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.”