Rental Housing, Prop 13, and School Funding
Original post made by Prop 13 Victim on Jun 28, 2006
For example, a recent advertisement lists a 4 bedroom rental in Palo Alto at 833 La Para (Web Link) for $5500/mo. This property generates $900/year in property taxes (Web Link), yet burdens the fixed pie of the school system with at least 3 extra kids. Multiply this problem several hundred times and you should understand my concern.
I see a problem that dwarfs all of the red herrings raised by the anti-parcel tax crowd, e.g., false residency. Prop 13 may keep a few seniors from eating dog food (or moving to Arizona--far worse), but it seems to have evolved into a particularly nasty form of parasitism benefiting landlords in basic aid school districts. Is a legislative fix possible? Of course, Palo Alto could always stop being a basic aid district. Is that the sound of falling housing prices I hear? Lookout below!
on Jun 28, 2006 at 10:19 pm
The burden of school finance should be carried by all of the citizens of the city equally. Or even in the form of a state tax.
There should be no special or significant parcel tax or any other tax specifically directed at the property owners and voted in by people who are not subject to pay these taxes.
Many of us don't have children in school and live on fixed incomes. It's not just few elderly. Where is the justice in us carrying a parcel tax burden?
on Jun 29, 2006 at 5:09 pm
I guess I don't understand why you think prop 13 benefits landlords more than it benefits any other long time property owner.
And I don't understand the concern over renters. Renters are the ones who indirectly pay the landlord's property tax bill. Moreover, by your own estimate there are a disproportionately more renters without children susidizing property tax payments for those with children.
If anybody should be ticked off, it's those folks who don't have any kids and yet are paying for the local school system.
OTOH it's today's kids will be the one's having to pay an unfair amount of social security to fund current adult's short sighted underfunded Social Security benefits.
on Jun 29, 2006 at 8:33 pm
I'll go into a little more detail as to why I find the effects of Prop 13 especially nasty when it comes to landlords renting to families with school age children. In 98% California school districts funding comes directly from the state and is directly proportional to the number of children attending school. If you add more students, the state will provide more funds. The Palo Alto school system is different. Palo Alto has a relatively high tax base, so it opted out of the conventional state funding system and funds most of the school system directly from property taxes. So, if you add more students, but don't increase funding, the amount of funding per student decreases. This system serves Palo Alto well because the schools are better funded that they would be under the state funding levels. Better funding is used to create the perception of a better school system and consequently create a price premium for lousy Palo Alto housing.
Now consider the Prop 13 effects. Prop 13 was in theory designed to prevent the elderly from being force out of their home because of rising property taxes. But many seniors (and older Baby-Boomers) have moved out or died, but the properties are still being taxed at a Prop 13 sheltered rated. So the seniors or their heirs are free to rent out the tax-sheltered properties at market rates. Renting a lightly taxed property to a family with kids adds more children to the school system, but doesn't bring in any more money. So, the amount of funding per student goes down in Palo Alto. Thus many Palo Alto landlords (including apartment building owners) who rent to families with children not only enjoy low taxes, but impose a very significant burden on the school system. If the profits on rentals could be taxed for the benefit of the local schools, the problem would be reduced.
By the way, if you think Social Security funding is unfair. Take a look at Medicare. The net present value of Medicare obligations is about 75 trillion dollars. No one under 50 can seriously expect to get benefits like today's seniors.