By Ari Burack
April 25, 2008
An anonymous tip by a real estate industry whistleblower has netted San Francisco more than $1.3 million, through the city’s recently established commercial real estate watchdog program, Assessor-Recorder Phil Ting announced Thursday.
Ting called the “amazing tip,” reported in 2006 following the passage of the city’s commercial real estate watchdog ordinance, “an example of how good government should work.”
Board of Supervisors President Aaron Peskin also hailed the program as a way of ensuring “our tax system is fair and equitable and everybody is playing by the same rules.” He added that the money “will help us pay for needed city services” while the city struggles with a substantial budget deficit this year.
The case involved a publicly traded real estate investment trust that failed to report that in 2001 it had acquired a majority stake in a partnership that owned an Inner Sunset District apartment building, according to the Assessor-Recorder’s Office.
That majority interest should have been reported and would have begun a reassessment of the property resulting in a “substantial increase” in property taxes to be paid to the city, according to the Assessor-Recorder’s Office.
An investigation revealed the city was owed $1.34 million in back taxes and interest, but that the mistake had not been deliberate, according to Ting.
“They came forward and admitted it,” Ting said. “We didn’t identify fraud in this case,” he added.
Assessor- Recorder Phil Ting
File photo by Luke Thomas
Peskin said the company has been assessed a $270,000 penalty.
Part of the watchdog program, the first of its kind in California according to Ting, is a reward for tips that correctly identify commercial property tax underpayments, up to 10 percent of the resulting tax increase, with a maximum of $500,000.
In this case, the Assessor-Recorder’s Office is recommending to the Board of Supervisors that the anonymous tipster receive 8 percent of the property taxes collected, nearly $60,000.
The tipster’s attorney, Mark Mosley, said that his client did not want to be publicly known because the person also works in the real estate industry.
Ting estimated that there may be “hundreds of other properties” in San Francisco for which taxes are being underpaid, and said he hoped the reward system would convince others to come forward.
The city’s Whistleblower Complaints Hotline can be reached at (415) 554-CITY or by sending an e-mail to whistleblower@sfgov.org.
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