SAN FRANCISCO — The street might as well be paved with gold, and now a couple from San Jose owns it.
Tina Lam and Michael Cheng are the proud owners of super-tony Presidio Terrace — the street itself, the parking spaces and sidewalks, the palm trees and garden islands, all of this just down the hill from the Presidio and near the city’s so-called Gold Coast. They purchased the block-long private street — everything but the 35 mansions that line it — for $90,100 two years ago in an under-the-radar auction after the Presidio Homeowners Association failed to to pay $994 in back taxes, penalties and interest.
It is “the most unique property I’ve come across, by far,” said Cheng, a real estate agent who focuses on investment properties. “I’m talking to my other investors and they’ve never seen anything like this — and they own some weird stuff.”
He and Tam, who live in San Jose’s Berryessa neighborhood, would like to build their own house on the San Francisco property, if there is space and zoning allows it, and move there: “When we saw it was zoned single-family, we started thinking about that — if it can be worked out,” Cheng said. He added, “We’re still trying to figure out what the land-use opportunities are.”
Since buying the gated, oval street in April 2015, the couple has quietly assessed the situation and lately has considered other options suggested to them, including that they should charge homeowners to park on the street which has 120 parking spaces. Their purchase was first reported Monday by the San Francisco Chronicle.
Meanwhile, the homeowners only recently learned of the sale and have sued Lam, Cheng and the city, while asking the Board of Supervisors to rescind the purchase. A hearing has been scheduled for the fall.
Presidio Terrace is an exclusive enclave. It’s the former home of U.S. Sen. Dianne Feinstein, House Democratic leader Nancy Pelosi and the late mayor of San Francisco, Joseph Alioto.
Early in 2015, Cheng and Tam stumbled upon it while scanning a jumble of parcels that were being auctioned online by the city of San Francisco’s tax office.
There were all sorts of “random, scrappy properties, including underwater properties, a very eclectic mix,” Cheng said. “In the midst of all this was just this odd property in a great location; the parcel number told you generically what it was: part of Pacific Heights, the right location, land in a good neighborhood. We took a chance.”
He and Lam bought it sight-unseen, he said, competing against 73 other bidders: “It was a pretty lively bidding. We just got lucky.”
And here’s the back story: The city’s tax office, the couple discovered, had put the property up for sale because the homeowners association hadn’t paid an annual $14 tax bill for three decades. All that time, it seems, the bill had been mailed to an accountant who stopped working for the homeowners in the 1980s.
The street — one of 181 private streets in San Francisco — has been managed by the homeowners since 1905.
Asked to comment on the situation, 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.”
Cheng objected to accusations that he and his wife — who works as an engineer in tech — have been sitting on the parcel in the hope that the mansions’ owners will buy it back for big bucks. Selling it back to the homeowners was not even a strategy they had thought of on their own, he said, though he acknowledged that others have suggested it to them.
Initially, he said, he and Lam had hoped to meet face-to-face with the homeowners to discuss the state of affairs.
“We were kind of looking forward to that,” Cheng said. “But when they filed a suit against the city and named us as their additional defendants, we were advised by our attorney not to talk to them.”