20 homeowners at Millennium Tower sue developer and San Francisco

Millennium Tower on Friday, July 29, 2016 in San Francisco, California. The tower is currently facing structural issues causing a lean. Millennium Tower on Friday, July 29, 2016 in San Francisco, California. The tower is currently facing structural issues causing a lean. Photo: Michael Noble Jr., The Chronicle Photo: Michael Noble Jr., The Chronicle Image 1 of / 18 Caption Close 20 homeowners at Millennium Tower sue developer and San Francisco 1 / 18 Back to Gallery

A group of 20 homeowners at the troubled Millennium condominium tower in downtown San Francisco filed suit against developer Millennium Partners and multiple city agencies Friday, alleging that both the builder and public officials knew about, but failed to disclose to buyers, evidence that the luxury high rise was sinking at an unexpected rate.

The homeowners, represented by Millennium homeowner and attorney Jerry Dodson, filed the claim against developer Millennium Partners, the San Francisco Department of Building Inspection, the city attorney and the Transbay Joint Powers Authority.

The complaint alleges that Millennium Partners knew in early 2009, before residents had moved in, that the tower had sunk 8.3 inches, rather than the 1 to 2 inches project engineers had said it would have settled upon completion.

“Millennium Partners made the decision to sell the million-dollar condominium units anyway, without ever disclosing the sinking to the buyers,” Dodson stated in a summary of the complaint. “That is a violation of California law, and they knew it.”

The plaintiffs also pointed to a memo from Raymond Lui, then deputy director of the Department of Building Inspection, asking a series of questions about excessive sinking in February 2009. In addition, the complaint says the city agencies signed a confidentiality agreement with Millennium Partners in 2010 “to make sure that the owners and potential owners would not find out about the instability of the Millennium Tower.”

“Each of the defendants need to answer to a judge or jury basically three questions,” stated Dodson. “Did you know Millennium Tower was sinking, when did you know it, and why didn’t you make that knowledge public?”

Controversy over settlement issues at the 58-story tower emerged in August when it became known that the building had settled 16 inches and was tilting two inches at its base. The developer has consistently blamed the Transbay Joint Powers Authority for pumping groundwater from an adjacent site where it is building the new Transbay Transit Terminal, contending the “dewatering” has weakened the soil beneath the tower. The TJPA has cast blame on the developer for setting the concrete tower on 80-foot friction piles sunk into dense sand rather than 200 foot piles that would have reached bedrock.

While City Attorney Dennis Herrera is a target of the claim, his office is also suing the developer, saying Millennium Partners had a legal obligation to tell home buyers about the sinking.

“We share the Dodsons’ frustration that the Millennium Tower developer failed to disclose that the building was sinking,” said John Cote, spokesman for Herrera. “That’s why the city is pursuing legal action against the developer for duping home buyers. Any notion that the city was somehow involved in a conspiracy to defraud residents is ridiculous and completely baseless.”

Millennium Partners spokesman P.J. Johnston said his client has not had a chance to review Dodson’s complaint.

“However, at the time of completion in 2008 and throughout its entire sales process, 301 Mission St. had settled within predicted and safe ranges,” he said. “We made all appropriate and legally required disclosures to the home buyers of 301 Mission during this period.”

The value of the units owned by the 20 homeowners who have signed on to the lawsuit exceeded $75 million prior to the construction defects becoming known, according to Dodson. Since then values and rents have plummeted and only two units have changed hands.

Dodson said he expects another 10 to 20 homeowners to sign onto his lawsuit, one of several filed by Millennium residents against the developer.

J.K. Dineen is a San Francisco Chronicle staff writer. Email: jdineen@sfchronicle.com Twitter: @sfjkdineen