An enterprising couple from the South Bay was just able to purchase a neighborhood street from an online auction because of an accounting error, The San Francisco Chronicle reports. Now the neighborhood is worried about the ways the couple might try to cash in on the purchase.
The couple, Tina Lam and Michael Cheng, who run real estate firm Archers Capital, bought Presidio Terrace, a one-block oval street just northwest of downtown San Francisco. It is surrounded by multimillion dollar mansions (here’s the Google Street View), and up until 1948, it was racially segregated. That is, a few decades ago, Tina and Michael couldn’t buy a house on Presidio Terrace. Now they own it, and they might start charging residents for parking, The San Francisco Chronicle reports.
The reason why Cheng and Lam were able to pick up the street has to do with an idiotic accounting error involving a cheap annual tax bill, as the local paper reports:
The couple’s purchase appears to be the culmination of a comedy of errors involving a $14-a-year property tax bill that the homeowners association failed to pay for three decades. It’s something that the owners of all 181 private streets in San Francisco are obliged to do.
The attorney for the homeowners association says the reason why the bill hadn’t been paid was because, since the 1980s, it had been mailed to the address of the wrong accountant.
The result of decades worth of the city sending bills to the wrong address tallied up to $994 worth of unpaid taxes, fees and interest, which San Francisco decided to try to get back by putting the street and its sidewalks up for auction about two years ago.
Cheng, a real estate investor, and his wife were looking for opportunities at the time, saw the street for sale, and jumped on it, dropping $90,100 on the property.
The residents were pissed, and petitioned the Board of Supervisors to nullify the sale. One resident explained to The San Francisco Chronicle the shock that they, the city’s wealthy, could be so rudely taken advantage of:
I was shocked to learn this could happen, and am deeply troubled that anyone would choose to take advantage of the situation and buy our street and sidewalks.
How dare they, indeed. But Cheng could make cash on this, saying of the 120 parking spots on the street “We could charge a reasonable rent on it.” The San Francisco Chronicle mentions that the couple wouldn’t sell spots solely to residents of the neighborhood, saying:
And if the Presidio Terrace residents aren’t interested in paying for parking privileges, perhaps some of their neighbors outside the gates — in a city where parking is at a premium — would be.
Well played.
I called up Michael Cheng, and he told me over our brief conversation that he and his wife were just looking to buy any land in San Francisco. After looking at 40 parcels, he wound up with Presidio Terrace. And while, right now, he has no immediate plans to sell the street (he says he’s just looking to “understand the parcel”), he did say charging for parking “could be an option.”
It’s no surprise that residents are pissed that they might have to pay for parking on the private street just outside of their homes. But at the same time, keep your damn mailing address up to date—this is like, the most pathetic financial error ever, right up there with forgetting to update an autopay after a credit card expires.
These are the basics, people.
Correction: This story has been updated to clarify that the issue was with the homeowners association’s accountant’s mailing address, not the city’s.