Carmen Chu San Francisco Assessor-recorder Office of the Assessor-recorder August 5, 2015 Attn: Presiding Judge Stewart*

The Office of Assessor- Recorder has made progress in clearing up the backlog, and as of February 2015, only 39 properties had exceeded the four-year statute of limitations. Nevertheless, a severe backlog problem remains. Response: 1, the office agrees that it has made significant progress in working down assessments and that there is a large number of unworked items remaining in the work queue. It is important to note that the term "backlog" has been used to generically describe the number of outstanding items on our work list at a single point in time and as such is inclusive of all outstanding assessments including those transactions that have recently occurred, duplicates, or cases that are ineligible for reassessment.

The lag in issuing assessments delays the receipt of tax revenue, leads to a loss in interest earnings on property tax revenue, and puts a burden on taxpayers who "are entitled to timely notification of assessments." (2013 BOE Survey) Response: 1, the Office of the Assessor-Recorder values timely assessments and is currently working to reduce the time needed to work assessment cases. Currently, the Revenue and Taxation Code provides county offices with a four year window to work change in ownership and new construction items and a two year window to hear assessment appeals cases - scheduling assessment appeals hearing is an independent function of the Board of Supervisor's Assessment Appeals Board. City Hall Office: 1 Dr. Carlton B. Goodlett Place Room 190, San Francisco, CA 94102-4698 www.sfassessor.org | e-mail: [email protected]

The funding from SCAPP and the matching monies from the City and County provides an opportunity to eliminate the Office of Assessor-Recorder backlog and raise their BOE rating. Response: 3, the SCAPP grant and matching monies provides much needed resources for the office, but it is only the start of addressing a larger need to resource the office. The grant funds provide a total of $300,000 in FY 2014-15, $460,000 in FY 2015-16, and $525,000 in FY 2016-17. Long term success at reducing the number of outstanding cases depends on additional resources, operational efficiencies, and market conditions which ultimately drive the number of appeals, changes in ownership, and new construction cases our office receives. Other measures that our office has successfully advocated for in partnership with the Assessment Appeals Board has been resources that allow for more scheduled more hearings. With respect to the term "BOE rating," and the report's use of the term "least efficient" when comparing San Francisco to other California counties, it is important to distinguish that the number referred to is actually the Board of Equalization's (BOE's) "assessment ratio." The assessment ratio does not measure an organization's efficiency in accomplishing its duties within resource constraints, nor does it speak to the complexities and unique attributes of different counties. In general, the assessment ratio compares our office's enrolled values to the BOE's opinion of value. It is derived based on a random sampling of assessments at a single point in time. An assessment ratio of 100 means the values enrolled are the same as the BOE's opinion of value. An assessment ratio less than 100 means that a county is valuing property at a level that is lower than the BOE's opinion of value and an assessment ratio greater than 100 means that a county is valuing property at a level that is higher than the BOE's opinion of value. Notably, since it is a point in time snapshot, any assessments that have not yet been worked will be counted as "undervaluing" the assessment even if the county is on track to value those assessments within the statute of limitation.

The funding from SCAPP is limited in time and does not cover other OAR personnel needs, including key administrative positions that can keep the backlog reduction momentum going. Response: 1, in addition to hiring staff to work assessment cases, it is vitally important to have strong staffing in administrative functions to support the work of the organization including staffing in information technology, human resources, contracting, etc.

OAR does not have a written staffing analysis and plan to reduce the remaining backlog of unassessed properties. Response: 3, over the last two budget cycles our office has successfully advocated for and outlined work plans for the hiring of additional staff through the City's annual appropriation process. In both instances funding requests were made to address a part of the outstanding assessment work load in both assessment appeals as well as new construction and to partially address the resources needed in key administrative positions. Looking forward, the office prioritized transitioning previously project- based limited positions who worked on appeals cases only to permanent positions for the office in order to provide operational flexibility. Operational flexibility is critical as our office is impacted by economic cycles - market downturns may drive more appeals cases and market upswings may drive additional new construction work so the ability to assign staff where the need is remains important. As administrative resources and data become available in the coming year, the office intends to refine our long-term projections and provide trade-offs for policy makers in their funding decisions.

There is still a need to communicate with the Department of Building Inspection about OAR needs in terms of the flow of information between the two departments, which has the potential for greater efficiencies for the OAR. Response: 1, the Office of the Assessor-Recorder is currently holding regularly scheduled meetings with the Department of Building Inspection (DBI) to improve data flow between both departments. In addition, we will be working through the City Services Auditor Division within the Controller's Office and with DBI to find additional opportunities to improve the flow of information from DBI to our office - this is particularly important as DBI begins planning for the next phase of their technology project.

There is a disconnect between the OAR Annual Report and the recommendations that have come from Civil Grand Jury, Controller, and State Board of Equalization reports. The Annual Report fails to clearly address the progress made, or the lack thereof, in its operations that stem from the recommendations that come from these outside agencies. Response: 2, Section 1.56 of the San Francisco Administrative Code requires City offices or departments to prepare an annual report describing its activities as part of the annual statement of purpose. The intent of the annual report is to share progress on key initiatives, inform the taxpayers of the general function and direction of the office, in addition to providing data on workload, challenges and achievements. Recommendations from previous Civil Grand Jury/Controller Reports and from previous Board of Equalization Assessment Surveys have also been addressed through the office's official responses - Civil Grand Jury responses are sent to the SF Superior Court, heard at public hearings before the Board of Supervisors and may have follow-up actions from the Civil Grand Jury - the State Board of Equalization also has a process to publicly incorporate the office's response and progress on recommendations and renews their review of San Francisco every five years. We look forward to working in the year ahead to improve our work and our annual report.