San Francisco city attorney sues developer of sinking luxury tower

November 3, 2016 3:35 PM EDT

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By Curtis Skinner

SAN FRANCISCO (Reuters) - San Francisco's city attorney on Thursday filed a lawsuit against the developer of a luxury condominium high-rise that has sunk by more than a foot, saying the developer failed to warn prospective buyers that the building was sinking faster and further than had been expected.

City Attorney Dennis Herrera told reporters at a news conference that Mission Street Development LLC failed to inform potential homeowners that the 58-story building had already settled more than it was projected to over its entire lifespan by early 2009, before any units had been sold.

"We are not going to sit by and allow a developer, or anyone else, to enrich themselves at the expense of others by hiding crucial information that they're required by law to disclose," Herrera said. "Buyer beware doesn't cut it here."

Millennium Tower, in the heart of downtown, is among the highest-profile buildings constructed amid San Francisco's real estate boom, with an average condo price around $1.8 million.

The building had settled 8.3 inches (21 cm) by February 2009, while the building had been projected to sink no more than 6 inches over its lifetime. But that information never made it to potential buyers, Herrera said.

Mission Street Development spokesman P.J. Johnston said in an emailed statement that the allegations had no merit and instead blamed the Transbay Joint Powers Authority (TJPA), of which the city of San Francisco is a member, for excavating near the building.

"It is unfortunate that Mr. Herrera, who is also legal counsel for TJPA, has chosen to take the focus off finding a fix for the building and is instead attempting to divert attention from the real culprit here — a government agency that has behaved recklessly," Johnston said.

Herrera said the suit was filed as a cross-complaint in an ongoing case brought by homeowners against the TJPA. The suit seeks unspecified damages.

The authority, created under state law to oversee the creation of the Transbay Transit Center nearby, excavated and removed water from sediment near the tower for the transit center.

Officials said Millennium Tower has sunk 16 inches (41 cm) to date and is also tilting. The authority has blamed the sinking on the developers for not anchoring the building to bedrock.

The residents' lawsuit says the building is still sinking at a rate of 1 inch per year and would likely settle another 15 inches. It also alleged tilting at the building's base translates to a 15-inch tilt at the top.

The resident's lawsuit said developers first disclosed the foundational issues in June 2015.

(Reporting by Curtis Skinner in San Francisco; Editing by Leslie Adler)



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