SAN FRANCISCO (CN) — A young Silicon Valley couple vowed to sue San Francisco Tuesday night after the Board of Supervisors voided their purchase of a private street and returned it to wealthy homeowners.
The owners of 35 multimillion-dollar mansions on Presidio Terrace learned this year that the city had auctioned off their private street more than two years ago for failure to pay $994 in back taxes. Presidio Terrace is a small, extremely wealthy neighborhood just south of the Presidio.
San Jose resident Hiuyan Tina Lam and her husband Michael Cheng snatched up the private street for $90,000 at an auction in April 2015.
On Tuesday night, the San Francisco Board of Supervisors voted 7-4 to overturn the city tax collector’s sale of the street, prompting complaints that the board favored wealthy homeowners over the rule of law.
“Does that mean that when you live on one of the most exclusive streets in San Francisco and you’re wealthy and you’re politically connected that you get a different system of government than the rest of us?” ask Shepard Kopp, an attorney representing Lam and Cheng.
The homeowners say they were deprived of due process because the city sent the $14-per-year tax bills and a notice of tax sale to the wrong address.
Even though letters were returned to the city as undeliverable, the tax collector made no effort to notify residents that their private street would be sold to the highest bidder, the homeowners say.
“The tax collector could then have done what the law, fairness, good government and due process require: tried other means to notify the association and Presidio Terrace residents before auctioning off their street and sidewalks,” the homeowners’ attorney G. Scott Emblidge told the board.
City Treasurer-Tax Collector Jose Cisneros said that though his office could have done better, the city followed the letter of the law when it auctioned off the block-long, oval-shaped street.
“When taxes remain unpaid, California law requires the county tax collector to auction properties,” Cisneros wrote in a report to the board.
Senator Dianne Feinstein, a former resident of Presidio Terrace, wrote a letter to the board in October, urging it to overturn the tax sale and return the road to homeowners.
“In the United States of America, no one should lose property at the hands of the government without knowing about it,” Feinstein wrote.
But Lam and Cheng say the Presidio Terrace Association has a history of failing to pay taxes, and that the homeowners shouldn’t get a “second bite at the apple” because they are wealthy and well-connected.
The homeowners association defaulted on property taxes from 1978 to 1983 before paying the back taxes in 1985, according to a brief submitted by Lam and Cheng’s attorney.
Supervisor Mark Farrell, whose District 2 includes Presidio Terrace, said that city has a responsibility to serve the interests of residents over “outside speculators.”
“Do we want to allow speculators from out of town to bid on our streets and start charging people for access to those streets?” Farrell asked.
Farrell cited other California counties, including Los Angeles, Alameda and Contra Costa, that have rescinded tax sales. He chastised Lam and Cheng for offering to sell the street back to the homeowners for a whopping $900,000, ten times more than they paid at auction.
The couple’s attorney declined to comment on the alleged $900,000 offer, saying settlement discussions “are confidential, or supposed to be.”
District 9 Supervisor Hillary Ronen said the wealthy residents of Presidio Terrace knew they had to pay taxes, and that overturning the sale could be seen as unfair to other homeowners.
“I get that it sucks for you, but did the treasurer act unreasonably? I don’t think so, and should we give these homeowners a second bite at the apple when other homeowners don’t get that?” Ronen asked.
After the board voted to void the sale, Cheng said he will challenge the decision in court.
“The law should be fair to everybody, not just someone who has millions of dollars and gets Dianne Feinstein to write a letter,” Cheng said after the hearing. “We’ll be suing. We’ll be standing up for the law and for ourselves.”