Fraud-linked San Jose and Fremont sites face woes

SAN JOSE >> Two big residential projects launched by a fraud-linked and bankrupt Bay Area developer face major construction roadblocks before they can be completed, court papers show.

The residential complexes that are hobbled by the problems created by Silicon Sage Builders and the company’s chief executive Sanjeev Acharya are The Almaden, a 91-unit residential complex in San Jose; and Savant at Irvington, a 93-unit residential project on Osgood Road in Fremont.

The San Jose and Fremont residential complexes are among the numerous Bay Area properties that were originally proposed or developed by Acharya and Silicon Sage Builders. The Securities and Exchange Commission has accused Acharya and Silicon Sage of fraud. Silicon Sage has been shoved into court-ordered receivership.

The uncertainties and delays that loom over the San Jose and Fremont housing developments also create a forbidding prospect for Silicon Sage’s investors and creditors who hope the proceeds from selling the projects will create funds to repay them after Acharya’s real estate empire crumbled beneath a mountain of debts.

Among the difficulties facing the residential projects in San Jose and Fremont: Sharply rising cost estimates to complete their construction, mold, construction defects and questionable financing arrangements.

In May 2021, the cost to complete the complex at 1821 Almaden Road in San Jose was estimated to be in the range of $15 million to $17 million, court papers filed at that time showed.

The cost to complete the Fremont project at 42111 Osgood Road was placed at about $6 million to $8 million, documents filed with the U.S. District Court in San Francisco stated.

Both of those estimates are now sharply higher, according to documents filed by the court-appointed receiver on Sept. 17.

“The cost to complete Osgood (Fremont) is estimated to be $18.9 million and the cost to complete Almaden (San Jose) is estimated to be $29 million,” documents filed by the receiver show.

These costs are on top of Acres Capital financing for the projects. Acres Capital provided a $45 million loan for the Osgood Fremont project and a $40.7 million loan for the Almaden San Jose project.

Construction defects also have emerged as an issue, at least at the Fremont site. The receiver has become aware that balcony guardrails could be a severe hazard.