SAN FRANCISCO—The luxury condo tower rises above one of the city’s trendiest downtown neighborhoods in 58 gleaming stories, minus about 16 inches of its original height and tilting slightly northwest.

The Millennium Tower, opened in 2009 as the city’s tallest residential structure, has a new nickname: “the leaning tower of San Francisco.”

The Millennium is sinking into the ground, and has fallen at least 16 inches since completion, according to a lawsuit filed by homeowners in August, in state superior court in San Francisco, that is seeking class-action status. It is slumping unevenly, tilting as much as 6 inches due in part to a “defective foundation,” the suit says. Residents can still inhabit the building but the value of units is sinking with the building, it alleges.

Developers say the building is safe and its descent is caused by a construction and excavation project nearby.

The shimmering high rise—in the city’s South of Market, or SoMa, neighborhood—is built on landfill, and has become an emblem of overheated development in a housing-starved city prone to earthquakes.


On Thursday, current and former city officials with the Department of Building Inspection submitted to more than two hours of questioning about the matter at a city audit and oversight committee headed by San Francisco Supervisor Aaron Peskin. The developer of the building, Millennium Partners, didn’t testify Thursday.

The SoMa neighborhood has seen rapid growth over the past decade, raising concern among some city officials about whether proper building standards are in place to prevent other structures from facing the sinking tower’s fate.

“There are some profound public-policy issues that go far and beyond the building,” Mr. Peskin said in a recent interview. “We have an obligation to make sure that it is safe, and we need to understand what went wrong in this particular instance, and we need to understand what other buildings built on landfill, and clay, and sand are in a potentially similar situation.”

The hearing followed news Monday that City Attorney Dennis Herrera subpoenaed Millennium Partners as part of an investigation into whether the company adhered to state law about properly disclosing the sinking to homeowners. The company says it has complied with state law.


The building will sink another 8 to 15 inches, descending a possible total of 31 inches, according to the suit. What’s more, the “tilt at the base of the building translated into an alarming 15-inch tilt at the top of the building,” the suit says. Earthquakes could make it worse, the homeowners say.

Mr. Peskin is focused on the city’s role, and has pointed to a February 2009 letter written by a building-department official as evidence the city knew about the sinking before it issued a certificate of occupancy in August that year. In the letter, the official raised concern about “larger than expected settlements” of the building.

Mr. Peskin on Thursday also questioned the protocols in place at the buildings department regarding the approval and continued monitoring of tall buildings in the city.

Ronald Tom, an assistant director at the Department of Building Inspection, said at the hearing that the Millennium was the first of such large, tall buildings San Francisco had seen, and his department was undergoing a review of procedures.


“We are going to develop a method of checks and balances that go beyond our own department expertise,” he said. “A building of this nature is complicated, and it is special…and we didn’t see these kinds of building at that time, and this was one of the very first tall heavy buildings.”

On Thursday, Mayor Edwin M. Lee, said in a statement that the building was safe and all measures would be taken to keep it so. He also said the city will consider updating its building codes and independent review processes for future high-rises.

“I want San Franciscans to be assured that we have a safe and resilient City,” Mr. Lee said.

Millennium Partners has said the building was designed and constructed to meet city standards and all of its permits were properly obtained. The group has said the building is safe, and that it has sunk because of excavation and construction work done nearby by the Transbay Joint Powers Authority, which is building a multibillion-dollar transportation and housing hub.


The suit by the homeowners also names the authority as a defendant, and describes its project as making the problem worse by “digging the biggest hole the City has ever seen.”

The authority has said its work isn’t related to the sinking of the tower, and that the sinking began before it started construction on its project.

Write to Alejandro Lazo at alejandro.lazo@wsj.com