City of San Jose sues owners of blighted downtown properties

SAN JOSE, Calif. - The City of San Jose is suing property owners it says have racked up thousands of dollars in fines and failed to keep their property in good condition right in the heart of downtown. The lawsuit was filed this week and San Jose’s mayor says he hopes the lawsuit will bring some resolution to decades of blight.

The properties in this lawsuit are right next to each other and owned by the same group of people. The mayor says it’s been a challenge to hold them responsible, so the city decided to take them to court.

"We’ve seen a couple of fights happen. Having no storefront there, there is no sense of policing happening on that corner," said Maria Charron, Mini Boss Asst. Gen. Manager. 

The Mini Boss arcade is at the corner of East Santa Clara and Second Streets. It’s located across the street from a three-story building, whose owners are now being sued by the city of San Jose for unpaid fines, defaulting on a loan and creating blight.  

"Having more vagrant spots around here is less of a draw for people to come down to us. So, it’d be nice to get somebody in there so that there’s more foot traffic and more people are incentivized to come to this block," said Charron. 

What we know:

Located at 35 & 49 East Santa Clara Street and 9 Second Street, the commercial parcel has been unoccupied for the last two decades. In 2004 and 2005, Isis Properties purchased them and then received a loan of $1,350,000 from San Jose’s Redevelopment Agency. The city’s lawsuit said Isis Properties was just a shell company for James Eu and Grace Eu, with no real capital or assets. 

"Enough is enough. It’s time to tell people you’ve got to be a good neighbor, or we’re going to hold you accountable for helping us maintain a city that’s safe and clean," said Matt Mahan, San Jose Mayor. 

The backstory:

Formerly used as a hotel, San Jose says the parcel is also a health hazard because of toxins left over from dry-cleaning operations. The lawsuit also claims the properties are a public nuisance, and the owners now owe more than $90,000 in fines and about $977,000 on the defaulted loan. As San Jose prepares to welcome thousands of visitors downtown for the Super Bowl and other major events next year, Mahan says cleaning up downtown San Jose has always been a priority.

"It’s not new, but I do think it’s table stakes for making downtown Silicon Valley’s downtown, being a destination for people all over the region, all over the country," said Mahan. 

The lawsuit said that since 2017, the city has made multiple attempts to collect the money owed on these properties. Mahan also said he hopes the lawsuit will lead to either new ownership or new management ordered by the court.

KTVU reached out James Eu and Grace Eu but didn't hear back from them in time for this report.