Residents of a neighborhood filled with mansions in San Francisco are suing an Asian couple for quietly purchasing their street at a city-run auction in 2015, according to court documents filed in Superior Court in San Francisco County.
The private street is in a prestigious gated community known as Presidio Terrace. It features 35 mansions surrounded by lush, manicured gardens and palm trees, with a round-the-clock security guard posted at the front gate, the San Francisco Chronicle reported.
According to the newspaper, Tina Lam, an engineer in Silicon Valley, and real estate investor Michael Cheng purchased the street, which circles through the Presidio Terrace community, for $90,100. The street was put up for sale at a city auction after the Presidio Terrace Association, run by the community's homeowners, failed to pay its property tax bill, $14 per year, for three decades. The total owed to the city was $994. For perspective: A single property in the affluent community was put on the market for $16.9 million in 2016.
Developed by real estate company Baldwin and Howell, Presidio Terrace was once billed as a haven for white people looking to stay segregated from Japanese and Chinese people in 1906, according to the Virtual Museum of the City of San Francisco.
"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," read an advertisement written by the San Francisco-based company in 1906 and republished online by the museum. According to the museum, Baldwin and Howell's ad suggested that residential districts were being "ruined" because Japanese and Chinese people had "invaded the Western addition."
As Forbes pointed out, those who purchased property at Presidio Terrace could sell only to white people ― that is, until 1948, when a U.S. Supreme Court ruling banned racial segregation in neighborhoods.
When Lam and Cheng, who are married, purchased the private circular street, they also took ownership of the sidewalks fronting the mansions and the "common ground" within the gated community, according to the Chronicle.
Presidio Terrace's private street is "the most unique property I've come across, by far," Cheng told the San Jose Mercury News. "I'm talking to my other investors and they've never seen anything like this ― and they own some weird stuff."
Cheng told the Chronicle that he and Lam have been working with land-use attorneys and looking into getting title insurance to make their purchased property "more marketable." They are even considering renting out the private community's 120 parking spaces.
"We could charge a reasonable rent on it," Cheng told the Chronicle.
The homeowners association filed a lawsuit against Lam, Cheng and the city and county of San Francisco on July 17, claiming that they were unable to pay property taxes on Presidio Terrace's common areas because the city of San Francisco was sending the bills and relevant tax notices to the wrong address.
The address the city was sending the bills to, the suit claims, was associated with an accountant who hadn't worked with the homeowners association since the 1980s.
The Presidio Terrace Association claims that the city knew that they weren't receiving any notices and made "no reasonable efforts" to inform the association and its members that the city had put the community's street and common areas up for sale.
"Such posting would have been simple and inexpensive for the City to accomplish," the lawsuit reads.
A spokeswoman for Treasurer-Tax Collector Jose Cisnero's office suggested that the homeowners should've known better and added that there's nothing that the state can do about the sale of their street.
Amanda Fried of the treasure-tax collector's office told the Chronicle: "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."
G. Scott Emblidge, the attorney representing the Presidio Terrace Association, did not return HuffPost's request for comment, but he provided the Mercury News with a statement from the association accusing Cheng and Lam of exploiting the city's oversight to purchase the street.
The statement claims that Lam and Cheng are "savvy real estate professionals" who "would like to exploit a bureaucratic oversight to their advantage" and calls the defaulted tax bills "purely an oversight that needs to be corrected."
Lam, however, said she and her husband love San Francisco and just want to own property there.
Lam, who was born in Hong Kong, told The Sacramento Bee that "the first time I came to San Francisco I fell in l love with the city," adding, "I really just wanted something to own in San Francisco because of my affinity for the city."
Read the Presidio Terrace Association's lawsuit below.
Hat tip, San Francisco Chronicle.