Investors scooped up one of the toniest private streets in San Francisco after wealthy residents didn’t pay property taxes for years, a sale homeowners want city leaders to reverse.
By taking up the issue Tuesday, officials sparked criticism that the city is not as fair and equitable as it claims – but a playground for the rich who don’t 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.
Those who live on Presidio Terrace, once home to U.S. Rep. Nancy Pelosi and U.S. Sen. Dianne Feinstein, paid an average of $5.1 million for the sought-after properties.
But as of April 2015, the median value of the homes declined and the private street went up for a city auction after homeowners failed to pay the $14 county property tax for a period of over 30 years.
Those who live on Presidio Terrace say the city should never have sold their street without properly notifying them.
They claim the $14 annual tax bill and auction notice had been sent to an outdated address.
Tina Lam and Michael Cheng (both pictured) bought SF’s Presidio Terrace for just $90,100 in 2015 after it was put up for city auction due to $991 in unpaid county taxes
The Presidio Terrace neighborhood in San Francisco is seen above in this snap taken earlier in the fall
The investors, originally from Hong Kong, came across the deal in April 2015 when looking for property bargains in San Francisco, where the median home value is now $1.2 million, according to Zillow
City Treasurer Jose Cisneros says the association representing some three dozen homeowners was responsible for updating its address and should have paid its taxes on time.
He backs investors, Tina Lam and Michael Cheng, who bought the street, sidewalks and common areas for a $90,000 deal in 2015.
Previous residents of the gated neighborhood including Pelosi and Feinstein, wrote a letter that accused the city of bureaucratic bungling.
The San Francisco Board of Supervisors is scheduled 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 government should not take property without better notice.
House minority leader Nancy Pelosi (seen with husband Paul in February) is one notable former resident of the street
Homes on the street cost an average of $5.1m. The homeowner’s association didn’t pay the taxes because the bills had been sent to an accountant they hadn’t used since the 1980s
The cul-de-sac’s asphalt, sidewalk and manicured lawns now belong to the couple. Residents only found out this May when they were asked if they wanted to buy it back
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 $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.
Presidio Terrace, the most prestigious street in the city, was for sale because of a mere $994 in back-taxes, fines and interest
The map above shows where the neighborhood is located in San Francisco
Lam and Cheng are now planning to charge for parking on the road, which is upsetting residents. The homeowners are now trying to get control of the street back
‘If the process of that sale was constitutionally impermissible, it settles the question. It should not have been sold.’
Michael Kirkpatrick, an attorney with national consumer-rights organization Public Citizen who won a similar case before the U.S. 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, attorney 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 didn’t pay taxes and lost title to the street, there’s not a whole lot of sympathy for them after that,’ Kopp said.
They discovered that the private street had been put up for a city auction because its property homeowners’ association hadn’t paid the annual $14 county property tax in 30 years