SAN JOSE >> Under a proposal by the mayor, the municipal government could seize ownership of the abandoned First Church of Christ, Scientist building, a historic downtown site that has become one of the city’s most blighted properties.

China-based Z&L Properties, acting through an affiliate, owns the property at 43 East St. James St. The real estate firm had promised to restore and preserve the old church and develop two housing towers next to it.

However, instead of high-rise housing and a vibrant adaptive reuse of the building, the church is boarded up and derelict.

“We have asked for action, maxed out our fines and two years later, we still have a blighted eyesore in our city center,” San Jose Mayor Matt Mahan said in comments texted to this news organization.

Under the mayor’s proposal, San Jose would pursue an eminent domain proceeding to gain a court order that would enable the city to buy the church and adjoining vacant lot in an effort to wrest ownership from Z&L Properties.

A possible eminent domain proceeding for the church is included in Mahan’s budget message to the San Jose City Council, which is slated to consider the proposals at this week’s meeting.

“Z&L is going from land owner to land loser if this year’s budget message is passed by the council,” Mahan said.

The blight at the church has been visible for years.

About four years ago, the unsightly conditions had morphed into a full-fledged eyesore, as documented by Bob Staedler, principal executive with land-use consultancy Silicon Valley Synergy.

By 2021, a huge tarp that was wrapped around the abandoned church began to rip apart, Staedler reported. At least three years of exposure to wind, rain, heat and sun shredded the tarp, leaving it tattered and decaying.

In 2024, construction executive James Salata led an effort to remove the tarp and reveal the church. The endeavor also enabled a cleanup of the site as well as a repair of a hole in the roof.

Staedler said San Jose could pave a less-expensive route to ownership other than eminent domain.

A previous development agreement approved by San Jose for the site obliges the Z&L affiliate to preserve and renovate the church, as well as develop the adjacent towers.

That agreement between the city and Z&L’s affiliate remains in force, according to Staedler, a former official with the city’s now-defunct Redevelopment Agency, which approved the deal with Z&L.

“The city has an enforceable agreement tied to the property that would allow the city to take back the property at a much lower cost,” Staedler said.

Under this approach, the city could enable a third party to buy the site.

Z&L Properties burst onto the local development scene several years ago with plans to dramatically reshape San Jose’s skyline with a flock of downtown residential towers.

Several years after the city approved the proposals, Z&L’s affiliates have constructed just one project — and even that landmark site is mired in a loan default and faces foreclosure.

Among the struggling Z&L projects other than the old church site:

• 188 West St. James St.: A lender has filed a notice of default for a delinquent $264 million construction loan. The double-tower residential complex, which totals more than 600 units, is the only San Jose project that Z&L ever constructed.

• 70 South Almaden Ave.: The former Greyhound bus terminal was once approved as the site of a 708-unit housing highrise, but the Z&L Properties affiliate that owns the site never broke ground. Now, the property faces foreclosure due to the owner’s default on a $19.5 million loan.

• West St James Street and Terraine Street: Z&L had proposed a large housing development but never broke ground. Z&L eventually sold the property near San Pedro Square to a real estate alliance of global developer Westbank and Bay Area developers Gary Dillabough, Tony Arreola and Mark Lazzarini.

• The 3,564-acre Richmond Ranch in southeast San Jose: In 2017, a Z&L affiliate paid $25 million for the pristine property. In January 2024, the Z&L affiliate sold it for $16 million through an intricate plan to eventually enable the Santa Clara Valley Habitat Agency and the Santa Clara County Parks and Recreation Department to buy the property. Z&L never disclosed its game plan for owning the vast ranch.

“Enough is enough,” Mahan said. “We can’t allow bad actors to take advantage of our city.”