Thrift and Consequences

How a supervisor with just $42,500 in income services $1 million in mortgages

If one judged from the annual financial disclosure form he files with the city, Supervisor Leland Yee would seem to have a modest, thrifty lifestyle that is almost entirely devoid of frills or financial entanglement. Yee's most recent filing, for instance, shows that he owns an apartment house free and clear, is debt-free, and supplements his public servant's salary with a small teaching stipend.

But other financial records, both public and private, describe a more complex picture. Yee actually owns three homes, not one, and must service approximately $1 million in mortgage loans on them. The annual income the supervisor reports on his economic interest statement -- $42,500 -- could not possibly cover the more than $60,000 in yearly payments due on Yee's mortgages, not to mention property taxes owed on the three buildings.

Although he answered questions about a variety of other financial matters over several weeks, Yee declined to comment directly on his home mortgages, referring inquiries to Jim Stearns, a spokesman for the supervisor's re-election campaign, who insisted last week that the supervisor is repaying his mortgage loans entirely from legitimate funding sources.

Stearns said Yee and his wife, Maxine, are paying the notes from a combination of the supervisor's current income, his wife's long-term savings, and the partial proceeds from a recent equity loan on one of their properties. The campaign spokesman also produced banking records that, he claims, show Maxine has substantial savings and made large payments from those savings toward the loans in question.

Those records, however, relate to only relatively short periods of time, and do not show the source of the savings supposedly amassed by Maxine Yee, who has not worked since 1991. For that matter, key records Stearns provided to SF Weekly, including one page from a savings passbook, are not identified as belonging to either of the Yees.

And when SF Weekly asked for tax returns and other financial documents that would provide fuller information on the Yees' ability to pay their mortgages, Stearns issued a written statement.

"Your inquiry raises a legitimate question. As you know, the Yees have gone above and beyond the standard of disclosure for public officials in this state to answer your inquiry. They have amply demonstrated to your newspaper that their personal financial situation is completely aboveboard and honest," Stearns wrote. "Without any guarantees from you that you will respect their privacy and refrain from printing personal information in your newspaper that can be abused by those who engage in identity theft and other crimes, we cannot release any more documentation."

Like all public officials in California, members of San Francisco's Board of Supervisors are required to publicly disclose financial information about themselves once a year. This disclosure is called a "statement of economic interests." It includes information about the official's investments in the stock market, his real estate holdings, and his income. Information about a spouse's income and property holdings is also required to be disclosed.

Some types of income and assets do not have to be made public; among the assets not required to be reported are loans backed by the official's primary residence, bank savings accounts, mutual fund investments, real estate owned outside city limits, and property held in a blind trust. An economic interest form must be sworn to by the public official filing it; an official who intentionally files a false disclosure statement can be subject to a perjury prosecution.

The disclosure statements required by California law do not show a complete picture of an official's annual income and accumulated wealth. But the statements can be used to compare what is known about an official's income and his expenses, and as a guide to possible conflicts of interest.

It is clear from the public record that Yee is currently spending a great deal more money than he and his wife earn.

As a supervisor, Yee is paid $37,500 each year. He pulls down another $5,000 by teaching psychology at Lincoln University in San Francisco, bringing his annual pay to $42,500. According to the Yees and the supervisor's economic interest statement, Yee's wife, Maxine, has had no income in the last eight years. Two of his four children are in college, and two live at home.

Despite his relatively small family income -- approximately $3,500 a month -- Yee was able to qualify for $900,000 in home loans last year, which he used to buy a new house near Golden Gate Park in the Sunset District.

The Yees now live in their new home, but for decades the family resided in a four-unit apartment building in Noe Valley that Yee says he inherited, debt-free, from his father. The Yees shared the building with Yee's mother, who still lives there. There are no rent-paying tenants in the building; the supervisor plans to fix up two units in the building and, eventually, rent them out to help pay off the debt he recently took on. But Stearns says Yee is very busy governing and running for office, and does not know when the renovation will happen.

The Yees bought their new home, a three-story building with an "in-law" apartment on the ground floor, in July of 1999. They paid $875,000. To finance the purchase, the Yees took out a $400,000 equity loan from Washington Mutual Bank, secured by the Noe Valley apartment building they had been living in. From this loan, they made a $375,000 down payment on the new house. They also got a $500,000 mortgage loan from World Savings Bank, collateralized by the Sunset District building.

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