Source: New York Times Online, November 11, 2016
Posted on: http://www.advisen.com
Five years ago, when Frank Jernigan, a retired Google software engineer, and his husband bought a 50th-floor apartment in downtown San Francisco for $4 million, they felt on top of the world. And judging by the commanding view of San Francisco Bay from the plate glass windows of their living room, they were.
“We were feeling pretty good about our investment here,” Mr. Jernigan said, looking out at the view from his home on Thursday afternoon.
But their 58-story luxury condominium building, the Millennium Tower, which has sunk 16 inches into the soft soils of reclaimed land and is tilting, is now derided as the leaning tower of San Francisco. A dispute over the building’s construction is fast shaping into a huge legal battle involving the developer, the city and owners, and one with stakes befitting Silicon Valley.
San Francisco’s city attorney, Dennis Herrera, announced on Thursday that he was filing a lawsuit against the developer of the building for failing to inform buyers that it was sinking “much faster than expected.” The developer, Mission Street Development, reaped hundreds of millions of dollars in sales from the more than 400 units in the building, which was completed in 2008.
“They went ahead and sold condominiums for a handsome profit without telling the buyers about the situation,” Mr. Herrera said. “This is every homeowner’s worst nightmare.”
The dispute over the Millennium Tower, with its irate wealthy apartment owners and questions about earthquake worthiness in an active seismic zone, has captivated San Francisco. The city has been transformed by the wealth of the technology boom, including a panorama of new skyscrapers, and the Millennium Tower has come to represent the extreme wealth and the potentially Icarus-like pitfalls of the rush to build.
Engineers have questioned the wisdom of building skyscrapers with foundations in mud and clay. A skyscraper being constructed next door has made it clear that its foundation, unlike the Millennium Tower, reaches down to bedrock.
P. J. Johnston, a spokesman for the developer, said the allegations by the city attorney had “no merit.”
The building had sunk within “predicted, safe ranges” during the entire sales process, Mr. Johnston said.
He blamed the city’s construction of a neighboring railway station for the building’s sinking. By removing water from the ground, the city agency, the Transbay Joint Powers Authority, had caused the building to “settle beyond the 12 inches it was predicted to settle,” he said.
“The city attorney’s action today has nothing to do with protecting public safety, the building, or its residents,” Mr. Johnston said. “Instead, it’s an effort by the City of San Francisco to duck its responsibilities and avoid paying for the harm caused by T.J.P.A.,” he said referring to the government agency.
A member of the city’s board of supervisors, Aaron Peskin, has quizzed city officials over why the building was approved for occupancy; engineers have bored into the sidewalk in front of the building to measure how much the Millennium Tower is sinking.
Patrick Shires, an engineer hired by the building’s homeowners association and the developer, held a news conference in September that seemed intended to reassure the public. Instead, he faced questions about his estimates that the building could sink up to 31 inches, which engineers say could put extreme strain on the building.
Mr. Peskin has also questioned whether the developer is playing down the severity of the problem. At a meeting in City Hall last week, Mr. Peskin read from a draft report prepared by Ronald Hamburger, a structural engineer hired by the developer to assess the building. The report concluded that parts of the tower, including the foundation, “had experienced significant stresses as a result of the settlement.” That observation was deleted in the final draft of the report.
“All of that language has been removed,” Mr. Peskin said.
Mr. Jernigan and his husband, Andrew Faulk, a physician, said they first found out the building was sinking and tilting when the homeowners’ association summoned owners to meeting in May — five years after they bought their apartment.
In a demonstration of what he said was the building’s tilt, Mr. Jernigan, rolled a marble across his kitchen floor and it rolled back to him.
“We feel cheated — and shocked,” Mr. Jernigan said.
Mr. Herrera said it was too early to say whether apartment owners might receive compensation. “We are going to see where this goes,” he said. “We are at the early stages of the litigation.”
Mr. Jernigan, 71, and Dr. Faulk, 62, had hoped the apartment would be an ideal location for an active retirement. Dr. Faulk spent his career tending to H.I.V. patients before drugs were available to mitigate the symptoms.
Most of their wealth comes from the windfall Mr. Jernigan received by joining Google in 2001, when the company had only around 200 employees.
Residents in the building can order room service from a trendy French restaurant on the ground floor. “It’s like living in a really nice hotel,” Dr. Faulk said.
Despite their material comforts and their wealth, Dr. Faulk says he wonders how they can prevail in the dispute with the developer.
“Often in America it seems like the individual with the most money wins,” Dr. Faulk said. “And we are up against a huge corporation with massive holdings.”
“We are the little guy.”