9, 2017 at 10:14 am

The question nobody’s asked, so far: what’s worth $14 a year that’s only worth $14 a year? Either the homeowners were getting ripped off, or the public was.

    amatuerwrangler in reply to PersonFromPorlock. | August 9, 2017 at 5:01 pm

    The Google maps show property boundaries (disclaimer here for using data I cannot vouch for) and using these and the “measure distance” feature and some geometry voodoo I get a rough square footage in excess of 85000 sq ft… That’s larger than a “regular” lot in a subdivision which is about 50 x 100. I would expect that much real estate in SF would be taxed at more than $14/year. Maybe some former owners were able to get a sweetheart deal on the valuation back then.

amatuerwrangler | August 9, 2017 at 4:21 pm

There are some missing pieces here.
1. Does the HOA have a name? What does it say, or its representative/agent for service? Surely the City took the legal steps to secure the right to sell for delinquent taxes.
2. In all those years the tax bills went to the wrong address and never was it “returned to sender”? Just one such return should have moved someone to double check things, except that we all know how unusual it is for bureaucrats to employ initiative. “We did everything the law requires” was the pat answer.
3. Google search the name of the HOA or the CPA at that address and call them… case closed.

I got a new PO Box closer to home about 6 months ago. I get a bill from the electric company every month for someone I do not know and who has never been a holder of that box, according to the postmaster. I turn it back and the PM returns to sender. Still it comes. I would think that by now the utility would have looked at where the power is delivered and sent the bill there, but no. Don’t look for initiative at the tax collector’s office either.

    Milhouse in reply to amatuerwrangler. | August 9, 2017 at 8:04 pm

    The HOA is called Presidio Homeowners Association.

    Scott Emblidge, the association’s attorney, provided a statement from the organization’s board. It calls Lam and Cheng “savvy real estate professionals” who waited for over two years to approach the homeowners’ group, “presumably so the property sale would be more difficult to rescind.” Cheng and Lam “would like to exploit a bureaucratic oversight to their advantage,” the statement says. “This isn’t about choosing not to pay property taxes; residents of Presidio Terrace pay their individual property taxes each year. Tax bills for the common area were sent to the wrong address and no notice of delinquency (for) the sale was made to any residents of Presidio Terrace. This is purely an oversight that needs to be corrected and we are working with the City to correct this unfortunate situation.”

I did an IT contract for a major CA city tax office. They were going to go to electronic tax notices, and allow anyone who could access the account to change the e-mail address without sending a notice to the old one. Ex-roommates, ex-spouses, etc. will just lurve that feature.

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