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The Naked Lots

Adam L. Brinklow | November 7, 2014 | Story Real Estate

If you’ve ever looked at one of the unsightly bald spots dotting the densely developed hills and valleys of San Francisco and wondered, What the hell? you are far from alone. Beneath the surface, there’s often a story so weird and/or tragic that it could star in an HGTV show: Real Estate Purgatory: Get Me Out of Here!

“We assume that a hot market is a perfect machine that utilizes all assets,” says Ben Grant, urban design program manager at the city-planning think tank SPUR. “But markets don’t build—people do. And people are quirky.” Even in the midst of a frenetic building boom in San francisco—24,000 new building permits were issued in the 2013 fiscal year, the most since the ‘08 housing bust—there exist a smattering of sites that even the voracious maw of a market can’t consume. These pieces of privately owned land linger in a kind of developmental no-man’s-land, marked only by urban debris, ominous holes in the ground, and grass tall enough to hide a stalking jungle cat.

How could these properties, collectively worth tens of millions of dollars, some of them located in the city’s most desirable neighborhoods, go quietly to seed? The answers turn out to be as varied—and quirky—as the city itself.

1. The Fading Dream
1886 Quesada Avenue (Bayview)
5,000 Square Feet
Naked Since: Before the Spanish arrived
Valued at $33,000

City College instructor Michael Shannon had a plan. In 1991, he bought two lots on the scrub-grass end of Quesada Avenue with the intention of building an old folks’ home—a quiet retirement space with a lovely view. The hill and the relative emptiness of the area provide as close to a country atmosphere as you’re likely to find in the city proper, and the sharpness of the hill’s grade allows a degree of privacy. Sure, it was the Bayview in the ’90s, a dangerous place, but Shannon’s placid little plot in the sun seemed like an antidote to all that.

So what happened? Shannon sums it up neatly: “I lost my shirt. I was an amateur investor. I had some financial reversals. I’d rather not discuss it.” He has held on to the land for over two decades, hoping, until recently, that the project would come through. But its quarter-million-dollar price tag (including the costs of cutting a new access road into the hillside, running a sewer line up the hill, paying for concrete to extend the sidewalk, and installing a custom water meter hookup to accommodate the needs of his hypothetical future tenants) kept it just out of reach. The city bought up almost all the adjoining lots for green space over the years, but Shannon didn’t sell. The Palou & Phelps Mini-Park now hems the property, and Shannon hopes that a new buyer will see the value in the spot. “Bayview is the Rodney Dangerfield of neighborhoods: no respect. But the view from the top of that hill is in the top 1 percent of San Francisco views. It’ll be a great place,” Shannon says, sounding only a little wistful, “for someone.”

2. The Immovable Object
941 Powell Street (Nob Hill)
9,500 Square Feet
Naked Since: The early 20th century
Valued at $542,000

A stone’s throw from the Fairmont Hotel sits a majestic and startling sight: an enormous pile of rock, hundreds of feet across—a tiny natural fortress atop swanky Nob Hill. According to owner Haig Mardikian, nothing has ever been built on this lot except perhaps some cottage or lean-to back in the early 1900s, making it a rare piece of quasi-virgin San Francisco. “My family has owned that lot since the ’40s,” Mardikian says, “and, as far as I can remember, there’s never been anything on it but rock.”

Mardikian planned to build a 90-unit apartment complex there in the late ’80s, but neighborhood crusaders (part of the backlash against Feinstein-era high-rise development) sank it at the Board of Appeals level. “I believe the objection,” he says, “was that they didn’t like the shape of the building.” Unlike many would-be developers, Mardikian doesn’t sound angry or sardonic when he talks about the failed deal—just a little surprised that it amounted to a death knell. “I think about that land very often,” he says, confessing that he just doesn’t have the killer instinct to pursue a big deal: “You’ve got to really, really want to build something in this town.” Then again, it sure would be nice to put something there. “I’m 67, and I’m in good health. So we’ll see.”

3. The Star-Crossed Plots
350 Bush Street and 500 Pine Street (Financial District)
48,900 Square Feet
Naked Since: the ’70S
Valued at $75 million

If you’re the sort who believes in curses, these two enormous holes in the ground in the heart of the city’s big-money district have bad juju written all over them. In the ’70s, the Shorenstein Company bought the lots and demolished the existing structures to make way for high-rise offices. In 1984, before the new buildings could be erected, city voters passed Proposition K, banning any new development that would throw shadows over public parks—parks like nearby St. Mary’s Square, which sits right in the shadow of the would-be Pine Street tower. Meanwhile, the Bush Street project floundered because of its adjacency to the historic Mining Exchange Building.

Walter Shorenstein himself was reportedly so nonplussed by all this that he canned the projects. Not that plenty of other developers haven’t made eyes at the land—it’s since been owned by the Swig Company, which sold it to Lincoln Property, which this year drafted Chinese real estate company Gemdale as a partner on a new project that should have broken ground in October. The proposed designs—one incorporates the Mining Exchange into its frame, and the other includes an extension of St. Mary’s onto its roof—are the work of architect Jeff Heller, who has dreamed of putting something on the two lots since “before you and I were born.” Heller calls the Pine and Bush plans “the single most complex permitting I’ve ever done. It’s a good thing I’m the patient type, because you could jump out of a window waiting on these things.”

4. The Bad Bet
490 Bryant Street (Soma)
2,550 Square Feet
Naked Since: 2001
Valued at $43,000

Only a few blocKs from Moscone Center, AT&T Park, and some of SoMa’s trendiest dining experiences sits the ideal spot ominous chain-link fence ringed with razor wire wrapped around a plot of dirt and refuse. So it’s been for 13 years, as owner Charles Segalas has fretted over what to do with it. When the previous residents—a flop hotel and a restaurant—closed down, the property became a homestead for a new demographic: the homeless. “They were breaking in all the time to urinate, defecate, and set trash can fires,” Segalas says. So in 2001, he figured out an ingenious work-around: Just demolish the old, derelict building and build a brand-new, spiffy, up-to-code property with the help of some new investors.

Not so fast. In the three and a half years (a not atypical period for development in the city) it took to get the permits for the planned office space, Segalas’s investors pulled out, leaving him with nothing to show for his trouble except a hole in the ground in the middle of what was becoming a destination neighborhood. “So,” he says, “I put up the fence.”

Ten years later, he’s located new investors and hopes to build office space with a restaurant on the ground floor. That is, if he can just get through the red tape this time.

5. Waiting For The Great Pumpkin
307–317 Sloat Boulevard (Sunset)
13,000 Square Feet
Naked Since: at least 1970
Valued at $831,000

This spacious patch of dirt just across the street from Stern Grove is barren and unvisited nine months out of the year. But every October, as if by magic, it transforms into the Great Pumpkin Patch. Owner Cyril Hackett, an Irish immigrant who also owns the Haight bars Kezar Pub and Mad Dog in the Fog, got the idea while selling 1989 World Series T-shirts in the lot along busy 19th Avenue. “Being a businessman,” he says, “it got me to thinking what else we could do with that spot.” And so it happened that when fall arrives, this fallow plot becomes a pumpkin-covered, bouncy house–bedecked neighborhood hangout that transforms again, in late November, into the Emerald Forest Christmas tree lot.

Hackett has received offers on the property, but he’d rather let it be. “We don’t need a high-rise there,” he says. “And who doesn’t love a pumpkin patch?” Turns out that at least one person doesn’t: Monio Pilpel, a retired pharmacist who lives 14 blocks away on Crestlake Drive. With clockwork predictability, Pilpel embarks on a yearly crusade against Hackett’s business that has become something of a holiday tradition itself. In 2005, Pilpel even got the pumpkin patch briefly shut down until the Board of Appeals ruled in his opponent’s favor. “I got called a Grinch,” he says, “but if they just followed the rules, I’d be happy to leave it be.” His complaints: Among other things, Hackett doesn’t have permits for both lots, fails to clean up after himself, and lets the two parcels go to pot most of the year. But Pilpel’s crusade has a distinct PR disadvantage: What politician wants to close down a Christmas tree lot three weeks before Christmas?

6. The Very Long Game
6335 Third Street (Bayview)
5,140 Square Feet
Naked Since: Unknown
Valued at $267,000

A single family has owned this junk-strewn lot near Candlestick for years, but never to much effect. Broker Sevan Kevorkian wouldn’t comment on why his clients have never opted to build anything or lease the space, but speaking hypothetically, he pointed out that land banking—buying property simply to hold on to until it appreciates—is common in the neighborhood. “Land banking is easy,” says one local developer. “You’re not working; you’re just waiting. When people show interest, you can ask whatever you want because you weren’t even trying to sell. It’s what people without access to capital often do because it’s the lowest possible risk.”

Indeed, sometimes the best course of action is to do nothing at all. A land banker might stumble onto a lot at a bargain price—maybe the neighborhood is blighted, maybe the seller is just eager—or simply inherit it, and then wait patiently until the neighborhood’s fortunes rise or an inevitable real estate boom comes along and sends values up. Thanks to Proposition 13, San Francisco land bankers rarely have to worry about property taxes spiking during said boom, so even in good times there’s little incentive to sell. This being San Francisco, the owner is faced with two enviable scenarios: Sell for a pile now, or sell for even more later.

7. How To Fill A Vacuum
370 Linden Street and 404 Octavia Street (Hayes Valley)
25,000 Square Feet
Naked(ish) Since: 1992
Value: Unassessed

Develo\per Douglas Burnham has a novel approach to undeveloped land: Put something there. Anything. “When lots sit empty, it’s a crisis of imagination,” he says philosophically. “[Property owners] can’t figure out how to crack the nut.” But Burnham is nothing if not a nutcracker, and his Proxy project in Hayes Balley offers a neat solution to the city’s black holes: fill them with productive retail, foot traffic, and, naturally, microbrews.

When the removal of the earthquake-crippled Central Freeway left 22 prime parcels empty in the middle of Hayes Valley, Burnham stepped in to find uses for them while the city labored on long-term building plans. The neighborhood’s beloved Biergarten is one such experiment, and the lot just north of it hosts a bike tours company.

The sites have a lot going for them that makes such a setup work: their location in tony Hayes Valley, for one thing, and the fact that the city controls the land and doesn’t mind letting shipping containers filled with pop-up shops occupy the space while plans for big development are finalized. (The Biergarten will become new market-rate housing, but not until 2021.) “Proxy was just supposed to be a way to get the neighborhood involved for a while, but the community liked it so much, and we’re still not ready to build there, so we figured we’d let them stay,” says Kevin Kitchingham of the Mayor’s Office of Housing and Community Development.

When the alternative is nothing, it turns out, something usually wins.

8. The Big Gamble
3579 Folsom Street (Bernal Heights)
1,500 Square Feet
Naked Since: Forever
Valued at $334,000

Just how badly do people want to live in Bernal Heights? So badly that this grassy curb, a lot so minuscule that even neighborhood brokers question whether it’s big enough to build anything on, can command more than $300,000. Real estate agent James Maxwell reports that he has an interested buyer who wants to build a house (presumably a very wee one) in the narrow shadow of Bernal Heights Park at the butt end of Folsom. But even if the sale goes through, it is just the first step in the very complicated pas de deux that is building in Bernal.

Maxwell knows that dance well—nine years ago, he bought an empty lot in the neighborhood. “It’s nerve-racking,” says Maxwell of his negotiations with the neighborhood review board and the citywide Planning Commission. “I had people warn me, ‘Get ready to pay somebody off, get ready to build a fence for your neighbor or do some work on their property. They’re going to come with their hands out for something.” This is the price, he says, of getting people not to file endless appeals. Maxwell hastens to add that in his case, the neighbors’ concerns were quite reasonable—but that doesn’t make the game any less fraught with peril.

9. The Grudge Match
115 Telegraph Hill Boulevard (Telegraph Hill)
7,500 Square Feet
Naked Since: 1999
Valued at $2.2 million

In one corner: well-to-do land-owners aiming to plant condos atop the Filbert steps, right next to Pioneer Park and Coit Tower. In the other: equally well-to-do neighbors willing to kick, scream, and file endless appeals to stop it from happening. How long could this turf battle possibly go on? How long ya got? “Development can happen on this site, but do you have to bomb the village to save it?” asks former Board of Supervisors president and expert bomb-thrower Aaron Peskin. His views mirror those of the Telegraph Hill Dwellers, the politically connected neighborhood group that is adamantly opposed to two-decade-old plans made by the owners of the hillside lot.

The Hill Dwellers criticize the owners, Tracy Kirkham and Joe Cooper, for having removed historic rental cottages that were condemned in the ’90s and for moving forward with a development that would “obliterate” views. A better idea would be to incorporate the lot into Pioneer Park, contends Peskin, pointing to a supposed $2.5 million purchase offer from a neighbor for just such a purpose. (The owners’ broker, Louis Silcox, says that no such offer has crossed his desk.)

After years of getting nowhere fast, Kirkham and Cooper have opted to sell, and developer Jeremy Ricks has stepped into the breach. “We have more support than opposition for our plan,” says Ricks. “We made changes and lost about 320 feet of buildable space in response to neighbors’ concerns—but they’re good changes.” The Planning Commission signed off on the new plans (with a few conditional changes) in September. Fifteen years after a truck hauled Spanish Civil War veteran Bill Bailey’s cottage away from 115 Telegraph Hill Boulevard, the plot may finally emerge from development limbo. Then again, it may not: The Hill Dwellers just filed an appeal. “My guess is, we haven’t heard the last of this,” says Peskin.

Originally published in the November issue of San Francisco

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