MP mom wonders: Who wins with Prop 13? Elections, posted by Editor, Mountain View Voice Online, on Mar 16, 2010 at 3:58 pm
Proposition 13 has been called California's "third rail." But one Menlo Park resident decided to touch it anyway, and conducted a parcel-by-parcel investigation. Her conclusion: In her city, homeowners today pay two-thirds of the property tax burden, up from half in 1978.
Read the full story here Web Link posted Tuesday, March 16, 2010, 2:29 PM
Posted by In Mtv, a resident of the Old Mountain View neighborhood, on Mar 16, 2010 at 3:58 pm
Wow! Give that lady an award. Also, both this and the other recent article referencing the Shoreline tax inequities make me think that cleaning up corporate property taxes would make a very compelling platform for one or the other gubernatorial candidate.
Posted by localmom, a resident of the Cuesta Park neighborhood, on Mar 16, 2010 at 5:09 pm
Good luck getting any money out of those "commercial property owners", particularly if they live in Cape Cod. They don't give a hoot about the local schools. They are also QUITE PLEASED I am sure to have someone else pay for their services!! Businesses exist for one reason: to make money. They are not charities. They do not give money away, even when asked, unless there is a compelling reason to do so.
I know this because I have worked copiously and slavishly for 3 South Bay public school foundations for 6 loooong years. I have 2 kids in public schools. No one donates but parents. Another good group might be parents whose kids have aged out of the schools, and perhaps extended family.
I'd LOVE to see a follow-up article on the property owners who are getting away w/murder and whether they want to pay for field trips and textbooks for kids 3,000 miles away!!! Hate to be such a cynic, but these things need to be legislated. I agree, it's time to make them pony up, but "Don't ask, TELL!" Now, start writing letters to Meg Whitman and Steve Poizner! Good luck.
Posted by ajai, a resident of the North Whisman neighborhood, on Mar 16, 2010 at 5:20 pm
A very well researched conclusion, with data backing the ultimate conclusion that prop 13 in its current form cannot continue forward. Excellent journalism by the writer/editor as well in succinctly explaining Ms. Bestor's findings.
Posted by Riley, a resident of the Cuesta Park neighborhood, on Mar 16, 2010 at 6:30 pm
Oh please. These parents will find any excuse to get more funding for their precious center of the universe children. No matter that repealing prop. 13 would throw millions of seniors on the street. These yuppies are funny.
Posted by Political Insider, a resident of the Old Mountain View neighborhood, on Mar 16, 2010 at 7:45 pm
The article misses the point that commercial property does change ownership and is still exempt. Most of the Prop 13 exemptions were passed by state politicians and not part of the original prop 13. (e.g. passing on to relatives) Prop 13 rewards tenure in ownership.
Posted by What?, a resident of the Monta Loma neighborhood, on Mar 16, 2010 at 9:35 pm
Has the author considered that an increase of property taxes on commercial parcels will inevitably result in higher prices of goods and services? If you raise the cost of land ownership, the rents the owners charge to cover their expenses will follow accordingly. When the rents go up, the prices of the goods and services will follow accordingly. This is an inflation driver. The premise of this and other similar/associated arguments is flawed. You cannot spend whatever amount of money you like and then go looking for revenue to cover your bad habit, anymore than you can submit a conclusion and then cherry pick facts to support it. That's called bad science. All government entities, at all levels, have to cut spending. These attempts to generate more revenue sound great, but they are just more of the same irresponsible behavior painted a slightly different color.
Posted by bikes2work, a resident of the The Crossings neighborhood, on Mar 16, 2010 at 10:14 pm
Your argument is not supported by local examples. Wal-Mart in the San Antonio shopping center bought their property when it was developed. Wal-Mart pays much higher property taxes than the Target store across the street. Target leases their property from a long-time landowner in Los Altos. The property taxes paid on the Target property are much lower than Wal-Mart's. Which store has lower prices?
You can look the data up for yourself on the Santa Clara County Assessor's website.
Posted by john, a resident of another community, on Mar 16, 2010 at 10:23 pm
What? - your assumptions about how the economics work are flawed. I have a family trust that holds property that has been passed down for 25 years. It is the most amazingly profitable investment I own. The free cash flow generated on the property is approximately 80% of the revenue stream. The investment has an ROC of more than 75% per year. Paying the proper taxes would reduce my return to a little more than 50%...still an outstanding return. Having said that, we all need a time horizon to modify our investment expectations. If the adjustment were made at once, inflation would certainly be a problem, which is why a phased in approach makes more sense. Having said that, I've sat through enough budget meetings and looked at the compensation plans to know that there is room to move on the expense line as well.
Posted by Bob P, a resident of the Blossom Valley neighborhood, on Mar 17, 2010 at 6:33 am
Once again the tax and spend bunch are at it. I bought my home in 1969, for about $20K. Taxes were around $400.00. 5 years later they were $2200. Prop-13 saved a lot of older folks from losing their homes. For the past 40+ years, the education budget has grown to about 65% of the total budget for CA. The level of education has dropped. CA. is almost at the bottom of the barrel.
The other problem we have is state and local gov. that spends way beyond its means. We also passed Prop-187 that would have saved a lot of money, only to be overturned by an activist judge. So quit blaming Prop-13 for everything, and learn how to live within your means.
Posted by Landlord, a resident of another community, on Mar 17, 2010 at 8:58 am
The original topic is about businesses portion of taxes and not seniors. As a CA landlord who has made a lot of money from my parents passing down rental property to me. I make more money that other landlords and DO NOT pass it to my tenants, but keep it for myself. It's embarrassing that I a well to do person makes so much more money because my parents owned a house in CA, but I'm not going to give it away. However, I am pleading to those to change change propisitions so the inequities in the system justly charges those who can afford higher taxes (like myself, businesses and landlords) and protects those who can not, the elderly.
As to the comment on how much we spend on education. Percentage wise we spend less now than we did in the 80's (check your facts, I just did). I don't know where you got 65%, that's not true. Lastly, our great state fell from first to almost last in most education categories which is directly due to prop. 13 and 98.
Posted by mc, a resident of the Cuesta Park neighborhood, on Mar 17, 2010 at 9:27 am
"The Trader Joe's property -- the 'new' market in town -- contributes just $7,471 of general tax towards our local services (for two-thirds of an acre of prime commercial property) compared with Draeger's up the street at $66,585. IT ISNT TRADER JOES, OF COURSE, THAT IS PAYING THE TAX -- if they'd bought the property when they moved in, that parcel would be contributing 500 percent-plus more."
The highlighted portion of the quote above is categorically false. Commercial property leases, especially a long term retail lease such as TJ's would have signed, almost always has the tenant directly billed for the property tax. Leases that dont call for this will have a provision that allows an owner to pass through any increases in their taxes directly to the tenant.
A very substantial percentage of buildings that would be impacted by a change to prop 13 are older properties that serve smaller businesses. Big new institutional grade buildings change hands more often and therefore have their tax rate adjusted.
This may or may not change your mind on how commercial property should be taxed, but these are the facts, so please base your opinion accordingly.
Fun with math : $200,467,800,000 CA budget divided by the 10 million households in CA works out to be $20,067 tax burden per household. The real problem here is not how we collect that burden (sales tax, property tax, state/fed income tax, etc.) but is that the burden is so huge.
Posted by pam, a resident of the Old Mountain View neighborhood, on Mar 17, 2010 at 2:20 pm
Yes - it would throw millions of seniors into poverty. Residences would have to be grandfathered in. Just because all of us don't enjoy Prop 13 doesn't mean we can just up and take it back from these people! Come on - jealousy isn't pretty!!
Posted by EC, a resident of the Shoreline West neighborhood, on Mar 17, 2010 at 2:40 pm
Finally! Fixing Prop 13 is long overdue. And note that I said "fixing" not "repealing". As a property owner I can't afford massive tax increases every year and hope Prop 13 will continue to limit that. But it seems reasonable for property owners both commercial and residential to pay an adjusted rate once in a while, so long as those adjustments are few and far between (20 years is extremely reasonable, IMO). Perhaps some provision could be made to exempt homeowners on fixed incomes from any increases so long as they remain in the home.
For those who are racing to label Ms. Bestor a "tax and spender" - please re-read the end of the article. She is simply suggesting we close the loopholes from which commercial real estate holders are profiting.
Posted by PM, a resident of the The Crossings neighborhood, on Mar 17, 2010 at 3:10 pm
We should fix Prop 13, but not by punishing commercial property owners. Rather, the reassessment at transfer of ownership should be eliminated for all properties (perhaps with retroactive effect for properties that have changed ownership since 1978). In this way the State could count on a reliable increase in property tax revenues of 2%/year, and not reap windfall taxes every time a property changes hands.
Posted by kanank, a resident of the Shoreline West neighborhood, on Mar 17, 2010 at 4:07 pm
I definitely think that Prop 13 needs to be reformed. At the same time, The govt is not going to spend the money any wisely. LOok at the glory years we had. Schools are taking in billions and billions and yet, the ranking overall and the quality have degraded in the last decade. So money is not the real issue here.
Posted by Doug Pearson, a resident of the Blossom Valley neighborhood, on Mar 17, 2010 at 4:21 pm
PM says, "the State could count on a reliable increase in property tax revenues of 2%/year." This is the crux of the problem with Prop 13. Inflation is what it is, it cannot be legislated, and over the last 30+ years it has been way over 2%/year. Imposing a 2% rate of increase on the all the State's taxes would be enormously destructive. The past damage to our schools would pale by comparison.
Not too long after the law was passed, the California Supreme Court was asked to declare that part of the law invalid. Unfortunately, although they agreed it was unfair, they said it was the will of the people and let it stand.
Prop 13 is indeed the will of the people and, though I would like very much to see that aspect invalidated, I can't believe it will ever happen.
Posted by Wondering, a resident of the Old Mountain View neighborhood, on Mar 17, 2010 at 4:27 pm
Look at the energy evident in these comments. Fabulous. Do you think we could work together and hammer out a solution? While it might not be perfect for everyone, everyone could support it. Then pass that consensus solution forward to the state? THAT would be invaluable!
Posted by PM, a resident of the The Crossings neighborhood, on Mar 17, 2010 at 5:34 pm
My suggesting a POTENTIAL retroactive elimination of the reassessment as a component for fixing Prop 13 has a simple rationale: it is the same as Ms. Bestor's! She feels that the share paid by residential property owners has grown to large relative to commercial property owners, I merely suggested an alternative to achieving this effect that does not raise taxes.
Another option would be to reassess all properties in 2010 and eliminate reassessment for all properties going forward. One could set the base rate for 2010 at a level such that property tax revenue for 2010 is a reasonable increase from 2009 (say 100 to 110% of 2009 revenues). This approach does not address historical inequities, but does eliminate them in the future.
Self-Interest Disclaimer - Retroactive elimination of reassessment would not benefit me personally. We do not own commercial property, and our residence was not subject to reassessment at the time of purchase.
Posted by Observer, a resident of the Old Mountain View neighborhood, on Mar 17, 2010 at 7:32 pm
I pay at least a third less in property taxes than my two neighbors. They also paid about three times more for their houses and I would guess make far more than me. Twenty or thirty years from now they will be saying the same thing about their new neighbors. And I'm slowing down in my old age and can't afford to pay more and more in taxes.
The point missed here is that Prop. 13 allows homeowners to create and work off a budget when it comes to financing their homes, and in turn allow them to sink roots into the community. Get rid of Prop. 13 and no one will be able to keep up with the tax increases.
Posted by Tax Payer, a resident of the Blossom Valley neighborhood, on Mar 17, 2010 at 8:05 pm
I live in Saint Francis acres, which is not one of your choices.
The research that was done in Menlo Park had to do with the financing of schools. What is the problem with schools being mainly financed by people who lives in homes and condos? It would seem that most of the students of the schools live in homes, condos and apartments, but not in big box stores, gas stations, offices, or other commercial properties.
Posted by Jennifer Bestor, a resident of another community, on Mar 17, 2010 at 9:20 pm
I was just told that the article had been posted here! It is a very strange feeling to find it proliferating! I enjoyed reading your comments, though the Menlo Almanac posting is where the torrent of comments is ... so that's the one I'm following.
That said, I do appreciate all of you reading and thinking about this! A few small comments:
mc said "Commercial property leases, especially a long term retail lease such as TJ's would have signed, almost always has the tenant directly billed for the property tax."
I've definitely seen this with old leases (Safeway, some of the gas stations, all the old car dealerships on Stanford land). That said, there seems to be a steady decline in the proportion of 1978 base year property tax bills being sent to tenants. Please go to the San Mateo County tax collector's website www.sanmateocountytaxcollector.com and type in the Menlo Trader Joe's APN (071-284-110). Then type in Hoot'n'Toot's (071-273-050). Do a Google maps look up, if you want, to reassure yourself that it is not Trader Joe's HQ (which is what I originally assumed ...!). I would think that someone will suggest that these addresses be changed to a local property management company soon (to escape this kind of scrutiny), so please look now!
And, Tax Payer, while what triggered my attention was concern about funding for schools, and I had to limit the task somehow (the school district boundary gave me a sample size of 350+ parcels close to my home that I was familiar with), the research was focused on overall levels of commercial property tax.
Interestingly, while a growing number of commercial property owners have weighed in (or called me), none has said that they didn't feel they should contribute to the schools. Apparently, the flip-side of overcrowding in the Menlo and Palo Alto schools is that they are drawing affluent families who shop at the retail stores, work in the office buildings, etc.
Which suggests an interesting (new) research avenue ... retail rental per sf correlated with local school district API!
Posted by QM, a resident of the North Whisman neighborhood, on Mar 17, 2010 at 11:08 pm
It all started with Greed. Where is California's 2010 Prop 13...
Yes it is wiki.. do your own homework...
In the early 1960s, several scandals erupted through California involving county assessors. These assessors, who had traditionally enjoyed great latitude in setting the taxable value of properties, were found rewarding friends and allies with artificially low assessments, with tax bills to match. These scandals led in 1966 to the passage of AB 80, which imposed standards to hold assessments to market value. However, assessors, who are elected officials, had traditionally used their flexibility to aid elderly homeowners on fixed incomes, and more broadly to systematically undervalue vote-rich residential properties and compensate by inflating commercial assessments. The return to market value in the wake of AB 80 could easily represent a mid-double-digit percentage increase in assessment for many homeowners.
As a result, a large number of California homeowners experienced an immediate and drastic rise in valuation, simultaneous with rising tax rates on that assessed value, only to be told that the taxed monies would be redistributed to distant communities. The ensuing anger started to form into a backlash against property taxes which coalesced around Howard Jarvis, a former newspaperman and appliance manufacturer, turned taxpayer activist in retirement.
Posted by mc, a resident of the Cuesta Park neighborhood, on Mar 18, 2010 at 12:16 am
"I've definitely seen this with old leases (Safeway, some of the gas stations, all the old car dealerships on Stanford land). That said, there seems to be a steady decline in the proportion of 1978 base year property tax bills being sent to tenants".
Jennifer, I do appreciate your passion for public schools--I share it. I'm afraid that your information is not complete, though. The assessors' information shows who is legally responsible for the taxes. A tenant in a commercial lease WILL generally be billed by the property owner for these taxes, as a condition of their lease. This contractual commitment will not be reflected in the public records that you are viewing. My original statement is 100% accurate. If you want to confirm this, you can find the leases for many publicly traded companies as a part of their online SEC filings. You will find that they are, in fact, billed for property taxes, including increases. The same is generally true for small local businesses.
Again, I'm not attempting to change minds, just put out the best information. I do wish you success in fighting for adequate funding for public schools, but I dont agree with your preferred method of finding the dollars.
Posted by KD, a resident of the Waverly Park neighborhood, on Mar 18, 2010 at 8:13 am
Votes should have known that Schwarzenegger would be ineffective on tax and financial affairs when he ignored advice from Buffet.
To illustrate the inequity of Prop 13, look no further than the
Americana apartment complex in Mountain View. 491 of its 549 units were built in 1969. The other 58 were built in 1999.
The property has not sold, so the valuation is based on 1978 and 1999 assessment values (grown 2% annually).
Annual property taxes on the 491(1969 vintage) units are $420 per unit, per year. Annual property taxes on the 58 (1999 vintage) units are $2,400 (per unit). Total taxes for the property average $550 per unit, per year.
Rents at the project range from $15,600 to $30,000 per year (depending on the unit layout (1 bedroom, 1 bath to 3 bedrooms, 2 baths).
The project website advertises "Mountain View has 12 public and eight private schools. Mountain View's public elementary schools the class size ratio is 20.4 students per full-time teacher. A great ratio by any standards"
Unfortunately, the owners of Americana (and other properties with property taxes based on historical, rather than current valuation), barely make a contribution towards the cost of the services (including schools) that the general population has asked governments (at all levels) to provide.
Posted by Kathleen, a resident of the Cuesta Park neighborhood, on Mar 18, 2010 at 9:35 am
Dave G. doesn't know what he is talking about.
My mom bought her home and has lived in Mt. View since 1965. This was long before this area became Silicon Valley and hordes of immigrants began taking over and raising the price of everything to astronomical rates. She is now 67 years old and disabled. She is on a fixed income. If it were not for Prop 13, SHE WOULD BE PRICED OUT OF HER HOUSE.
She has not had a child in school since 1977, should she pay for the schools? She does not own a car cannot drive, should she be responsible for road repairs?
As it is, I can barely afford to live in the area I was born and raised in, which is sad. I am getting priced out of my own home town. I rent, I can't afford to buy a home here. The taxes are insanely high. For now, I need to live near my mother to be able to help her so I stay.
I agree with Harpoq: Cut spending, stream line administration, revamp the entire educational system and THEN we'll talk about raising taxes.
Posted by KD, a resident of the Waverly Park neighborhood, on Mar 18, 2010 at 9:42 am
There seems to be some confusion about who is responsible for paying property taxes on commercial properties, especially when they are leased to tenants (including Trader Joe's, Walmart, Target, etc).
Ultimately, the owner of the property is responsible, because if the taxes remain unpaid (i.e. go into default)the county has the right to seize the property, sell it, use the proceeds of sale to pay the taxes (and penalties), with any excess proceeds going to mortgagees (lenders) if these is are deeds of trust registered as security for loans, and then the property owner.
Property taxes are different than operating costs (i.e. PG&E, water and sewer, repair and maintenance, cleaning, landscaping, property management, insurance, etc) because the providers of these services do not have the right to seize the property if they don't get paid. They can only stop providing the service and seek payment through the courts.
Property owners have two basic choices when it comes to how they are compensated by tenants. The first is a "full service" (or gross) lease, where the tenant makes one monthly payment (say $10,000) to the property owner (or his agent), the property owner pays the property taxes and the operating costs or CAM (common area maintenance)and then keeps what remains as rent.
The second is a "net" (often referred to as "fully net", or "triple net") lease, where the tenant makes a monthly rent payment (say $7,000) to the property owner (or his agent), plus a monthly property tax payment (say $1,000), representing the tenant's share of 1/12 of the annual property taxes), plus a monthly CAM payment (say $2,000) representing the tenants share of property operating costs, etc.
Virtually any variation to the method by which the landlord collects rent and ensures that property taxes and operating expenses are paid, fall somewhere in the spectrum between "gross" and "triple net"
As evidenced in a comparison of the above examples, a property owner with a $400 per month property tax obligation (beneficiary of lower assessed value due to Prop 13) would probably use a "full service" lease and pocket the $600 dollar difference (otherwise payable by the owner of a similar building that might have sold and been reassessed).
Although the property owner's decision to structure leases on either a full service or triple net basis (or some variation between the two) is predicated on a number of factors, the primary goal of investors is to generate higher current profits while preserving long term value. Nothing does that better than Prop 13.
Posted by kathy, a resident of the Sylvan Park neighborhood, on Mar 18, 2010 at 10:31 am
Talk about a hot topic, it is about time someone did something about prop 13. All property owners should share the burden, also think the ability to inherit your parents property tax should be eliminated.
Posted by Parent, a resident of the Waverly Park neighborhood, on Mar 18, 2010 at 2:51 pm
Kathleen says: "She has not had a child in school since 1977, should she pay for the schools? She does not own a car cannot drive, should she be responsible for road repairs?" I live in a safe neighborhood and have never needed to call the police; guess I don't need them, so I don't want to pay for them. I don't use the library much, so I won't pay for that. Society wouldn't function if we were all allowed to pick and choose the public services we want to pay for. Everyone has a stake in how are kids are educated, whether our roads are drivable, whether we have streetlights and fire stations and police departments and libraries and.... on and on and on. These things are all part of what makes for a good quality of life--for everyone. And as other posters have mentioned -- the point of the article was that Prop 13 needs REFORM, because the large landowners and corporations have benefited far more than homeowners over the years. It used to be that corporations and large landowners (apartment owners, etc.) paid more than half the property taxes. Now the homeowners pay way more than half. It's skewed. No one is suggesting that your mother suddenly get forced out of her home because of a property tax bill.
Posted by mc, a resident of the Cuesta Park neighborhood, on Mar 18, 2010 at 2:52 pm
KD is partially right, but missing an important fact. MOST commercial lease agreements- Full Service or Net, allow the property owner to pass through increases in the property taxes (and other expenses). If property taxes were to double, the tenants' monthly bill would go up by the same amount regardless of the type of lease.
Posted by KD, a resident of the Waverly Park neighborhood, on Mar 18, 2010 at 4:00 pm
MC - A full service lease that provided for an increase in rent due to an increase in property taxes (or any other expense) wouldn't be a full service lease. (It would be triple net, double net or modified gross or some other equally arcane name.)
You are correct that net leases require tenants to pay certain or all operating costs, which over time, usually increase. Prop 13 allows property taxes to rise 2% per year (barring change of ownership).
Where there is potential for a dramatic increase in property taxes due to reassessment relating to the sale of the property, informed tenants usually require the net lease to contain a clause that specifically limits the annual (or total) increases in occupancy cost for the term of the lease.
Posted by candlelight, a resident of the Rex Manor neighborhood, on Mar 18, 2010 at 4:45 pm
We're not arguing the value of education. What we're tired of and will not stand anymore is more and more endless taxes going to a school system that is ineffectual and wasteful. Enough is enough, find people who have new ideas to make the schools better with the money they already have. It's the incompetents who want more taxes, more bonds, more of everything!
Posted by jb, a resident of the Monta Loma neighborhood, on Mar 18, 2010 at 7:15 pm
I see a lot of people on here that think throwing money at something will fix the problem.
-- The problem is money, but not the lack of, but the waste of money. --
Here are just a couple of examples.
1) Alum Rock school board gives superintendent $294,000 as she steps aside
By Sharon Noguchi, San Jose Mercury News, December 3, 2008
School District Superintendent Norma Martinez has worked out a deal to resign from the struggling East San Jose district with about $294,000 in severance pay plus benefits.
In a hastily called meeting Tuesday, the board voted 3-1 to release Martinez — at her request — effective Dec. 31. But before that, the board arranged to pay her 18 months of her salary to walk out the door. Her contract, however, allows only 12 months of severance if she were fired without cause — and none if she resigned.
Posted by ann, a resident of another community, on Mar 19, 2010 at 10:10 am
leave prop 13 alone.....why would you want to raise taxes on your fellow americans...prop 13 was the best darn tax revolt this country ever saw....i and my neighbors were going to lose our houses if prop 13 had not passed....our property taxes were going to be raised so high in one year it was insane...when we got the tax bills....we went to our knees...and the best part of prop 13....that your prop valuation can only go up 2% a year...which benefits tenants and property owners....if your landlord's property tax bill goes up...trust me....your rent goes up. whether you bought your home 5 years ago or 10 years..you are benefiting from prop 13....prop 13 got the government under control and was badly needed....and is needed again now....stop the lavish outrageous spending....and if you want to research something....dig into the california lottery.....remember when they told us if it passed it would all go to our schools and fix them.......what a scam....go after the lottery and leave prop 13 alone......higher taxes are not a good thing....
Posted by Sue, a resident of another community, on Mar 19, 2010 at 12:20 pm
Way to go Ann. You Californians are way too kooky with your paying, paying, paying. Why would anybody want to keep paying more money? It's ridiculous out here that you have to be a money pool so the so-called leaders can dump it down a giant hole. The whole state of California has their heads in the sand. Wise up already.
Posted by reader, a resident of another community, on Mar 19, 2010 at 12:34 pm
No one wants to pay too much in taxes. The question, though is HOW we pay them, and what those taxes go to. For example, Texas has a much higher property tax rate than California, but pay much less in things like sales taxes. No one would accuse Texas of being "way too kooky with your paying, paying, paying."
That's why this conversation is a good one. The oversimplified notions of out-of-staters like Ann and Sue are way off mark.
Posted by ImATaxHawkButIsSpendingReallyThatMuchHigherNow?, a resident of the Blossom Valley neighborhood, on Mar 19, 2010 at 11:15 pm
USA... thanks for the links... according to those numbers and california population in 1976 and 2009, inflation-adjusted per capita spending in california has increased from $3500 to $6000 in 2009 dollars. I was not around here back then... how was education funded in 1976? the only thing that could account for that big of a jump would be transfer of education funding from local to state (basically an accounting change with prop tax going to state prior to being redistributed). Anyone have a definitive answer to this?
Posted by Bagel Mom, a resident of the Cuesta Park neighborhood, on Mar 20, 2010 at 5:46 am
Currently, prop. 13 and 98 is supposed to help:
3. Children and grandchildren (this is nepotism as is usually condoned in most societies)
Change prop. 13 and 98
1. Stop tax increases for Seniors altogether.
2. For businesses change the tax rate to something closer to the cost of living (3-4%)
3. Eliminate the parent to child/grandchild - why give the weathly more unmerited benefits than they deserve. The poor aren't benefiting because they don't have property to pass down. I like to call this the "Wealthy Fund" because we are funding the weathy's children.
Posted by Honest mom, a resident of the Cuesta Park neighborhood, on Mar 20, 2010 at 8:00 am
I think Bagel Mom is thinking about prop. 58 and 193 which allows reassessment exlcusion for real property transfers between parent to child and grandparent to grandchild, not prop. 98 (guards funding for state schools).
Irregardless, I agree with her message. Prop. 58 and 193 need to be repealed and prop. 13 needs to be "fixed".
I currently live in parent's passed down home and pay $1,100/year whereas my neighbors pay nearly $12,000/year. I pay less, yet receive that same goods and services and can afford a higher tax bill. It's not right. For years I have been on the prop. 13/58 bandwagon, but now I realize that I was just being selfish. Yes, I can pay my share, but won't until taxpayers make me.
Posted by Fanny, a resident of the Jackson Park neighborhood, on Mar 20, 2010 at 8:46 am
The last poster is a poser. Most senior don't have kids that are the center of the universe in the public school system that want more and more money so why should they pay the same as the family with four kdis? Gotta love the picture of the tax and spend liberal as some sort of deep thinker... or head in the clouds is more like it.
Posted by Observer, a resident of the Old Mountain View neighborhood, on Mar 20, 2010 at 9:14 am
I couldn't agree with you more Fanny. Definitely a poser. These are the same liberals who would like to see the state come in after you die and tax or seize upward of %50 more of everything you own or have saved, or maybe even more. They don't realize that a stable middle and thriving entrepreneurial class (and believe it or not folks, 99% of well-off people even in this area are only upper middle class at best by definition) are the key to a thriving economy.
If Honest Mom (yeah right) "can pay her share" as indicated, no one is stopping her from donating that extra $11,000 to the schools every year. But her comment is clearly designed to antagonize those whose families down through the generations have saved and passed on their wealth to their children in order to help them get a good education, have a non-state sponsored safety net, and to become leading professional and productive members of society.
Posted by Jennifer Bestor, a resident of another community, on Mar 20, 2010 at 10:17 pm
Thank you, KC, for the definition of full service, and mc, for your interest in how/whether tenants actually see the property tax bill or not. The definition is useful because I am plowing through all the commercial rental listings on loopnet for Menlo Park. I didn't realize that NNN and Full Service were mutually exclusive for a while, especially since one of the early vacancies listed both. I'll report back.
Observer and Fanny, while Honest Mom may be a poseur, a friend just forwarded me a note about Atherton's budget ills that caused me to look at the first 106 of Atherton's 430 homes carrying pre-1985 bases. Of them, 84 had the same owner (tho' often just the wife/widow), 16 had different names (but the same basis, presumably children or grandchildren), 5 had added a new name to a surviving wife's name (generally with the same last name), and 1 had changed from a person's name to a corporation. So, at least in Atherton, about 15% of the pre-1985 basis homes have been passed on to a new generation with the basis intact, exactly as Honest Mom describes.
Posted by Observer, a resident of the Old Mountain View neighborhood, on Mar 21, 2010 at 10:05 am
So what is wrong with people passing their home and wealth to their children? What do you have against that? Why should their children be taxed out of their home if the market drives their home price up over time?
Prop 13 will never be repealed so get over it folks. There are plenty of other witches to burn.
Posted by Jennifer Bestor, a resident of another community, on Mar 22, 2010 at 8:33 am
Some of us believe that Prop 13 has been a useful tool to allow older people to stay in their homes and new homebuyers to play for the future. We are hard-pressed to defend it in light of Prop 58's add-on effects, however. It is one thing for the 36-48% of new homeowners to see an elderly neighbor paying one tenth of what they are paying, it's another to see a young family with three kids in the school system (at $8,000 of other people's property taxes each) and a BMW in the driveway.
And, of course, yet another to see the "family home" turn into rental property, at the original basis, with tenant children in the school system. Or the family investment apartment building.
I salute people who can pass their homes and their wealth on to their children, but so often their "get over it folks, I've got mine" means they see no problem passing the financial health of our community over to their children as well.
And who is going to pay for the police, fire and courts that defend the 'home and wealth' that is passed on, if the legacy homeowners will not? Please remember that schools absorb less than half of total property taxes.
Posted by SB, a resident of another community, on Mar 22, 2010 at 9:03 am
Thank you Ms. Bestor for your comprehensive and thoughtful research. Prop. 13 has been taking a toll on our education system for far too long. Now that we have healthcare reform, how about education funding reform, as well.
Posted by RJ, a resident of the Monta Loma neighborhood, on Mar 22, 2010 at 9:36 am
You asked, "So what is wrong with people passing their home and wealth to their children? What do you have against that? Why should their children be taxed out of their home if the market drives their home price up over time?
I have a lot of issues with not reassessing property taxes for houses passed down from the parent to child.
First, why should a child/grandchild be entitled to a tax break, yet enjoy all the services. In other words, someone else will be footing their bill, that's not morally right when they are able to pay.
Second, these are young and able people who should be paying their fair share. They are no different than those who did not get the tax break, but seem to be surviving.
Third, I do not know of a single person/family who has benefited from prop. 98 and 193 that would be kicked out of their home due to the property tax increase. I have friends (at least 5) that are currently benefiting. One told me she could not afford the additional taxes. I asked her if she could not afford or did not want to pay. Reality check, my friend has a new car, does not work by her choice, and has all the latest and greatest gadgets. She's using "I can't pay" as a major scapegoat. She admitted that she could pay, but doesn't want to. Two other friends said the same thing.
Forth, most of the people who are receiving the homes passed down from their parents already have found a way to buy a house in California and the parent's house is turned into rental. Those who could not afford to live in CA. have moved out and will rent their parents houses or sell.
Fifth, they are getting their parents house, usually free and clear of any mortgage. Isn't that enough? Why add insult to injury to the rest of us who have to work hard and pay for our way?
Keep prop. 13, and REPEAL proposition 98 and 193 (where property passed from parent to child or grandparent to grandchild) is not reassessed.
Posted by KD, a resident of the Waverly Park neighborhood, on Mar 22, 2010 at 10:05 pm
MC: I don't want to belabor the point (but I will). Under a gross or full service lease, the tenant pays a fixed amount, regardless of the expenses that the landlord incurs. If the rent is $10,000 a month for 60 months, thats what the tenant pays, even if property taxes drop or double. Google "full service lease" or gross commercial lease". Or try Wikipedia.
Posted by Observer, a resident of the Old Mountain View neighborhood, on Mar 23, 2010 at 11:11 am
You both seem obsessed with measuring yourself up to the Jones'. You ought to spend less time wondering how much your neighbors pay or make or commenting about the BMW in their driveway. What do you really know about these people's lives, accomplishments, fortunes, or personal tragedies? My guess is probably very little. Many seniors are exempt from pay parcel taxes for schools. Are you going to go after them next because they have a Mercedes in their driveway? Based on your logic, I should be jealous of my neighbors with five or six children versus my two. Aren't they getting away with paying far less for the same services and schools? It all sounds like pure jealousy. Shame on you both. Keep your noses out of other people's live.
Posted by Big Al, a resident of the Old Mountain View neighborhood, on Mar 23, 2010 at 6:18 pm
I agree. Keep your nose out of your neighbors' financial affairs Jennifer and focus on doing something positive.
On that note, why not raise property taxes on the families per student attending public schools. Unfortunately, the many illegals with a train of children following them to school each morning would never be able to afford it. Maybe there should be a cap on how many children should be allowed to live on each parcel. Two? Three? Which families are costing the schools more with each new child they send to school?