Real Estate

When will San Francisco take assessors seriously?

One of the most, if not the most, important revenue producing department in the City and County of San Francisco is the assessor’s office. The assessor’s office is responsible for identifying and appraising all real and business property within San Francisco, resulting in approximately $2 billion in tax revenue annually. These monies provide funding for our police and fire; for social, recreational, and educational programs; and for administrative offices such as the mayor’s office, Board of Supervisors, and controller, to name a few.

Then why do we not take the assessor seriously?

Since the two-term limit passed in 1990, there have been five assessors — all politicians. Former Supervisor Dick Hongisto, who resigned as assessor to become police chief and later was fired for taking neighborhood newspapers; former Supervisor Doris Ward, who hired her campaign manager on a city contract to run her campaign; former Supervisor Mabel Teng, who resigned midway through her first term in office; Phil Ting, who used public financing to run for mayor to help boost his bid for the Assembly; and now former Supervisor Carmen Chu, who was being termed out as District 4 supervisor and needed a place to go and was appointed by Mayor Ed Lee.

If this were private industry, none of these people would be considered for the assessor position based on their qualifications and experience. Before the two-term limit, the assessor came up through the ranks and had the experience and qualifications needed to run the office. Just like it is in the real world in private industry. However, this is government and, as you know, qualifications are secondary to political payback. Three of the five former assessors resigned and were replaced with mayoral appointments. The last real assessor was Sam Duca, who retired in 1988.

The city will receive a substantial increase in property tax revenue due to new construction going on all over the city and due to transfer tax revenue from increased sales. But those who know the business know that these positive increases in tax revenue over the years were made by assessor staff in spite of these political assessors. Based on my own experience and on discussions with former and current staff members, the office would do a much better job and increase revenues more if there was a professional, qualified, and independent assessor. In fact the city would bring in tens and potentially hundreds of millions more in additional tax revenue annually if there was a professional, experienced, and independent assessor. Not a politician.

The assessor’s office has been backlogged in new construction for over 10 years, as well as being backlogged in assessment appeals. Due to the substantial backlog in new construction, the State Board of Equalization (SBE) noted in its June 2013 report on the San Francisco City and County Assessment Practices Survey, that there are lengthy delays in processing building permits and adding value due to the new construction. They found numerous cases in which new construction was not made until four years after the date of completion. This results in delayed property tax bills for taxpayers and delay in collection of tax revenue. Further, this causes an unnecessary burden on the taxpayer for payment of taxes.

The assessor’s job is to appraise in-progress new construction as of January 1. The SBE found ongoing projects over several years in which the assessor did not enroll any value even though there was evidence of partially completed projects. The SBE noted that “the assessor’s failure to assess new construction as of Jan 1st is contrary to statutory provisions and results in a loss in revenue and inaccurate assessments.”

Based on a small sample, the SBE also found many procedural deficiencies and noted “We found a number of parcels that were not assessed even though the assessor was aware of the transfer.” Just think if they took a larger sample.

Over the past year, I have identified nearly $200 million in tax revenue to the city that is not currently being appraised by the assessor’s office, such as the unconstitutional loophole in the Presidio Trust that tax-exempts tenants, the non-assessment of naming rights at AT&T Ballpark and of the PG&E franchise fee by the SBE, and the appalling appeal by the Giants to reduce their ballpark value to $140 million after they built it 2000 for over $350 million, to name a few. If these properties are not being assessed appropriately, what about other properties in the city?

Where is the Chronicle? Where is the Examiner? Where is Harvey Rose? How can a mayor approve a budget knowing that there is this excessive backlog and that property tax revenues are not all being accounted for fairly and equitably?

Since the advent of the two-term limit, the assessor position has never been taken seriously and was considered a place where someone would be politically rewarded and then retire at a high pension. However, since Phil Ting became an assemblyman, it is now looked at as a stepping stone to higher office. I hope the current assessor will take this opportunity to provide a professional environment and not just use the position like her predecessors.

A professional, qualified, and independent assessor means at least $100 million more annually in tax revenue to the city.

Everyone should pay their fair share.

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John Farrell, MBA, is a broker/Realtor with Farrell Real Estate, and is a former city assistant assessor for budget and special projects. E-mail: [email protected]