SF supes reverse sale, return private Presidio Terrace street to homeowners

Overhead view of Presidio Terrace, the private street that was sold in a tax auction to a San Jose couple even as homeowners were in the dark. Overhead view of Presidio Terrace, the private street that was sold in a tax auction to a San Jose couple even as homeowners were in the dark. Photo: Matier & Ross, Courtesy Google Photo: Matier & Ross, Courtesy Google Image 1 of / 10 Caption Close SF supes reverse sale, return private Presidio Terrace street to homeowners 1 / 10 Back to Gallery

A tony private street in the Richmond that was sold to a San Jose couple for $90,000 in a little-noticed tax auction over two years ago will be returned to the residents who live there.

The San Francisco Board of Supervisors on Tuesday voted 7-4 to overturn the sale of Presidio Terrace, a looping, exclusive street that went on the auction block after its residents failed to pay $994 in back taxes.

It turned out the Presidio Terrace Homeowner Association’s $14-a-year tax bill was being mailed to an accountant who hadn’t worked for the association in years. The bill applied to the common areas and green spaces on the circular street, which were lumped together and taxed as a “vacant” parcel, separate from residents’ homes.

South Bay real estate investor Michael Cheng and his wife, Tina Lam, snatched up the property, and the supervisors approved the sale on Feb. 11, 2015 — one among 550 tax-default deals that were made official in a single unanimous vote. The sale was first reported in The Chronicle.

Residents of Presidio Terrace were stunned when they were contacted in May by a title search company asking if they were interested in buying the property back. They petitioned the board to undo its vote and filed a lawsuit against Cheng, Lam and the city to prevent the couple from unloading the property while the appeal was pending.

Carol Sharer, who said she is in the process of moving to a fixer-upper at 27 Presidio Terrace from her former home in Boston, said she heard about the tax sale from a television newscast.

“You can imagine how shocked we were to find out from the news in Boston that our new community has this condition,” she said.

At the hearing Tuesday, the homeowners’ attorney, G. Scott Emblidge, blasted the city’s tax collector, Jose Cisneros, for depriving San Francisco residents of their property “without due process of law.”

Homeowners who spoke at the hearing said they didn’t receive a single letter or phone call, nor was a sign posted on the property to alert them of the sale. Cisneros said his office had posted notices on its website and in the San Francisco Examiner, and sent one via certified mail to the former accountant’s address before selling the street.

“They (the homeowners) could have visited our website, called the city’s 311 number ... or come to our office,” Cisneros said, adding that his office had followed state rules. Presidio Terrace, like most of the other properties on his 2015 tax default list, was classified as a vacant lot.

Supervisor Mark Farrell, whose district includes the street, noted that other cities require tax collectors to go to great lengths to find the owners of delinquent properties. He chided Cisneros for not doing more to reach the Presidio Terrace Homeowners Association after his letter to the accountant was returned. Farrell made the motion to rescind the sale.

“As a matter of policy, I am proud of my ... colleagues who voted against allowing these speculators to get away with purchasing a neighborhood street and attempting to extort San Francisco residents that I represent into a quick $1 million payday,” Farrell said in a statement after the vote. “I am shocked that four of my colleagues sided with these out-of-town speculators.” Those four supervisors were Jane Kim, Aaron Peskin, Hillary Ronen and Norman Yee.

“I believe the vote today to rescind this sale was the best possible outcome,” Farrell said. “The speculators get their money back — no harm, no foul. The back taxes the Presidio Terrace owners owe will be paid immediately. And, we are moving to implement policy reforms (to) the current broken process that allowed this sale to happen in the first place, so that this situation does not happen to any San Franciscan ever again.”

Emblidge urged the board to enact a law that would beef up noticing requirements for delinquent properties and “prevent other San Franciscans from having their rights violated.”

Presidio Terrace was seized once before, in 1983, for defaulting on a common-area tax bill. Several owners who testified at the hearing Tuesday were around that year, when the state took over the deed. Homeowners regained the property two years later.

Shepard Kopp, the attorney representing Cheng and Lam, said his clients had bought the property “fair and square in an auction that complied with all laws of the tax collector.”

He argued, further, that rescinding the sale would set a dangerous precedent, potentially invalidating other sales of delinquent properties.

But Emblidge said several other jurisdictions in California have reversed tax sales. Sixteen were undone in Los Angeles, he said. One was annulled in Alameda County, and one in Contra Costa County.

“It’s not totally unusual,” he said.

Cheng, who spoke at the hearing, characterized himself and his wife as law-abiding property owners who are being penalized “by people who don’t know the laws.”

“We’re going to be very responsible stewards of this street,” Cheng said. “And we’ll make sure all the taxes are paid.”

Lam, who works as an engineer in the South Bay, said she’s not rich enough to buy a home on the street. Buying the street itself fulfilled her “simple dream of owning a piece of San Francisco.”

Kopp said his clients now plan to sue the city.

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com

Twitter: @rachelswan