captioned by the national captioning institute --www.ncicap.org-- supervisor chu: good morning, welcome to the regular meeting of the budget committee. sfgtv, mr. young, do we have any announcements today? >> if you wish to turn in public comment, please provide a copy to the clerk. items heard today will appear on the board of supervisors agenda on march 1, 2011, unless otherwise stated. supervisor chu: please call item no. 1. >> item #one. resolution approving an emergency public work contract under san francisco administrative code section 6.60 to replace the sewer on polk street from bush street to pine street with a contract amount not to exceed $422,339. supervisor chu: that this item was heard at the last budget committee. the reason it was continued with, the dollar value was slightly lower. previously stated that 420,000 and 07 $1. -- $420,071. it was continued for one week to allow for the actual public notice of the value. i will be prepared to take a notice to take it out. there is no presentation, but we can open it to public comment. are there any members of the public that wish to speak on item number one? seeing no one, public comment is close. i have a motion to send this forward with recommendations and without objection. thank you. item number two, please. >> item #2, resolution authorizing tax collector to sell at public auction certain parcels of tax-defaulted real property. >> i believe we have -- supervisor chu: i believe that we have francis from the treasurer text apartment. >> good morning. my name is francis [unintelligible] of the office of the treasurer tax collector. here to request your approval for a resolution to allow the tax collector to build 117 properties that have been taxed the faulted for five or more years. they are subject to the tax collectors power to sell. the public option would take place over the internet from april 23 through april 26, 2011. supervisor chu: is that the extent of your presentation? >> do you have any questions? supervisor chu: thank you. let's go to the budget analysts report. >> as we pointed out on page 5 of our report, these 117 properties sold at the minimum bid would fine the city realizing $1,100,000. the general fund would accrue $781,928. really, this is the annual sale, as you know, attacks the faulted property where persons of delinquent taxes -- there is nothing unusual except that, for the first time, you are being asked to authorize the treasury tax collector to sell timeshare properties at or below the minimum bid if they do not get the minimum bid without requesting an additional public auction sale. i believe that that is reasonable. that there are problems with these time shares each year. we set it as a policy matter only because it is the first time you would be given the authorization to sell below the minimum bid. supervisor chu: i believe that we have a question. supervisor mirkarimi: thank you to the tax collector treasurer's office. curious, what would be a market guest at the real property value of these properties? >> referring to the timeshare units? for the real property is? supervisor mirkarimi: real property, then timeshare. >> real property, there is no problem selling at the minimum bid amount. with the exception of the timeshare units. we believe that we might have difficulty selling all the time shares on a list. the reason for that is that in the last auction we had 13 offered for sale and only one was sold at a minimum bid amount. we did not receive bids for the other 12. leading us to believe that the minimum bid amount may be equal to the fair market value. supervisor mirkarimi: ok. i am looking at the -- give me an example of the minimum bid for a time share. >> the minimum bid, for example, if you look at item 37, it is $1,630 on the left column. supervisor mirkarimi: that is nothing. if these are going out at a minimum bid. >> the fair market value of the time share, some of them have very low fair market value. depending on the size of the unit and the location of the building. we anticipate only a small portion of the time share in one building we have had problems selling. supervisor mirkarimi: which building is that? knob hill inn on 1000 pine street. the rest of them are located in the heart of downtown and are easier to sell. supervisor mirkarimi: is it likely that these minimum bids will yield considerably higher amounts? >> the minimum bid is about the fair market value. the problem is that the owners do not want to buy these because of the high cost of maintenance. supervisor mirkarimi: the caretaker maintenance? >> yes. to occupy it for just one week each year. supervisor mirkarimi: how is the property tax settled on this item? >> i am not sure. supervisor mirkarimi: is their disputed or unresolved property tax on these? >> no. supervisor mirkarimi: they are absorber by the minimum bid? >> yes. supervisor mirkarimi: it just seems extremely low for a time share in san francisco. >> anything that any of these properties, time shares or others would yield above the minimum bid, the minimum bid just represents related property taxes and a minimum fees. anyone bidding in excess of that, that money goes to the property owner. so that the property owners would still realize anything in excess of that bid. supervisor mirkarimi: i understand. supervisor chu: to clarify, from my understanding that minimum bid is prescribed by california law? >> yes. supervisor chu: so, by california law we have to set the minimum bid at what the delinquent property tax values are. and then if we get a bit higher than the minimum bid amount, we would basically pay for all of the costs associated with putting that on the marquette. and what ever is in excess, by law, has to go back to the property owner? >> that is correct. supervisor mirkarimi: please go to the process of how the public gets to participate in these auctions. >> yes. we advertise the public auction in the newspaper for three consecutive weeks. we also have the information available on our website. we also send a notice to any potential bidders who have contacted the tax collector's office for any future events. this will be online. public option, through a lot of people it exposes those that may not believe in san francisco. they can also participate on- line. supervisor mirkarimi: are they done physically at all? they used to have them on the steps of city hall. >> the ones done on the steps are conducted by private property -- private institutions. supervisor mirkarimi: this is not that, though? it is this that? >> no, this will be online. just like what they do on e-bay. the highest bidder gets the property. supervisor mirkarimi: is there any kind of discount affiliated with an on-line transaction like that? >> no. supervisor mirkarimi: regarding the dwelling report, the personal property -- regarding the dwellings, personal property, real property, how many units are those? >> out of 117 possible, there are 96 timeshare and the rest are single-family homes. we have five condominiums, eight single-family residential units, one commercial retail store, three apartments, and one hotel. supervisor mirkarimi: i am curious. these are casualties, for whatever reason, of the wave of foreclosures? do we know that if there had been good faith effort in trying to save these buildings, modifications of loans, etc.? >> the tax collector always make sure that the owner is afforded with consistent ways to retain property. we have notified the owner before the sell date. before the sell date we will also fought -- notify them and if a personal contact cannot be made, we will post a notice at the front entrance. we will likely talk to the neighbors. we also hired a research consultant agency to locate the owners. in past auctions, almost all of the real property sales were redeemed by the sale late. the notification? how many days? >> we have many back in 2010. we will follow up with ward supervisor approval. sending certified mail to all parties of interest. after we see the reports from our research agency, as i said, going to the property to notify the occupant or owner in person. supervisor mirkarimi: 4 public edification, please distinguish why the city is moving on an auction of property and not the banks. what is the difference? >> the difference is that the tax collector can only sell property when they have defaulted on property taxes. private companies foreclose on mortgage defaults. supervisor mirkarimi: chances are that the tax the fault is significantly less and more reconcilable than the mortgage default, correct? >> yes. which is why all of them, most likely will be redeemed by the time they are sold. supervisor mirkarimi: thank you. supervisor chu: i think that that line of questioning its at the fact that it should be a high threshold before the city goes and sells a property owner's private property. in this situation and sounds like the property owner has defaulted on tax payments owed to the city. my understanding of the background material provided is that generally the property owner has been given five years to pay back the property tax default. not only have they not done so, but in addition they have not contacted us to say that they are trying to set up an installment payment. and in terms of notification you have sent a certified mail to the property owner plus, you are also going through the efforts of hiring a private firm? >> correct. supervisor chu: in most cases we have seen that once the final sale is pending, property owners say wait. >> in the past they came forward to pay off the taxes before the sell date. supervisor chu: supervisor kim: thank youkim -- thank you. supervisor kim: just a couple of follow-up questions. roughly 6% were bought back by owners last year. is there a general percentage for the number that buyback property each year? is that buyback generally what we see every year? >> yes. supervisor kim: around 60%? >> yes. supervisor kim: the units that are not sold go back out this year? >> we did not put those back this year because we have to ask for the board of supervisors approval to authorize a tax collector to sell at less than a minimum bid amount. supervisor kim: that is not in this request, though. selling below minimum four units from previous years. >> last year there was no public auction. supervisor kim: what do we plan to do with units we have never sold? how many are there besides the ones from 2009? >> all of them were either redeem or sold. supervisor kim: what are we going to do with those 12 from 2009? >> we will be putting them back next year. supervisor kim: has the interest accrued even more? >> which is why we are looking for the authorization to retreat -- reduce the interest amount to sell them? we would add to the cost of the minimum bid. it would not be cost-effective. we know that we would not be able to sell those. supervisor kim: i see that there are roughly 15 units -- . is anyone currently occupying those units? >> yes. if he looked -- if we look, there is a homeowner exemption showing that they might be a resident of that property. meaning we should pay more attention. supervisor kim: if the owner is not able to buy it back, we would have to go through the victim process? >> yes. supervisor kim: how often does that happen? >> we have never seen it so far. they often get loans from relatives to play. -- relative to pay. supervisor chu: are there any members of the public that wish to speak on item number two? seeing no one, public comment is closed. in terms of the clarification of the document, i know that you had indicated a desire for the department to sell timeshare items below the minimum to the point where in the might be a question for the city attorney. >> madam chair, my understanding is that the department was going to make that change. is that something that you want to do? what i was under the impression that the budget analysts office had a pair rapper indicating that the tax collector is requesting to sell at less than a minimum bid is sounds like the budget analyst with recommending it all happened. we should accept the recommendation to make beds. supervisor chu: i think that the budget analysts recommendation shows that we should amend the legislation to allow the timeshare units to sell below the minimum. not to take away from our ability to collect to do taxes, but make sure that we are able to sell those timeshare properties is there a motion? supervisor mirkarimi: motion to accept a budget analyst recommendations. supervisor chu: on the item as amended? supervisor mirkarimi: i would like to ask a question. to the budget analysts, have we ever done a city survey of where they are? in terms of solvency, how healthy the industry is? what i have read in "the wall street journal" and elsewhere is that this is a sick industry with significant problems internationally. cut and am wondering what the burden looks like in cities like ours. >> there are at least 9800 units in san francisco. five or six buildings. club. tella on post and mason, those are -- club nutselo, on post and mason. we have the streets at fishman whorf on hyde. also very attractive. the opera at civic center. we do not have problems with those. the san francisco streets on how -- powell and post, we have no problem with that. the only buildingt