Winds shred tarp that had covered downtown San Jose historic building

SAN JOSE — Recent wind blasts have shredded a tarp that had been covering an old church in downtown San Jose, exposing the historic building to the winter’s elements, including fierce rain storms.

Z&L Properties, a unit of a China-based real estate firm, owns the church and adjacent sites such as a surface parking lot and weed-choked field.

San Jose officials have begun to press the property owner to place a new tarp or reimburse the city for the replacement work, according to Nanci Klein, the city’s director of economic development.

It’s unclear whether either of those outcomes will transpire any time soon.

“We have been in contact with Z&L,” Klein said. “We are trying to get them to replace the tarp or grant us access so we can replace it and then they would pay us back.”

A significant obstacle has materialized, however, that could hobble both approaches.

“Z&L is telling us that they don’t have the money for the work,” Klein said.

As of Wednesday, Zhang Li, the principal executive and co-owner of Z&L Properties, as well as the co-chairman of Z&L’s primary owner, China-based Guangzhou R&F, had a net worth of $1.8 billion, according to an estimate that financial publication Forbes had posted on its website.

Zhang, however, might be distracted by significant legal matters at present. Zhang is fighting an attempt by federal prosecutors to extradite him to the United States. The extradition is linked to a U.S. investigation into possible kickbacks and bribery involving a project in San Francisco.

Zhang was detained in London in December. The extradition and other legal proceedings have been ongoing.

“One of the problems is all the decisions have to be made company’s chairman,” Klein said, referring to Zhang.

Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy, said he doesn’t buy the Z&L stance with the city.

“Z&L claiming that they lack the funds to manage the site properly is extremely insulting to the people of San Jose,” Staedler said. “The city of San Jose should be issuing fines and using all remedies from the original development agreement to force the issue.”

This news organization sent an email to two Z&L representatives, George Casey and Li Wu, to request a comment in connection with the church site.

Z&L Properties, which has a Foster City office, owns several downtown San Jose sites:

• Two residential towers at 188 W. St. James St. in San Jose have been built but are only partly occupied. The towers total 640 units, consisting of roughly 320 units in each tower. Condominium sales are proceeding in one tower. The other tower remains empty.
• A pair of housing high-rises and the revamp and rescue of a historic church at East St. James Street and North First Street. Neither tower has begun construction and the church appears to be suffering from water damage and mold.
• A project of two housing towers that would replace a former Greyhound terminal at 70 S. Almaden Ave. This project has been delayed to the extent that a key permit has expired on the proposed development. That property is up for sale.

In 2021, Z&L Properties yielded ownership of one of its development sites, a 1.6-acre property near the corner of Terraine Street and Bassett Street. Z&L’s plans for a big residential tower at that location had stalled.

An alliance led by global developer Westbank, local developer Gary Dillabough, and San Jose-based Terrascape, a firm headed by real estate veterans Tony Arreola and Mark Lazzarini, paid $11.4 million for the choice parcel. The property is in a downtown district known as the North San Pedro neighborhood.

Meanwhile, the church has yet to be renovated as it awaits its fate in an important section of downtown San Jose, a situation that has alarmed the city and an array of observers.

“The city should not allow Z&L to let the property fall to neglect or a fire and profit from it,” Staedler said.