By Thea Lavin

The revelation that San Francisco Assessor-Recorder Mabel Teng hired and promoted 16 contributors to her campaign made a splashy front-page headline in the Sept. 9 San Francisco Chronicle. Yet the Chron missed an even more troubling fact: some of those employees changed property tax assessments for other Teng contributors and skirted the office's checks-and-balances system that was designed to prevent such potential abuses of power.

In at least two instances, principal real estate appraiser and Teng contributor James Pan lowered property tax values after city appraisers recorded significantly higher estimates. City records show Pan didn't notify anyone about the changes, despite Teng's initial assertion that no appraiser can single-handedly adjust property tax assessments.

Teng promoted Pan to a managerial position in 2003. He donated $617 to her 2002 campaign for office, according to campaign finance records at the San Francisco Ethics Commission.

This July, Pan lowered the recorded property tax value of a 12th Street apartment building by $633,000. That cost the city more than $6,300 in lost tax revenue. The property owner, Jin Zhen, had donated $500 to Teng's 2002 campaign. Zhen could not be reached for comment.

"There are people in the office lowering values on real estate," an appraiser in the Office of the Assessor-Recorder told the Bay Guardian on condition of anonymity. "They are all campaign supporters, the property owners and the people changing [property tax values]. So you can guess why."

Pan also gave an $88,000 tax reduction to property represented by Jeffrey J. Chang, a San Francisco lawyer and Teng campaign contributor. Pan lowered the value two months after the San Francisco Board of Appeals rejected a request by Chang to lower the assessment.

"I sincerely think that my donation has zero or little to do with it," Chang, who donated $250 (half of the maximum amount allowable), told us. "My donation is way too little to show up on the radar screen."

Reform and politics

The Bay Guardian was supportive of Teng's efforts earlier this year to get tough with downtown businesses over commercial property tax assessments (see "Assessing Blame," 4/7/04) and to clean up the mess left by her predecessor, Doris Ward. Indeed, she has successfully cleared out a big backlog of assessments and increased tax collections beyond projections.

Yet in early July, two unions that represent employees in the Office of the Assessor-Recorder – Service Employees International Unions Local 790 and the International Federation of Professional and Technical Engineers Local 21 – told journalists Teng was handing out political favors to campaign contributors, and we began investigating the charges.

"We think they are replacing the civil service workforce with people who supported her campaign," IFPTE Local 21 communications director Maya Shone told us July 21.

Many of those employees had little experience in an assessor's office. Donna Kotake, who supervises Pan, worked as a venture capital attorney and a legislative assistant to Teng when Teng served on the San Francisco Board of Supervisors. In 2003, Kotake became deputy director of the Assessor-Recorder Office. Another new employee lacking assessment experience is Jonathan Mao, Teng's 26-year-old nephew, now a senior assessment clerk.

Teng defended her hires and promotions in an interview with us last month. "I updated the job requirements," she said. "In today's financial market there are banks that do it [assess property], insurance companies. So you have to look at the skill, not just the assessing skill."

Other California county assessors, however, disagree. "If you are going to oversee appraisal of such properties, you have to have extensive experience yourself," Alameda County chief deputy assessor Russ Hall said. "For most of us, we gain that experience over a career of working in assessment."

Teng maintains contributions have nothing to do with it. "Even had I known they were contributors, it really doesn't matter. I picked the best qualified people on my team to implement the plan," she said.

Whether Teng's hiring patterns show nepotism and political cronyism, the most serious charge facing Teng's office is that hundreds of thousands of dollars in property value were erased.

Contributors helping contributors

Pan was promoted to be the direct supervisor over all real estate tax assessments in San Francisco. According to Teng and a 2001 personnel audit performed by KPMG Consulting, under department policy, his new position should not have afforded him the authority to change property tax values without notifying a colleague.

Both sources said a principal appraiser must work in conjunction with another appraiser to change values.

"Of course you have to have two people to change a value," Teng told us Aug. 18, when asked about the office procedure for changing tax values.

But Kotake, who oversees Pan's division, told us he could change most property tax estimates without notifying another appraiser or his supervisor, Alex Tharayil.

"Normally on smaller properties, all the principals can work independently," Kotake said. "He doesn't have to have Alex's final on them."

Kotake added that until recently she wasn't familiar with the Zhen or Chang property values that were changed by Pan. "I had not been aware of them, but I know that all the principal appraisers can change the valuations without knowing all the details," she said. "So my immediate reaction was we should look and see. After talking with Alex, I felt that they were valid."

Pan didn't return our calls for comment, but Tharayil and Kotake said they were speaking on Pan's behalf. Tharayil said the value was lowered because the property had water damage. "The owners complained about Natalya's assessment, and James speaks Chinese, so he talked to them," Tharayil said. "He felt it was justifiable to lower because of the condition of the property at that time."

In July, Natalya Epelbaum, a longtime real property appraiser in the Office of the Assessor-Recorder, provided the original tax estimate for a multiunit apartment building on 12th Street that Zhen purchased for $760,000.

"All comparable properties in similar condition indicated a higher value for that building," said Epelbaum, who on June 1 assessed Zhen's property to be worth $1,393,000.

More than a month later, on July 29, Epelbaum received an e-mail from coworker Ronald Domingo notifying her the value had been reduced to $789,672. "On the notes screen, you had indicated that you put in a different value on this. But James Pan changed the value and approved it himself so I would just like to let you know about it," Domingo wrote.

Office documents show that on Aug. 2, Pan used his own identification number to log into the computer system and lower the value to $775,200.

"He [Pan] didn't tell me that he lowered it," Epelbaum told us. "So I asked him why he could do it, and he said that he has the authority."

The property value was decreased a final time Aug. 3, to $760,000, or almost half of the initial tax value. This time Epelbaum's identification number – which was available to Pan – was used to enter the changes, although she denies it was her own action.

"James Pan changed the assessment under my ID number, but I didn't do it," she said. "If I did change it, I would have put an explanation."

Tharayil wasn't aware of the discrepancy between the ID number and the employee who changed the value. "I don't know why Natalya's ID came up. It might have been something with the computer," Tharayil said. "Sometimes the computer does wrong dates and wrong numbers."

Although Teng previously told us any change in assessment value requires supervision, on Sept. 11 she acknowledged that an appraiser could currently change a property tax assessment without notifying another employee.

"I should have made it clear when I spoke to you that I am putting a system in place that will deal with the security issue," Teng said. "Right now the check-and-balance system doesn't exist all the time. This has been going on for a long time and is the result of my predecessor's computer system."

The KPMG audit performed in 2001 while Ward served as assessor-recorder states that a strict protocol existed that established a system of checks and balances.

Teng also said that in terms of changing assessment values, "Anything goes in this office right now. That is an issue of concern to me."