Noah Baustin

The company run by Chinese billionaire Zhang Li will have to pay a $1 million fine after a sentencing in federal court Thursday. Representatives for the firm pleaded guilty to conspiracy to commit fraud for its part in bribing ex-San Francisco Public Works head Mohammed Nuru to get approvals for a major development project in the city.&nbsp;

core/paragraph

The company run by Chinese billionaire Zhang Li will have to pay a $1 million fine after a sentencing in federal court Thursday. Representatives for the firm pleaded guilty to conspiracy to commit fraud for its part in bribing ex-San Francisco Public Works head Mohammed Nuru to get approvals for a major development project in the city.&nbsp;

The sentence, which also requires Z&amp;L Properties to enter into a corporate compliance program designed to prevent corruption, stems from a yearslong international saga in which real estate mogul Zhang was first <a href="https://sfstandard.com/2022/12/14/chinese-real-estate-tycoon-arrested-in-london-over-sf-corruption-case/">arrested in London</a> and fought extradition to the United States.&nbsp;

Chinese real estate tycoon arrested in London over SF corruption case

The sentence, which also requires Z&amp;L Properties to enter into a corporate compliance program designed to prevent corruption, stems from a yearslong international saga in which real estate mogul Zhang was first <a href="https://sfstandard.com/2022/12/14/chinese-real-estate-tycoon-arrested-in-london-over-sf-corruption-case/">arrested in London</a> and fought extradition to the United States.&nbsp;

After an extended legal battle, Zhang agreed to be extradited to San Francisco in July, where he confessed to bribing Nuru in exchange for the U.S. Department of Justice agreeing to drop the charges against him personally in three years. That month, prosecutors filed criminal charges against Zhang’s California company, Z&amp;L Properties. The business agreed to plead guilty and pay the $1 million fine as part of Zhang’s deal.

After an extended legal battle, Zhang agreed to be extradited to San Francisco in July, where he confessed to bribing Nuru in exchange for the U.S. Department of Justice agreeing to drop the charges against him personally in three years. That month, prosecutors filed criminal charges against Zhang’s California company, Z&amp;L Properties. The business agreed to plead guilty and pay the $1 million fine as part of Zhang’s deal.

READ MORE: <a href="https://dash.parsely.com/sfstandard.com/find?url=https%3A%2F%2Fsfstandard.com%2F2023%2F08%2F30%2Fsan-francisco-san-jose-trash-bag-church-troubled-developer-zhang-li%2F" target="_blank" rel="noreferrer noopener">Chinese Billionaire at San Francisco Corruption Scandal’s Center Leaves Wake of Troubled Properties</a>

READ MORE: <a href="https://dash.parsely.com/sfstandard.com/find?url=https%3A%2F%2Fsfstandard.com%2F2023%2F08%2F30%2Fsan-francisco-san-jose-trash-bag-church-troubled-developer-zhang-li%2F" target="_blank" rel="noreferrer noopener">Chinese Billionaire at San Francisco Corruption Scandal’s Center Leaves Wake of Troubled Properties</a>

Zhang is just one of more than a dozen <a href="https://sfstandard.com/2023/08/04/players-in-san-francisco-corruption-scandal-mohammed-nuru/">powerful public officials and business executives</a> who have been charged in a federal probe into San Francisco corruption. Others who bribed Nuru ended up in federal prison, including <a href="https://sfstandard.com/2023/03/22/city-blacklists-4-more-firms-tied-to-mohammed-nuru-scandal/">Alan Varela</a>, who received a two-year sentence, and Florence Kong, who was sentenced to one year of incarceration. Zhang’s deal, however, required no prison time, and he returned to China immediately after his lone appearance in federal court this summer, his attorney previously told The Standard.

San Francisco corruption scandal: A guide to the players involved

SF just banned these businesses as corruption probe trucks on

Zhang is just one of more than a dozen <a href="https://sfstandard.com/2023/08/04/players-in-san-francisco-corruption-scandal-mohammed-nuru/">powerful public officials and business executives</a> who have been charged in a federal probe into San Francisco corruption. Others who bribed Nuru ended up in federal prison, including <a href="https://sfstandard.com/2023/03/22/city-blacklists-4-more-firms-tied-to-mohammed-nuru-scandal/">Alan Varela</a>, who received a two-year sentence, and Florence Kong, who was sentenced to one year of incarceration. Zhang’s deal, however, required no prison time, and he returned to China immediately after his lone appearance in federal court this summer, his attorney previously told The Standard.

Before accepting the fine prosecutors offered to Zhang, Judge William Orrick questioned the impact it would have on the fabulously wealthy Zhang.

Before accepting the fine prosecutors offered to Zhang, Judge William Orrick questioned the impact it would have on the fabulously wealthy Zhang.

“He could pay $1 million, and it’s just money off his back,” Orrick said.

“He could pay $1 million, and it’s just money off his back,” Orrick said.

In response, prosecutor David Ward argued that Zhang’s punishment included four days in custody and seven months of house arrest in the United Kingdom before he was extradited, and that the U.S. Justice Department was seeking the “maximum fine.”

In response, prosecutor David Ward argued that Zhang’s punishment included four days in custody and seven months of house arrest in the United Kingdom before he was extradited, and that the U.S. Justice Department was seeking the “maximum fine.”

Orrick, in the end, accepted the sentence.

Orrick, in the end, accepted the sentence.

“If I keep my blinders on to what this company is charged with and did, I think it’s more than fair,” Orrick said.

“If I keep my blinders on to what this company is charged with and did, I think it’s more than fair,” Orrick said.

Jennifer Lewis, a resident of one of Z&amp;L Properties’ San Jose developments where residents have feuded with the company, saw the $1 million fine as low given the billions Zhang’s company is worth.&nbsp;

Jennifer Lewis, a resident of one of Z&amp;L Properties’ San Jose developments where residents have feuded with the company, saw the $1 million fine as low given the billions Zhang’s company is worth.&nbsp;

“It seems fairly inconsequential for the scope of what he would be willing or able to pay out today,” she told The Standard.

“It seems fairly inconsequential for the scope of what he would be willing or able to pay out today,” she told The Standard.

READ MORE: <a href="https://dash.parsely.com/sfstandard.com/find?url=https%3A%2F%2Fsfstandard.com%2F2023%2F08%2F04%2Fplayers-in-san-francisco-corruption-scandal-mohammed-nuru%2F" target="_blank" rel="noreferrer noopener">San Francisco Corruption Scandal: A Guide to the Players Involved</a>

READ MORE: <a href="https://dash.parsely.com/sfstandard.com/find?url=https%3A%2F%2Fsfstandard.com%2F2023%2F08%2F04%2Fplayers-in-san-francisco-corruption-scandal-mohammed-nuru%2F" target="_blank" rel="noreferrer noopener">San Francisco Corruption Scandal: A Guide to the Players Involved</a>

<h2 class="wp-block-heading" id="h-the-china-trip">The China Trip</h2>

core/heading

<h2 class="wp-block-heading" id="h-the-china-trip">The China Trip</h2>

At the center of both the cases against Zhang himself and his company is a lavish 2018 trip in China that Nuru took at Zhang’s expense, according to the agreement the business tycoon <a href="https://sfstandard.com/2023/07/19/chinese-billionaire-admits-to-bribing-top-san-francisco-official-zhang-li-mohammed-nuru/">signed with prosecutors</a>. As part of that agreement, Zhang admitted to paying for Nuru’s luxury hotel, transportation, services at a hot spring and numerous gifts totaling $6,500.

Chinese billionaire admits to bribing top San Francisco official

At the center of both the cases against Zhang himself and his company is a lavish 2018 trip in China that Nuru took at Zhang’s expense, according to the agreement the business tycoon <a href="https://sfstandard.com/2023/07/19/chinese-billionaire-admits-to-bribing-top-san-francisco-official-zhang-li-mohammed-nuru/">signed with prosecutors</a>. As part of that agreement, Zhang admitted to paying for Nuru’s luxury hotel, transportation, services at a hot spring and numerous gifts totaling $6,500.

Prosecutors have further alleged that the trip <a href="https://sfstandard.com/2023/07/22/chinese-billionaire-zhang-li-treated-corrupt-san-francisco-official-mohammed-nuru-to-10000-liquor-security-detail-and-a-luxury-spa-feds-claim/">featured a $10,000 bottle of liquor</a> shared over dinner with the vice president of a foreign country.

Chinese mogul treated corrupt San Francisco official to $10K liquor, security detail and a luxury spa, Feds claim

Prosecutors have further alleged that the trip <a href="https://sfstandard.com/2023/07/22/chinese-billionaire-zhang-li-treated-corrupt-san-francisco-official-mohammed-nuru-to-10000-liquor-security-detail-and-a-luxury-spa-feds-claim/">featured a $10,000 bottle of liquor</a> shared over dinner with the vice president of a foreign country.

Mohammed Nuru, director of Public Works, speaks  on the steps of City Hall during a rally supporting Better Market Street on Tuesday, October 15, 2019 in San Francisco, Calif. | Lea Suzuki/The San Francisco Chronicle via Getty Images

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/02/INLINED05_RecologyCorruption02212023-scaled.jpg?w=2500" alt="" class="wp-image-132230"/><figcaption class="wp-element-caption">Mohammed Nuru, then-director of Public Works, speaks on the steps of City Hall during a rally in 2019.</figcaption></figure>

core/image

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/02/INLINED05_RecologyCorruption02212023-scaled.jpg?w=2500" alt="" class="wp-image-132230"/><figcaption class="wp-element-caption">Mohammed Nuru, then-director of Public Works, speaks on the steps of City Hall during a rally in 2019.</figcaption></figure>

Zhang treated the powerful public official to that trip, and regular dinners in San Francisco, so that Nuru would help usher along Z&amp;L Properties’ high-profile development project at 555 Fulton St., he admitted in the agreement.&nbsp;

Zhang treated the powerful public official to that trip, and regular dinners in San Francisco, so that Nuru would help usher along Z&amp;L Properties’ high-profile development project at 555 Fulton St., he admitted in the agreement.&nbsp;

On Dec. 3, 2019, Zhang messaged Nuru via WeChat, according to a transcript in the agreement.

On Dec. 3, 2019, Zhang messaged Nuru via WeChat, according to a transcript in the agreement.

“How are you doing, Bro, 555 Fulton project has finished almost all inspection and have signed off plumbing &amp; electrical &amp; SFFD inspection for South Tower,” the business mogul wrote. “Can you please help to arrange inspection ASAP? Thank you very much Bro!!”

“How are you doing, Bro, 555 Fulton project has finished almost all inspection and have signed off plumbing &amp; electrical &amp; SFFD inspection for South Tower,” the business mogul wrote. “Can you please help to arrange inspection ASAP? Thank you very much Bro!!”

Nuru quickly replied: “No problem, will make sure you get all your sign off,” promising to make a call and get an update for the tycoon. Nuru followed up two days later, writing that paperwork had been signed for the building.

Nuru quickly replied: “No problem, will make sure you get all your sign off,” promising to make a call and get an update for the tycoon. Nuru followed up two days later, writing that paperwork had been signed for the building.

Corner of 555 Fulton St. building at Laguna St. seen on Wednesday, Jan. 29, 2020, in San Francisco, Calif. (Photo By Liz Hafalia/The San Francisco Chronicle via Getty Images)

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/02/GettyImages-1321771331-scaled.jpg?w=2500" alt="" class="wp-image-123910"/><figcaption class="wp-element-caption">The development at 555 Fulton St. is at the heart of the bribery scandal. </figcaption></figure>

Zhang’s Guangzhou-based company, R&amp;F Properties Co., has assets topping $53 billion, <a href="https://www.forbes.com/companies/guangzhou-rf/?sh=2a5f7f1a2522" target="_blank" rel="noreferrer noopener">according to Forbes</a>. He first purchased 555 Fulton St. in 2012, and in 2016, he formed the Foster City-based company Z&amp;L Properties to manage that project and others in California.

Zhang’s Guangzhou-based company, R&amp;F Properties Co., has assets topping $53 billion, <a href="https://www.forbes.com/companies/guangzhou-rf/?sh=2a5f7f1a2522" target="_blank" rel="noreferrer noopener">according to Forbes</a>. He first purchased 555 Fulton St. in 2012, and in 2016, he formed the Foster City-based company Z&amp;L Properties to manage that project and others in California.

Nuru pleaded guilty in 2022 to a slew of corruption charges reaching well beyond Zhang’s case. He’s currently <a href="https://sfstandard.com/2022/08/25/disgraced-public-works-chief-gets-7-years-for-role-in-bribery-scandal-your-crime-resulted-from-greed/">serving seven years in prison</a>.

Disgraced Public Works chief gets 7 years for role in bribery scandal: &#8216;Your crime resulted from greed&#8217;

Nuru pleaded guilty in 2022 to a slew of corruption charges reaching well beyond Zhang’s case. He’s currently <a href="https://sfstandard.com/2022/08/25/disgraced-public-works-chief-gets-7-years-for-role-in-bribery-scandal-your-crime-resulted-from-greed/">serving seven years in prison</a>.

<h2 class="wp-block-heading" id="h-a-series-of-troubled-properties">A Series of Troubled Properties</h2>

Z&amp;L Properties’ other developments have faced serious problems, <a href="https://sfstandard.com/2023/08/30/san-francisco-san-jose-trash-bag-church-troubled-developer-zhang-li/">The Standard found</a>. In August, San Jose Mayor Matt Mahan criticized the company for allowing a historic downtown church in the city to languish in disarray for years, earning it the name “Trash Bag Church.”

Chinese billionaire at San Francisco corruption scandal&#8217;s center leaves wake of troubled properties

Z&amp;L Properties’ other developments have faced serious problems, <a href="https://sfstandard.com/2023/08/30/san-francisco-san-jose-trash-bag-church-troubled-developer-zhang-li/">The Standard found</a>. In August, San Jose Mayor Matt Mahan criticized the company for allowing a historic downtown church in the city to languish in disarray for years, earning it the name “Trash Bag Church.”

“Those responsible for this neglected, frankly dangerous, building have not done their part,” Mahan said about Z&amp;L Properties’ management of the church.

“Those responsible for this neglected, frankly dangerous, building have not done their part,” Mahan said about Z&amp;L Properties’ management of the church.

The company is also in a prolonged feud with the owners of apartments in its 188 W. St. James St. development in San Jose. That owners&#8217; association accused Z&amp;L Properties of insurance fraud in a letter to the federal court overseeing the criminal case. The company filed for insurance reimbursements of over $138,000 for a window that actually cost about $10,000, the letter claims.&nbsp;

The company is also in a prolonged feud with the owners of apartments in its 188 W. St. James St. development in San Jose. That owners' association accused Z&amp;L Properties of insurance fraud in a letter to the federal court overseeing the criminal case. The company filed for insurance reimbursements of over $138,000 for a window that actually cost about $10,000, the letter claims.&nbsp;

The company is also in a prolonged feud with the owners of apartments in its 188 W. St. James St. development in San Jose. That owners&#8217; association accused Z&amp;L Properties of insurance fraud in a letter to the federal court overseeing the criminal case. The company filed for insurance reimbursements of over $138,000 for a window that actually cost about $10,000, the letter claims.&nbsp;

The owners association also accused Z&amp;L Properties of failing to pay dues it owes for the maintenance of communal spaces in the building in a letter to the court, stating that homeowners have recorded 10 liens on units the company owns within the development over the delinquent payments. Meanwhile, Z&amp;L Properties controls the communal funds and has spent some of the money collected from 188 W. St. James St. residents to pay for PG&amp;E bills at another building, the letter claims.

The owners association also accused Z&amp;L Properties of failing to pay dues it owes for the maintenance of communal spaces in the building in a letter to the court, stating that homeowners have recorded 10 liens on units the company owns within the development over the delinquent payments. Meanwhile, Z&amp;L Properties controls the communal funds and has spent some of the money collected from 188 W. St. James St. residents to pay for PG&amp;E bills at another building, the letter claims.

A view of condo towers at 188 W. St. James Street in San Jose on Tuesday, August 29, 2023. Less than half of the units have been sold in the tower on the right. The tower on the left has yet to be completed.

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/ZLProperties08292023_56.jpg?w=2500" alt="" class="wp-image-196384"/><figcaption class="wp-element-caption">The condo towers at 188 W. St. James Street in San Jose are owned by Z&amp;L Properties.</figcaption></figure>

Attorneys for the owners association asked the court to disqualify Z&amp;L Properties from serving on any building board, including at 188 W. St. James St.

Attorneys for the owners association asked the court to disqualify Z&amp;L Properties from serving on any building board, including at 188 W. St. James St.

“These financial criminals should not be permitted to continue handling the money of others,” attorney Maria Kao wrote in the letter.

“These financial criminals should not be permitted to continue handling the money of others,” attorney Maria Kao wrote in the letter.

Thursday’s final sentence, however, did not include the owners&#8217; association’s requested conditions.

Thursday’s final sentence, however, did not include the owners' association’s requested conditions.

Thursday’s final sentence, however, did not include the owners&#8217; association’s requested conditions.

Z&amp;L Properties’ attorney declined to comment on the owners association’s allegations.

Z&amp;L Properties’ attorney declined to comment on the owners association’s allegations.

In July 2022, the owners association at 555 Fulton in San Francisco sued Z&amp;L Properties, claiming that the building contained construction defects, including leaking windows, water ponding in stairwells, inadequate hot water delivery and overheating units, among other issues.

In July 2022, the owners association at 555 Fulton in San Francisco sued Z&amp;L Properties, claiming that the building contained construction defects, including leaking windows, water ponding in stairwells, inadequate hot water delivery and overheating units, among other issues.

The Trader Joe’s that was promised at that location has been stalled for years. But <a href="https://www.bizjournals.com/sanfrancisco/news/2023/10/02/555-fulton-trader-joes-z-l.html" target="_blank" rel="noreferrer noopener">reports by the San Francisco Business Times</a> that Z&amp;L Properties sold the commercial space to a new developer in September indicate efforts to bring a grocery store may finally be underway.

The Trader Joe’s that was promised at that location has been stalled for years. But <a href="https://www.bizjournals.com/sanfrancisco/news/2023/10/02/555-fulton-trader-joes-z-l.html" target="_blank" rel="noreferrer noopener">reports by the San Francisco Business Times</a> that Z&amp;L Properties sold the commercial space to a new developer in September indicate efforts to bring a grocery store may finally be underway.

Meanwhile, at least 1,000 homes that Z&amp;L Properties announced it would build in the Bay Area <a href="https://sfstandard.com/2023/08/30/san-francisco-san-jose-trash-bag-church-troubled-developer-zhang-li/">remain far from a reality</a>.

Meanwhile, at least 1,000 homes that Z&amp;L Properties announced it would build in the Bay Area <a href="https://sfstandard.com/2023/08/30/san-francisco-san-jose-trash-bag-church-troubled-developer-zhang-li/">remain far from a reality</a>.

Chinese billionaire’s company fined $1M in San Francisco bribery scheme

Kevin Truong

A slew of major companies, including Capital One, grocery store chain Trader Joe’s and Twitter Inc., are seeking to reduce the value of their San Francisco properties in line with uncertainty in the city’s real estate market.

A slew of major companies, including Capital One, grocery store chain Trader Joe’s and Twitter Inc., are seeking to reduce the value of their San Francisco properties in line with uncertainty in the city’s real estate market.

And citywide, thousands more property owners are sending in applications to San Francisco’s Assessment Appeal Board looking to lower the assessed value of their properties—and by extension the property tax they owe.

And citywide, thousands more property owners are sending in applications to San Francisco’s Assessment Appeal Board looking to lower the assessed value of their properties—and by extension the property tax they owe.

While it’s not uncommon for some building owners to appeal their assessment every year, the board has seen a definite uptick during the pandemic: it received 2,399 new applications during fiscal year 2020 to 2021, more than 69% more than the year prior. In the current fiscal year, the board has received 2,412 applications so far. 

While it’s not uncommon for some building owners to appeal their assessment every year, the board has seen a definite uptick during the pandemic: it received 2,399 new applications during fiscal year 2020 to 2021, more than 69% more than the year prior. In the current fiscal year, the board has received 2,412 applications so far.

Here’s what you need to know about how reassessments work, and what they could mean for the city’s tenuous fiscal picture.

Here’s what you need to know about how reassessments work, and what they could mean for the city’s tenuous fiscal picture.

Why Would Owners Ask for Reassessments?

<h2 class="wp-block-heading" id="h-why-would-owners-ask-for-reassessments">Why Would Owners Ask for Reassessments?</h2>

<h2 id="h-why-would-owners-ask-for-reassessments">Why Would Owners Ask for Reassessments?</h2>

A property’s assessed value is directly linked to the property tax paid on the real estate and—with <a href="https://sfstandard.com/business/tales-of-a-tower-salesforce-tower/">open questions around the demand for office space</a> in San Francisco—some companies and individuals are aiming to lower their tax bills by asking for reassessments.&nbsp;

A property’s assessed value is directly linked to the property tax paid on the real estate and—with <a href="https://sfstandard.com/business/tales-of-a-tower-salesforce-tower/">open questions around the demand for office space</a> in San Francisco—some companies and individuals are aiming to lower their tax bills by asking for reassessments.&nbsp;

Because of <a href="https://sfstandard.com/business/remote-work-san-francisco-downtown/">higher-than-expected numbers of remote workers</a>, commercial office spaces are seeing higher vacancies, retail outlets are seeing fewer customers and hotels have fewer guests—all of which is leading some property owners to argue that their buildings are worth less now. Take the <a href="https://www.bizjournals.com/sanfrancisco/news/2022/02/23/former-home-of-s-f-disney-store-sells-at-a-loss.html">former home of San Francisco’s Disney store</a> as one example: the vacant building at 39 Stockton St. sold for $11 million in February 2022, a 60% drop from the $27.5 million paid to acquire the property back in 2017.

Because of <a href="https://sfstandard.com/business/remote-work-san-francisco-downtown/">higher-than-expected numbers of remote workers</a>, commercial office spaces are seeing higher vacancies, retail outlets are seeing fewer customers and hotels have fewer guests—all of which is leading some property owners to argue that their buildings are worth less now. Take the <a href="https://www.bizjournals.com/sanfrancisco/news/2022/02/23/former-home-of-s-f-disney-store-sells-at-a-loss.html">former home of San Francisco’s Disney store</a> as one example: the vacant building at 39 Stockton St. sold for $11 million in February 2022, a 60% drop from the $27.5 million paid to acquire the property back in 2017.

Prop. 13, a 1978 law that caps property taxes at 1% of a property’s value, generally limits the annual increase of a property’s assessed value to 2% unless it trades hands at a different price. A new property value can also be assessed through an appeal to the appeals board, an independent panel that rules on the valuation of properties in San Francisco. 

Prop. 13, a 1978 law that caps property taxes at 1% of a property’s value, generally limits the annual increase of a property’s assessed value to 2% unless it trades hands at a different price. A new property value can also be assessed through an appeal to the appeals board, an independent panel that rules on the valuation of properties in San Francisco.

What’s the Reassessment Process?&nbsp;

<h2 class="wp-block-heading">What’s the Reassessment Process?&nbsp;</h2>

<h2>What’s the Reassessment Process?&nbsp;</h2>

After receiving an appeal application, the Assessor&#8217;s office then can request additional information from the applicant, and if it’s received, the property goes to what’s known as a <a href="https://sfgov.org/aab/">valuation hearing</a>. At that hearing, the assessor’s office will present an appraisal report and walk the board through their reasoning behind the value it’s been assigned.

After receiving an appeal application, the Assessor's office then can request additional information from the applicant, and if it’s received, the property goes to what’s known as a <a href="https://sfgov.org/aab/">valuation hearing</a>. At that hearing, the assessor’s office will present an appraisal report and walk the board through their reasoning behind the value it’s been assigned.

After receiving an appeal application, the Assessor&#8217;s office then can request additional information from the applicant, and if it’s received, the property goes to what’s known as a <a href="https://sfgov.org/aab/">valuation hearing</a>. At that hearing, the assessor’s office will present an appraisal report and walk the board through their reasoning behind the value it’s been assigned.

What’s the Success Rate for These Appeals?

<h2 class="wp-block-heading">What’s the Success Rate for These Appeals?</h2>

<h2>What’s the Success Rate for These Appeals?</h2>

The vast majority of the applications to the appeals board are known as Prop. 8 appeals, which involve a one-year, one-time reduction that needs to be renewed annually. In fiscal year 2019 to 2020, 86 applicants had their property’s assessed value lowered by the board. That number dropped to 30 the following year. In the current fiscal year, 45 applicants had been successful as of Dec. 31. 

The vast majority of the applications to the appeals board are known as Prop. 8 appeals, which involve a one-year, one-time reduction that needs to be renewed annually. In fiscal year 2019 to 2020, 86 applicants had their property’s assessed value lowered by the board. That number dropped to 30 the following year. In the current fiscal year, 45 applicants had been successful as of Dec. 31.

The board must make a final determination within two years of the appeal’s filing date, and the bulk are turned down for reasons ranging from a board denial, an invalid application or a withdrawal decision by the applicant.&nbsp;

The board must make a final determination within two years of the appeal’s filing date, and the bulk are turned down for reasons ranging from a board denial, an invalid application or a withdrawal decision by the applicant.&nbsp;

What’s the Potential Impact of Reassessments?

<h2 class="wp-block-heading">What’s the Potential Impact of Reassessments?</h2>

<h2>What’s the Potential Impact of Reassessments?</h2>

Property taxes are the single largest source of local tax revenue for San Francisco. In fiscal 2020 to 2021, the city earned $2.34 billion from property taxes, more than triple its $722.6 million in revenue from business taxes. Reassessments cut the amount of tax revenue received per property by requiring the city to issue a partial refund to the owner.&nbsp;

Property taxes are the single largest source of local tax revenue for San Francisco. In fiscal 2020 to 2021, the city earned $2.34 billion from property taxes, more than triple its $722.6 million in revenue from business taxes. Reassessments cut the amount of tax revenue received per property by requiring the city to issue a partial refund to the owner.&nbsp;

The <a href="https://sfcontroller.org/sites/default/files/Documents/Budget/Joint%20Report%20FY%202022-23%20through%20FY%202025-26%20FINAL.pdf">San Francisco Controller’s office estimated</a> some $8.9 billion of property value at risk through assessment appeals filed in 2021, with projected average reductions of 11.3% for single-family residential, 17.5% for apartments, 11.3% for office; 18.6% for hotels and 36.1% for retail.&nbsp;

The <a href="https://sfcontroller.org/sites/default/files/Documents/Budget/Joint%20Report%20FY%202022-23%20through%20FY%202025-26%20FINAL.pdf">San Francisco Controller’s office estimated</a> some $8.9 billion of property value at risk through assessment appeals filed in 2021, with projected average reductions of 11.3% for single-family residential, 17.5% for apartments, 11.3% for office; 18.6% for hotels and 36.1% for retail.&nbsp;

The city expects to refund $85 million to property owners whose buildings have been reduced in value over the next two fiscal years, according to budget analysts. That’s an increase from the $47.9 million paid out during the preceding two-year, pre-pandemic period.&nbsp;

The city expects to refund $85 million to property owners whose buildings have been reduced in value over the next two fiscal years, according to budget analysts. That’s an increase from the $47.9 million paid out during the preceding two-year, pre-pandemic period.&nbsp;

Uncertainty around San Francisco real estate values have another potential risk: Gaps between asking prices for large real estate developments, and the price buyers are willing to pay, is leading to fewer properties trading hands and a decline in projected transfer tax and lower-than-expected property tax revenue, according to the Controller. That could be compounded if the remote working trend persists permanently or grows.

Uncertainty around San Francisco real estate values have another potential risk: Gaps between asking prices for large real estate developments, and the price buyers are willing to pay, is leading to fewer properties trading hands and a decline in projected transfer tax and lower-than-expected property tax revenue, according to the Controller. That could be compounded if the remote working trend persists permanently or grows.

What’s the Optimistic Take?&nbsp;

<h2 class="wp-block-heading">What’s the Optimistic Take?&nbsp;</h2>

<h2>What’s the Optimistic Take?&nbsp;</h2>

Despite the uncertainty, property taxes are still expected to rise in the coming years. That’s because the anticipated 2% increases for the overall property roll outweigh any reductions in assessed values.&nbsp;

Despite the uncertainty, property taxes are still expected to rise in the coming years. That’s because the anticipated 2% increases for the overall property roll outweigh any reductions in assessed values.&nbsp;

Ted Egan, the city’s chief economist, said that the long-term effect of the pandemic on property values is yet to be determined. But he added that because of Prop. 13, assessed values in San Francisco are somewhat artificially depressed from their fair market value. That gives the city’s finances a bit of breathing room. For a potential model, he turned to the last major economic downturn: During the Great Recession, even as the city’s real estate markets fell into turmoil, property tax revenue continued to rise. That makes San Francisco, with its famously expensive real estate, unusual compared to the rest of California.&nbsp;

Ted Egan, the city’s chief economist, said that the long-term effect of the pandemic on property values is yet to be determined. But he added that because of Prop. 13, assessed values in San Francisco are somewhat artificially depressed from their fair market value. That gives the city’s finances a bit of breathing room. For a potential model, he turned to the last major economic downturn: During the Great Recession, even as the city’s real estate markets fell into turmoil, property tax revenue continued to rise. That makes San Francisco, with its famously expensive real estate, unusual compared to the rest of California.&nbsp;

“Our cushion from Prop. 13 cushion was so powerful that San Francisco never had any one-year decline in property tax revenue during the Great Recession, which was unlike the experience in the entire rest of the state,” Egan said.

“Our cushion from Prop. 13 cushion was so powerful that San Francisco never had any one-year decline in property tax revenue during the Great Recession, which was unlike the experience in the entire rest of the state,” Egan said.

More SF property owners are disputing the value of their buildings. Here’s what that means

Airbnb CEO Brian Chesky <a href="https://twitter.com/bchesky/status/1519831566486147073">took to Twitter</a> last Thursday to officially announce that the company’s workers will not be required to come back to the office, following in the footsteps of other erstwhile tech employers that have gone at least partially remote.&nbsp;

Airbnb CEO Brian Chesky <a href="https://twitter.com/bchesky/status/1519831566486147073">took to Twitter</a> last Thursday to officially announce that the company’s workers will not be required to come back to the office, following in the footsteps of other erstwhile tech employers that have gone at least partially remote.&nbsp;

“Our business wouldn’t have recovered as quickly from the pandemic if it hadn’t been for millions of people working from Airbnbs,” Chesky wrote. “We also had the most productive two-year period in our company’s history—all while working remotely.”

“Our business wouldn’t have recovered as quickly from the pandemic if it hadn’t been for millions of people working from Airbnbs,” Chesky wrote. “We also had the most productive two-year period in our company’s history—all while working remotely.”

The short-term rental company had previously targeted a September 2022 return for its return to the office, but careful trackers of Airbnb’s real estate moves shouldn’t be too surprised about Chesky’s announcement. The company has continued to <a href="https://www.bizjournals.com/sanfrancisco/news/2021/05/17/airbnb-san-francisco-office-leases.html">shed office space</a> in San Francisco during the pandemic, dropping or subleasing more than 400,000 square feet ​​at sites across the city. It even took a $113 million charge last year in order to exit a lease early.

The short-term rental company had previously targeted a September 2022 return for its return to the office, but careful trackers of Airbnb’s real estate moves shouldn’t be too surprised about Chesky’s announcement. The company has continued to <a href="https://www.bizjournals.com/sanfrancisco/news/2021/05/17/airbnb-san-francisco-office-leases.html">shed office space</a> in San Francisco during the pandemic, dropping or subleasing more than 400,000 square feet ​​at sites across the city. It even took a $113 million charge last year in order to exit a lease early.

The company confirmed it is currently occupying two San Francisco offices at 999 Brannan St. and 888 Brannan St. Employees working remotely won&#8217;t see any changes to their compensation, the company said.

The company confirmed it is currently occupying two San Francisco offices at 999 Brannan St. and 888 Brannan St. Employees working remotely won't see any changes to their compensation, the company said.

The company confirmed it is currently occupying two San Francisco offices at 999 Brannan St. and 888 Brannan St. Employees working remotely won&#8217;t see any changes to their compensation, the company said.

When asked whether Airbnb plans to shift its HQ out of San Francisco or continue its downsizing efforts, a spokesperson said they “don’t have any changes to or updates on our offices to share at this time.”

When asked whether Airbnb plans to shift its HQ out of San Francisco or continue its downsizing efforts, a spokesperson said they “don’t have any changes to or updates on our offices to share at this time.”

Not a great vote of confidence, nor a great sign for the sluggish recovery of the city’s office&nbsp;market.&nbsp;

Not a great vote of confidence, nor a great sign for the sluggish recovery of the city’s office&nbsp;market.&nbsp;

Airbnb joins other blue-chip tech companies like Yelp, Dropbox and Salesforce subsidiary Slack in reducing its San Francisco footprint. Block, another major tech employer that’s gone primarily remote, recently revealed that it’s <a href="https://sfstandard.com/business/square-block-headquarters-jack-dorsey/">removed San Francisco</a> as its headquarters.&nbsp;

Airbnb joins other blue-chip tech companies like Yelp, Dropbox and Salesforce subsidiary Slack in reducing its San Francisco footprint. Block, another major tech employer that’s gone primarily remote, recently revealed that it’s <a href="https://sfstandard.com/business/square-block-headquarters-jack-dorsey/">removed San Francisco</a> as its headquarters.&nbsp;

Hybrid work has persisted despite concerted efforts by the mayor and business groups to get workers back in the office and support struggling downtown small businesses.&nbsp;

Hybrid work has persisted despite concerted efforts by the mayor and business groups to get workers back in the office and support struggling downtown small businesses.&nbsp;

As an example, none of the <a href="https://sfstandard.com/business/tales-of-a-tower-salesforce-tower/">five largest tenants in Salesforce Tower</a>, who represent more than 1.2 million square feet of rentable space — currently have plans to bring workers into the office five days a week. Most are at three or fewer days in the office.

As an example, none of the <a href="https://sfstandard.com/business/tales-of-a-tower-salesforce-tower/">five largest tenants in Salesforce Tower</a>, who represent more than 1.2 million square feet of rentable space — currently have plans to bring workers into the office five days a week. Most are at three or fewer days in the office.

The city itself has more than <a href="https://sfcontroller.org/sites/default/files/Documents/Budget/Joint%20Report%20FY%202022-23%20through%20FY%202025-26%20FINAL.pdf">doubled its estimate</a> of the proportion of office workers that will be permanently telecommuting from 15% to 33%.

The city itself has more than <a href="https://sfcontroller.org/sites/default/files/Documents/Budget/Joint%20Report%20FY%202022-23%20through%20FY%202025-26%20FINAL.pdf">doubled its estimate</a> of the proportion of office workers that will be permanently telecommuting from 15% to 33%.

Commercial vacancy rates in San Francisco rose to 23.8% during the first quarter of 2022, according to a report from real estate services firm CBRE. That’s higher than the levels seen during the peak of the dot-com crash.&nbsp;For context, previous vacancy highs for San Francisco were 19% in 2003 and 16% in 2010.

Commercial vacancy rates in San Francisco rose to 23.8% during the first quarter of 2022, according to a report from real estate services firm CBRE. That’s higher than the levels seen during the peak of the dot-com crash.&nbsp;For context, previous vacancy highs for San Francisco were 19% in 2003 and 16% in 2010.

Net absorption for the quarter—the amount of new space rented minus the amount of space that became vacant—was at -1.1 million square feet, marking the ninth straight quarter of occupancy losses.&nbsp;

Net absorption for the quarter—the amount of new space rented minus the amount of space that became vacant—was at -1.1 million square feet, marking the ninth straight quarter of occupancy losses.&nbsp;

Vacancy rates also vary widely by submarket in the city’s central business district, ranging from 18.4% in the South Financial District to 41.2% in Yerba Buena.

Vacancy rates also vary widely by submarket in the city’s central business district, ranging from 18.4% in the South Financial District to 41.2% in Yerba Buena.

Airbnb likely isn’t the <a href="https://sfstandard.com/business/return-to-office-sf-london-breed-google/">last domino to fall</a>, either: According to CBRE, further adoption of hybrid work “is likely to persist throughout the year.”

Airbnb likely isn’t the <a href="https://sfstandard.com/business/return-to-office-sf-london-breed-google/">last domino to fall</a>, either: According to CBRE, further adoption of hybrid work “is likely to persist throughout the year.”

That theory has been borne out by other measures of the <a href="https://sfstandard.com/business/return-to-office-sf-london-breed-google/">city’s return to work</a>.&nbsp;

That theory has been borne out by other measures of the <a href="https://sfstandard.com/business/return-to-office-sf-london-breed-google/">city’s return to work</a>.&nbsp;

According to office occupancy data provided by keycard company Kastle, the percentage of in-office workers for the week of April 20 hovered around 33%, which puts the city ahead of both the New York and San Jose metro areas, although below the 41% average of 10 major metros across the country.

According to office occupancy data provided by keycard company Kastle, the percentage of in-office workers for the week of April 20 hovered around 33%, which puts the city ahead of both the New York and San Jose metro areas, although below the 41% average of 10 major metros across the country.

Still, real estate observers say signs of a recovery are emerging alongside greater clarity around the pandemic, noting a pickup in square footage requirements of companies in the market for office space.

Still, real estate observers say signs of a recovery are emerging alongside greater clarity around the pandemic, noting a pickup in square footage requirements of companies in the market for office space.

&#8220;Now that returning to the office has started in earnest, companies will get a better understanding of what their office space needs may look like in the months ahead,&#8221; said Colin&nbsp;Yasukochi,&nbsp;executive director of CBRE’s Tech Insights.

"Now that returning to the office has started in earnest, companies will get a better understanding of what their office space needs may look like in the months ahead," said Colin&nbsp;Yasukochi,&nbsp;executive director of CBRE’s Tech Insights.

&#8220;Now that returning to the office has started in earnest, companies will get a better understanding of what their office space needs may look like in the months ahead,&#8221; said Colin&nbsp;Yasukochi,&nbsp;executive director of CBRE’s Tech Insights.

&#8220;This uncertainty, which is related to how hybrid work evolves, will reset the connection between employee growth and office space needs,&#8221; he said.

"This uncertainty, which is related to how hybrid work evolves, will reset the connection between employee growth and office space needs," he said.

&#8220;This uncertainty, which is related to how hybrid work evolves, will reset the connection between employee growth and office space needs,&#8221; he said.

Airbnb’s shift to remote work is another hit to SF’s struggling office market

Josh Koehn

Zara Stone

Donald Trump&#8217;s planned appearance at a San Francisco fundraiser this Thursday won’t just inspire protests and ridicule in this arch-liberal city.&nbsp;

Donald Trump's planned appearance at a San Francisco fundraiser this Thursday won’t just inspire protests and ridicule in this arch-liberal city.&nbsp;

Donald Trump&#8217;s planned appearance at a San Francisco fundraiser this Thursday won’t just inspire protests and ridicule in this arch-liberal city.&nbsp;

It’ll also be a coming-out party for the former president’s host, David Sacks, who has seized the mantle as the loudest and proudest conservative in San Francisco. Sacks and his wife, Jacqueline, will roll out the red carpet for the soiree, with top tickets to enter the couple’s posh Pacific Heights mansion <a href="https://www.politico.com/newsletters/california-playbook/2024/06/04/trumps-awkward-fundraising-swing-00161367">reportedly going for $500,000 for couples</a>.&nbsp;According to the New York Times, 25 people are expected to attend dinner at the Sacks home, while another 50 will attend a reception.

It’ll also be a coming-out party for the former president’s host, David Sacks, who has seized the mantle as the loudest and proudest conservative in San Francisco. Sacks and his wife, Jacqueline, will roll out the red carpet for the soiree, with top tickets to enter the couple’s posh Pacific Heights mansion <a href="https://www.politico.com/newsletters/california-playbook/2024/06/04/trumps-awkward-fundraising-swing-00161367">reportedly going for $500,000 for couples</a>.&nbsp;According to the New York Times, 25 people are expected to attend dinner at the Sacks home, while another 50 will attend a reception.

core/video

<figure class="wp-block-video"><video autoplay loop muted poster="https://content.sfstandard.com/wp-content/uploads/2024/05/20230603sackstrump_feature-00_11_34_09-still035.jpg" src="https://content.sfstandard.com/wp-content/uploads/2024/05/20230603sackstrump_billionaire_row_inline.mp4"></video><figcaption class="wp-element-caption">Venture capitalist David Sacks will host a presidential campaign fundraiser for Donald Trump at his $20 million home (center, white) in San Francisco.</figcaption></figure>

For Trump, the timing is ideal. Coming off the fresh humiliation of 34 felony <a href="https://sfstandard.com/2024/05/31/trump-verdict-san-francisco-republicans/">convictions for falsifying records</a> to cover up a sex scandal involving a porn star, he has yet to be sentenced, and can still travel outside the state of New York.

&#8216;Rigged.&#8217; &#8216;Shocked.&#8217; &#8216;Appalling.&#8217; San Francisco Republicans sound off on Trump verdict

For Trump, the timing is ideal. Coming off the fresh humiliation of 34 felony <a href="https://sfstandard.com/2024/05/31/trump-verdict-san-francisco-republicans/">convictions for falsifying records</a> to cover up a sex scandal involving a porn star, he has yet to be sentenced, and can still travel outside the state of New York.

He gets to bask in the warm embrace of Sacks and a growing tribe of moneyed Silicon Valley conservatives who have bridled publicly at the Biden Administration’s policies on antitrust, inflation, the environment, Covid, Ukraine, China, TikTok, AI regulation, immigration and more.&nbsp;

He gets to bask in the warm embrace of Sacks and a growing tribe of moneyed Silicon Valley conservatives who have bridled publicly at the Biden Administration’s policies on antitrust, inflation, the environment, Covid, Ukraine, China, TikTok, AI regulation, immigration and more.&nbsp;

And for Sacks, he gets to enjoy a proximity to power that he has long lusted after. With the possible exception of friend Elon Musk, no one has pushed back against progressive politicians more often or noisily than Sacks, a venture capitalist, podcast host and former tech CEO. Though he previously backed other Republican and independent candidates over Trump, Sacks has recently gone full MAGA, declaring his unwavering support for the indictment-plagued ex-president.

And for Sacks, he gets to enjoy a proximity to power that he has long lusted after. With the possible exception of friend Elon Musk, no one has pushed back against progressive politicians more often or noisily than Sacks, a venture capitalist, podcast host and former tech CEO. Though he previously backed other Republican and independent candidates over Trump, Sacks has recently gone full MAGA, declaring his unwavering support for the indictment-plagued ex-president.

Chinese billionaire’s company fined $1M in San Francisco bribery scheme

More SF property owners are disputing the value of their buildings. Here’s what that means

Airbnb’s shift to remote work is another hit to SF’s struggling office market

Meet tech’s biggest Trumper: How David Sacks became the GOP’s Silicon Valley money man

How a mega-rich oligarch linked to Putin derailed a Bay Area homeless shelter

Search Results for: commercial real estate

Chinese billionaire’s company fined $1M in San Francisco bribery scheme

More SF property owners are disputing the value of their buildings. Here’s what that means

Airbnb’s shift to remote work is another hit to SF’s struggling office market

Meet tech’s biggest Trumper: How David Sacks became the GOP’s Silicon Valley money man

How a mega-rich oligarch linked to Putin derailed a Bay Area homeless shelter