1979 Mission Rendering: Mission Street Building

Maximus Real Estate Partners, the development team which has already invested an estimated $8 million to design and entitle the proposed development of 331 residential units at 1979 Mission Street, the so-called “Monster in the Mission,” has now filed suit against the family which still owns all the land upon which Maximus intends to build.

According to the complaint, as reported by the Business Times, Maximus accuses the Jang family of working behind the scenes, “through a series of bad faith, fraudulent and oppressive business maneuvers,” to actively delay the approval process for the project in order to sell the site to an unnamed “national development company based on the East Coast” for $55 million, $13 million more than the $41.88 million contract price which Maximus negotiated in 2013.

Having made a $5 million earnest money deposit, Maximus had until July 9 of this year to fund the $36.88 million balance and close escrow on the sale of the property per the terms of the original purchase agreement. But with growing community resistance and entitlement delays, Maximus proposed forming a development partnership with the Jangs, rather than purchasing the land outright, last fall.

While the suit claims the two parties “agreed to and did form the Partnership” earlier this year, the final term sheet was never formally executed. And “suddenly and without warning” on June 5, the Jangs moved to enforce the July 9 closing date for the purchase agreement which Maximus was unable to meet.

An extension to August 11 was granted, but that date has come and gone without a closing. And as such, Maximus has technically forfeited its $5 million deposit and any claim to the property, hence the lawsuit which was filed on the 11th in Superior Court seeking to block a sale of the land to another developer, enforce the aforementioned Partnership, and allow Maximus to move forward with the development of 1979 Mission.

With the potential for an additional $18 million in profit should the Jangs prevail and successfully sell the land to another developer for $55 million, and the potential for Maximus to lose its entire investment of $13 million to date, don’t expect a quick resolution to the suit or any forward progress on the development until it’s settled.

Comments from “Plugged-In” Readers

  1. Posted by Elitist Pig

    Well this is going to end well…

    • Posted by BobN

      And soon, of course.

      • Posted by Elitist Pig

        More than likely this is all just going to go up in flames, and everyone will lose out until we go through this whole thing again in 5-10 years.

        • Posted by Patrick

          The lawyers will make out like bandits!

          • Posted by Orland

            No, this is on the litigants.

        • Posted by Sierrajeff

          Meanwhile the urban planning ulcer that is the corner of 16th and Mission will continue to fester (and spoil the surrounding area).

          • Posted by Elitist Pig

            That is someone’s “outdoor living room” you are talking about! Show some respect.

          • Posted by shza

            ahem. “urban living room” is the term you’re looking for.

          • Posted by NoeNeighbor

            I think urban bathroom is more accurate.

  2. Posted by mas

    If this is true, a part of me is hoping that the East Coast developer gets the deal and designs a better looking building.

  3. Posted by NextCycle

    From the sounds of things, the Jangs will end up with an old Walgreens next to a poorly cleaned subway station. I have my doubts that this will ever get built if no one breaks ground soon.

  4. Posted by R

    That’s pretty messed up on the Jang’s end and stupid on Maximus’

    • Posted by jenofla

      I don’t know if the Jangs are messed up. They just want to sell the darn land, not be in a “development partnership” for a project in the Mission with community resistance. Sounds pretty sensible to me. If Maximus couldn’t buy the land by the date, then they didn’t budget enough for this kind of project. At least that’s how I read the above.

      Only the well-heeled and brave need apply. And the more community resistance, the more expensive a project gets, and the more expensive the units’ll be, putting them even more out of reach of the community.

      • Posted by Elitist Pig

        They agreed to a sale price, but now they are trying to scuttle the deal by halting the project in underhanded ways. That doesn’t sound messed up?

        Don’t make a deal if you are going to back out on it. This sounds like much more than using an offer to get better offers. Frankly I hope the Jang family takes a bath on this and still has to sell it for the original offer that they accepted.

      • Posted by formerly%whatever

        The case from Maximus is weak. They didn’t come up with the cash to close and now they’re trying to enforce a “partnership” that was not signed. They have $5 million tied up in escrow and they “spent” $13(!) million pursuing entitlements. If there is really another buyer waiting in the wings, they should get their $5m plus a few more for their trouble and go away. Otherwise, step up close the deal.

        The Jangs need to show that there’s a real price out there so that when the city buys the property from them they can’t be lowballed.

        • Posted by OMN

          Judging from the city’s purchase prices for other parcels on 16th street, I don’t think a lowball offer is possible.

  5. Posted by Zugamenzia Farnsworth

    It’s kind of like the field of Gettysburg in a modern, local way: a timely struggle, interesting, and possibly somewhat telling.

  6. Posted by seriously

    Please, please, please, please, please, please just build this already. This area is a s—hole.

  7. Posted by Government Shrinkage

    I am so relieved. I’d miss the smell of urine as I go into the Walgreens to buy the antacid I need after my trip to Burger King for their Spicy Chickn Crisp Sandwich.

  8. Posted by jamesjr

    Better a urine soaked Walgreen’s then a Monster, right?

  9. Posted by farts

    the Jangs are in for groundhog day if they go for the other developer. no one would close escrow without being absolutely certain of entitlement. and given the community resistance, that’s a long ways off. if they wanna sell, and they wanna sell now – sell it to a non-profit developer for half price, get the other half in city bonds over 25 years, and let it be 100% affordable housing.

    • Posted by SF resident

      There’s too much low income housing near that intersection. We want market rate where the people care about the surroundings. Most people are fed up w/ that disgusting corner.

  10. Posted by ostrich

    What ever happened to just complying with your contract? Maximus, like every developer, wants to get the property without paying for it until they’ve secured the gold at the end of the rainbow. They failed to pay by the date, even with the extension. How can you blame Jangs? Heck, that extra dough will help them get just a bit further from the battlefield that is the Mission, which they will certainly need after this mess.

  11. Posted by wsf

    Here’s a prediction: Contract for the land was at $42M. Another developer swoops in with a $55M offer. The City will come to the rescue and buy the land for $90M and put up BMR and homeless shelter units at a cost of $1.5m/ea.

    That’s the logic behind the price paid at 490 S. Van Ness – which they bought the land for $18.5M (last sold in 2009 for $2.65M) where the units will cost $1M ea.

    I’ve been a homeowner within 2 blocks since 2004. So sad this isn’t getting developed… what is wrong with people?

  12. Posted by Jake

    Well, if they can get $55 million for 331 units ($166k/unit), it is much cheaper than the $18.5 million for 72 units ($257k/unit) SF just paid for nearby at Van Ness and 16th.

    Maybe SF should use the new bond money, if approved this November, to buy it and build all BMR/affordable/etc. And if SF is willing to cost it out as high as $257k/unit, they/we could scale it down to around 214 units. Less units and more affordable might mitigate enough local opposition to get it done. Then everyone is a winner sort of, except for the taxpayers who have to vote for their own soaking or not in November.

    • Posted by Government Shrinkage

      If we don’t build market-rate development, tenant buyouts and Ellis evictions will keep increasing. Why isn’t this obvious to everyone?

      • Posted by Jake

        I think SF history has shown Ellis evictions and tenant buyouts follow the changes in the rental market rates. When we have had steep rent rate increases like recently and in the dotcom, then they’ve gone up and when rents dropped or flattened they went down. A few hundred units targeted at any price range or renter subgroup isn’t going to affect the market much. That should be obvious to anyone that isn’t obviously pushing an agenda.

      • Posted by NoeNeighbor

        Tenant buyouts and Ellis evictions will increase in any case — they make economic sense for the landlords and a few market rate developments won’t alter that.

    • Posted by SF resident

      NO NO NO
      on the bond at the balot!
      1M per unit is not what I’m paying for.

    • Posted by Orland

      Any well considered proposal which proves feasible and will quell opposition (private/public/mixed) would be much welcome to transform this key property. However, the instant problem requiring immediate attention is the dispute of individuals seeking to maximize return on this potential residential real estate deal. The of Maximus appears not well taken and until the Jangs have a clear title do not expect to see anything happen. I doubt Maximus will simple acquiesce. Perhaps, the contending parties can reach an “arrangement.” If it goes to litigation, it will likely be years before anyone will touch this with so much as an idea.

  13. Posted by SmartGirlInSF

    When did $42 million become “not enough”? Nothing good comes of greed.

  14. Posted by jayjay

    this is hilarious. i hope the developer loses out, and then the moratorium kicks in. perfect timing for a lawsuit.

  15. Posted by Orland

    Obviously all Campos’ fault!

  16. Posted by Sflandlord

    When will community activists realize all their protests make existing real estate even more expensive (and out of reach for their constituents)?

    • Posted by moto mayhem

      communizty activists wont suddenly “realize” they are making things more expensive. They are uneducated about housing and economics, and being misled for political gain. It will take a lot of education

    • Posted by Frisco

      Because it’s not true. Building luxury condos makes the neighborhood more expensive because it makes it “better” or more desirable (for people who can afford it).

      • Posted by parklife

        While not disagreeing with your premise that this building would make the neighborhood more desirable and possibly more expensive, I have to quibble with this oft used term “luxury condos”. It seems every new development is deemed to be “luxury condos” or “luxury apartments” merely because the price is high. By that measure, SF is planning to build “luxury BMR units” near this location.

        In SF anything new will be considered “luxury” because the cost of the land and building costs put the price beyond the means of the majority of current residents. The only way scalable way to bring down these costs is to endure a significant economic downturn.

        • Posted by Frisco

          Fair point. Many condos are promoted as luxury by the developers, but this one hasn’t been.

      • Posted by moto mayhem

        no one is building luxury condos. they are building regular condos that have high prices because there is not enough market rate housing to fill the demand by people who have money to buy.

        If you were to build a crappy building here with subpar materials, it would still be very expensive because theres not enough housing to meet demand. If 10 buildings of similar size were built in the mission over the next 3-4 yrs, the prices would come down for everyone.

        Everytime people block buildings likes this, they are just driving prices higher and higher. the only way out of the high prices is to build a lot more market rate units. building BMR is fine the lucky few lottery winners, but will not help the porblem overall. 5,000 new units in the mission over the next 4 yrs would bring prices down.

        • Posted by Orland

          I don’t think the Mission (the neighborhood, not the market) could absorb that many more units without significant change to its character.

          • Posted by [SF resident]

            Who cares about the neighborhood changing, this is life – it changes.

            It’s changed in the last 15yrs I’ve lived there, I really hope it doesn’t stay static for the next 20. It’s the folks at Calle 24 that want the City to never change.

            We have too many people in SF now, so 400 units that are not built is fine, but that’s the corner they should be built on because it’s so awful at the Bart St.

            The Jang’s have a right to do as they please, and if Maximus couldn’t get the project through, maybe the next developer will. Stop listing to the crybabies in the Mission, in 10yrs those people will be in the East bay, or they will have grown up and accepted that they live in the USA – a pretty fine place if you’ve seen the rest of the world.

          • Posted by moto mayhem

            it needs changing.

          • Posted by Orland

            First of all, I wasn’t referring to cultural displacement, but simply massive physical transformation the likes of which would greatly diminish what makes it so currently attractive. What Moto proposed would create another Mission Bay West.

          • Posted by Hola

            What? You mean less muggings and homeless? Sounds good to me!

          • Posted by moto mayhem

            orland, if as you say, this “would greatly diminish what makes it so currently attractive,” then prices would drop since its less attractive, right?

  17. Posted by Pfffttt

    Market rate, please. I support Darwinism!

    • Posted by Frisco

      I can’t tell if you’re joking but obviously “social Darwinism” is a poor political distortion of Darwinism.

      • Posted by Pfffttt

        Did you just make up that term, “social Darwinism”? There’s no such thing. It’s just Darwinism–period.

        • Posted by jenofla

          No, he didn’t. And yes there is. Wikipedia it.

  18. Posted by soccermom

    What do Kearny, Montgomery, Scott, Sloat, Polk, Grant, Stockton, and Taylor have in common?

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