Presidio Terrace, San Francisco.
Jim Heaphy/Wikimedia Commons
explainer / money

The Deeper Problem Behind the Sale of a Posh San Francisco Street

The news that a posh San Francisco street was sold for delinquent taxes exposes the deeper issue with America’s local revenue system.
The news circulated last week that a couple had purchased one of the most exclusive streets in San Francisco through a delinquent property tax sale. Capitalizing on a routine if little understood aspect of municipal governance—city government’s sales of property to recoup their unpaid taxes—the couple nabbed the street right from under its tony residents’ Tesla tires. Readers chuckled that Presidio Terrace’s residents might soon be forced to either buy the street at a considerable mark-up or pay an exorbitant rent to park their cars in their regular spots.

But the kind of delinquent tax sale that, in this case many read about with gleeful schadenfreude, is a grim fact of life for many city dwellers, often those least able to carry the burden.

For urban scholars and analysts, the episode shed unexpected light on the use of property taxation—the lifeblood of city governments. Now is the right moment to re-evaluate the practice, especially as progressives begin to look to local governments to check the Trump administration’s action on immigration, welfare, Medicaid, and other issues.

The readiest source of funds available to most cities is the property tax. But, over the last century, that source of revenue—beyond the often discriminatory process of tax sales—has created a series of perverse incentives for municipal government that have often been the cause of so many social problems progressives want to prevent Trump from exacerbating.

Spatial and economic inequality, gentrification, unequal housing, and yawning gaps in educational opportunities are certainly the product of overtly racist policies. But even for administrations with ostensibly good intentions, cities’ historical dependence upon property values to fund municipal services has been a structural constant in ensuring iniquitous outcomes: Because municipal governments depend on property values for their chief source of local revenue, it has always been in their interest to abet systems of racial capitalism rather than stand as bulwarks against them. Until progressives understand this history, they will be doomed to repeat it.
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