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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ...  (More)

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Who Pays for Palo Alto Schools

Uploaded: Feb 19, 2019
There is an ongoing discussion about what, if anything, Stanford should pay for students added in housing on campus. The Weekly had an op-ed arguing the current per student costs were near $20,000 and that Stanford should pay “full mitigation”, which I interpret as $20,000 or so per added student. I do not know what the right number is but I am sure that it is nowhere near $20,000.

There are so many misunderstandings in this chain of reasoning that it is hard to know where to begin—misunderstandings about who pays and how much for our schools, about the difference between average cost and marginal cost per student and misunderstandings about enrollment trends and the cost of students in the 550 rental units that Stanford is proposing.

Let’s start with who pays for the schools. I got these numbers form the 2016-17 and 2017-18 budgets. If anyone has updated numbers, please add them in but I am pretty sure these numbers are close to currently correct.

Of the total revenues, a little over 80% come from the property and parcel taxes. The other 20% come from state and federal aid, lease revenue, donations. The 2016-17 budget book showed $17.5 million from the state, $9.6 M from lease revenue, $8.6 M from special education funds, $5.7 M from Partners in Education donations and a small amount from other sources—all adding up to around 20% of school funding.

Of the 80% from local tax revenue, 28% came from non-residential property owners.
So that leaves roughly 60% of school revenue that comes from property and parcel taxes on residential property.

We can calculate the average payment per household. There are roughly 29,000 housing units in Palo Alto and the assessed value (both for 2019) is $23.4 billion. So the average residential AV is around $800,000—much more for single family homes and less for apartment units.

I believe PAUSD gets about 45% of the total property tax (if anyone knows a different %, please weigh in) so $800,000 in assessed value would produce $3,600 in school property tax. Add in $800 for the parcel tax (voluntary for residents 65 and older) and you get an average contribution of $4,400.

What does this tell us? We now know that around 20% of school funding does not come from taxes on property and another 20% comes from non-residential owners. The rest comes from families with children in school and most from families with no children (or children in private school) and from older residents like Nancy and me whose children have long graduated. In 2017 just over one-third of Palo Alto households had children under 18 living at home.

Virtually no one pays $20,000 per student. We have owned a home in Palo Alto for 42 years and we have yet to come close to paying for the cost of our kids’ education even though back then it cost much less than $20,000 per student per year.

Most current transactions are around $2 million for a single family home. The new residents will pay $10,000 in school property and parcel taxes—about half of the cost of one student. The rest is paid by others. And not so much is paid by long-time owners like myself whose property taxes have risen by at most 2% per year.

And 550 rental units built by Stanford even if taxed would pay far less than the tax on a $2 million home.

But Nancy and I are happy to support the schools as other did for our children and happy with many other long-time owners to pay the parcel tax. We recognize that supporting our schools is a joint endeavor.

Next there is the issue of marginal cost versus average cost.

Even if 275 students were added to an enrollment of 12,000+ very few cost items would change. Many if not most cost items are not sensitive to a 2% change in enrollment.
But that is not relevant as even if new on campus Stanford rental housing added 275 students, total enrollment is expected to go down not up. And new state projections released in January show a decline in enrollment statewide with Santa Clara County having the third largest total student loss.

This is happening as birth rates fall and families with 2 or more children are replaced by families with fewer children and the share of families with children declines as the population ages.

This is a mistake often made in EIRs and public discussion--looking only at the incremental effect and not what happens for existing homes and residents.That is why we have more homes than 30-40 years ago and yet fewer students and why water conservation from existing residents can and did offset water use from new residents.

The people who are making the Stanford should pay $20,000 per student argument are smart people. So it is hard to explain why they skipped over the data presented above and the obvious American value that we all pay for the education of the children in our community, not just the people who have children now or the people who build the homes they live in.

Maybe a fair amount is for Stanford to pay what they would be assessed if the rental housing they build on campus were taxed. I will leave that to the negotiators. But even that amount would be far, far less than $20,000 per student
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Posted by Douglas Moran, a resident of another community,
on Feb 19, 2019 at 6:49 pm

Douglas Moran is a registered user.

Basic logical mistake: Levy presents tax per *parcel* as if it is directly related to cost per *student*. There are many parcels with no students -- both residential parcels and the non-residential parcels that Levy excludes from his "calculation" -- and some parcels with multiple students.

 +   18 people like this
Posted by stephen levy, a resident of University South,
on Feb 19, 2019 at 8:25 pm

stephen levy is a registered user.


The blog clearly notes that our schools are funded by 1) state, federal, lease and donation funds. non-residential properties, and residential properties two thirds of which have no students. So most funding comes from properties with no students.

That is precisely the point--no one pays the full cost of their students public education nor should they be expected to. So why should Stanford be asked to pay the full cost of any students in their 550 rental units when the taxes on these units even if they were fully assessed would be far, far less.

 +   12 people like this
Posted by not a boomer, a resident of another community,
on Feb 19, 2019 at 8:44 pm

So, you're paying next to nothing in property taxes, and you claim to be supporting paying for kids' education?

The below is all due to prop 13, which has benefited you and been a huge detriment to everyone since:
You're paying on the order of 10X less towards kids' education as someone who has newly purchased in Palo Alto. You're not paying enough to support someone else's kids in a meaningful way.

Claiming that you're happy to do so is an insult to those of us who *do* pay that 10X more in property taxes. As a hint, these are the folks who are most likely to have kids here (unlikely for a Boomer to have a kid in school here at this point).

Not only do we newer-than-boomers get to deal with the massively increased property taxes, but we get to deal with massively more demand on the infrastructure, needing to drop off/pick up kids (no school buses anymore), and childcare costs that are staggeringly high (2k/kid/month).

Stanford is clogging up the roads both directly (more people) and indirectly (more jobs attracted to the area).

Normally this (more jobs) would be fine or good, but Stanford doesn't pay any fair share for the infrastructure that the city must build to support it. Worse, the housing that Stanford builds or purchases is used only for Stanford students or faculty. When Stanford increases its population, it increases demands on other external housing. As a non-Stanford student or faculty, I'm not allowed to live in that housing, and our PA educators aren't allowed to do so either.

The "debate" over students in the Palo Alto Unified School District is only part of people's slow realization that Stanford is weaseling out of its fair share by not needing to pay any taxes on that HUGE property, and worse, when it purchases other property inside PA, it removes those from the city's revenues.

 +   10 people like this
Posted by stephen levy, a resident of University South,
on Feb 19, 2019 at 9:04 pm

stephen levy is a registered user.

@not a boomer

I actually do pay just under half much in taxes as someone who just bought a $2 million home--not as much but not 10 times less either. And my taxes go up 2% a year just like yours--not enough to keep up with the rising cost of education. And I like may long-time renters pay Palo Alto's $800 school parcel tax though we are allowed to opt out.

I see no insult in being willing to pay more for the schools if asked. I do not understand your comment at all.

And the family that bought that $ 2 million home (voluntarily knowing the taxes) does not pay for their kids education if they have kids.

We all pay. That is how the schools are funded.

Even with Prop 13 our schools have been getting property tax increases of over 6% a year but only because there is new construction and old homes turn over.

None of this answers the question of why Stanford should be asked to pay $20,000 a year for each student in their 550 rental units on campus.

 +   5 people like this
Posted by common sense, a resident of Midtown,
on Feb 19, 2019 at 10:15 pm

Stephen is incorrect in his analysis by using "29,000" housing units, and by only considering Palo Alto. The school district services not just Palo ALto, but Los Altos Hills and Stanford (Santa Clara County).

The school district services 19,999 single family parcels (single family homes, condominiums, townhouses), with an assessed value of $26.8 billion, which provides $120.6 million in property taxes, plus another $12+ million in the 2014 parcel tax adopted. In addition another $21.4 million is taxed for school bonds. The average assessed value is $1.35 million, not the .8 million Stephen calculates.

There are 857 multi-residential properties (apartment buildings), assessed at $2 billion, paying $9 million in property taxes, around .7 million in the 2014 parcel tax, and another $1.6 million for school bonds.

There are 1,693 non-residential properties (office buildings, retail, etc.) with an assessed value of $4.9 billion, and they also get taxed for "personal property" with an assessed value of $1.9 billion. They provide around $30.6 million in property taxes, another $1.3 million with 2014 parcel tax, and another $3.8 million towards the school bonds.

There are a number of properties that receive exemptions from taxation, totaling $11 billion - Affordable housing units, churches, Stanford Hospital, Palo Alto Medical Foundation, etc.

The school budget is around $230 million. Single family housing properties provide about 56% of the school budget. Non-residential properties around 14%, and Multiresidential around 4.6% - so that's about 75% paid from property taxes.

As to why Stanford should contribute more for the "Multi-residential" housing they would like to build? Because they are disrupting the status quo, and it's in their interest as well as everyone else's interest that they do so to maintain the status quo in funding. If Stanford doesn't contribute more, then class sizes will increase and the people they hire will be sending their kids to a school district which will be declining in it's ability to educate because of Stanford's action. And those same kids will be overflowed to schools all over town, meaning more traffic, a loss of community, and it will make it more difficult for Stanford to attract talented staff when they find out their kids will spending alot of time in the car traveling to and from school.

 +   2 people like this
Posted by casey, a resident of Midtown,
on Feb 19, 2019 at 11:10 pm

casey is a registered user.

@not a boomer

"The "debate" over students in the Palo Alto Unified School District is only part of people's slow realization that Stanford is weaseling out of its fair share by not needing to pay any taxes on that HUGE property, and worse, when it purchases other property inside PA, it removes those from the city's revenues."

Your statement is not entirely accurate. To the extent that land is used exclusively for educational purposes, Stanford can seek an exemption from property taxes, as could other nonprofit colleges However, if Stanford acquires residential property, such as in College Terrace, and uses them to provide housing for its faculty, these are not exempt from property taxes.

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Posted by stephen levy, a resident of University South,
on Feb 20, 2019 at 7:34 am

stephen levy is a registered user.

@ Common sense

You are correct that the District boundary is slightly larger than Palo Alto. And you are correct that there are a number of properties that receive exemptions from property taxes.

But it makes no difference to the analysis and conclusions. We both calculated that about 60% of the school budget comes from residential property. We both used the school budget for the share of property taxes versus other funding. The larger school district boundary has more single family homes but virtually all of the non residential and apartment AV is in Palo Alto. The District AV is about 10% higher than the city AV according to the 2018-19 county Assessor's report. Changing the boundary does not change the conclusions.

Overall enrollment as I pointed out is likely to fall not increase.

The question I posed is not whether Stanford should contribute towards school funding but that the amount should be nowhere near the $20,000 per student that is being called for.

As your analysis and mine both point school funding comes from many sources including most from those that have no children in school. Virtually no resident in the District pays the full cost of their children's education. It has always been a shared responsibility.

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Posted by mind the zeros, a resident of Leland Manor/Garland Drive,
on Feb 20, 2019 at 8:07 am

23.4 BILLION with a B
not million

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Posted by stephen levy, a resident of University South,
on Feb 20, 2019 at 9:04 am

stephen levy is a registered user.

Yes $Billion--has been corrected

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Posted by Engineering, a resident of Stanford,
on Feb 20, 2019 at 9:35 am

As everyone knows a point load requires more reinforcement as opposed to a distributed load.

Stanford is placing a point load on the PAUSD. They will concentrate a large number of child bearing age young adults in a small geographic region. Nothing wrong with that but reality should be recognized as reality, right.

They then will contribute nothing to that, and they will severely underpay those young adults (most all will qualify for food stamps and medi-cal).

Stanford is sandbagging.

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Posted by Todd Collins, a resident of Barron Park,
on Feb 20, 2019 at 10:21 am

Todd Collins is a registered user.

@Steve Levy, thank you for writing on this topic. I'm thrilled to see the community discuss issues like whether Stanford should contribute the marginal vs. average cost, etc. - these are fine topics. The challenge we have right now as a District and community is that Stanford PROPOSES TO PAY ZERO DOLLARS for new students in tax-exempt rental housing - ZERO ("not a penny" were their exact words). That's includes funding for the over 400 PAUSD students living already in rental housing at Stanford.

Moreover, Stanford has declined for over a year to make any proposals on how they might make an ongoing contribution to the district in relation to students they send. The District and Stanford in fact are no longer even meeting to discuss, since, given Stanford's position, there is nothing to discuss.

Whether the right amount is $8K, $13K or $20K per student per year, we can work that out. But if the number is zero, or close to it, we have a big problem. Stanford is the largest, fastest growing, and wealthiest landlord in our community - if they don't pay their fair share, we have to subsidize them or see spending per pupil erode. It is everyone's interest - including Stanford's - for them to do their fair share.

 +   15 people like this
Posted by Mary, a resident of Crescent Park,
on Feb 20, 2019 at 10:21 am

From the article,"The people who are making the Stanford should pay $20,000 per student argument are smart people. So it is hard to explain why they skipped over the data presented above and the obvious American value that we all pay for the education of the children in our community, not just the people who have children now or the people who build the homes they live in."

I can't understand this either and it has been the most upsetting part for me about PAUSD's approach to their requests. They provide a partial analysis with select data to skew the numbers. It's a huge disservice to the citizens and the students of Palo Alto. We all have seen what can happen with campaigns of mis-information. We are a thoughtful community. Let's have a thoughtful discussion around a body of facts. Personally, I'd like to see the School Board and the PTA held accountable for this. They are not being good models for our children.

First, as Steve Levy points out, very few, if any households are paying over $42K in property taxes to generate PAUSD's stated number of $19,200 per student for each student. So, that's an absurd place to start. Unless PAUSD wants to say that any household who is not paying that amount is NOT paying their fair share. Whether it's $3600 or $4100, we know it's not $19,200.

I read through the rest of PAUSD's "analysis" or "argument" and some "facts" are even more egregious. Let's have a non-inflammatory conversation around this issue and stop maligning Stanford, their faculty and staff and students. We can and must do better than this as an informed, thoughtful community.

Hopefully, this article will get a thoughtful conversation with the accurate information started. Thank you for writing it.

 +   19 people like this
Posted by Mary, a resident of Crescent Park,
on Feb 20, 2019 at 10:35 am

@ Todd Collins. First, my understanding is that Stanford is in negotiations with the County and cannot be negotiating with anyone else? I thought, based on the letter PAUSD wrote to the County, that PAUSD made their requests to the County. Am I wrong about that? Is Stanford allowed to be in "secret negotiations" with the County AND be negotiating with the School Board?

Where is that 400 number from? From an email I received from PAUSD when I asked for data, I was told that about 800 students live on Stanford campus and attend PAUSD. Stanford provided a more exact number of 725. Of those, only 157 live in rental housing. The rest pay taxes - full taxes.

If you are including Stanford West in that number, that's mixing apples and oranges to favor PAUSD's argument. Stanford West in not in Stanford, it is in Palo Alto. It was not developed as part of a GUP. It was developed under a permit from the City. The children in those apartments were anticipated. And, Stanford, like any other city landlord pays full taxes on Stanford West. It was built in the early 2000's so they are probably paying more taxes than most apartment complexes.

Is PAUSD's position that landlords who rent to Stanford affiliates must pay MORE than their property taxes to PAUSD because they are renting to a Stanford affiliate? There used to be a Knight Fellow living in a cottage near where I live. Her daughter went to PAUSD. Is your argument that the cottage owner should pay MORE to PAUSD than her property taxes because she was renting to a Stanford affiliate?

Given that 44% of Palo Altans rent, having a discussion about what rental units are contributing to the school district may not be a bad idea. But, let's discuss all rentals, not just Stanford's then. I have friends who rent. They don't want to speak up about any of this because they are already feel awkward being "renters" versus "homeonwners."

Prop 13 and aging at home is great. But leaving the area and renting your home out isn't so great for the schools. How about this - if your home hasn't been reassessed in 25 years AND you rent it out, you have to pay a school impact fee?

 +   2 people like this
Posted by resident, a resident of Midtown,
on Feb 20, 2019 at 12:32 pm

Stephen - the $20,000 per student is not the cost of adding a student to the district. There are many expenses that would stay the same for 12,000 students or 12,500 students (for example, the superintendent's salary is not on a per student basis; same for most of the district level staff, and school administration like the high school principals.).

But as Todd Collins points out, the cost is not zero either, and as common sense argues, it is in Stanford's best interest in helping to maintain or improve the school district if they want to attract top talent.

 +   19 people like this
Posted by Mary, a resident of Crescent Park,
on Feb 20, 2019 at 1:05 pm

@ resident. I think that's the point Steve is making: it doesn't cost $20K to add one more student. There are marginal costs involved. However, in PAUSD's analysis, they argue $20K is correct and then use that number to grossly inflate all the costs. From the article by Heidi Krup, the et al that appeared a week ago.

"PAUSD spends about $20,000 per student. The district currently absorbs $8 million annually to educate students living in tax-exempt Stanford-owned rental properties." Web Link

That's just factually wrong. Clearly, they took the incorrect number being cited by Todd Collins of 400 students who live in Stanford tax-exempt rentals (it's under 160) and multiplied it by $20,000 to come up with $8M as the amount that the district "currently absorbs."

Why mis-state the facts is such an obvious and erroneous way? How does that do anything except cause confusion and upset?

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Posted by Anon, a resident of Another Palo Alto neighborhood,
on Feb 21, 2019 at 4:13 pm

>> That's just factually wrong. Clearly, they took the incorrect number being cited by Todd Collins of 400 students who live in Stanford tax-exempt rentals (it's under 160)

This is the crux of the argument. Sure, PAUSD students of Stanford people who live out here in the city and pay taxes out here are already paid for. The question is -exactly- how many PAUSD students are living tax-exempt right now. We keep seeing vastly different estimates of this, but, it actually should be pretty easy for PAUSD to come up with a very accurate number. These currently-tax-exempt students have tax-exempt addresses. Let's see an accurate tally, and, a better estimate for the proposed new numbers.

I also agree with the concept that the "real" cost includes the full marginal cost. By that, I mean that I agree that per-student state/federal reimbursed should not be included, but, revenue from other taxes is not relevant. If it costs PAUSD $10-$13K-$15K per student per year of new net expenditure, than, Stanford should pay that. Not ZERO. But, for 385 students, 500 students, 625 students, or whatever the actual new number of tax-exempt students is.

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Posted by Mary, a resident of Crescent Park,
on Feb 21, 2019 at 6:27 pm

@Anon, "If it costs PAUSD $10-$13K-$15K per student per year of new net expenditure, than, Stanford should pay that."

This would mean that we give "credit" to Palo Alto residents for their collective contribution to the schools, but not Stanford residents. We don't put up an apartment building in Palo Alto and assign an ongoing "fee" per student per year to it. Why hold Stanford to a different standard? Before your say, because the new building pays property taxes, make sure you know that there are more than a few buildings and units that file for property tax exemptions here in Palo Alto because they provide below market rate or affordable housing for their tenants (what Stanford wants to do for its grad students). We, as a community, absorb the costs of educating those children. Stanford homes, condos, etc. generate about $6.5M a year. Shouldn't that somewhat offset what they should pay?

And, remember, Palo Alto is way behind on creating the amount of affordable housing the State has requested. I believe the number is close to 1800 units with almost 700 of them for people with with "very low income." If there are any property taxees associated with them, they will be very, very low.

This is relevant because whatever is done, will set a precedent not just for Stanford, but potentially other developments as well. And, certainly for other tax exempt educational institutions.

And, yes, the number of students should be "relatively" easy to get. PAUSD was unable to give me the exact number. I believe the 400 they are citing includes property that lies in Palo Alto and that they pay taxes on. Todd Collins should be able to answer that.

 +   1 person likes this
Posted by chris, a resident of University South,
on Feb 21, 2019 at 8:04 pm

These arguments are based on the assumption that PAUSD enrollment will go up by 275 students. As Steve Levy, it is quite possible there will be a continuing decline in enrollment going forward.

The county should work out a development agreement with Stanford which is based on what actually happens.

 +   1 person likes this
Posted by Allen Akin, a resident of Professorville,
on Feb 21, 2019 at 8:09 pm

Allen Akin is a registered user.

@Mary: "And, remember, Palo Alto is way behind on creating the amount of affordable housing the State has requested. I believe the number is close to 1800 units with almost 700 of them for people with with "very low income." If there are any property taxees associated with them, they will be very, very low."

Just to avoid disappointing people, we should be clear that Palo Alto is not responsible for creating housing. It *is* responsible for ensuring that enough building sites are available and zoning rules are permissive enough for certain target amounts of housing to be built, and it has already done so.

After that, it's up to the developers to build. If the return-on-investment for housing is too low, as it is for most types of housing in Palo Alto today, then they won't build much. That issue is beyond the scope of the discussion here.

If I understand correctly, taxes are determined by the appraised value of a property, and that's derived from the market values of comparable properties, not by rental rates of units in the property. So the fact that some units are rented to very low income tenants doesn't necessarily mean that the property taxes will be very low.

 +   2 people like this
Posted by PA Grandma, a resident of Community Center,
on Feb 21, 2019 at 8:33 pm

I find this thread very confusing. Every person talking about the numbers has a different way to measure the different parameters and a different dollar amount. It would be helpful if PA Online would print the clear and understandable figures that Todd Collins presented at one of the town meetings last fall.

And . . . Prop 13 applies to businesses/commercial property as well as homes, so to accuse homeowners for the shortfall in school funding is false. On average, California homes turn over about every 10 years, while commercial properties rarely turn over or change hands. This means that the property tax burden has shifted to homeowners. Before Prop.13, residential accounted for 55% of the property tax and commercial paid 45%. Now residential pays 72% of the tax burden while commercial only pays 28%. Chevron alone saves over $100 million a year by benefiting from Prop. 13's Corporate Loophole.

If those of you who are upset about Prop 13 want to make a difference, check out Evolve - a group that is petitioning Gov. Newsom to do something about the problem.

Web Link

 +   4 people like this
Posted by Mary, a resident of Crescent Park,
on Feb 21, 2019 at 9:51 pm

@grandma. I believe that requests for the numbers from County have been made because yes, these numbers can be confusing. Take a look at the Santa Clara County Assessor annual report it has a page about prop 13 impact. 83% of property tax for Palo Alto were generated by properties assessed after 1999. My husband and I benefit from Prop 13. I would still vote to change it.

@allen Arkin. Yes, but the assessed value is not necessarily what's paid. One can apply for exemptions for numerous reasons including you have a percentage of BMR housing.

@chris. According to the County prepared FEIR, 275 was a conservative estimate of the likely number of new students that would be generated over the next 17 years for the development requested by Stanford. A better estimate would be under 200. How conservative? For the 2000 GUP, Stanford paid $10m for the possible addition of 550 students. The 2000 GUP has generated 50 more students.

And none of the above is to say that Stanford shouldn't pay it's “fair share." It's about having a thoughtful discussion around facts about what that “fair share" should be. And keeping in mind public policy considerations.

 +   2 people like this
Posted by Stanford Impact, a resident of another community,
on Feb 21, 2019 at 10:20 pm

The basic argument that 275 students cost nothing to serve for PAUSD is fundamentally wrong. At a minimum that number of students would cause hiring of 14 more teachers costing $200K per year in salary and benefits. So the direct cost for added teaching staff alone would be $2.8 Million. You can say some kids can fit in classes with space, but there would also need to be new classes created perhaps with extra space in them. Not every child can go in every class. And this is a conservative estimate of cost, because High School students use more teachers compared to K-8. Then there is the capital cost. An extra 14 classrooms cost about $14 Million to construct--just the classroom not the rest of the school and the other resources used by the students. Any one time impact fee goes to the capital costs, not to annual operating costs.

275 is a conservative estimate because the number could be 350. It's all how you look at it.

Prop 13 doesn't enter into it. All the new housing Stanford might use for academic purposes is TOTALLY EXEMPT from all taxes, even if it is off campus and within the city boundaries of Palo Alto or Los Altos. In Los Altos there is an apartment complex called the Colonnade that was purchased by Stanford. Immediately all the tax revenue for that complex went poof EXCEPT for the BMR units which are not reserved for Stanford faculty and staff. Because they are general use, the value of the BMR units is THE ONLY THING about the complex which is taxed. Again, this has nothing to do with Prop 13. Stanford is categorically exempt from all property taxes. In this case, it's not just PAUSD which is affected by LASD and MVLA. The same situation exists in Menlo Park.

Really crazy to allege that added students don't generate added costs for PAUSD or any other school district. In Palo Alto, a lot of the property taxes are from commercial property and these are the properties that also generate jobs and a housing imbalance. That's the way it is in most cities. The school districts all depend on commercial property for taxes. Thank God Stanford has to pay property tax on most commercial endeavors, but for example one would think of a medical office as being taxable, but all the Stanford Health properties also pay no property tax, not just the Medical Center proper. In the case of the Colonnade, it's a tough issue for LASD because LASD mostly gets property tax revenue from residential rolls. Go check the county property tax report about that. Stanford is a growing problem because it keeps gobbling up property and turning it tax free by virtue of being owned by Stanford. It takes revenue away from the cities and school districts. I'd say that is more of a problem than Prop 13.

 +   1 person likes this
Posted by Allen Akin, a resident of Professorville,
on Feb 21, 2019 at 10:23 pm

Allen Akin is a registered user.

@Mary: Property tax exemptions are more restricted than most people realize. For example:

"...property tax owed on the first $20 million of assessed value will be exempt. In order to qualify, however, the property must be owned and operated by a nonprofit organization where low-income households occupy 90 percent or more of the property." Web Link

Publicly-financed projects are largely exempt, but we have few of those in Palo Alto.

 +   4 people like this
Posted by Mary, a resident of Crescent Park,
on Feb 21, 2019 at 10:48 pm

@stanford impact. I haven't seen anything written here that suggests or alleges that the addition of students from Stanford or Stanford development or any development doesn't have an impact. The question is how does one quantify it? And, can there be a conversation around it that isn't inflammatory?

Prop 13 has an impact on many things - definitely school funding as PiE points out on its website. But it's not Prop 13 OR development.

@Allen Akin. Thank you for link. It's a complicated area. I “heard" the other day that an exemption will be filed for the Buena Vista Mobile Home Park - which is fine/all good. But, do you know if any of this information is public?

 +   1 person likes this
Posted by musical, a resident of Palo Verde,
on Feb 22, 2019 at 4:49 am

I got no dog in this fight, but always ready to fill gaps in my tax awareness. Had to look up @Stanford Impact's Colonnade Apartments example above. Counted 167 units on their site plan. Current year's county property tax bill looks like $212,000; or about $100 per month per unit. That's around 2.5 to 3.0 percent of the rental rate dollar amount. What would be a "fair" percentage? Is there any way to compare percentage-wise what a homeowner pays, say against mortgage payments or opportunity costs?

Difficult to believe the above parses to 100% on Colonnade's BMR units and 0% ("poof") on their Stanford affiliate units.

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Posted by SRB, a resident of St. Francis Acres,
on Feb 22, 2019 at 7:15 am

@Stephen Levy - The fair thing to do would be to repeal Stanford's expensive and expansive property tax exemptions. Short of that, you'll have to come up with a formula to cover at a minimum the cost (number of added students) Stanford imposes on the school districts (as another poster commented not just PAUSD but also nearby districts where Stanford tax-exempted some properties). Short of repealing Stanford's property tax exemptions, in your opinion, what would be a fair formula?

 +   1 person likes this
Posted by Allen Akin, a resident of Professorville,
on Feb 22, 2019 at 8:35 am

Allen Akin is a registered user.

@Mary: No, that's news to me. I did a quick search, but it didn't turn up anything.

That made me curious about the current situation, so I also checked the County Assessor's site for a few of the Buena Vista addresses. (You can find them here Web Link if you search for properties at 3980 El Camino.) On all the properties I checked, the owners were claiming the standard homeowner's exemption, and that eliminated most of their tax liability. I guess a new exemption might be worthwhile if improvements raise the property values, though.

 +   2 people like this
Posted by Mary, a resident of Crescent Park,
on Feb 22, 2019 at 9:12 am

@ Allen. I couldn't find it either. I shouldn't have posted it since it was something I "heard" but couldn't verify. And, an exemption would be worthwhile if the desperately needed repairs, etc. cause a property value increase. I was glad that we were able to save those homes. Thank you for the information.

 +   2 people like this
Posted by John Horgan, a resident of another community,
on Feb 22, 2019 at 10:59 am

For the sake of unbiased clarification, the state Department of Education's website indicates that the Palo Alto Unified School District spent $19,526 per student in 2016-17 (the latest year available online). That per child figure includes dollars from all available sources. The website notes that the District's revenues per pupil are just slightly below that $19,526 amount.

 +   7 people like this
Posted by Train Fan, a resident of another community,
on Feb 22, 2019 at 11:55 am

Mary wrote:
"Prop 13 has an impact [on] school funding"

not a boomer wrote:
"is all due to prop 13"

Oy vey! So much misinformation.

1: Since Prop 13 passed, total property tax revenues across the state have increased over the subsequent 40+ years by about 7.3% PER YEAR on average. That increase in tax revenue outpaces California's economic growth for the same time-frame.

The state is overflowing with property tax revenue, which is the opposite of the narrative pro-tax sycophants try to paint.

2: Prop 13 has NOTHING to do with how property tax revenues are apportioned. Assembly Bill 8 (AB8) is the law primarily responsible for how property tax revenue is doled out. AB8...NOT Prop 13...is the reason why Menlo Park Fire Protection District is flush with cash while Redwood City Elementary SD's revenue is just 12,869/student.

The distinction between Prop 13 and AB8 is crucial; unlike Prop 13 (which would require a public vote to change), the state legislature can change AB8 WHENEVER IT WANTS TO. Many of the school districts that need more revenue are short-changed not by Prop 13 but by the LEGISLATURE.

The State government LOVES our tax structure simply because they're getting high income taxes, high sales taxes and high property taxes, while at the same time the uninformed blame Prop 13. That's a sweet deal: no political consequences.

You people who blame Prop 13 for all ills are simply misinformed.

Please educate yourselves. Thank you.

 +   5 people like this
Posted by Mary, a resident of Crescent Park,
on Feb 22, 2019 at 12:03 pm

@ John Horgan. The amount spent is not in dispute. It's how much households contribute to get to that amount. That is, what are the sources of that funding? I'm just a resident/homeowner in Palo Alto who supports schools. But, after the 2016 election when facts stopped mattering and the spread of mis-information (including the campaign of mis-information that got Judge Persky recalled), I've become determined to keep FACTS in the dicussion and leave the insults, hyperbole, mis-direction out of these important policy discussions. There aren't "alternate facts." We need to do better as a community. And, we should never single out any child based on a property tax contribution the child's household makes. Never.

 +   1 person likes this
Posted by @musical, a resident of Los Altos,
on Feb 22, 2019 at 1:47 pm

The Colonnade Apartments assessment for 2018-19 dropped to $72 Million so a normal property owner would have to pay $720,000(1%)+ (or it works out to about $850,000 total with the special voted-on taxes) in ad valorem property taxes, not $200,000. The Colonnade has a $60 Million exemption due to being owned by Stanford. The average value per apartment should be $450,000. Instead only the BMR units are valued, so the average taxable value drops down to $75,000.

Yes, when a new apartment is built in Los Altos, the owners pay $5000 per unit in annual property taxes, or over half of one month's rent. It's closer to 10% of the rent which goes to defray property taxes than it is to 2%. I don't know where you get the idea that these new apartments rent for $5000 per month. They are some nice 2 and 3 bedroom apartments and they rent for $8000 at least, which is also the case in Mountain View on El Camino Real.

People who argue for Prop 13 being repealed need to be a little more specific. Without the 1% limitation, which comes from Prop 13, we'd easily see a full month worth of rent being paid for property taxes on new construction.

 +   1 person likes this
Posted by @musical, a resident of Los Altos,
on Feb 22, 2019 at 1:58 pm

Correction, the owner of new apartment buildings dedicate 5-6% of the total annual rent collections to defray property tax bills. Without Prop 13 limiting this to 1% of total value and holding it steady as the building appreciates in value, then the amount of total rental collections needed to pay property taxes would be more like 10%. But Prop 13 keeps it at the lower 5-6% value. not just 2-3%. Without Prop 13, rents on tall apartments would tend to increase. For 10+ year old apartment buildings, Prop 13 saves the tenants an extra cause of rising rents.

 +   1 person likes this
Posted by musical, a resident of Palo Verde,
on Feb 22, 2019 at 3:14 pm

Web Link shows nothing near $5000/month. The $212K county tax bill is straight from Web Link

I question the statement "Stanford is categorically exempt from all property taxes."

 +   3 people like this
Posted by Enrollment level is a red herring, a resident of Downtown North,
on Feb 22, 2019 at 7:15 pm

I've heard Steve make the argument before that enrollment declines in PAUSD should somehow offset an increase in students from Stanford, eliminating the impact of those students. But that's like saying that if your income goes down and you stop going out to eat in response, there was no impact of your income decline -- look, your budget is still balanced! Enrollment fluctuations in the district cause per-student spending to go up and down. They don't result in property taxes being cut overall, and especially not just for new property owners. But that's what Steve is arguing Stanford should get: the benefit of any enrollment decline. Why should Stanford collect that benefit, when no one else in the district does?

The fact is, as Collins points out, is that the outcome of Stanford not paying is a negative externality -- per student spending goes down.

It's a little hard to tell what Steve is arguing, maybe he can clarify -- are you OK with that outcome, or should Stanford pay at least the marginal cost of new students?

 +   4 people like this
Posted by The Colonnade Taxes, a resident of Los Altos,
on Feb 22, 2019 at 8:56 pm

Anyone can see the huge categorical exemption applied to The Colonnade on account of being owned by Stanford University and being used as housing for its academic mission. Just go to Web Link and enter APN 170-01-099 The select bill detail. Plain as day can be seen that the assessor values the property at $72 Million and applies a tax rate of .0042% to the $72 Million. Then there is an exemption of $60 Million which reduces the amount subject to the 1.1782% rate down to $12.4 Million, yielding a bill of $1469,303.84. Parcel taxes and special assessments add another $62,661 to the total bill, but most of that is a Sewer fee of $57,000, which is not a property tax. So it's bogus to use the $210,000 number. If you want to see the actual bill, look at Web Link

 +   1 person likes this
Posted by The Colonnade Taxes, a resident of Los Altos,
on Feb 22, 2019 at 9:02 pm

Sewer service fees aside, the $149,303.84 property tax bill on The Colonnade would be 6 times as much without the exemption, i.e. an annual bill of $890,000. Most if not all of the special fees would remain the same including the sewer service fee which in Palo Alto would come on the water bill. Los Altos is different and uses Property tax bills to collect sewer fees since it does not have municipal water service. Again, the actual bill is available Web Link

 +   4 people like this
Posted by The Colonnade Taxes, a resident of Los Altos,
on Feb 22, 2019 at 9:12 pm

So the point about The Colonnade is that Stanford is not just socking it to PAUSD. In the case of The Colonnade, an extra $740,000 in property taxes would be collected if that complex was not taken over by Stanford post-construction. Of the $740K, 19% would go to the Los Altos School district, 16% to the MVLA High School district and 17% to the county ERAF which ends up funding K-12 schools as well. This is a huge hit to the expected K-12 school revenue for this property, but there are still kids living in the complex. Stanford saves $740K each year on this property. It makes a good illustration of the problem in PAUSD too. It's not limited to where you'd traditionally think Stanford would be housing families and not paying taxes.

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Posted by 80/20, a resident of Old Palo Alto,
on Feb 26, 2019 at 11:17 am

Families who moved here for "good schools" in PAUSD are subsidizing Stanford, Tech Behemoths, and Prop 13 homeowners - many of whom are renting/owning multiple homes at next-to-nothing in RE taxes. It's a simple rule of 80/20, folks. Eighty percent of Palo Altans are subsidized by the twenty percent who moved young families to an over-subscribed and under-funded infrastructure. Crowded roads for young bikers and crowded schools with teachers who cannot live where they teach are compounded by a negative birth rate, exodus of young families, huge shift toward private schooling, a male-dominated workplace, CDC-defined mental health epidemic and severe scarcity of mental wellness resources. Upwards of 70% registered PA voters do not have kids in PAUSD schools. But their home values and RE portfolios are soaring on the backs of the schoolchildren. If your kids are more than 25yrs old, this is no longer their father's middle class suburb with all the amenities, pleasantries, and simple comforts that they enjoyed as kids in Palo Alto. I'm also quite certain that they can't find a job or buy a home or raise a family here with the same levels of education and income that their retired parents brought to the workplace or neighborhood 30+ yrs ago. Young families moving in are vastly different in socio/economic/cultural/academic profiles than their very sweet neighbors. It leaves a lot of young families disconnected from the houses across the street and next door. No kids running thru each other's yards and families enjoying communal bonding bc of generational and lifestyle incongruence.

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