Transcript: SF Board of Supervisors on Property Tax Relief
San Francisco Board of Supervisors
San Francisco Board of Supervisors Meeting
March 31, 2020
Via video conference call
Link to meeting minutes
Link to meeting video
(3:15) YEE: Colleagues, and we have the treasurer Cisneros that would be available if you have any questions. As you are well aware, property taxes are due next friday, April 10, 2020. Given the shelter-in-place order and the closure of City Hall, we are unable to provide taxpayers the ability to pay taxes in person. It has come to our attention that late payments would accrue penalties unless this Board officially closes the Treasurer-Tax Collector’s in-person payment location. Therefore I am introducing a resolution along with Supervisors Safai, Stefani, Fewer, and Haney to officially close the tax collector’s office so that any late payments are not penalized. We understand this is a difficult time for many residents and so this is why we're doing this. Unfortunately, the city is unable to defer your property taxes as this is a state issue. However, the resolution will ensure that you are not accruing penalty fees while the shelter-in-place is in order and while the tax collectors' office is closed. I’m introducing this resolution so that we can act on it. Are there any questions on this imperative item? I don't see any on the rosters. Roll call, please --
MANDELMAN: You have a question from Mandleman.
CLERK: And then public comment. Name is on the chat roster.
MANDELMAN: I think Ahsha got himself in there before me.
YEE: Supervisor Safai?
SAFAI: Thank you, Mr President for putting this imperative item forward. We’ve heard from a significant number of our property owners. Many of them are those directly impacted by COVID, whether they’re seniors that are aging in place that rely on income from their family members, whether they’re working families or whoever they may be, they're in many cases having to make the decision between using savings to pay property taxes right now or worrying about having to incur late penalties and fees and so like you have, President Yee, we’ve been working with the treasurer's office. We understood that we needed to, by resolution, make it clear the office is closed, and because the office is closed and until it’s open again, there would be no late fees and penalties incurred. Right now, under the order that we've put forward, the resolution we have put forward and the order that the mayor and the health director have put in place, a new deadline would be May the Fourth and that might be changed. But just want to thank you for putting this forward, colleagues. This is extremely important to a lot of working people and small property owners that need this relief in the meantime and clarity that they won't incur a 10% late fee if they don't make the payment by April 10th. So thank you, President Yee.
YEE: Okay. Now, Supervisor Mandelman.
MANDELMAN: Alright, thank you. I have a couple of questions. One is, I presume this does not create a cash-flow problem for the City?
YEE: This question is for the treasurer?
MANDELMAN: Sure.
YEE: Treasurer Cisneros, are you online right now? I know we won't get your video, but we should be able to get your voice. Or if, Molly, if you're available, you could answer that, too, I suppose.
MOLLY: This is Molly from the office of Treasury and Tax Collector. Apologies for the technical difficulty from the Treasurer himself, hopefully he'll able to jump on and answer the question, but we've been talking with the Controller's office about this issue and we do not believe that this should present a cash-flow concern to the city though that is obviously a question that is best handled by the Controller rather than our office.
MANDELMAN: Is the Controller on? The a lot o second
YEE: Mr. Rosenfield, are you still available?
CISNEROS: Hello, this is Jose Cisneros, San Francisco Treasurer. Can you hear me?
YEE: Yes.
CISNEROS: Oh sorry, thank you, I was on mute. I agree with Molly that the cash-flow predictions and estimates for the City are best managed by the controller, Ben Rosenfield. The moving of the date likely could delay some of the payments on our website. As we saw from Controller Rosenfield earlier in this very meeting the City is under a lot of pressure financially and so we're urging everybody who can pay to please pay and pay as soon as they can. While our offices are closed and we're not able to accept in-person payments, we are accepting all payments made online or by mailing a check or money order through the US Postal Service. So I just want to remind everybody that we are accepting property tax payments and urging everybody who has the ability to pay to please pay.
YEE: So Supervisor Mandelman, we're trying to get the Controller back and I think he thought he was done. So if you want to wait, it may take a little while. I don't know if we can get a hold of him. You're muted, Supervisor Mandelman.
MANDELMAN: I feel like we should probably try to get the Controller to assure us that this is not gonna create a cash-flow problem for us in the next month or two. But also, I have also heard from many folks worried about that April 10th deadline and what I have understood and have been telling folks was that the treasurer's office was going to have a very broad waiver policy for COVID-19-related hardships. And so it seems like this is moving in a different direction than is much broader and potentially will apply to everyone regardless of whether they have a COVID hardship, including, you know, large corporate property owners or others, right?
CISNEROS: Supervisor Mandelman through the President. You are correct. State law controls all property tax payments and collection and state law does allow treasurer-tax collectors to waive penalties in the case of certain extenuating circumstances. And therefore, I want to be clear that we've also posted on our website that we understand that many people have had very severe impacts from this COVID-19 pandemic and we are urging anybody who is in that situation and therefore unable to meet the property tax deadline whenever it is, whether it's April 10th or another date, as set by the closure of the office, that if they're not able to meet that deadline, they have a process whereby they can go on our website and fill out the penalty waiver online and request a waiver of the penalty by explaining their circumstances and how they've been affected so I want to make sure that people know that and yes, Supervisor Mandleman, that is available to everyone, no matter when the deadline is.
MANDELMAN: And what kind of proof would be required of hardship?
CISNEROS: It really depends on their circumstances, Supervisor. So we're giving people the opportunity, of course, to attach any information and documentation they can and we're gonna try and make it easy for them to apply for this penalty waiver online and explain their situation to us and we'll get back to them as soon as possible.
MANDELMAN: So I can see for the individual taxpayer, the appeal of having this sort of blanket extension through May 4th be much more attractive than having to try to prove to your office the hardship.
CISNEROS: We're gonna be very understanding about people's circumstances. We, of course, like everybody else, know that this pandemic has had broad and very intense impacts on a number of people so we want to make sure we're understanding of that and exercising the opportunity to waive the penalties wherever it makes sense. (3:26)
MANDELMAN: So you were supporting this -- this is from you and the board President, yeah?
CISNEROS: So we don't take a position. This is a matter for the board. The state law affords every county in the state the opportunity to adjust the due date by resolution if the county Board of Supervisors states that the Treasurer's office is closed. So it's really a matter of the Board to decide and I will just note that since the due date as it stands is not until April 10th, there's time for the Board to consider this, hear back from the Controller and still be able to ask, I presume, if there's a board meeting next week in advance of the April 10th deadline.
MANDELMAN: And just one last question. So my understanding is that for a lot of homeowners, their property tax is taken out each month by the mortgage company -- that’s not the case with my mortgage -- but there are a number of homeowners who pays their taxes through their monthly mortgage payment, and those tax payments are then held by the mortgage companies. This extension would apply the date as well, right?
YEE: No, I don’t think so
CISNEROS: Yes - I believe if you move the date, it moves the date for everybody and I would have to check with the attorneys to be selective about who the new date applies to. But my understanding is once the date is moved to another date, that it applies to everybody and so that might delay when we would get those funds, as well. Those are typically some sort of escrow companies you're describing that collect through each monthly mortgage payment, for some property owners, the amount of the taxes, and then they have it now in hand and theoretically, it would have probably all those funds available and will remit them to the county appropriately by the deadline whenever you guys decide that it is.
YEE: So Mr. Treasurer, maybe I'm getting confused now. For those that have mortgages and most people that have mortgages do pay into their regular amount every month or whatever, and the mortgage company then turns around and pays the property tax and that's done electronically. So, if they're capable of doing that electronically, it's okay, right?
CISNEROS: Yes, Mr. President, they will do that electronically, but I believe -- and we can maybe make check with the attorneys on this, if they're available to answer the question now. But my understanding from them is once the Board moves the due date, it's moved for all property tax owners in san francisco and that would include the properties whose taxes are being paid by an escrow-type company on behalf of the property owners and it would move for them, as well.
YEE: Right - I guess what I'm saying is that it doesn't prevent people to pay by April 10th if they wanted to?
CISNEROS: You're absolutely correct, Mr. President. As I stated a minute ago, during this time, even while our office is closed and during the shelter-in-place orders, our office is accepting property tax payments both online and individuals can pay online using a credit card, which does entail a fee or they can use what's called an echeck payment, whereby they pay using their bank account number and bank routing number and they can do an e-check for no charge, no additional cost to them. Or they can mail us a check or money order through the U.S. Mail in the envelope that they received in their property tax bill and as long we receive that by the deadline or it’s postmarked by the deadline, then they will be paying on time. So we definitely are accepting payment at this time.
YEE: Okay, so I don't want to confuse anybody, because this dialogue is confusing for someone listening. One can pay any time before the deadline. What we're talking about is, if because of people that may not have mortgages, which is a lot of the seniors, and they choose to go down to your office, which not everybody does but quite a few people do, they go down and pay their property tax in person, because they don't have a mortgage and those are the people we're trying to capture and not to penalize them, correct?
CISNEROS: That is correct, Mr. President. Those are the people who would be supposedly impacted by our office being closed and by moving the dates to the first day, the due date to the first day after we open the office, the first day after we end the shelter-in-place and closure of the office, theoretically that will give them an opportunity to pay in person, if that's the only way they have to pay. I hope to repeat to everybody, that I encourage everyone, no matter when they're able to pay, to please pay online or through the mail and not necessarily have to rely on coming to our office.
PEARSON: President Yee?
YEE: Who is this?
PEARSON: This is Ann Pearson, can you hear me?
YEE: Go ahead, Deputy City Attorney.
PEARSON: I wanted to reiterate a point that was made earlier which is that if the Board chooses to adopt this resolution, it needs to do so by April 10th. Which means that In light of the questions coming up, you could choose to not take action today and defer action until next week and still have time to take that action before April 10th.
YEE: And the reasoning for that is because once we pass it, the mayor has to sign it, correct.
PEARSON: That's right. We would need to try to expedite the signature, but there would be still time to do that before.
YEE: One day, correct?
PEARSON: Well, I think the next meeting is the 7th.
YEE: Three days, oka
SAFAI: President Yee, this is Ahsha.
YEE: Go ahead, Supervisor Safai.
SAFAI: I mean, I think the reason and the argument you would make for doing the resolution today is because the public health orders were extended and shelter-in-place has been made clear that it is extending through May 1, and then if the office is closed and people can't make their payments, then, as I understand the law, and by that reasoning, they have to make it clear that they're not going to impose any late penalties or fees on anybody. so this resolution actually makes clear now what the rules are now and nothing will change between now and next week. The health order has been stated, offices will be closed through May 1st, people will continue to be encouraged with a shelter-in-place and we don't want there to be any confusion and there is about getting the information out to those that rely heavily on coming in to pay in person which I will tell you disproportionately my district pays in person. So I think it makes sense, the health order has been stated today and the office won't be reopened and because the office is not open on that date, then whether we do this resolution or not, the Treasurer would have to make clear to everyone that no penalties or fees will be incurred until and after May 4th.
YEE: Supervisor Mandleman, I didn't mean to cut you off.
MANDELMAN: No, you didn't cut me off. If it is the will of all of my colleagues go forward with this, I won't stand in the way with that. I do think this is functionally changing the deadline for payment of property tax to May 4th and the Treasurer has said, now without us doing this, that he will waive late payments where there is a hardship and it would be, I think, nice to know just to confirm that this doesn't create -- these payments come in in May rather than in April, that it doesn't create a cash-flow problem.
YEE: Understood. So I believe City Controller, Ben Rossenfield, are you back?
ROSENFIELD: I am, Mr. President.
YEE: Did you get gift of the concern here that Supervisor Mandelman has raised?
ROSENFIELD: I believe so. To the Board through the President, I guess there's a couple of issues that arise with the delays in property tax payments, whether they're because of a closure of the Treasurer's office or simply later payment. To start with, I think it's important to remember that we -- the treasure is billing property tax, not just for the City and County of San Francisco but for other tax amenities, the school district, BART, community college and others in the city. And under our arrangement in state law, which we call the teeter plan, we are required to make those payments out to those other tax entities regardless of when money is collected. So that means that we will, with any delay, we will be fronting several hundred million dollars to those entities in advance of the receipt of the revenues. The usual way in a Teeter Plan approach that the county is compensated for that is through penalties and interest. And so we get to keep the penalties and interest in return for advancing these funds and creating certainty for them. So I think the financial consequence of delay is one of loss of penalties and interest which we estimate to be about $13 million for the remainder of the fiscal year. That’s the amount that’s expected from penalties and interest. Some part of that would be foregone. Additionally, we have the cash-flow issue, I think that Supervisor Mandelman has raised. The cashflow issue I think is less severe, provided that cash is received shortly after May 1 that's less of a concern for me and I think for us. The only other issue to note here is that in some cases we're billing and collecting other assessments on the property tax bills and so in some cases, if we are to delay receipt of property tax, we will need authority to make payments to advance money, for example, to community benefit districts that in some cases are using proceeds we're collecting and then remitting to them to secure debt for other operating expenses.
YEE: So, first of all, Supervisor Mandelman, thank you for raising these issues and just to be clear, I'm the author, but it was brought to me in regards to asking me to carry this and I supported it. People like myself who’s senior and still finishing paying my mortgage and I go in and pay personally and to be truthful, when I get the tax bill, I always throw away the envelopes. But fortunately, for the Treasurer, I pay the whole year in November or whatever. So I could just imagine, again, we have to balance this out, for those that may be in my category and they get anxious about, oh, my God, what am I going do? I can't seem to figure out how to pay this right now? I don't know how many people. Maybe there's only a few and I think we're trying to get rid of some of the anxiety for these older people that already have other anxieties because of the virus. So if there's not enough clarification, we could continue this item until next week. And so, are there any comments from any of my colleagues around this issue? Before you talk, I want to say that even though we have three days, you're cutting everything very close and if we're still worrying about those particular individuals that are in the category where they pay the mortgage, that you're creating a lot more anxiety not letting them know what’s happening. So Supervisor Safai.
SAFAI: Thank you, President Yee. I guess what I'm still confused about -- and not confused, I'm sorry -- I guess what I want to overemphasize is the fact that the office that we know today is not going to be open all the way through May the 4th and it's clearly stated. My understanding is that the Treasurer would have to amend his statement to the public in terms of asking folks to fill out a hardship, but it would be stated that because the office is closed, no penalties would be incurred until May 4th. Treasurer Cisneros, are you still on the line?
CISNEROS: I am.
SAFAI: Am I stating that correctly? The fact that you know your office is closed would you not have to just state on your website, or your frequently asked questions or letting people know that no late fees and penalties will be incurred if they don't pay until May 4th?
CISNEROS: Supervisor, my understanding and again, I would refer to the attorneys who are the experts on what the state law says, my understanding is that we would not be, in effect, telling the people that there would be no penalties merely because the office is closed. We can't do that until the Board of Supervisors passes the resolution performing that action and I believe that's stated under state law. What we would do, merely, is continue our statement to taxpayers that says if they have been impacted by this COVID-19 pandemic, they are allowed to submit a penalty waiver and we will consider their circumstances and hope to support them in that way.
SAFAI: Okay, I guess I must have misunderstood what you and I discussed yesterday. I thought you made it pretty clear to me that you would be updating your website with that information.
CISNEROS: Supervisor, apologies if I wasn't clear. We can't make the change to the due date until the Board of Supervisors passes the resolution stating such and pointing to the office being closed as the reason for doing that. Again, that's my understanding of the California state law.
SAFAI: Well, Deputy City Attorney Ann Pearson, are you still there?
PEARSON: I am here, yes.
SAFAI: You know, I am far from an expert in the state tax law, but my understanding of the state law here is that unless and until the Board takes some action by resolution to close the office, the property taxes will become due on April 10th and if you take the action by resolution to affirm the decision to close the office, then those taxes will not become due until the next date that the office is open. We don't yet know when that will be, but they will not become due until the reopening of the office. Even if we know when this emergency order that's been declared by the Mayor that just came out today, that's made it very clear that everything is going to be closed until May 4th?
PEARSON: It could be superseded by another order after that date, so the time when this office might be closed might actually be longer. We now know the duration of the existing stay-at-home order but we don't know if there will be another one to follow it.
SAFAI: Thank you.
RONEN: I just think at this point so much of the revenue coming into the City is in flux and unclear that and that the situation that tenants and property owners are in at the moment is so dire that we have to take this chance and act and we're going to be adjusting our budget over the next couple of months in countless ways, but that your original intention for this act and this resolution makes sense to me and I'm prepared to vote in favor of it today.
YEE: So why don't we just go ahead and vote on this item, then. Madam Clerk, can you call the roll on the imperative.
CLERK: Yes, on the imperative item. Peskin, absent..
CLERK: There are ten ayes.
YEE: Ok, then the resolution --
CLERK: You are correct, it is a resolution, Mr. President.
YEE: Ok, then this resolution is adopted unanimously.