This action might not be possible to undo. Are you sure you want to continue?
affordable housing project as if it were an “isolated incident”—rarely, if ever, showing us what the total costs of these projects might be. This “big picture” involves looking at “externalities” (often considered as hidden/future costs), or the exemption from taxes—which effectively shifts the cost of government services from one group to another. The so-called Maybell Orchard project gives us a chance to look at the Palo Alto Housing Corporation (PAHC) (a non-profit agency which was created with the assistance of the City Council in 1970) in terms of its taxable properties, its tax liability and long-term tax avoidance. The table below was generated by taking the properties listed on the PAHC web-site and determining the assessment of each property on the Santa Clara County Assessors web-site. Under Prop.13, taxes are one percent (1%) of assessed value, so the tax liability is easily derived. Arguments Opposing the Maybell Orchard/Measure D Ballot Proposition The Measure D arguments seem to be falling into four general areas: 1) Site Specific (traffic increases, safety, quality-of-life) 2) Opposition to High Densification/PC-zoning Abuse, 3) Transparent and Sustainable Government Finances, and 4) Immigration-related issues. This paper speaks to some of the issues involved with Transparent and Sustainable Government Finances. While many Palo Altans might be inclined to see only one, or two, of this grouping of arguments, it’s important to point out that all of these issues are involved directly, or indirectly, in opposition to this housing project being proposed for Barron Park. Palo Alto Housing Corporation Property Tax Data
http://www.paloaltohousingcorp.org/properties/list.ht m Development Alma Garden Apartments 2507-2533 Alma Street (650) 853-1788 Alma Village Apartments 3445 Alma Street Alma Place 753 Alma Street Acquired /Built 2010
Type Family (studio)
Parcel Number 132-25-054
Assessed Value $1,000,000
Tax Liability $0
Family 132-28-124 1&2 BR Single Room Occupa ncy (studio) $1,000,000 $1,000,000
(650) 473-9195 Arastradero Park Apartments 574 Arastradero Road (650) 493-4376 Barker Hotel 439 Emerson Street (650) 327-5327 California Park Apartments 2301 Park Blvd. (650) 321-2730 Colorado Park Apartments 1141 Colorado Avenue (650) 856-9377 Curtner Apartments 300 & 310 Curtner (650) 858-2199 Elm Apartments 129 Emerson Street (650) 858-2199 Emerson North Apartments 3051-3061 Emerson Street (650) 858-2199 Emerson South Apartments 3067-3077 Emerson Street (650) 858-2199 Emerson House 330 Emerson Street (650) 858-2199 Ferne Apartments 1972 60 1989 45 1995 66
Family & Senior 1, 2, 3 & 4BR Single Room Occupa ncy (studio) Family
124-28-052 1, 2 & 3BR Family & Senior 1, 2, 3 & 4BR Family & Senior Studio, 1 & 3BR Family & Senior Studio, 1 & 2BR Family & Senior Studio
Family & Senior Studio
Family & Senior 1BR Family
101-131 Ferne Avenue (650) 858-2199 Oak Court Apartments 845 Ramona Street (650) 326-3211 Oak Manor Townhouses 630 Los Robles Avenue (650) 858-2199 Pine Street House 1259 Pine Street (650) 858-2199 Plum Tree Apartments 3020-3038 Emerson Street (650) 858-2199 Sheridan Apartments 360 Sheridan Avenue (650) 326-1240 Treehouse Apartments 488 W. Charleston Road (650) 858-1101 Ventura Apartments 290 & 310 Ventura (650) 858-2199 Waldo Apartments 3039-3049 Emerson Street (650) 858-2199 Webster Wood Apartments 941 Webster Street (650) 326-9271 Palo Alto Housing Corporation
2BR Family 120-28-109 1, 2 & 3BR Family 137-12-002 2 & 3BR Family 003-45-085 3BR Family 132-48-010 2BR 703,000 $75,238 $75,238 $5,419,621 $5,419,621 $23,256,428 $1,886,096
Senior 132-36-081 1BR 33 Studios 1 1BR 6,400,000
0 132-46-072 $9,272,765
Family 132-41-042 2 & 3BR Family & Senior 1 & 2BR $1,685,684 $131,598
Family & Senior 1, 2, 3 & 4BR
725 Alma Street Units: 652 Assessed: Taxable: $113,640,962 $17,592,483
Table.1 Note—the tax assessments in this table reflect the nature of Prop.13’s initial assessment scheme. For instance, Webster Wood is assessed at a mere $4M, although it clearly is worth many times more than that if it were assessed at today’s market prices. Therefore, the PAHC’s total tax assessment should be considered very low compared to the current market value of the properties in its portfolio. Property Tax Exemptions Organizations like PAHC find many loopholes in the California Tax code by which to qualify for partial/total tax exemption. When they are awarded these tax exemptions, then taxes that would be generated by these properties are not paid. The people living in these properties still demand services, requiring that others bear the burden of providing these services through higher taxes, or fees, or some revenue generation scheme that likely doesn’t apply to those folks. Until the Maybell project is built, there is no way to accurately predict its initial assessed value. However, with the past practice of the PAHC and the Assessor’s Office represented in the table above—it is hard to believe that the Maybell project will not be awarded an exemption that is any different than those in the table above. 55-Year Property Tax Exemption For Maybell Since government goes on forever, finding timeframes that make sense to do cost calculations for situations like these. However, the Tax Credit applications for which the PAHC has applied with the State of California use a 55-year timeframe for some of their calculations. So, using this same 55-year timeframe for our calculations seems reasonable. The Tax Credit application shows that the permanent loan need to construct this project is estimated at $26M. Using that as an estimate for the initial assessment of this property, once construction is complete, and applying the Prop.13 year tax assessment rules, we find that the 55-year tax liability for this property is about $26M. Assuming a 100% property tax exemption, then the Maybell project will end up costing the taxpayers about the same amount as the PAHC claims it costs to build it. Public Services Cost The City claims that it is spending about 2,500 per person in providing public services. If we were to apply this cost to each new resident in this project (assuming 1.5 persons per
unit), then we would come up with the staggering cost over this 55-year period of about
Approximate Public Cost Of Maybell Project Although research into the total public costs of this project is still on-going, there is enough data available to suggest: Approximate Taxpayer Cost For Maybell Project Tax Credits: $14M Impact Fee Waiver: ~$1M Property Tax Exemption: ~$26M Public Services Required: ~$35M PAUSD School Bonds: ~$2M CPA Infrastructure Bonds: ~$1M Total: ~$78M Table.2 So, a first order estimate of the public cost of the Maybell project comes to about $78M. There are other issues yet unresolved, such as whether the PAHC pays State/Federal income taxes on the rents from its properties, or if they have found ways to reduce these tax liabilities too. There is also the possibility of a loan forgiveness clause in the PAHC loan contract with the City of Palo Alto. (The City is showing about $15M in loan forgiveness in its portfolio of outstanding loans to organizations operating affordable housing in its Comprehensive Annual Financial Report [CAFR].) The cost of services in Palo Alto will grow yearly. It’s clear that the PAHC has caused, and will cause, a significant loss of revenue to the City by its belief that PAHC clientele should not be expected to help fund City/County/State operations via property taxes embedded in their rents. (Table.1 above shows that the PAHC is avoiding about 85% of the taxes that would be paid if their properties did not enjoy exemptions.) The costs of running Palo Alto, Santa Clara County, the State of California and the US have grown to the point that the whole system is in danger of collapse. Everyone needs to contribute —and that includes the clientele of the PAHC.
Conclusion The so-called affordable housing projects in places like Palo Alto include many hidden/future costs which the City fails to recognize, or acknowledge, in its promotion of these projects. Nonetheless, these costs exist. Given that the Maybell project is going to a vote in November, hopefully this is an opportunity to raise these issues for consideration of this particular project’s future, as well as other projects which seek to locate here in Palo Alto--using similar public financing schemes and tax avoidance mechanisms. Wayne Martin Palo Alto www.twitter.com/wmartin46 www.scribd.com/wmartin46 www.youtube.com/wmartin46
Notes (1) Worksheets available upon request. (2) There are no doubt legitimate objections as to how these estimations were made. The point of the exercise is to identify a target for the future cost of various services that will be required for occupants of this project, and the significant property-based taxes that will not be paid, within a reasonable likelihood of error..
Sources/Resources PAHC Loan Request:
Maybell PC Zoning Document: http://www.scribd.com/doc/173709255/City-of-Palo-Alto-CA-Planned-Community-PCZoning-Request PAHC Tax Credit Applications/Staff Responses: http://www.treasurer.ca.gov/ctcac/2013/secondround/applications.pdf http://www.treasurer.ca.gov/ctcac/staff/2013/20130925/145.pdf Tax Credits 101: http://file.lacounty.gov/dmh/cms1_181001.pdf Immigration: One Quarter of CA Families On Welfare: http://www.ppic.org/main/pressrelease.asp?i=365 Is California A Welfare Magnet? http://www.utsandiego.com/news/2012/Jul/28/welfare-capital-of-the-us/ 34%--Of the nation’s welfare recipients live in California but only 12%--of the U.S. population resides here. Soaring Rate of Immigrant Parents Imperils Overhaul Boon: http://www.bloomberg.com/news/2013-05-10/soaring-rate-of-immigrant-parentsimperils-overhaul-boon.html Welfare For Immigrants: http://www.ppic.org/main/publication.asp?i=56
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.