Who should pay for bond-measure costs? Supes to enter fray
Property owners want tenants to share burden

The Board of Supervisors’ Finance Committee will consider legislation tomorrow that would allow landlords to pass on the cost of bonds, such as the $90 million for the M. H. de Young Memorial Museum on the June ballot, to tenants.

In San Francisco, bond measures – which are essentially loans taken out by the city – are repaid by increasing property taxes. Property owners have long argued that because of this mechanism, tenants enjoy all the benefits of the bond projects without bearing any of the fiscal burden.

Tenant advocates maintain that because bond projects usually result in increases to property values, owners certainly don’t take a hit because of the tax increases, which are usually minuscule. If anything, they say, property owners profit by the current scenario.

Under the retroactive ordinance before the Finance Committee, the owners of residential buildings would be allowed to pass on the cost of bonds approved by voters between November 1996 and November 1998. Owners of commercial property are already able to recoup the increase to their taxes.

“Everybody who’s affected by the passage of bonds will have to pay–and it’s fair,” said Brook Turner, the executive director of the Coalition for Better Housing.

According to a May 4 memo from budget analyst Harvey Rose to the members of the committee, the amount that landlords could pass on to their tenants would be determined by the controller and the supervisors, who would calculate how much of the increase in the annual property tax assessment was due to bond costs. That amount would be distributed over the total number of units in a building and passed on to the tenants in monthly increments.

The pass-through amount would be recalculated annually, to allow each year’s bond costs to be recouped.

Since November 1996, the voters have approved $288 million worth of bonds. If the de Young proposal passes, the total would come to nearly $378 million. On a property of 12 units, with an assessed value of $1 million, the pass-through costs to a tenant would amount to $50 a year. That number would rise as additional bonds win at the ballot box.

The committee’s decision could have a profound effect on the de Young bond proposal. Landlord interests, led by the Coalition for Better Housing, have threatened to torpedo the measure unless the legislation passes.

Tenant advocates, too, have pledged to work against the museum money, if the ordinance is enacted.

Tenant activists say that because the figures are recalculated annually, the costs to tenants would be much greater than the $50 a year cited in the budget analyst’s report.

“This is the kind of thing that would make Ronald Reagan proud,” said Randy Shaw, of the Tenderloin Housing Clinic. “It’s truly taking from the poor and giving to the rich.”

According to a report from the board’s legislative policy analyst, Gail Feldman, that criticism could have some merit.

“From an implementation point, it could be difficult to keep track of the amount over the years as bonds come in and bonds go out,” Feldman said.

Yet, by all accounts, the pass-through legislation will be enacted. It has strong support from Mayor Willie Brown. Moreover, the housing coalition has had a long association with political consultant Jack Davis, one of the city’s most well-connected figures, who has the mayor’s ear. 

Shaw, though, says the tenant organizations plan to organize strong opposition to the pass-through ordinance. “We’re mad as hell,” Shaw said. “The savings to Jack Davis’ clients at the expense of tenants will be enormous. They’ll reap the biggest rewards.”