SAN JOSE — The purchase of two West St. James Street housing towers by Machine Investment Group offers hope of a turnaround for the troubled project.

The New York City-based group aims to quickly orchestrate a rebound for the double-tower complex at 188 W. St. James St., which consists of more than 600 residential units.

China-based Z&L Properties, acting through an affiliate, had been the owner and developer of the two towers. The deal with Machine Investment Group marks a major milestone in the unraveling of the Z&L real estate empire in downtown San Jose.

“Z&L has left a trail of broken promises in San Jose, neglecting historic landmarks, abandoning shovel-ready housing and sitting on properties that should be community assets, not community eyesores,” San Jose Mayor Matt Mahan said.

The transaction also ends a long-running ordeal for the West St. James towers that has stretched over about eight years.

During the Z&L affiliate’s ownership, a loan delinquency, foreclosure threats, lawsuits, project delays, construction blunders and defects, evidence that some workers were forced to live in an East Bay warehouse, allegations of slave labor and a death have haunted the property.

“A fresh start for 188 West St. James” is the guiding principle and strategy, according to Eric Rosenthal, managing partner for Machine Investment Group.

The new owner has wide-ranging plans for improvements.

“Our firm is uniquely positioned to apply its construction, finance and development expertise to stabilize building operations, relaunch sales and provide an important housing solution to one of the most dynamic residential markets in the country,” Rosenthal said.

Machine Investment Group intends to recapitalize the project, prepare units for sale and reengage with the community to restore confidence in the towers. The real estate firm intends to sell the remaining condos.

“With its prime location near San Pedro Square and proximity to major tech employers, 188 West St. James is poised to regain its stature as the most sought-after address in San Jose,” Rosenthal said.

Yet while a buyer has taken control of the towers, that doesn’t mean the effort will immediately bear fruit, warned Bob Staedler, principal executive with Silicon Valley Synergy and a land-use consultant.

“Completing this project will be an immense undertaking,” Staedler said. “Don’t expect this to be completed in the short term.”

Z&L Properties has left behind a forbidding legacy of wrecked projects bedeviled by blight and deteriorating buildings.

A viable solution hasn’t materialized for two parcels owned by Z&L affiliates that have yet to be developed despite their advantage of commanding prime locations. Both had been expected to be the location of future housing towers, but neither has broken ground.

Here are some details of the respective status of the two downtown San Jose projects that affiliates of Z&L Properties continue to own:

43 E. St. James Street: Z&L agreed to protect and renovate an old church at this site next to St. James Park. Instead, the real estate firm has neglected the historic building and allowed it to fall into disrepair. Z&L also has failed to develop housing towers on the site. At one point, the church structure was covered by a huge tarp that eventually shredded with exposure to the sun, wind and rain. The tarp has been removed. The First Church of Christ, Scientist remains abandoned.

70 S. Almaden Ave.: Z&L had proposed a housing project at the site of a one-time Greyhound bus terminal. The old bus depot has become an eyesore. City code inspectors call it a public nuisance. Graffiti has defaced the site at times. Despite being on the city’s radar screen for more than six years, San Jose has done little more than threaten fines and penalties for the owner.

“The city of San Jose needs for Z&L to divest all of its properties,” Staedler said.

Z&L’s real estate adventures reached as far away as a site of pristine open spaces at the far end of south San Jose.

In 2017, a Z&L affiliate paid $25 million for the 3,654-acre Richmond Ranch. 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 it.

At Terraine Street and Bassett Street in downtown San Jose, Z&L had proposed a large housing development, but never broke ground. Z&L 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.

“While I’m encouraged by progress at 188 West St. James, the First Church of Christ, Scientist and the Greyhound station remain stuck in limbo,” Mahan said. “We’re exploring every option to ensure these sites deliver the jobs and housing our community needs.”