A seven-bedroom, seven and a half-bathroom mansion on the corner of Broadway and Baker streets in San Francisco is on the market for $45 million. It is in the Gold Coast, one of San Francisco's most exclusive neighborhoods. If it sells, the city could get more than $500,000 a year in taxes. The current owner pays just $7,722 a year, $1.13 for each of its 6,800 square feet.
"This county average is $3.41 of tax per square foot of house; the last house to sell on this stretch of Broadway sold in September of 2009 and its tax burden is over $42 a square foot," The Bay Citizen reporter Elizabeth Lesly Stevens said.
Lesly Stevens poured over San Francisco County tax records, looking at what these homeowners pay in property taxes. What she found was that many of the most valuable homes in the county pay very little in property taxes.
One house on Pacific Street is worth about $12 million, but its owner pays just under $4,000 a year in taxes.
Another is owned by the family that gave San Francisco its symphony hall. It is worth about $21 million, but the family pays just under $5,000.
"Which is what the tax burden would be for someone buying a $500,000 house today," Lesly Stevens said.
To put that in perspective, the median home sale price in the Bay Area in April was $400,000. The annual taxes paid on that home would be $4,564.
It may not sound fair, but it is completely legal.
Proposition 13, passed in the late 1970s, tied property taxes to the purchase price on every sale thereafter. Under Prop 13, property taxes cannot be raised and assessed values cannot be increased by more than 2 percent annually.
"In that neighborhood, a significant number have never changed hands; they have been in the same families since pre-Prop 13 and they have sort of had the maximum benefit of the law," Lesly Stevens said.
"If their home was assessed at fair market value, they very well may have to sell," Jon Coupal said.
Coupal is with the Howard Jarvis Taxpayers Association. It is named for the author of Prop 13. He says despite how unfair it may seem, Prop 13 actually is the fairest way to assess property taxes.
"The best way to do it is to base it on acquisition value, because it reflects what people are willing to buy at the time they purchased," Coupal said.
"Whatever the original intention of Prop 13 was, I think it certainly has become twisted to hurt the economy," Assm. Tom Ammiano, D-San Francisco, said.
Ammiano is among those who think the law needs to be tweaked. He says that while Prop 13 may protect the elderly or low-income from huge tax bills, the law needs to be reformed.
"I do think there is a way to protect that and look at some of the more egregious disparities," Ammiano said.
It is those disparities that The Bay Citizen hopes to shed a light on.
"I think that most people don't realize the level of the disparity," Lesly Stevens said.
Read The Bay Citizen's full report, "On Gold Coast, a Legacy of Low Taxes."
Written and produced by Ken Miguel