News


Guest Opinion: Tax revenues from Stanford lands support Palo Alto schools

Estimated $23.8 million for the Palo Alto school district was generated from commercial properties on university land

Stanford's application to Santa Clara County for a renewed land-use permit has initiated a robust community discussion about the role Stanford plays in Palo Alto and our other local communities. We welcome the dialogue, and we appreciate the opportunity to engage in a constructive and fact-based discussion about the shared future of Stanford and our region.

One topic of interest has been Stanford's financial contribution to the Palo Alto Unified School District (PAUSD). The ongoing success of Palo Alto's public schools is very important to the Stanford community, and Stanford has a long history of partnering with PAUSD in support of local public education.

Unfortunately, a number of comments have surfaced recently that potentially leave some with the impression that Stanford does not contribute financially to our schools or does not contribute its appropriate share. In addition, speculative assertions have been made that future Stanford housing would add 1,500 children to Palo Alto schools. That is not the case.

Stanford lands devoted to academic uses are tax exempt under the California Constitution, under the same provision that exempts property of local government, public schools, state universities and religious institutions. But Stanford also has devoted significant lands in the Stanford Research Park and at the Stanford Shopping Center to commercial uses that are not exempt and generate significant tax revenues for PAUSD. In addition, much of Stanford's housing is subject to property taxes that support PAUSD — including the 960 residences in our on-campus faculty neighborhoods, the 628 rental units in the Stanford West complex along Sand Hill Road and the new University Terrace neighborhood.

In Fiscal Year 2017-2018, an estimated $23.8 million for PAUSD was generated from just the commercial properties on Stanford lands, or about 10 percent of the district's income.

A substantial majority of PAUSD students who reside in Stanford housing live in residences that contribute property taxes to the school district. In the case of those who live in tax-exempt residences on campus, such as the Escondido Village housing for graduate-student families, the sizeable tax contribution from Stanford's commercial lands more than supports the cost of their enrollment in PAUSD.

Under Stanford's proposed 2018 General Use Permit, Stanford has asked to build up to 550 apartments for faculty and staff between now and 2035. If families with children were to occupy all of these units, PAUSD's student generation rate estimates there could be 275 school-age children. Stanford has not proposed future housing that would add 1,500 students.

Data from the 2016-2017 school year shows that students living in tax-exempt Stanford residences represented less than 2 percent of PAUSD students — yet, tax revenue from Stanford's commercial lands alone contributed nearly 10 percent of PAUSD's income that year. This tax revenue would continue to more than support new students from Stanford's housing.

Stanford's support for Palo Alto's schools extends beyond current tax revenue, of course. Stanford has provided much of the land for Palo Alto schools. Today, four schools are located on 112 acres previously owned by the university — Palo Alto High School, Gunn High School, Escondido Elementary School and Nixon Elementary School. These lands comprise 40 percent of the current PAUSD land portfolio.

We have also supported the education, safety and wellness of students through community partnerships with Project Safety Net, Safe Routes to Schools and Abilities United Employment Services Program. The Lucile Packard Children's Hospital School Program is a unique collaboration between PAUSD and the hospital that provides quality education to critically and chronically ill children.

Stanford is committed to its partnership with PAUSD and to addressing the District's concerns about how to best serve new students as Stanford's future housing plans take shape. Moreover, as we plan for Stanford's future over the next 20 years, Stanford welcomes the community's input on key issues of concern. The university's original application was carefully structured to minimize the impact of Stanford's academic mission on our neighbors, and we are pursuing additional solutions that are responsive to the concerns of local residents. More information is available at gup.stanford.edu.

Jean McCown is associate vice president for government and community relations at Stanford University. She can be reached at communityrelations@stanford.edu.

Related content:

Stanford offers new plan to tackle affordable housing

School district criticizes county's Stanford housing study

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Comments

113 people like this
Posted by Todd Collins
a resident of Barron Park
on Aug 3, 2018 at 12:11 am

I'm disappointed to see Stanford continue to make misleading statements about their contributions to PAUSD.

Below are some of the facts. More about the problem, the GUP's economic impact on PAUSD, and rebuttals to Stanford's arguments is in this two-page flyer - Web Link . My (brief) comments to the City Council earlier this week are here - Web Link

Some facts:

Stanford itself pays less than $2M in property taxes (based on analysis of county assessor data), not the $23.8M they claim credit for. Stanford itself pays little or no taxes on the Shopping Center, the Research Park, or the residential property on campus - for almost all, the ground-leasers (who usually also own the buildings) pay the taxes.

Besides, Stanford's commercial tax payments are not really relevant. Commercial tax payers don't get a break on their residential taxes. Residential and commercial owners BOTH have to pay their share for the system to work.

Stanford did not "provide" sites for Palo Alto schools - PAUSD bought them, most or all at fair market value. (For the Paly High School site, bought almost 100 years ago, we don't know if it was market value or not.)

Finally, it definitely is possible that the GUP will generate up to 1,500 new students. The County's draft EIR looks at that specific scenario as "Additional Housing Alternative A" (Web Link). Stanford may not prefer it, but the County clearly is considering it.

What no one disputes is that GUP housing, under any scenario, will generate hundreds of new PAUSD students with zero new revenue. I hope Stanford will stop disputing the facts and start figuring out how to address this impact. And I hope the community will urge its leaders to make sure that Stanford does its share.


31 people like this
Posted by resident
a resident of Midtown
on Aug 3, 2018 at 8:41 am

Stanford should realize that having a well funded and excellent public school system will be a selling point for recruiting the best faculty. Their current position will lead to higher classroom sizes and overflowing kids who would live on campus to schools many miles away - and I could see over universities who compete for the same faculty prospects using these facts to out recruit Stanford.

So Stanford can continue to do the minimum required by law, have a tarnished reputation in the local community, and have a harder time recruiting, or they can take a pro-active approach and collaborate with the community to help make this a better situation for all involved.


1 person likes this
Posted by Class of 58
a resident of Old Palo Alto
on Aug 3, 2018 at 8:44 am

Stanford = following in the footsteps of its founder.


19 people like this
Posted by Wayne Martin
a resident of Professorville
on Aug 3, 2018 at 2:23 pm

Wow! Where to start to unravel some of the more egregious comments of the Stanford University spokesperson.

Let’s start with the issue of property tax exemption. The VP is correct that this exemption is written into the CA State constitution. In fact, the question was put to California’s voters in the general election of 1900. (Can’t find the results of that election at the moment, but seems to me that the Amendment providing tax exemption was passed with a 2-to-1 margin, with fewer than 750,000 votes cast.)

At the time, Stanford’s endowment was about $10M (but would rise to about $40M when Ms. Stanford passed away a few years later.) The school’s operational budget was about $150K-$200K at the time, with SCC property taxes of between $25K-$30K.

Here is a snippet documenting Stanford's property assessment around 1900--

#----
San Francisco Call, Volume 87, Number 54, 24 July 1901 — Santa Clara County's Wealth.

SAN JOSE, July 23.— The assessment roll just completed by Assessor Spitzer indicates the vast resources of Santa Clara County. All property in the county assessed foots up $50,643,985, against $50,725,593 last year. This reduction is caused by the tax being taken off church property and Stanford University. The assessment of church property was $177,915 and the Stanford University assessment $200,185, making a total of $378,020.
#---

California Amendment 23 was promoted by almost everyone associated with Stanford. The following snippet explains why the proposition passed so handily:

Amador Ledger, Volume 1900, Number 2, 2 November 1900 — The Stanford Constitutional Amendment.

"This amendment corrects any possible defects in the original founding of the University. It authorizes it to receive property by will, and property situated in other States and countries than California, and it places in the hands of the Legislature the discretionary power to exempt personal property of the University from all taxation. 'All this Is in consideration for free tuition to all students of California.

(Authored by President David Starr Jordan--A man whose name has recently been banned by the PAUSD.)

#----
So, the Stanford VP seems to have omitted the fact that Stanford promised the voters of California that if they voted to amend the constitution so that the Legislature could subsequently exempt them from property taxes, then all California students admitted to the school would be able to attend tuition free.

Just how long did this promise hold? Around 1908, Stanford began to charge fees for law students, and in 1920, all students were charged a fee.

This little bit of history says a lot about Stanford promises.


12 people like this
Posted by Wayne Martin
a resident of Professorville
on Aug 3, 2018 at 2:39 pm

From the humble beginnings of 1891, when Stanford went “live”, it has grown over the last 120 years to be a financial behemoth. The following financial data comes from its website:

Web Link

Finances

In 2017–18, Stanford is a $6.3 billion enterprise. This figure represents the university’s consolidated budget for operations, a compilation of all annual operating and restricted budgets that support teaching, scholarship and research, including the budgets of all schools and administrative areas and the SLAC National Accelerator Laboratory. It does not include the $1 billion capital budget and excludes the budget for Stanford Health Care and Lucile Packard Children’s Hospital.

Endowment

Stanford’s $24.8 billion endowment (as of Aug. 31, 2017) provides an enduring source of financial support for fulfillment of the university’s mission of teaching, learning and research. Almost 75 percent of the endowment is designated by donors for a specific purpose. There are more than 8,000 endowed university funds.

Web Link

Highlights of the Budget Plan:

o) The Consolidated Budget for Operations projects a surplus of $165 million on $6.3 billion of revenues, $5.9 billion in expenditures, and $243 million in transfers. We anticipate revenue to increase 5.0% over the projected 2016/17 year-end results. This results from an 11.6% increase in health care services revenue and a 12.6% growth in investment income, offset by a 13.2% reduction in SLAC sponsored research activity, which is driven by a smaller construction program compared to 2016/17. Overall, we are budgeting a 4.1% increase in expenses, resulting from a 7.8% growth in compensation coupled with a small reduction in other operating expenses.

o) The Consolidated Budget includes $1.45 billion in general funds, of which $200 million flows to the Graduate School of Business, the School of Medicine, and Continuing Studies in accordance with previously agreed upon formulas. We anticipate a general funds surplus of $26 million, a figure higher than last year but comparable to most years following the recession. We have also budgeted a $20 million contingency against uncertainties in federal research, endowment payout shortfall, and initial costs of initiatives emerging from the Long Range Planning process. This surplus, coupled with the contingency, provides an appropriate cushion against revenue fluctuation and will allow us to address one-time needs throughout the year.

o) This Budget Plan presents the projected 2017/18 results in a format consistent with Generally Accepted Accounting Principles, as reported in the university’s annual financial report. The projected Statement of Activities shows a $115 million surplus.

o) The Capital Budget calls for $1.2 billion in expenditures in 2017/18. These expenditures are in support of a Capital Plan whose projects, when fully completed, will total approximately $4.3 billion. Principal expenditures in 2017/18 will be directed toward:

o) $329 million for Stanford Redwood City Phase 1. This is part of a multi-year project to build an administrative campus in Redwood City at a total cost of $569 million. It is expected to open in 2018/19.

o) $171 million toward the new Escondido Village Graduate Residences.

o) $119 million towards the $257 million ChEM-H and Stanford Neurosciences Institute Research Complex.

o) $104 million towards the Center for Academic Medicine 1 building.

o) $104 million towards the BioMedical Innovations Building.
#-----

Given these numbers, the SCC Assessor publishes in his annual report:

Stanford University qualifies and receives a $13.6 billion exemption from property taxes, nearly double the amount exempted five years ago.


16 people like this
Posted by Wayne Martin
a resident of Professorville
on Aug 3, 2018 at 3:30 pm

The Stanford VP argues that Stanford lands support the schools. Well, that’s true—but Stanford, the official owner of these lands, pays very few property taxes on these properties because Stanford has shifted the taxes to those leasing properties from the University. All of the private companies operating on Stanford lands are issued the tax bills, and they pay those taxes. Nothing illegal, or even wrong, about this situation. On the other hand, for Stanford to effectively take credit for those taxes is not all that “right”.

If these leased properties were not owned by Stanford, the property would be taxed according to its use. Stanford would not pay those taxes. If the properties were not leased and were sitting idle, Stanford would not pay any tax on those parcels. Stanford does not pay property taxes on much of its properties. As pointed out in a previous posting, Stanford qualifies for a $13.6B (Billion) exemption. Virtually all of the taxes paid from Stanford lands are paid by parties other than Stanford.

All too often, people make claims that those living in the residential areas of Stanford do not pay property taxes. This is most definitely NOT true. They do pay property taxes, just like everyone else owning property in the PAUSD jurisdiction. As it were, however, because of the low turnover of the homes in Stanford’s residential areas—the amount of tax collected from these 1200-odd homes is less than a similar collection of homes in Palo Alto, or Los Altos Hills.


33 people like this
Posted by disingenuous or what
a resident of Adobe-Meadow
on Aug 3, 2018 at 4:52 pm

@Wayne,

"However, because of the low turnover of the homes in Stanford’s residential areas—the amount of tax collected from these 1200-odd homes is less than a similar collection of homes in Palo Alto, or Los Altos Hills."

Mostly true but it's really because the house prices for those properties are depressed because of the limited number of people that Stanford will allow to buy the properties. If they were not limited by Stanford, those properties would be worth 4-5 times their current value with corresponding increase in property tax.

It seems that this opinion piece tries to say that "Stanford pays its due" when in fact it pays only a fraction of what it probably should be paying.
Stanford should work with the district in providing a corresponding funds to educate their children of their faculty in PAUSD as they do to educate students at Stanford. What they're paying taxes certainly doesn't come anywhere near.


46 people like this
Posted by cmarg
a resident of Palo Alto High School
on Aug 4, 2018 at 1:00 pm

cmarg is a registered user.

Wow, I am amazed that someone from Stanford would write this. So basically the revenue we get now is great to accommodate 550 more apartments for faculty and staff? And of those 550 apartments, there would be only 275 school children. I am surprised at the author not realizing that this makes absolutely no sense. All the talk is about what Stanford has done in the past, not what they plan to do with the increasing Stanford residents.

If they feel they offer so much to the community and help Stanford Shopping Center, then why not create housing in another town and have the students attend another communities schools with no tax revenue.


17 people like this
Posted by Stanford Student
a resident of Stanford
on Aug 4, 2018 at 2:45 pm

Stanford is not a school...it is a business.

It sells pedigrees.


37 people like this
Posted by Anonymous
a resident of Duveneck/St. Francis
on Aug 4, 2018 at 8:53 pm

Stanford: with your extremely high endowment, you are truly selfish. Provide correct support for students you generate. I went to school with many faculty kids here in the public school system.
Stanford must contribute to PAUSD.
They sure benefit from it, offering it to attract faculty to come here!


35 people like this
Posted by Paly Parent
a resident of Professorville
on Aug 5, 2018 at 1:43 am

"leave some with the impression that Stanford does not contribute financially to our schools or does not contribute its appropriate share"

Gosh, this is pretty low! Are they seriously trying to take credit for the taxes other people pay? Do they think that people will fall for it just because they say it?

And besides - if they are going to have hundreds of more kids with no more taxes, things are just going to get more crowded. Do they seriously think the rest of Palo Alto should subsidize Stanford?!


10 people like this
Posted by Jim
a resident of Menlo Park
on Aug 7, 2018 at 10:37 am

We have a similar issue in Menlo Park. Stanford plans to build tax exempt housing on El Camino Real. However, unlike Palo Alto, I'm not aware that Stanford has significant commercial real estate in Menlo Park--so Ms. McCown's questionable rationale doesn't apply at all in this case.


10 people like this
Posted by commonsense
a resident of Professorville
on Aug 7, 2018 at 11:31 am

commonsense is a registered user.

Amazing how ALL of the comments ignore the benefits that Stanford provides and has provided for 100+ years. This would just be another ordinary town on the peninsula if not for Stanford. Congratulations on your success. Thank you Stanford for all you have done for us!


22 people like this
Posted by Resident
a resident of College Terrace
on Aug 7, 2018 at 11:38 am

Stanford thank you for all you do and have done. Please pay your fair share and we're all happy.


9 people like this
Posted by Revolving door
a resident of Old Palo Alto
on Aug 7, 2018 at 11:39 am

Jean McCown is the poster example of the revolving door.
From the City Council she went on to advocating to the city as a lawyer for developers.
Then Stanford hired her and she is still promoting private interests to the city council on which she served.
There ought to be a law.


1 person likes this
Posted by Mark Weiss
a resident of Downtown North
on Aug 7, 2018 at 11:44 am


This is a bit of an apples and oranges thing but last week at council apropos of the office cap, Tiffany Griego who manages the industrial park said that her her portfolio is valued at $12 billion .
I’m guessing that’s based on the value of the most recent ground leases for example Peter Pau of Sandhill property which ironically is now at Pagemill Road has a couple billion dollars of leases I believe.
I said something at one of the recent hearings about the student activist during the Vietnam era including current mayor of Mountain View Lenny Siegel protesting the creation of Palo Alto Square I saw a flyer online about them performing an exorcism with Saint Patrick driving away the snakes which at the time was a developer name dilling I said something in the recent hearings about the student activist during the Vietnam era including current mayor of Mountain View Lenny Siegel protesting the creation of Palo Alto Square I saw a flyer online about them performing an exorcism with Saint Patrick driving away the snakes which at the time was a developer name Dillingham. Robert Reich the former Clinton administrator in his recent book saving capitalism argues that the endowment universities should pay taxes.
I don’t waste to vilify Stanford I enjoy being near it but I think there’s room to optimize our relationship, we the people .


14 people like this
Posted by Taking Credit Where None is Due
a resident of Midtown
on Aug 7, 2018 at 12:13 pm

Taking Credit Where None is Due is a registered user.

@ "We have also supported the education, safety and wellness of students through community partnerships with Project Safety Net, Safe Routes to Schools and Abilities United Employment Services Program."

Wow, claiming credit for something else Stanford hasn't done. Safe Routes to School.

As a past Safe Routes volunteer, I have never once seen Stanford participate in this effort! As far as I'm aware, Safe Routes has NOTHING do with Stanford which was started by PAUSD parents/PTSA members, the City of PA, and the PA Police Dept.

Anyone can look online and see the three partners mentioned in the Safe Routes brochure. Stanford is NOT one of them! Web Link

I don't know what this spokesperson means by saying Stanford "supported the program"? Anyone can say they support a program without doing any work - but it doesn't mean you get to put it on your resume! It appears based on the statement above Stanford is claiming credit for something the University hasn't actually done. Very offensive to those hard working volunteers, city and police employees who have actually worked so hard on this PAUSD program for over 20 years.


12 people like this
Posted by John
a resident of Crescent Park
on Aug 7, 2018 at 12:15 pm

Weekly, get real!

McCown's "opinion piece" is much like an advertisement any commercial enterprise would create. It is full of half-truths and glossed-over reality. It clearly represents the biased views of the institution that she works, promoting its agenda.

Most enterprises would be required to pay for this type of advertisement, but Stanford has enough clout, even with our press, to get free placement.

What a shame.


11 people like this
Posted by jh
a resident of Evergreen Park
on Aug 7, 2018 at 12:40 pm

jh is a registered user.

"Stanford lands devoted to academic uses are tax exempt under the California Constitution, under the same provision that exempts property of local government, public schools, state universities and religious institutions."

But Stanford is not a state university, it is private. Other private schools don't have this exemption. At this point it's a little hypocritical for Stanford to compare themselves to state universities as a justification for not paying property taxes.


2 people like this
Posted by Anonymous
a resident of Duveneck/St. Francis
on Aug 7, 2018 at 1:35 pm

@ John
Stanford is hardly the only enterprise with well-funded PR. But I agree they have a major emphasis ON PR.
Their “news” department was much heralded back in the 70’s and 80’s (I have no idea who runs it now): The Stanford News Service - perhaps officially Ms. McCown is the VP figurehead official of that department in recent years.
A funny thing I recall about four or so years ago was the creation of an elite multi-university consortium and I read two versions: a neutral one in some publication (complete description) and Stanford’s version, in which Stanford was the only named university, with impression given for self-promotion.


5 people like this
Posted by resident
a resident of Adobe-Meadow
on Aug 8, 2018 at 6:04 pm

Sounds to me like SU should as part of their developmental plans add another elementary school for on-campus kids. And Cubberly should then be upgraded to a middle school so that the existing schools can be resorted by numbers. I grew up in LA and it was continually required to adjust to the growing population by building more schools and then re-spreading the population of students to even out each school. It also allocated to create diversity and in total they produced great results. Any location that is growing needs to add more facilities and they have the space to do that.


3 people like this
Posted by resident
a resident of Adobe-Meadow
on Aug 9, 2018 at 9:10 am

Note that SU is creating a second campus in Redwood City where they have already built a new hospital. So SU is impacting Redwood City with new growth. We should be looking at what they are working out with RWC so that the business model for growth is consistent across the board. They should not be working each city with different business models.


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