S.F. developer ordered to settle city taxes related to downtown HQ
San Francisco is looking to collect more than $108,400 in unpaid property taxes that it is allegedly owed by Maximus Real Estate Partners in connection with the developer’s downtown San Francisco headquarters at 1 Maritime Plaza.
The city filed an application in San Francisco Superior Court this week seeking a summary judgment — or a decision based on review of evidence that does not require a trial — that forces Maximus to settle missed payments relating to a type of property tax known as an “escape assessment” from Maximus.
The legal action coincides with news that Maximus requested to transfer a construction loan for one of its San Francisco projects to a special servicer.
Maximus’ $1.8 billion mortgage for the redevelopment of Parkmerced, its more than 3,000-unit apartment community next to Stonestown mall and San Francisco State University, is scheduled to mature at the end of the year. The move to send the debt into special servicing — meaning that a third party entity has oversight of a distressed debt — can lead to foreclosure proceedings.
According to Amanda Fried, chief of policy and communications for the city’s Office of the Treasurer and Tax Collector, the filing is related to nonpayment of the assessment for the years 2018 through 2020, and 2023, totaling $108,409. A judgment in favor of the city was entered on the same day the city filed its application.
Maximus did not immediately respond to a message seeking comment on Friday.
Fried said the tax collector’s office takes “seriously our duty to collect taxes owed to the city and county.”
“The overwhelming majority of taxpayers pay their taxes on time and in full. If taxpayers are late, we communicate with them early and often about their obligations and increasing penalties that apply to any late payments,” she said, adding that issuing a summary judgment is “a time intensive process for our collections and legal team.”
In any given year, the team issues about 50 notices of intent to take the matter to court, and approximately 30 “end up with a summary judgment action,” Fried said.
The city’s softening real estate market in the wake of the pandemic has seen many owners struggle to meet mortgage obligations and deadlines when debt comes due, and has caused large construction projects to stall throughout the city.
The Maximus loan that was sent into special servicing originated in 2019, when Maximus planned to start construction to significantly expand the Parkmerced community, which includes 3,221 apartments. The developer has long sought to grow the sprawling neighborhood to more than 8,900 apartments, but the project has yet to advance.
The following year, Maximus appeared to struggle to make payments on another, close to $1 billion loan secured by Parkmerced, according to reporting by the Real Deal.
Data on the Parkmerced loan, provided by financial services company Morningstar, shows that, as of September, the community was 83% occupied, with cash flow “well below” the level needed to cover debt payments.
For the better part of the decade leading up to the pandemic, Maximus worked to redevelop the BART Plaza at 16th and Mission streets into hundreds of units of marketrate housing, but the project was ultimately killed by community opposition. The city then acquired the project site at 1979 Mission St. in 2022 for affordable housing.