News

Menlo Park: Attorneys call for city action on housing crisis

The city of Menlo Park needs to take action now to deal with a housing crisis that is driving low- to moderate-income families out of the city. That's the message to the city from attorneys with Community Legal Services, a nonprofit agency based in East Palo Alto that provides free and low-cost legal services to low-income residents.

With rents rising nearly 50 percent over the last four years in San Mateo County, the attorneys urged swift action, including an emergency moratorium on both rent increases and tenant evictions without cause.

In an April 11 memo to the city, they recommend that the city develop policies for rent stabilization and just-cause eviction, create a funding mechanism to support renters in times of emergency, and develop affordable rent preferences for local tenants.

They also call for more "below market rate" housing – including 30 to 40 percent of new housing in the M-2 light industrial area east of U.S. 101 – and more incentives for developers to build affordable housing.

Attorney Keith Ogden said in an interview that he and his colleagues (Jason Tarricone and Daniel Saver) wanted to make the recommendations in advance of a number of meetings coming up in Menlo Park that could affect housing policy.

He said he hopes it is a "launching pad for continuing the dialogue from the community's perspective."

Mayor responds

In an interview with the Almanac, Menlo Park Mayor Rich Cline said the memo contained some great ideas, a few of which, he said, "we can probably take on." Others, he said, were "deeply political," "not insignificant," or would take a "heck of a lot of time" to implement.

In general, he said, he'd support a short-term moratorium on no-cause evictions to give the city "time to think" about housing policies. Such a moratorium would need a clear deadline, he said.

He was more cautious about other proposals, such as increasing the percentage of new housing that developers must build at an "affordable" rate, or preventing rent increases above a certain amount or percent.

Increasing population density anywhere in Menlo Park can be highly controversial and complex, and such a policy could pose implementation challenges, he said. Meanwhile, rent stabilization policies, he said, pose their own logistical challenges.

He said he wants to see how other cities are dealing with housing issues, and hopes broader countywide or regional agencies can also implement their own policies that could apply to Menlo Park.

The city, he said, should be more proactive and quick to react to the regional housing crisis. "The economics are moving so fast that it's a little intimidating," he said.

Menlo Park and its Belle Haven neighborhood, he said, have a "rich, diverse history we need to preserve."

The City Council plans to hold a joint study session on housing issues with the city's Housing Commission on May 3.

Evictions

Real estate speculation affecting rentals is on the rise countywide, the attorneys said in the memo. Investors buy apartment buildings at inflated prices, raising rents to recoup their costs, driving out existing tenants. Then the investors renovate the buildings to attract more affluent tenants.

Commonly, the attorneys say, these building acquisitions come with no-cause, 60-day eviction notices to all or most of the building's tenants, or include building-wide rent increases of hundreds or thousands of dollars per month.

According to University of California, Berkeley, researchers on urban displacement, the attorneys say, "it is not too late for strong affordable housing policies and anti-displacement measures" to help stabilize housing conditions for lower-income families.

Belle Haven data

The memo provides data on housing conditions in Belle Haven, where 57 percent of residents rent their housing. The median annual household income there (about $57,000) is about 56 percent of the county's median ($101,000).

The majority of renter households in Belle Haven who earn under $75,000 are paying more than 30 percent of their monthly income toward rent. For many, that proportion hovers at more than 50 percent of income.

The attorneys recommended that Menlo Park immediately pass an emergency moratorium on "exorbitant rent increase and no-cause evictions."

The city should also have a program that grants rent funding to people who are at immediate risk of losing their permanent housing in Menlo Park, the memo says. Forgivable loans or grants based on short-term need, such as in the case of a sudden, unexpected medical, auto or other expense, could help give burdened renters more stability in times of emergency.

Menlo Park should devise a set of rent stabilization and just-cause tenant eviction policies that fit the needs of the city, including capping rent increases to parallel the inflation rate. Landlords should be prohibited from arbitrarily evicting a tenant, but should still be allowed to evict tenants who fail to pay rent, breach the lease, or cause other problems, they say.

The city could set provisions for when market conditions change and the programs were determined to no longer be necessary.

San Francisco recently approved a residential development that would require 40 percent of its units to be affordable, and the city of Concord has committed to making 25 percent of its residential development "affordable," the attorneys note.

New affordable units should be integrated into market-rate housing developments to prevent geographic separation by income level, and to ensure that lower-income residents can remain housed in the same area as they increase their income over time, the memo says.

In addition, they recommend that the city implement a policy called "right to purchase," that would allow tenants the first chance to buy their apartment building whenever it goes up for sale, thereby keeping it out of the speculative market and allowing it to be community-controlled.

The attorneys concluded their memo by saying: "If Menlo Park gets it right, ConnectMenlo Plan (the city's review of its general plan) can be an example of how to pursue development without displacement, ensuring that the benefits of future growth will be shared with both the existing residents who made the city what it is today, as well as with the diverse set of new residents who will continue to make Menlo Park a vibrant and complete community."

Go to tinyurl.com/rent321 to see the memo.

Comments

14 people like this
Posted by Former MP Housing Commission Member
a resident of Menlo Park: Central Menlo Park
on Apr 21, 2016 at 1:01 pm

I was on the Housing Commission in the 1990s. Same tune, different choir!!! Until someone makes some decisive decisions, nothing will change. The complete lack of energy given to this topic is shameful. Lip service only.


34 people like this
Posted by Frugal
a resident of Menlo Park: Downtown
on Apr 21, 2016 at 1:14 pm

The answer is not to build office buildings and hotels on El Camino that generate more jobs but no housing to go with it.


15 people like this
Posted by MPer
a resident of Menlo Park: Central Menlo Park
on Apr 21, 2016 at 1:52 pm

@Frugal

The two larger project proposed both have housing included AND the NIMBYs of MP are still fighting them. Unfortunately, the entitled citizen of MP, many of those who's property taxes are subsidized by newer residents, do not want anything built in MP. Nothing. It has been this way for years and years and years. This is why MP is full of very expensive, low quality rental and housing stock.


4 people like this
Posted by Downtowner
a resident of Menlo Park: Central Menlo Park
on Apr 21, 2016 at 4:56 pm

Building a higher ratio of "affordable" housing in a development does nothing but increase the pricing for the other housing stock in that project. It costs X dollars to build the project & if 30- or 40% have to be offered at limited prices, the remaining costs get distributed throughout the rest of the project. Developers must keep profit margins the same, no matter where they spread the entire cost.

If you're talking "moderate-income" housing, that establishes the need for far greater oversight than has been shown by MP in the past. Resales on those homes should require the same financial verification steps, which never happens. Also, there must be a provision that they be owner-occupied by the primary borrowers, as MP has been blind in the past. Some such units were bought for use as rentals by upper-income MP residents who never intended to move in. One family claimed theirs was owner-occupied because their grad student son lived in it. Another one was rented from Day 1 to various tenants for several years by the owners, who stayed in their Sharon Heights home & collected rent.

Why not limit commercial development? Is the City that greedy for fees? We can't provide adequate infrastructure for the existing residents. Without any streets connecting Middlefield or El Camino to Alameda (except Valparaiso) traffic is a maze of cut-throughs. Valparaiso isn't big enough to handle the traffic for the only middle school in town as well as SJP, Sacred Heart, and Menlo School + College. One lane in each direction for the only way to get across town?? Nuts to bringing in more commercial space -> more housing -> more traffic -> less profit for downtown. Residents avoid going downtown because the traffic to get there is such a mess. I


7 people like this
Posted by Shelley
a resident of Menlo Park: Belle Haven
on Apr 21, 2016 at 5:50 pm

This sounds like the same feeble attempts to talk about, to implement a study, to gather information, but do nothing. I've been hearing this for decades, and each time the plans get shot down. When will our community recognize that all the low income workers here are so very vital to the area, and think of us for a change? High tech and high end are nice, but what about the support system, the foundation of the whole area, which is hard working blue collar and has been throughout history? If you eat caviar, someone has to harvest, prepare and serve it. We have forgotten that?


Like this comment
Posted by Menlo Voter.
a resident of Menlo Park: other
on Apr 21, 2016 at 6:04 pm

Menlo Voter. is a registered user.

Define "affordable" in Menlo Park. Given the average home price is $2million or more, just what is "affordable? $1million? You think your housekeeper can afford that? Next life.

"Affordable housing" in Menlo Park is a joke. Unless, all of the property owners in MP want to provide MAJOR supplements so housekeepers can afford to live here.

I'll believe it when I see it. It's Econ 101 folks.


13 people like this
Posted by Train Fan
a resident of Hillview Middle School
on Apr 21, 2016 at 6:27 pm

Train Fan is a registered user.

Creating "affordable" housing only results in a very few benefiting from it; the ones that are lucky enough to "win" are far outnumbered by the ones that don't "win". And those winners get to sell their "affordable" housing at market rate, which means it's no longer affordable.

So you're right back where you started, in the same housing crunch as before, but a few folks effectively won the lottery.

A better, fairer and more impacting solution is to provide better regional public transportation. This has a LOT of benefits:

1) it's not a lottery where only a few benefit. EVERYONE benefits from improved regional public transit. And everyone can ride on public transit, rich and poor alike.

2) it allows people to live further from the urban/suburban core of high paying jobs, but be competitive for those jobs.

3) By having more people living outside the urban/suburban core, you reduce the demand for housing in the core, which results in lower pricing for housing (Or at least slows the increases in prices. Simple supply/demand).


I sympathize with the folks who are dealing with the large increases in rents in the area. But trying to subsidize housing is only going to benefit a few at the expense of others. There are better ways.





11 people like this
Posted by MP Realist
a resident of Menlo Park: other
on Apr 21, 2016 at 7:52 pm

Why would the Menlo council do anything to make housing costs fundamentally cheaper? If that's even possible at this point, that would reduce their own personal savings by reducing their home values. The Almanac should report out on how much each council member has personally benefitted from this insane home price appreciation, and ask them on the record if they are going to "do the right thing" and try to bring those back down to earth.


2 people like this
Posted by Shakedown.
a resident of Menlo Park: Allied Arts/Stanford Park
on Apr 21, 2016 at 8:28 pm

It sounds like another attempt by housing advocate industry to shakedown the city for perceived inaction to address the problem. This happened four years ago. The result was hiring a supplied consultant, having hearings, and updating the housing element of the general plan. As we are now rewriting the general plan, they want more. Four years ago they sued the city and we had to give them $1 million as part of the settlement.

we have weak council members.


7 people like this
Posted by Mark L
a resident of Menlo Park: Central Menlo Park
on Apr 21, 2016 at 9:13 pm

I would also like to suggest a city-wide moratorium on attorneys raising their hourly rates, they have been going up like crazy lately. And 30% of new attorneys setting up offices in Menlo Park should have below-market rates so low income people can afford to have legal representation.


15 people like this
Posted by Thea
a resident of Menlo Park: other
on Apr 21, 2016 at 10:52 pm

MP NEEDS TO BUILD HIGH DENSITY HOUSING ON El Camino near Cal Train and other infill areas. The area is not full. There's plenty of room to build. And BMR units when resold in SF have restrictions on resale prices so why wouldn't MP?


21 people like this
Posted by George Kaplan
a resident of Menlo Park: Downtown
on Apr 21, 2016 at 11:11 pm

Do you really want to make housing more affordable? Upzone the Caltrain corridor: Laurel, Noel, Roble, Live Oak. Knock down the 1-2 story aging buildings and allow 4 stories with greatly reduced parking. Tenants will take public transit or Uber.

The upzoned land values will increase. Owners will sell or redevelop. Properties will be reassessed. Huge win for tenants, the local economy, the town, and the schools. The increased density could be a game changer for Santa Cruz Ave ... imagine if it had a fraction of the foot traffic of University Ave.

The newer units will create the new market rate. If enough units are built and the supply/demand balance is controlled, the market rate could even fall. The current stock of older apartments will be less desirable and warrant lower rates, aka "affordable housing".


8 people like this
Posted by supply & demand
a resident of Menlo Park: Central Menlo Park
on Apr 22, 2016 at 8:32 am

The insane housing costs reflect demand that far exceeds supply. If Menlo Park wants to walk the talk, it would encourage more supply, or discourage more demand, for housing.
I doubt that is what our Council and City Manager want, though. They talk about Menlo Park as a "jobs center". What that means is that they want to keep adding jobs. That means increasing the demand for housing. So housing costs increase. Simple Econ 101.

If instead they want to improve the balance between supply and demand, they would examine their policies and zoning to encourage that. If they want a lot more jobs, they have to do everything they can to encourage more housing. And they wouldn't approve imbalanced new projects when they have the ability to withhold approval until the balance exists (Facebook, Bohannon, Stanford, Greenheart projects as examples that have presented themselves or are facing the Council now).

The real question is whether the Council really cares enough about this issue to exercise the power they possess. Or will their hand be forced again by a lawsuit by housing advocates?


5 people like this
Posted by Madeline Bernard
a resident of another community
on Apr 22, 2016 at 9:52 am

Heads-up: in 16 days, early voting starts for the race to replace Rich Gordon for the 24th State Assembly seat. Mike Kasperzak is the candidate who has a "increase housing supply" sensible platform. I hope you'll keep in mind that the only way out of this housing crisis is to build housing (or crash the economy, I guess, but option A is less hurtful for everyone).


7 people like this
Posted by Joseph E. Davis
a resident of Woodside: Emerald Hills
on Apr 22, 2016 at 10:15 am

Rent control is, always and everywhere, a terrible idea. It's a shame that so many people are misinformed enough to support it, but it's not really surprising since our educational system does such a bad job of teaching economics.


12 people like this
Posted by MPer
a resident of Menlo Park: Central Menlo Park
on Apr 22, 2016 at 12:28 pm

why not get rid of Prop13. It would free up a ton of housing stock when people are forced to pay their fair share if property taxes


4 people like this
Posted by Joan
a resident of Menlo Park: Central Menlo Park
on Apr 22, 2016 at 1:48 pm

A subject that is never seriously discussed is small second units that could go a long way to solving our housing crisis. Many residents with larger lots would build in-law units on their property if MP made it possible. As it stands now, the permit fees are so high that very few of these units are being built. They are far better than 4 story highrise stack-and-pack housing. MP should be encouraging these units, not thowing up roadblocks. Portland, OR waived their fees to encourage these units and it has been wildly successful.

As for the person who wants to see Prop. 13 reversed, they must want to see the elderly out on the street. Shameful.



14 people like this
Posted by MPer
a resident of Menlo Park: Central Menlo Park
on Apr 22, 2016 at 2:50 pm

There are lots of ways to roll back prop 13 without "throwing seniors out of their homes". Suggesting so is not shameful, but nice try. I am sure that I subsidize your property taxes, while your house and appreciation are worth well over mine.

So why is it OK that I pay 6x the property taxes than do my parents. My home is worth 1/6 of theirs and my montage is also 6x more than theirs.

Anyone who whats to build a cottage on their property would make up the permit fees with the first few months of rental income. And how nice for us GenXer and Millennials and beyond. Rather than being able to own homes that are affordable as they were for baby boomers, we can rent a cottage on your property. Sweet deal.


15 people like this
Posted by George Kaplan
a resident of Menlo Park: Downtown
on Apr 22, 2016 at 2:53 pm

@Joan A few scattered in-law units are not going to move the needle on the housing crisis. In what way are they better than 4-story buildings? By the way, 4 stories is not a high-rise and they can be very tastefully done (see Munger at the Stanford Campus).

@Joan Prop 13 is a gift to the incumbents at the expense of the young, citizens and businesses alike. Have you ever seen a dilapidated house with overgrown landscaping on a fine lot and wondered how someone could leave it like that? Well because of prop 13, the cost for a long-time owner to hold a property and speculate is close to nil. There are many run-down 1-story multifamily buildings that are not "the highest use of the land", but the owners can keep them like that forever because they are paying a 1978 tax basis.

Do you want me to assume that you think it's just and right for today's 30-year-old to pay an inflated $3M for a house and $35k/yr in property tax so that you can pay $8k/yr to stay in your identical home that you bought for a quarter of the price? Because I think that's shameful.


9 people like this
Posted by Joan
a resident of Menlo Park: Central Menlo Park
on Apr 22, 2016 at 3:06 pm

"There are lots of ways to roll back prop 13 without "throwing seniors out of their homes"."

Please explain how that would work, Mper. I am thinking of my elderly neighbors, age 85 and 92. How would you prevent them from losing their house due to increased taxes?

My property tax is enough to gag an elephant so don't think you are subsidizing me - you are not.


11 people like this
Posted by read the memo
a resident of Menlo Park: South of Seminary/Vintage Oaks
on Apr 22, 2016 at 5:28 pm

The April 8 memo from Community Legal Services in East Palo Alto to the City of Menlo Park deserves to be read, especially by all who have posted here. It recommends that the City's policymaking decisions regarding the General Plan update and M-2 Area Zoning Update process understand that due to the rapid job growth in the region, there is an escalating housing crisis and threat of displacement to residents now icing in Belle Haven.
Companies that have decided to build their businesses in the Mid Peninsula area rely on developers to obtain permits to build office buildings that will fill up with employees who want to live near their jobs. The Live/Work/Play theme that the M-2 Zoning meetings feature is a stretch when the City Planning Commission and Council does not require office developers to include housing in every project. Bohannon's project has no housing component. This is wrong. Facebook is projecting a future employee count of 20,000 but their current housing proposal, while commendable, is minimal.
Growth = jobs = employees = housing shortages = rent increases = resident displacement. Housing shortages also = commuters = traffic = pollution.
Who's in charge? The Menlo Park Council has to grapple with this honestly. Lip service and another study is not the answer. Include the requirement for including housing in every office development. 30% should be affordable. Half of that 30% should be affordable to extremely low income families. Talking isn't going to solve this problem.


8 people like this
Posted by Downtowner
a resident of Menlo Park: Central Menlo Park
on Apr 22, 2016 at 6:21 pm

@ Joan & MPer -

For starters, prop 13 doesn't apply to business or commercial properties which can be transferred within & between corporations without ever being reassessed. Elminating that loophole would be a big step in the right direction.

Joan, your elderly neighbors who got their taxes rolled back in 1978 to pre-1975 levels have surely accumulated sufficient equity to be able to use a reversed mortgage or HELOC to handle what would be a modest increase of property tax. Since they aren't re-buying their home @ current pricing, they wouldn't be hit with 1.00% of sale price as the new tax basis.


6 people like this
Posted by knows
a resident of Portola Valley: other
on Apr 23, 2016 at 7:08 am

to Downtowner -
Have you ever looked into a reverse mortgage? They come with an awful expense in the end ! Reverse mortgages are NOT free nor are they inexpensive. The hidden costs are a deal breaker. Anyone considering one should have someone sit with them & do the math. Did that for my Mom in the last few years of her life & by the time she passed away, it had consumed a large part of the equity in her home & you have just a short time to pay it back afterr death. NEVER NEVER consider a R.M. unless that is a last resort


6 people like this
Posted by Mickie Winkler
a resident of another community
on Apr 23, 2016 at 9:44 am

As many of you have said, what constitutes “affordable” housing in Menlo Park is a joke. It is not affordable. Just “slightly more” affordable. Menlo Park has spent more in legal fees and planning costs than it has in providing any so-called affordable housing at all.

Secondly, the answer as train fan has said above, is better regional transportation, so that workers can commute to their ultimate destination comfortably. This is the only place I have lived—worldwide-- where public transit doesn’t work.

Solvable? Theoretically. Caltrain has to extend its reach to remote suburbs (just as Bart did to Pleasanton), ferry solutions must be considered, and the “last mile” problem must be solved so that commuters can get their ultimate destination. Innovative solutions must be considered. Check out Sky Trans for example, as they are doing in Mountain View. Consider tuc tucs too.

However, solving regional transportation is a messy challenge because the region has 23 transit agencies!! Sam Trans, for example, has a 9-member board of directors and a 15 member advisory committee. While caltrain, has a 9-member board and 3 advisory committees, and VTA has much more of the same. Each, of course, with its own staff.


10 people like this
Posted by Train Fan
a resident of Hillview Middle School
on Apr 23, 2016 at 10:57 am

Train Fan is a registered user.

> answer as train fan has said above, is better regional transportation...Caltrain has to extend its reach to remote suburbs (just as Bart did

Exactly! Caltrain needs to have its reach extended. By extending its reach, Caltrain becomes a viable option to commute to high paying jobs from more remote locations, which reduces traffic AND reduces demand for local housing.

Example: Does anyone remember the railway tracks that passed near Frys Electronics in Palo Alto? That former railway right-of-way fed right into the Caltrain right-of-way. If you Google-Map the area, it's clear that the former railway path still exists (the tracks are removed of course). That right-of-way should be restored for railway commuter transportation.

And note that this area's railway infrastructure used to be more vast than it is now, with other former railway lines in the far southern reaches of the south bay. We should be analyzing the viability of restoring a subset of those lines to improve the reach of caltrain. And of course reactivate the Dumbarton rail right-of-way as well (which Regional Measure 2 was suppose to fix, but the MTC illegally transferred funding for that project). Try using Google Maps on the East Bay near the Dumbarton: it's LITTERED with railways!

I'm a fiscally prudent person who believes that eminent domain is frequently abused by governments, but even I think this is one of the few applications where applying eminent domain makes sense; reacquire the land that was previously a railway right-of-way. Hello? Eminent domain is already being applied to railway projects in the area (cough Bart cough); why not use it on a former railway line?

Improving public transportation as a way to increase the affordability of housing is a win-win-win. It's a no-brainer!


6 people like this
Posted by supply & demand
a resident of Menlo Park: Central Menlo Park
on Apr 23, 2016 at 5:48 pm

@Joan - Menlo Park already allows almost any property owner to build a granny unit.

The city could go another step towards making that more likely by not allowing any residential property to build a single family home up to the maximum allowed on the site, with just enough allowable square footage to build a granny unit. This does not make the current owner or developer actually build a granny unit, but leaves enough square feet so they or a future owner could. A rule like that would need to include a requirement that there is sufficient space left of the lot, too.

As a long-term property owner now retired, I am grateful for Prop 13 for people on a fixed income like us. The real problem with Prop 13 is the loopholes that allow corporations to avoid reassessment because the property rarely turns over, technically. Businesses reap the growth in our area but are not paying their fair share towards infrastructure and, especially, not to our schools.


1 person likes this
Posted by Hmmm
a resident of another community
on Apr 23, 2016 at 8:32 pm

Menlo doesn't care, never has, never will.


Like this comment
Posted by MPer
a resident of Menlo Park: Central Menlo Park
on Apr 25, 2016 at 11:03 am

first world problem


4 people like this
Posted by MPer
a resident of Menlo Park: Central Menlo Park
on Apr 25, 2016 at 11:10 am

@supply & demand

I am glad that you are happy to have other subsidize your property taxes. You pay 1978 property taxes, but get to keep the 2016 value/appreciation on your house. I pay at 6x what you do and I'll be my house if worth less than yours with none of the appreciation. Glad you can stay in your house. Can your kids or grandkids afford to live here? Probably not, unless they hit the option lottery.

Unfortunately, it is that attitude that keep housing out of reach for even middle- class families. I got mine, who cares about anyone else!


6 people like this
Posted by Subsidies
a resident of Menlo Park: Central Menlo Park
on Apr 25, 2016 at 12:12 pm

All homeowners benefit from Prop 13 given that housing prices continue to rise. If you bought your house two years ago, your neighbor who bought last month will be paying more property taxes than you. That's the beauty and treachery of Prop 13.

Those of you who just bought into this town (welcome!) and are annoyed about your higher property taxes, keep in mind that you can take those as a deduction on federal and state taxes, thus lowering what you pay the feds/state. So while you're "subsidizing" your neighbors on property taxes, they're subsidizing you with their higher federal and state taxes. And in a year or two, you will be branded as the freeloader who is underpaying -- because relative to your newer neighbors, you will be!


4 people like this
Posted by MPer
a resident of Menlo Park: Central Menlo Park
on Apr 25, 2016 at 1:38 pm

@subsidies

Retirees on fixed incomes are not subsidizing my income taxes. Guaranteed I pay more in those in addition to my higher priority taxes. It has been shown that repealing prop 13 would lead to increased housing supply, an leveling of prices and a more equitable distribution of property taxes.


4 people like this
Posted by Subsidies
a resident of Menlo Park: Central Menlo Park
on Apr 25, 2016 at 5:15 pm

It's easy to win an argument when you define the parameters narrowly, but most who benefit from Prop 13 are not retired, are making decent incomes (essential around here) and are in fact subsidizing newcomters' state and federal taxes.

I would love to see Prop 13 repealed, even though my taxes would escalate. Not happening. I've heard it described as California's third rail; savvy politicians won't touch it.

Check back in ten years and see how you feel about your comparatively lower prop taxes. Bet you'll have a different perspective.


13 people like this
Posted by peninsula resident
a resident of Menlo-Atherton High School
on Apr 25, 2016 at 7:10 pm

From the article:
"a housing crisis that is driving ... families out of [Menlo Park]."

MPer wrote:
"repealing prop 13 would lead to increased housing supply"

Ummm, that "increased housing supply" would be from driving families out of their homes due to the projected tax impact you're counting on.

In other words, you want to drive some families out of the area, so some families are not driven out of the area.

Do you see the flaw in your logic?


5 people like this
Posted by Can't Afford Menlo Park?
a resident of another community
on Apr 26, 2016 at 12:41 pm

Housing is a lot more affordable in the East Bay. Menlo Park is under no obligation to to offer subsidized housing. There is plenty of affordable housing across the Bay in San Lorenzo, San Leandro, Hayward, Union City, Fremont, Newark, and Milpitas. I suggest you look there where you can rent 2 bedroom 2 bath condos for $1800/month and commute across the Dumbarton or San Mateo bridges or take Highway 237 into Silicon Valley.

We should also jettison HSR and build commuter rail to the central valley and down to Salinas where there are even more affordable housing stock.

And we should also get rid of ABAG. What a worthless entity.


4 people like this
Posted by MPer
a resident of Menlo Park: Central Menlo Park
on Apr 26, 2016 at 1:26 pm

@ peninsula resident & others

The most nonsensical thing about Prop 13 is that it treats rising home prices as though they're harmful to property owners. This is very obviously false. I know this because if I owned a home and it increased in value by $100,000, I would be very happy, not very sad. Even if it meant paying an extra thousand dollars a year in property taxes (which it would, without Prop 13), I would still be really excited about it.

What we need to do is change the law in a way that recognizes the glaring fact that increasing values are good for homeowners, while also acknowledging that there are some who can't afford significantly higher property tax payments—pensioners and others on a fixed, limited income. And, that while there are quite a few homeowners who could afford to pay taxes on the full value of their homes, they'd rather not. Reform must balance these interests without agitating anyone too greatly.

The way to do that is fairly simple, and it would look like this:

Let people continue paying property taxes on their homes as though they're increasing in value by just two percent per year.
Reassess the actual value of people's homes every few years, and track the difference between what they're paying at the two percent level and what they would pay at the full, actual assessed value of their home.

When they sell their home, collect the difference from the proceeds of the sale.
Under this system, no one is being forced out of their home by rapidly increasing property tax payments. More property tax revenue is collected, allowing the state government to cut income and sales tax rates. Residents are placed on a much more equal footing, regardless of age or tenure. Current homeowners are less discouraged from moving to a new home when it otherwise makes sense for them to do so.
Money is currently being transferred from newer to older residents, and from younger to older and non-white to white homeowners. This is a system very clearly in need of fixing. Source: Dowell Myers, Urban Planning Research.
Money is currently being transferred from newer to older residents, and from younger to older and non-white to white homeowners. This is a system very clearly in need of fixing. Source: Dowell Myers, Urban Planning Research.

And people who win big in the housing appreciation lottery still come out way ahead. Take, as an example, a home that's purchased for $400,000 today. Assume its actual resale value increases by an average of 5 percent per year, but under Prop 13 its taxable value only increases by 2 percent annually. Over a 20-year period the taxable value of the home would increase to $583,000 and the homeowner would pay $107,000 in property taxes.

That home's actual value—what it would sell for on the open market—is $1.01 million. If the owner sold their home and had to pay the difference between the "true value" property taxes and the "two percent per year" Prop 13 taxes, they would owe an extra $38,500 in property taxes at the point of sale. They'd still come out with a healthy profit of $465,000 on an initial $400,000 investment. If their home's value instead increased by 6 percent per year, they'd owe $55,000 at the point of sale, but they'd have earned a total profit of $648,000—the faster their property value increases, the larger the difference between their resale value and their total property tax bill. I don't feel too bad for them; do you?

MORE BENEFITS
Although this system doesn't raise quite as much revenue as if Prop 13 was abolished completely (since the incremental taxes are collected after the actual assessment, when inflation had eroded some of their value), that's actually okay. The purpose of this reform isn't to increase revenue, it's to level the playing field. Over time the property tax would increase as a share of total government revenues and the state could pare back its contributions to local school districts by an equal amount (or a lesser amount, if we wanted to prioritize education). This would in turn allow California to cut sales taxes and/or income taxes—say, by eliminating the lowest tax brackets altogether, and effectively giving every working Californian a pay raise.

Cutting taxes elsewhere to "pay" for this bill would be a great political sell, too: not only would no one's property tax bill go up in the short-term, everyone would also get a break on other taxes. The immediate impact would be to put more money in people's pockets; those tax cuts would be back-filled in the least painful way possible, and by those in the best position to pay. Because this reform's impacts would take at least a few years to accumulate to a noticeable level, reductions in sales, income, and other taxes would also need to be phased in slowly.

Over time, homeowners would see less need hold onto their homes for tax reasons, and we'd see more of them moving to new homes in locations that were actually convenient for them. This would benefit the homeowners themselves, obviously, but would also help young and first-time homebuyers who are competing in a housing market with extremely limited supply. This in turn could help mitigate some of the demand pressures that are making housing so expensive—for both owners and renters.


3 people like this
Posted by simple 4 step plan
a resident of Menlo Park: Downtown
on Apr 26, 2016 at 5:46 pm

Simple 4 step plan (though expensive - and regional, not just MP)

1) increase transportation (last mile and common commuting paths)
2) repeal prop 13 for businesses (that was never intended anyway)
3) adjust prop 13 for residences to encourage downsizing and moving to any county in California
4) increase residential construction in train corridors, with very limited parking


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Posted by supply & demand
a resident of Menlo Park: Central Menlo Park
on Apr 26, 2016 at 9:48 pm

MPer suggests an interesting approach that is more productive than accusing others of being greedy. We did not live here when Prop 13 was passed, and we have moved often enough to know what it's like to pay a lot more taxes than our neighbors.

If the commercial taxes were adjusted so they pay their fair share, not exploiting Prop 13's loopholes, perhaps none of us residents would be faced with the same degree of tax hikes that occur when we move.


3 people like this
Posted by Plane Speaker
a resident of another community
on Apr 27, 2016 at 1:21 am

When the market doesn't work or breaks down and causes insurmountable
problems with citizens government needs to do something.

The predictions are that in the future most new or remaining jobs are going
to be centered around urban areas, and with this gentrification, which is good,
but removes housing from the market, going on with no plan, no regulation,
not thought for people who have lived and worked here their whole lives,
just pretending there is a free market doesn't work.

I do think commercial properties ought to be removed/exempt from Prop 13
protection. Prop 13 was designed specifically to save people's homes from
becoming unaffordable to live in at the time when people retired and the
local economy or real estate and tax values changed. With the economy
booming it is quite an outrage to have commercial property getting this tax
break ... at a time of windfall profits for them.

This is low-hanging fruit that is the first thing that should be done.


3 people like this
Posted by Plane Speaker
a resident of another community
on Apr 27, 2016 at 1:34 am

simple 4 step plan posted:
>> 3) adjust prop 13 for residences to encourage downsizing and moving to any county in California

How would you do that?

Right now if you bought your house say 10 years ago, property values are
doubling about every 10 years, and they never were cheap with respect to
the homeowner deduction offset for selling your primary residence.

Meanwhile other real estate values are rising and costs of living are rising
as well.

It means that if you bought a modest house say 20 years ago for example $500K
it is probably going for over $2,000,000 now. If you sell virtually all of that is
capital gains to be taxed. Then what you are left with is really not enough to
downsize anywhere in the area? It is nice to have lower taxes and be able to
transfer your tax basis to any these counties ....

Alameda
El Dorado
Los Angeles
Orange
San Diego
San Mateo
Santa Clara
Ventura
Riverside

counties, but all of the nearby counties are almost as expensive as here, and
the others are far away. If you find another county to live in you have to then
hike up your tax basis and pay that forever.

I've hypothesized that the best solution would be what I think the old system
was. Sell your house and you have one year to buy a new house of equal or
lesser value and only pay taxes on the remaining amount, less the homeowner
deduction.

There may be holes in this idea, but I have not heard any.

The object is to get people to move out of here and open up homes and land
for redevelopment - is it not. This would do it.

Right now it makes zero sense to get out of this area unless you are so rich
you do not need to. the status quo is fine for the very rich and of course
so there is no incentive or constituency for anything to change.


20 people like this
Posted by Train Fan
a resident of Hillview Middle School
on Apr 27, 2016 at 12:11 pm

Train Fan is a registered user.

MPer, a resident of Menlo Park: Central Menlo Park wrote:
> Dowell Myers

I would not call Dr. Myers an impartial analyzer of demographic data. He has a perspective that he's trying to advance.


> the housing appreciation lottery

Excuse me. This is a gross mis-characterization. You are asserting that appreciation is purely random and purely luck which is patently false. Trying to assert that significantly weakens your credibility.


> The purpose of this reform isn't to increase revenue,
> it's to level the playing field.

"MPer" has gone on in great length espousing a more "level" tax system for old & young, white & non-white. But I have a truly fairer system...

No property taxes on primary residences.

THAT is fairer; regardless your age, race, sex, orientation, religion, length of ownership or marital status, you pay no property taxes on your primary residence. All of the alleged issues that "MPer" described above are all addressed if property taxes on primary residences is eliminated. There would still be property taxes on business real estate and investment/rental properties. And of course when you sell you'd pay capital gains.


> This would in turn allow California to cut sales taxes and/or income taxes

Ha, yeah right. Out of the goodness of their hearts, the governor and legislature would lower sales taxes and income taxes. You are quite the comedian!

Philosophically, I could support adjustments in real estate taxation provided they were done IN LOCKSTEP with permanent reductions in income taxes and sales taxes. But to be blunt you are being very very naive if you think the State would be interested in changing the tax code in a way that was tax-revenue-neutral.

Note that every proposal to reverse/amend Prop-13 NEVER comes with proposed reductions in sales taxes or income taxes. I challenge you to find a legislative proposal that proposed lowering sales and/or income taxes as part of a change to Prop-13.

The State and Prop-13 opponents have absolutely no interest in tax-revenue-neutral changes in the tax code; they simply want more of your income and more of your worth by taking it with MORE TAXES.


2 people like this
Posted by Ethan
a resident of Menlo Park: University Heights
on Apr 27, 2016 at 4:56 pm

From an article by Thomas B. Edsall in today’s NY Times:

For years now, people have been talking about the insulated world of the top 1 percent of Americans, but the top 20 percent of the income distribution is also steadily separating itself — by geography and by education as well as by income. This self-segregation of a privileged fifth of the population is changing the American social order and the American political system, creating a self-perpetuating class at the top, which is ever more difficult to break into.

In hard numbers, the percentage of families with children living in very affluent [read: high-cost] neighborhoods more than doubled between 1970 and 2012, from 6.6 percent to 15.7 percent. At the same time, the percentage of families with children living in traditional middle class neighborhoods with median incomes between 80 and 125 percent of the surrounding metropolitan area fell from 64.7 percent in 1970 to 40.5 percent.

Geographic segregation dovetails with the growing economic spread between the top 20 percent and the bottom 80 percent: The top quintile is, in effect, disengaging from everyone with lower incomes. . . Segregation of affluence not only concentrates income and wealth in a small number of communities, but also concentrates social capital and political power.


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Posted by supply & demand
a resident of Menlo Park: Central Menlo Park
on Apr 28, 2016 at 10:26 am

Anyone else wonder why an article about lack of housing, particularly affordable housing, has become a chance to rant about older neighbors living in single family houses that will never become affordable or multi-family (other than granny units).

Will Menlo Park once again be subject to a lawsuit for not being serious about its plans for housing?


1 person likes this
Posted by resident
a resident of another community
on Apr 28, 2016 at 11:41 am

Affordable housing is a way for developers to build more expensive units under the guise of offering a few token "affordable units", as well as a form of corporate welfare.

Employers should pay a wage level so that their workers can afford housing, instead of taxing all the residents (through quality of life degradations from overbuilding) to support their sub standard wages. If employers can't pay wage level so that their workers can afford housing, they should move to a location where that's possible - eg. central valley, coast communities, etc.


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Posted by Joan
a resident of Menlo Park: Central Menlo Park
on Apr 28, 2016 at 12:08 pm

The main reason older residents don't sell and move is the capital gains and Medicare tax that is due upon the sale of a home. The property tax issue shrinks when compared to hundreds of thousands of taxes due upon sale. If you haven't calculated the tax, you should.



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Posted by Plane Speaker
a resident of another community
on Apr 28, 2016 at 12:32 pm

Joan, it seems like by the time "older residents", seniors, have health problems or it's really past time that they can move and settle in well to new surroundings. The time to get out with respect to lifespan is at retirement or when children leave the area, which most children do. If you are sick, infirm, inactive and have significant Medicare costs a big change in lifestyle at that time is rougher and this area is better for services and activities.


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Posted by supply & demand
a resident of Menlo Park: Central Menlo Park
on Apr 28, 2016 at 6:24 pm

So how is it that pushing seniors out of their homes will help the housing crisis described in the attorneys letter? The real problem is too many people work in an area that doesn't have enough housing. More housing supply results in less unmet demand and lower prices. Econ 101.

Many of the seniors in my own neighborhood either have relatives living with them or have rooms rented out (mostly to Stanford students). They are providing "affordable" housing.


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Posted by Plane Speaker
a resident of another community
on Apr 28, 2016 at 8:55 pm

Supply & demand - I don't think anyone is talking about "pushing" seniors anywhere.
Current circumstances and tax laws make it difficult for people, including seniors,
especially seniors to move somewhere relatively close to the area, to downsize.

There has been a lot of rebuilding of housing, but I think if you check the majority of
houses in the area are not multi-dwelling and do not have many surplus bedrooms
in a configuration that can be rented out. Then if you rent, you theoretically have to
pay taxes on the income, and it can blow up in your face if you have a problem and
you are renting out rooms. I've seen it get ugly for a few seniors who have done that.

You do have a good point that people moving out do not themselves change things
very much, but over time housing density and size changes, mostly at time when
houses are sold.


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Posted by MP Resident
a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Apr 29, 2016 at 10:06 am

This is indeed a big challenge, and I cringe when people think folks are "doing nothing" about it because they are inept. The reality is that the simple "solutions" are extremely difficult to find.

The reality of the world though is that there is a supply and demand in our housing market. We are not all entitled to live wherever we please at a price suitable to us any more than we are entitled to drive a Ferrari at a Honda price tag. Menlo Park shouldn't feel obligated to meet some entitlement expressed by folks who want to live in Menlo Park but can't afford to. If so, where does that end? Is Atherton obligated to make homes available at Menlo Park prices if people from Menlo Park really want to move there? Why not?

Menlo Park will only feel obligated if the situation happens where businesses and private employers can't hire enough people to do important work in Menlo Park because nobody wants to commute to Menlo Park. Until that situation happens, the market won't dictate a change.

Even if Menlo Park felt that they needed to add more affordable housing just to be generous, folks have to consider that the roads need to be widened or upgraded to deal with more traffic, schools have to be expanded and funded to allow for higher enrollment, every city service (police, fire, public works, garbage, etc.) has to grow to meet the inevitable demand of a higher population. It's not just about adding homes, it amounts to the growing of a city.

I would agree with the above who mention that better public transportation is a huge solution. There are many far more affordable cities that only feel like they are far away because our traffic is horrendous, many of our highways are poorly designed or in states of terrible disrepair, and our public transportation is severely limited. A 20 to 30 mile commute is quite common and manageable in areas of our country that have placed their resources in public transportation. I believe that's where our focus should be in the future.


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