SAN JOSE — A new battleground has emerged in the fight to control a former Greyhound bus terminal as the site for a significant housing project in downtown San Jose that has yet to begin.
A lender controlled by real estate executives William Wang and Chris Jiashu Xu is attempting to seize the property at 60 and 70 South Almaden Ave. through a foreclosure of a delinquent $19.5 million loan.
More than 700 homes have been proposed for a double-tower housing project at the location.
In July, the development site’s owner, an affiliate of China-based real estate firm Z&L Properties, filed for bankruptcy in a quest to reorganize its finances. The bankruptcy has delayed foreclosure efforts, which enabled Z&L to cling to ownership of the site.
On Oct. 2, a federal judge issued an order that would have effectively terminated the bankruptcy case and allowed the lending group to proceed with the foreclosure and take control of the property, bankruptcy court records show.
The same day, the Z&L Properties affiliate filed a lawsuit in Santa Clara County Superior Court to block the foreclosure. The affiliate’s allegations included wrongful foreclosure, unfair business practices and other claims, according to the lawsuit.
About a year ago, the lending group offered the Z&L affiliate a pathway to renew financing for the property, according to the lawsuit.
But the lender’s proposal for a workout and renewal of a financing package consisted primarily of a loan with a 10% interest rate, which was higher than the existing rate on the delinquent loan of about 8%, the Santa Clara County lawsuit states.
“The October 2024 renewal was not a real workout,” the Z&L affiliate stated in a court filing. “It was a foreclosure trap.”
City officials have already approved plans for Z&L to develop about 700 housing units on the former Greyhound site. Z&L’s affiliate never broke ground on the project.
The delays have been long enough that the permits for the site have expired, which would oblige a developer to start the planning process over from scratch.
The Z&L affiliate and the lending group have both stated in court filings that they have new plans to develop housing on the property.
Regardless of the outcome of the court battles, housing is not going to sprout on the property any time soon, said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.
“It could take years for this property to be developed,” Staedler said. “The developer still has to design a project that pencils out financially and meets the current demand for housing. They will have to get it financed and complete construction drawings. They have to get the city’s approval.”
The Z&L affiliate is also seeking a restraining order to halt the foreclosure until a judge or jury issues a decision on the matter.
Z&L Properties and its affiliates have produced a checkered business and real estate history in San Jose.
Over a period of several years, complaints have arisen about the blighted state of a Z&L-owned historic church at 43 East St. James St. in downtown San Jose.
In June, a two-tower residential complex at 188 West St. James St. was bought by Machine Investment Group for $181.9 million through a fast-track foreclosure proceeding that wrested ownership of the property from a Z&L affiliate.
After nearly all of its real estate empire in San Jose has dissolved through a combination of property sales at discounted prices or foreclosure proceedings, Z&L Properties appears to be mounting a fight to hang on to its Greyhound site.
“There is still demand for housing, which means the Greyhound site could be developed,” Staedler said. “But it is complicated calculus to see what makes sense financially.”