Z&L Properties’ neglect of church in San Jose fits company profile

A Chinese real estate firm has neglected to repair a historic church in Downtown San Jose while its CEO has been arrested in London on suspicion of bribery and corruption in San Francisco.

Z&L Properties, run by Zhang Li, has failed to restore the former First Church of Christ, Scientist at 43 East Saint James Street, leaving it to the elements, the San Jose Mercury News reported.

The China-based developer with an office in Foster City had planned to restore the church and build two housing towers beside it.

Instead, the former Christian Science church, built in 1905, has tumbled into apparent abandonment by its owner, an affiliate of Z&L Properties.

The church, designed by San Francisco architect William Polk, is now exposed to the elements. Torrential rains in December and January drenched the building surrounded by a weed-choked field and covered by only a tattered tarp.

“This is turning into negligence,” Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy, told the Mercury News.

“I personally have been reaching out to Z&L personnel,” added Nanci Klein, San Jose’s director of economic development. “I’m frustrated that the company has not fulfilled its obligations.”

In 2018, Z&L filed plans to restore the Greek Revival church, from which the congregation had moved in 1946, and build two highrises with 221 apartments and five townhomes, which would have helped revitalize the moribund St. James Park.

“Z&L Properties knows how important the historic First Church of Christ Scientist building is to the City of San Jose,” Robert Buckner, chief financial officer with Z&L, told the Mercury News at the time.

But the developer’s inability to break ground fits a pattern. Z&L Properties has struggled with its Bay Area property portfolio – having completed just one local project, a 640-unit double-highrise in Downtown San Jose near San Pedro Square. Only one tower is available for occupancy.

In 2021, Z&L Properties sold a 1.6-acre development site near Terraine and Bassett street in the North San Pedro neighborhood for $11.4 million, after plans for a 313-unit tower stalled.

Z&L also failed to break ground on a housing highrise at an old Greyhound Station at 70 South Almaden Avenue in Downtown San Jose. Last month, it put the property up for sale.

“The fact that the Greyhound site is on the market and not the church site is quite telling,” Staedler told the newspaper. “They should have put both properties on the market at the same time, listed them together. But Z&L hasn’t done that. Maybe they are hoping that the church property will be so neglected that the building will be gone in a few years.”

Zhang, a real estate tycoon in charge of Z&L, is co-founder of R&F Properties in Guangzhou, China, now trying to restructure debts and negotiate with bondholders. Z&L acquired 12 projects in the Bay Area and Los Angeles in 2014 and 2015, during the peak of the China property mania, and was planning to build 3,400 high-end condos, according to GSI Exchange.

Zhang was detained in the British capital last month in connection with a U.S. investigation into possible kickbacks and bribery involving a project in San Francisco. He was released after paying 15 million British pounds in bail.

He was tied to a federal case against former San Francisco Public Works Director Mohammed Nuru, who was indicted in January 2020 on public corruption charges.
The indictment states that Nuru had met the developer in China on multiple occasions and that Zhang had showered him with gifts and put him up for free at five-star hotels. In exchange, Nuru “used his official influence with other city officials to solve problems” the developer encountered, according to the San Francisco Chronicle.

— Dana Bartholomew