Blighted new S.F. condo building set to be reborn as rentals in 2024

The building at 1554 Market St., known as the Oak, may finally convert from condos to rentals after sitting empty for three years, according to an application filed with the San Francisco Planning Department. 

The building at 1554 Market St., known as the Oak, may finally convert from condos to rentals after sitting empty for three years, according to an application filed with the San Francisco Planning Department. 

Stephen Lam/The Chronicle

After three years of sitting empty, a newly constructed 109-unit housing complex at the crossroads of Hayes Valley and the Civic Center neighborhood may finally fill up with residents in 2024.

Investor Steven Hong, who is foreclosing on a $76.7 million construction loan on the building known as the Oak, filed an application Friday to convert the units at 1554 Market St. from condos to rentals, according to an application filed with the San Francisco Planning Department. The news was first reported by the San Francisco Business Times.

Hong said he was “drawn to this investment due to its strategic location and potential for long-term growth.”

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“The San Francisco rental housing market is dynamic and presents many opportunities,” he said. “We believe in the resilience of the market and are optimistic about its long-term growth. Factors such as job growth in technology and AI contribute to our positive outlook.”

If Hong succeeds in getting the units converted, it will end what has been a trying ordeal for nearby residents, who watched the handsome 12-story complex rise only to see it sit empty and become a frequent target for taggers and squatters. 

“It’s been incredibly frustrating to have more than 100 homes ready for occupancy but which don’t have human beings in them on account of the fact that the ownership couldn’t get their act together,” said Dan Sider, chief of staff of the Planning Department. “We have a beautiful structure ready for occupancy — it’s time to get something done there.”

 Zhang Li, a central player in San Francisco’s wide-ranging corruption probe, headed the firm that built the troubled project.

 Zhang Li, a central player in San Francisco’s wide-ranging corruption probe, headed the firm that built the troubled project.

Getty Images 2017

The building was one of several troubled projects built by Z&L, a Chinese real estate developer headed up by Zhang Li, who became a central player in the wide-ranging corruption probe that has led to the indictment of more than 20 people, including the city’s former Public Works chief  Mohammed Nuru. In July, Li was extradited to San Francisco from London. He was charged with one count of conspiracy to commit wire fraud service, admitting to bribing Nuru with food and drinks and other favors in exchange for fast-tracking a housing development at 555 Fulton St. 

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Li paid two fines — one for $1 million and one for $50,000 — and prosecutors agreed to drop the charges after three years.

The turmoil has had an impact on 1554 Market St., which sat vacant for three years, as well as 555 Fulton, which took nearly five years to construct due to building violations.

At 1554 Market St.,  Z&L originally marketed the units as for-sale condos and put several units into contract before walking away from those deals and instead started marketing the entire complex for sale. Eventually the company went into default on the project’s construction loan, which Hong purchased. 

The group of would-be buyers included several who had won the lottery for below-market-rate condos. 

Chester Pidduck, shown with wife Rayyaneh Karami and daughter Donzheh, was devastated to learn that the building would not open as condos.

Chester Pidduck, shown with wife Rayyaneh Karami and daughter Donzheh, was devastated to learn that the building would not open as condos.

Stephen Lam/The Chronicle

In January 2022, San Francisco Opera singer Chester Pidduck was elated to learn that his family had been selected for a 1,100-square-foot, ninth-floor, two-bedroom condo that looked out across at the San Francisco Conservatory of Music and was walking distance to his job at the opera house. 

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Unlike the family’s longtime one-bedroom apartment at Fillmore Street and Golden Gate Avenue, the condo would allow their daughter to have her own room. At $400,000, it was something Pidduck’s family could afford. The interest rate was locked in at a historic low of 2.5% and, in part because of the pandemic-related income loss, the family qualified for a unit at 100% of area median income — about $110,000 for a family of three. 

The family was devastated to discover a few months later that the developer did not intend to sell the units as condos after all. 

“The timing was so perfect. We were so excited — this was a major lottery win,” he told the Chronicle in July. “And now it’s all gone. We feel we have been incredibly screwed by Z&L. I couldn’t believe they could just walk away like that.”

The building at 1554 Market St., known as the Oak, has been the target of graffiti and tagging.

The building at 1554 Market St., known as the Oak, has been the target of graffiti and tagging.

Ethan Swope/The Chronicle 2022

While filling the units with renters won’t help those families that had hoped to buy units in the building, it will represent a big step forward, according to Hayes Valley Neighborhood Association President Jen Laska.

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“Getting Z&L out of the neighborhood is excellent news — they have done such a disservice to Hayes Valley and the city,” she said. “It’s beautiful brand new construction that has already become blight. We need to see that space activated.”

Hong said that as soon as the city approves the switch from for-sale to rental, “we will work diligently to initiate the lease-up process.”



This article was originally published by a www.sfchronicle.com . Read the Original article here. .