The affordable housing situation in San Francisco is terrible, horrible, no good, very bad and, for now, unceasing. It’s tragic, really, considering what a beautiful town it is.
It’s only natural then that a case of real estate comeuppance playing out in the most exclusive neighborhood in the most expensive-to-live-in city in the United States is garnering national attention. It’s one of those delicious, irony-wrapped morsels that priced-out and struggling-to-survive San Francisco residents crave. And since news broke of what has transpired on tony Presidio Terrace, it’s been a schadenfreude feeding frenzy.
Long story short, the 35 homeowners residing in San Francisco's only gated neighborhood recently discovered that the manse-lined elliptical street — also named Presidio Terrace — running through the enclave had been sold in 2015. At auction. By the city. To outsiders. Outsiders who, prior to 1949, wouldn’t have even been permitted to live on San Francisco’s most affluent cul-de-sac.
And it’s just not the privately owned street itself that was sold sight unseen at auction to the highest bidder. All of the "common areas" within the boundaries of the neighborhood — sidewalks, "well-coiffed garden islands, palm trees and other greenery," per the San Francisco Chronicle — were sold as well to Tina Lam and Michael Chang, the newly minted landlords of Presidio Terrace.
Containing a single oval-shaped street, the affluent Presidio Terrace enclave is located opposite the Presidio Golf Course. Oddly enough, one of its closest neighbors is the charity Little Sisters of the Poor. (Map screenshot: Google Maps)
When a street costs far less than the homes lining it
Many have been surprised to learn that a city street can even be owned and sold, the extreme wealth of its residents aside.
They sure can.
In this instance, the street was owned by the Presidio Homeowners Association, an entity that had ruled over and tended to the neighborhood’s lushly manicured common spaces since 1905, the same year that Presidio Terrace was established by real estate development firm Baldwin & Howell as a master-planned community for San Francisco’s most well-heeled white denizens. (Presidio Terrace was forced to integrate following the landmark Supreme Court Case, Shelley vs. Kraemer).
Like all of San Francisco’s privately owned streets — there are 181 of them in all — the Presidio Homeowners Association is required to pay property taxes on the street and sidewalks. The problem is, the association didn’t pay the annual tax — a mere $14 annually — for nearly 30 years. The unpaid tax bills, with a small fortune in fees and penalties tacked on, began piling up at which point the property went into default and the city’s tax office put the street up for auction online, unbeknownst to the people living on it.
In April 2015, San Jose residents Cheng and Lam outbid 73 other interested parties and quietly acquired Presidio Terrace for $90,000. That’s peanuts compared to what homes, an assortment of historic mega-manses in a mishmash of architectural styles, within the neighborhood go for. (In 2016, the 1909 Colonial Revival at 26 Presidio Terrace hit the market for $16.9 million.)
“Until a 1948 U.S. Supreme Court ruling banning the enforcement of racial covenants, homes in Presidio Terrace... https://t.co/XZkyA2iqKx— Victor Panlilio (@victorpanlilio) August 9, 2017
It wasn’t until this May that homeowners even became aware that their street had been put up for auction and subsequently purchased when an investment firm representing Cheng and Lam approached the association and asked if it was perhaps interested in buying the street back. Surprise, surprise.
The shocked — likely a massive understatement here — residents of Presidio Terrace blame thirty years of misdirected mail for the epic tax bill mishap. Apparently, property tax bills were continually being sent to an accountant that hadn’t worked for the association since the 1980s. And, apparently, the association just went ahead and assumed that someone was paying the bills so everything was all good. Nope.
Since learning in May that the private street they live now belongs to a non-homeowner, Presidio Terrace homeowners have sued the city as well as Cheng and Lam. According to the Chronicle, the association has also filed a petition with the Board of Supervisors to rescind the 2015 sale. The hearing is scheduled for October.
"I’m very optimistic that the city officials want to see a reasonable end to this, and a reasonable end is to rescind the sale and put things back the way they were,” Scott Emblidge, an attorney representing the association, tells the Guardian. “The same thing that happened here could happen to anybody, poor or rich, that happens to have a parcel like this. The issue isn’t really a rich versus poor situation. It’s what should have to happen before someone can sell my property.”
Goodbye exclusivity, hello public parking spots?
In addition to the lawsuits, there’s been a predicable amount of finger pointing directed at the city from homeowners, who believe it was the city’s responsibility to alert them to the pending auction two years ago. This “would have been simple and inexpensive for the city to accomplish,” one “deeply troubled” Presidio Terrace homeowner tells the Chronicle.
The city, however, maintains that it did nothing wrong and should not be held responsible for failing to give Presidio Terrace’s ultra-wealthy homeowners — past residents include Sen. Dianne Feinstein, House Minority Leader Nancy Pelosi and former mayor Joseph Alioto — a proper heads-up that their street was up for auction.
“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,” a spokeswoman for the office of City and County Treasurer Jose Cisneros explains. “There is nothing that our office can do.”
As for Cheng and Lam, they insist that they have no immediate plans to sell back the street despite what was said back in May when Presidio Terrace residents learned of the news. In fact, they’re mulling over the possibility of charging residents to use the 120 parking spaces that line the cul-de-sac. “We could charge a reasonable rent on it,” Cheng, a Taiwan native, tells the Chronicle.
Residents of Presidio Terrace are fuming. City sold street to a guy who is thinking he might install parking meters. pic.twitter.com/MAnMnkdELE— Mark Matthews (@MarkMatthewsNBC) August 7, 2017
And if residents don’t feel like coughing up cash to pay for street parking, there’s always the possibility that Cheng and Lam could open up the coveted parking spots for area residents living outside the gates.( As the Guardian notes, parking spots in this highly desirable part of the city go for about $350 month on Craigslist.) Obviously, this is nightmare material for a mini-neighborhood that has long excelled at keeping people out through racial covenants, guarded gates and exorbitant prices.
“I’m a first-generation immigrant, and the first time I came to San Francisco I fell in love with the city,” Hong Kong-born Lam tells the Chronicle. “I really just wanted to own something in San Francisco because of my affinity for the city.”
It would appear that Lam and Cheng are aware of the irony that they — a pair of first-generation immigrants — are the owners of the only street in an enclave that was founded with a racial covenant. In fact, Presidio Terrace used its whites-only rule as a major selling point to prospective buyers: “There is only one spot in San Francisco where only Caucasians are permitted to buy or lease real estate or where they may reside. That place is Presidio Terrace,” reads a 1906 sales brochure.
“The more we dug into this, the more interesting it got,” says Cheng.