How Many Laws Does San Francisco’s Prop. A Violate?

Whether or not San Francisco’s upcoming appeal to voters to borrow $600 million to pay for for low income housing is a good idea or a bad idea depends on who you ask.

Proponents claim Prop. A, which will appear on the ballot this November 5th, is necessary because San Francisco doesn’t have enough affordable housing. Opponents argue, among other things, that Prop. A is mostly for “rehabilitation” of existing low income housing and therefore doesn’t significantly increase the supply of housing.

But does Prop. A’s proposed use of funds conform to state law that directs how bond money can be spent?

Does Prop. A’s Use of Proceeds Violate California’s State Prop. 46?

Eight years after the passage of the landmark Prop. 13, which California’s voters approved in 1978 to freeze property taxes at one percent of the assessed value at that time (with a maximum two percent per year permissible adjustment), Prop. 46 was passed by voters to offer some exemptions to Prop. 13. Specifically, Prop. 46 authorized local governments to increase property taxes if, by a two-thirds vote, ballot measures were approved to permit borrowing “to purchase or improve land and buildings.”

Prop. A’s proposed use of funds appears to skate very close to the edge in terms of complying with Prop. 46, because there is a difference between “improvement” and “repairs.” In the world of accounting and finance, this difference is significant. The distinction between capital improvements and repair expenses is clearly defined in […] Read More