Thursday, January 21, 2010

SF Hits Archdiocese for $7.3 Million More: But Was Law Changed with Church in Mind?

On Tuesday, January 26, the San Francisco Board of Supervisors will vote on the transfer-tax assessment levied by the city of San Francisco against the Archdiocese of San Francisco. Now, in addition to the $14.4 million in taxes, the city is gunning for a $5 million delinquent penalty and $2.3 million in interest. I don’t think there’s much doubt on the outcome, although the case will end up being decided in Federal Court. Background posts on the issue are here, and here.

I've been trying to get a copy of the report on the case from the Controller’s office for more than a month. Today, I learned that it was finally finished earlier this week, but is now being revised. The finalized report is scheduled to be released on Monday, January 25, one day before the Supervisors meeting/vote on January 26.


I’ve always been struck by the coincidence that just as the dispute between the city and the Archdiocese was taking place, the relevant law was being modified by the Board of Supervisors.

A timeline:

April, 2008: the Archdiocese reorganized, and met with the Assessor’s office about the reorganization.

November 18, 2008: Ordinance 081450 is introduced. The Board of Supervisors’ synopsis reads:

“Real Property Transfer Tax - Change of delinquency date; substitution of references to current laws; conform partnership rule to state law changes; elimination of tax stamp provision and Transfer Tax Review Board]

Ordinance amending Sections 1106, 1108, 1108.4,1115, 1115.1 and 1115.3 and deleting Sections 1109, and 1115.2 of Business and Tax Regulations Code to (1) change delinquency date; (2) replace references to prior bankruptcy, income tax, with references to current laws; (3) conform rule for partnership interest transfers to state law changes; (4) eliminate regarding documentary tax stamps; and (5) eliminate Transfer Tax Board of Review and references to that Board. Supervisor presented.RECEIVED AND ASSIGNED to Government Audit and Oversight Committee.”

Ordinance 081450 then began its journey through the legislative process. From the minutes of the Supervisors’ meetings:

December 9, 2008: 081450 “Continued on first reading.” Vote: unanimous.

December 16, 2008: 081450 “Passed on First reading.” Voting “no”: Alioto-Pier, Chu, Dufty.

January 6, 2009: 081450 is item #22 on the agenda. San Francisco Board of Supervisors’ meetings are videotaped, and there are also published captions from the video. The video and captions are not always complete, however. Before the January 6 vote Supervisor Bevan Dufty spoke. Because there are no captions for this segment, a transcription from video is below. But readers should also watch the video by going here then scrolling down to 1/6/09, and selecting "video." The transcripted exchange begins at 13:10 into the video.

Supervisor Dufty--signatory to Resolution 168-06; welcomed speaker at Most Holy Redeemer Church; consultant to Catholic Charities during the Family Builders by Adoption fiasco; Chair of the Honorary Committee Honoring Nancy Pelosi at the Archdiocesan partner the San Francisco Organizing Project--is out for blood:

Supervisor Dufty: I wonder if the controller could maybe speak about what that process will be for them. Cause your office will be involved in any appeals prior to enacting this ordinance.

Controller: Existing law, Supervisor, provides for the appeals process to go to the Transfer Tax Review Board, which is a three-person body, that’s myself, the Treasurer, and the Director of Property for the City. So that’s the existing process that any existing appeals would proceed through if the appellant so desired and this process would remove that process going forward.

Dufty: Do you have any recollection or knowledge of the last time this process was invoked?

Controller: I believe there was one small appeal filed last year and that was the first appeal in many years.

Dufty: And I guess, do you mind stating for the record, I guess there is a major appeal which has been filed with the city which is the basis of these questions.

Controller: There is an appeal filed in the middle of December (2008) by the Catholic Church contesting the Assessor’s opinion that a recent transfer of their properties, of all their properties in San Francisco are subject to a transfer tax.

Dufty: And I guess I just want to state I did vote against this legislation and I will continue to do so. I am concerned about changing the process at this stage and feel for my purposes I would like further consideration and discussion of this given the significance of this particular case which I think is in the range of $3-15,000,000 to the city and so I am concerned about changing a process which has not been utilized for many years and all of a sudden there is a proposal to not only change the process but we have a pending case that I am encouraged to hear will be handled under the existing system.

January 6, 2009: 081450 “Finally Passed.” Voting “no”: Alioto-Pier, Campos, Chu, Dufty.

January 6, 2009: 081450 “Previous vote rescinded.” Voting “no”: Daly, Maxwell.

January 6, 2009: 081450 “Finally Passed.” Vote: unanimous

January 13, 2009: Ordinance 081450 comes before the Board of Supervisors again. Before the vote (Item 7 on the agenda) Supervisor Dufty addressed the Board. This meeting did have the the video captioning. Here it is, from, (with capitalization, etc. cleaned up):

Supervisor Dufty: Thank you, Mr. President. We had a meeting on Monday that Supervisor Elsbernd and myself participated in with the city assessor and the city attorney to talk about concerns that had come up with respect to this legislation. I'm anticipating that language is going to be delivered shortly from the city attorneys office that reflects the discussion there and an agreement to continue for a sunset period for four years the existing property transfer tax, appeal board mechanism with the city controller but recognizing the -- that claims with respect to property transfer tax disputes would be filed with the city attorney's office and understanding furthermore that in the event of discrepancies of 25,000 or more or disagreements that exceed 25,000, that those would be brought before the Board of Supervisors. So colleagues I recognize we have a short agenda but I wondered if perhaps we could defer this item and bring it up after roll call or public comment or at some point prior to the special order when the amendment is delivered.

At 1:25:56 in the video, Ordinance 081450 reappears.

Board President Chiu: Back to item 7, which has already been called, Supervisor Dufty I understand you have an amendment.

Supervisor Dufty: Yes, Mr. President. Thank you. This has been distributed to our colleagues and I talked outside and asked the deputy city attorney to reflect for a moment and outline the changes made here and indicate again that these were discussed between the city attorney and the city assessor and they have come to agreement on these changes and that they would both support this legislation if amended. Deputy city attorneys Adams, would you like to walk us through.

City Attorney Adams: This proposed amendment has been prepared as a result of the discussions that you have described and the difference really in this document versus the prior document that is in your packet and before you last time is that the tax or transfer tax review board rather than being eliminated outright would be phased out so there would be a sunset and the tax board would remain operative until January1st of 2013 at which time it would then be eliminated.

Dufty: Also requires taxpayers who get a refund to record a document to show they paid a reduced property transfer tax.

I'd like to move this as an amendment. Motion, seconded by Supervisor Mirkarimi. Can we move this without objection? So moved.”

January 13, 2009: 081450 “Passed on First Reading as Amended.” Vote: unanimous.

January 27, 2009: 081450 “Finally Passed.” Vote: unanimous.

February 5, 2009: o81450 approved by Mayor Gavin Newsom

Ordinance 081450 as amended and finally passed can be read here. I leave it to lawyers to decipher how the amendments affect the Archdiocese’s case, but I don’t see how anyone can watch the video of the Supervisor in action without concluding that he amended Ordinance 081450 with the Church in mind.

Posted by Gibbons J. Cooney

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