S.F. City Attorney Files Suit Against Millennium Tower Developers

San Francisco City Attorney Dennis Herrera today filed suit against the developer of the Millennium Tower, alleging that the company knew that the luxury high-rise was sinking more than expected before it began selling units, but failed to disclose the information to buyers.

Herrera said the developer, Mission Street Development LLC, an affiliate of Millennium Partners, knew as early as February 2008 that the 58-story tower at 301 Mission St. had sunk nearly 6 inches, the maximum amount engineers had predicted over the lifetime of the building.

By the time the units went on sale in 2009, the firm knew that it had sunk 8.3 inches, and by the end of 2009, the developer knew it was sinking at different rates in different areas, potentially causing a tilt, the suit alleges.

"Before they had sold a single condo, Mission Street Development LLC knew their building had sunk more than it was supposed to in its lifetime -- and that it was still sinking," Herrera said. "Yet they didn't tell the homebuyers, as they're required to do so under the law. It's that simple."

News reports surfaced this summer indicating that the Millennium Tower was sinking and leaning. Current projections suggest it could ultimately sink more than 30 inches. A story in today's San Francisco Chronicle says "the high-rise has sunk at least 16 inches and is tilting 2 inches to the northeast at the base."

Since that time, the developer and various agencies have worked to blame each other, while homeowners have watched the value of their units drop.

"The whole reason for the expansive law in this area is so that people don't get ripped off and that they're protected," Herrera said. "That's what in our view makes this particularly egregious."

Millennium Partners has maintained that the building's excess settlement is directly caused by excessive groundwater pumping next door at the Transbay Transit Center site, which began construction in 2010.

The Transbay Joint Powers Authority, the agency responsible for the transit center, in turn has blamed the building's settlement on its design, which combines heavier-than-usual concrete construction with a concrete slab foundation and piles that go into sand rather than down to bedrock.

Some homeowners say they would like to see criminal fraud charges brought against Millennium Partners.

"Clearly, there's criminally fraudulent conduct here," said Jerry Dodson, a lawyer and resident of Millennium Towers who spoke to reporters after the announcement. Dodson said he hopes to meet with both Herrera and District Attorney George Gascón in the near future to talk about potential criminal action.

Thursday's suit by the city was filed as a cross-complaint in a class action lawsuit filed by some homeowners against the developer and the Transbay Joint Powers Authority in August. San Francisco is a party to the Joint Powers Authority, and as such faces potential liability in the case.

Millennium Partners issued a statement today saying the city attorney's allegations had "no merit."

"The City Attorney's action today has nothing to do with protecting public safety, the building, or its residents," the developer said in a statement. "Instead, it's an effort by the City of San Francisco to duck its responsibilities and avoid paying for the harm caused by TJPA."

The extent to which city building officials knew of the building's troubles has been the subject of two recent hearings held by Supervisor Aaron Peskin. The Department of Building Inspection sent at least one letter to the developer to inquire about reports of excess settlement in 2009, but does not appear to have followed up again until media coverage of the problem began this summer.

Herrera today said city building officials did not have information on potential problems with the building until this past July.

Ryan Levi contributed to this post.