Tenants May Lose Out With Supes’ Decision on Bond Costs

‘Pass-through’ law could affect de Young bond

The Board of Supervisors last night approved legislation allowing property owners to pass on the cost of bond measures, such as the $90 million proposed for the M.H. de Young Memorial Museum on the June 2 ballot, to tenants. 

The approval, which stems from a 1996 deal engineered by Mayor Willie Brown between property owners and tenant advocates in an effort to secure victory for $100 million worth of affordable-housing bonds, has profound political consequences for the museum money. 

As a result of the supervisors’ decision, tenant advocates have vowed to do their best to ensure that renters across the city vote against Proposition A, the museum bond measure that will appear on the June ballot. 

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

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

Tenants advocates maintain that because bond projects result in higher property values, owners certainly don’t take a hit from the tax increases, which are usually minimal. If anything, they say, owners benefit because their property values go up as the improvements financed by the bond money come on line. 

Supervisor Sue Bierman last night proposed an 11th-hour “50/50” amendment to the legislation, which would have allowed property owners to pass on only half of the costs of bond measures — an amendment that, had it passed, might have partially placated tenant activists. That proposal, however, went down to defeat by a vote of 8-2. Supervisor Barbara Kaufman, a property owner, abstained from voting. 

 Supervisor Michael Yaki said a compromise similar to Bierman’s proposal might be put forward in the future.

“I believe it should be 50/50,” said Yaki. “As soon as this is over we should sit down and talk about a 50/50 split so that no side could hold a future bond hostage.”

Under the retroactive ordinance before the supervisors, the owners of residential buildings will be allowed to pass on the cost generated by the passage of bonds approved from November 1996 through November 1998. Owners of commercial property are already able to recoup the increases 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, which represents the interests of property owners.

According to a May 4 memo from budget analyst Harvey Rose to the board’s Finance Committee, the amount that can be passed on to renters will be determined by the controller, who will calculate how much of the increase in the annual property-tax assessment is due to bond costs. That amount will be distributed over the total amount of units in a building and passed on to tenants in monthly increments. 

The amount will be recalculated annually to capture the costs associated with the bond measures approved each year by the voters. 

Since November 1996, the voters have approved $288 million worth of general bonds that could be passed on to tenants. If the de Young proposal passes, that number would come to nearly $378 million. On a property containing 12 units with an assessed value of $1 million, the pass-through cost to a renter would amount to $50 a year, or $4.17 a month. 

Supervisor Barbara Kaufman, who supports the pass-through, knew that approving the measure could have dire consequences for the de Young bond initiative, she hoped that it would not. 

According to the City Charter, bond measures need a “supermajority” — a yes vote from at least two-thirds of the voters who participate — to pass. San Francisco’s electorate comprises approximately 70 percent renters.

“What does it mean for Prop. A?” Kaufman asked. “I hope nothing. The de Young is not the exclusive domain of property owners … yes, it’s tough to get a two-thirds vote, [but] I think it would be shameful of someone were to run a campaign against the de Young simply because of this legislation.”

Tenant advocates, such as Shaw and San Francisco Tenant’s Union president Ted Gullicksen, though, have pledged to do just that. In fact, with Proposition E — which would repeal rent control in owner-occupied buildings that contain four or fewer units — also on the ballot, they have an added impetus to get out the vote. 

“We have 25,000 slate cards ready to go,” Gullicksen said. “We’re going to make sure that tenants know what was done to them here … and that they vote on June 2.”