Very good analysis of bond measures

http://www.hoover.org/research/desensitization-debt-accountants-analysis-propositions-51-53

Yes, good analysis. Thanks for the post.

"With voters approving four out of five local tax and bond ballot measures, one has to ponder. Are voters unaware that the debt is paid out of their taxes? Are they bullish on the future and unafraid to pay higher taxes?"

Indeed, that, and maybe because so many voters pay no taxes, either thanks to high-end tax shelters on both property and income, or thanks to lower-income government credits.

And BTW what happens if there is an downturn? Debenture holders get their due. How about the rest of us?

So, the message needs to be communicated to those who do pay taxes -- neighborhood property owners and renters (they pay pass-trough taxes)?

I will forward this link to others.

Marcy

Bond measures are paid mostly out of real property taxes.

Renters do not pay any part of property taxes on the property they rent.

Rental are based on supply and demand in the rental market.

The property tax on a specific property has nothing with the rents charged on it.

Hence, renters do not any property taxes, which would be the same with or without a property tax.

This certainly explains why bond measures pass so easily.

Those who actually pay the bills are a minority of voters.

As to other taxes most voters apparently do not see the connection between voting for taxes and their cost of living.

But the benefits from spending the tax dollars are often visible immediately.

Hi Les and All,

These are questions that I am posing because I want to see if my thinking is really not correct at all, or what.

1. Can we really say that renters do not pay a portion of property taxes? All bond proposals state that landlords are allowed to pass through 50% of their property tax increases to tenants.

2. Can we really say that rent prices are not connected to property taxes? True, price of any good or service depends on supply and demand. However, when demand for rental space is high, landlords have more of a chance to pass through costs, such as property taxes. Rent control would not affect this ability to pass through costs, since as tenants move out, the landlord could increase the price of new tenants' rent to where his costs are covered.

But, yes, unless voters connect the dots, they will keep voting for more "benefits" without giving thought to the fact that maybe they will be paying for those "benefits" whether they can afford it or not.

Or, there might be another variable, far fetched but still possible. Voters have accepted a brave new world, where everyone is happy taxes and all, except us bothersome Libertarians.

Marcy

Hi Marcy and All. My feeling is that some renters do pay some small part
of these property tax increases (when allowed). However, since they never
cut a check directly to the SF Tax Collector, they will never make the
connection between their YES vote and the consequence of that vote.
Furthermore, the 50% pass-through will get divided by the number of units
in that building, so it really will be quite small. Too small for the
average renter to really care, and as I recall, I remember reading one
supporter's comment regarding Prop AA (Save The Bay tax) this past
spring--something to the effect that he didn't mind paying the $12 as long
as it might do some good.

And, by the way, when I presented the LPSF argument against Prop A at the
PTA meeting this past Wednesday, I forgot to mention that Richard Carrenza,
the Superintendent of the SFUSD, mentioned they're already thinking about a
parcel tax for the SFUSD for 2018. One woman balked at that idea and asked
if maybe they could come up with some other type of tax that could be
pushed onto businesses rather than homeowners! And of course they all
voted unanimously to support the current bond measure. It would appear to
be hopeless with the SF mindsetšŸ˜±!

Thanks!
Aubrey

The bond obligation pass through is rather easy to do, but it's buried on the SFRB website. I asked a number of landlords about it at an apartment owner's association meeting, and most were surprised. One challenge is it can crowd out fair rate of return non CPI based increases (such as mortgage financing upon sale), so renters are reticent to do so.

Between obligation passthroughs and SFPUC passthroughs, you can usually get $20/month more per unit.