7 ms·
> Cities do not want apartments because that doesn't generate revenue The property owners still pay tax on it don't they? I'm sure it is less lucrative per squ
by markbnj 7y ago
> Cities do not want apartments because that doesn't generate revenue
The property owners still pay tax on it don't they? I'm sure it is less lucrative per square foot than commercial development, but I assume it is still better than the revenue from the closed furniture store and parking lot, and after all you need people to patronize businesses.
- i_am_proteus 7y agoPerhaps it's something to do with how California has lower property taxes (partially due to Prop. 13) and higher income taxes-- but those income taxes go to Sacramento, not to municipalities. In other parts of the country, municipal treasuries grow as volume and prices of residential units grow.
- option 7y agoCalifornia does not have low property taxes. Tax = rate * assessed_value. assessed_value is huge if you purchased during last 7 years and goes up 2% every year
- almost_usual 7y agoPurchased in the last 7 years is pretty recent. Most home owners bought 15+ years ago. If you're buying within the last decade you're probably paying a transplant premium.
- mktmkr 7y agoFrom 1985 to 2008 the median tenure of a family in a home was 6 years. This figure only started going up in recent years, due to housing crisis. Americans have traditionally expected to move house 8-9 times in their adult life. It is certainly not true that "most" people have tenure of 15 years or more. That is the 90th percentile tenure.
- wahern 7y agoAFAICT those are the national figures from a National Association of Realtors (NAR) report. I can't find figures for California. EDIT: The closest I could find was an ambiguous stat in a CNN article, https://money.cnn.com/2017/04/27/real_estate/home-prices-sellers-market/index.html https://money.cnn.com/2017/04/27/real_estate/home-prices-sel..., which cites an average of a little over 4 years (2000-20007) that might be for San Jose. However, there's wording that suggests such figures are computed from the tenure of sellers, not across all homeowners, in which case the statistic seem useless (imagine one guy selling every two years and nobody else--that would be a 2-year tenture average but in fact nobody but him is moving). Would nice if the NAR report was freely available.
- seanmcdirmid 7y agoCalifornia does feedback some income tax revenue to localities (mostly to schools).
- canuelaborate 7y agoCan you elaborate on what you mean by "those income taxes go to Scaramento"? I mean the state has to coordinate the money it collects, but doesn't it use that money for state-wide projects like roads, dams, and other infrastructure? I live in Los Angeles and pay CA income tax. I'm perfectly fine with the state using some of that money outside of Los Angeles. I often travel outside of Los Angeles, so I'm getting use out of whatever they make with it (assuming it's not just put into politicians' pockets). What is Sacramento doing with the income tax revenue that you don't like?
- i_am_proteus 7y agoThe difference between paying $9000 to Sacramento and $1000 to LA or paying $5000 to Sacramento and $5000 to LA. In the latter system, the local government gets direct control over the spending, as opposed to needing to lobby the state government for funds for road improvements, schools, etc. For instance, in California, the majority of K-12 funding comes from Sacramento. In most of the rest of the country, the majority of K-12 funding comes from local, largely property, taxes-- exceptions being low-performing schools targeted for improvement with state funds.
- inferiorhuman 7y agoCan you elaborate on what you mean by "those income taxes go to Scaramento"? I mean the state has to coordinate the money it collects, but doesn't it use that money for state-wide projects like roads, dams, and other infrastructure? I live in Los Angeles and pay CA income tax. I'm perfectly fine with the state using some of that money outside of Los Angeles. I often travel outside of Los Angeles, so I'm getting use out of whatever they make with it (assuming it's not just put into politicians' pockets). What is Sacramento doing with the income tax revenue that you don't like? The big issue is that cities and counties don't typically collect taxes in California. There are a few statewide organizations (Franchise Tax Board, Board of Equalization) that do instead. There are also tight limits on sales tax (cities can levy up to ~2% beyond the base rate for specific things). Essentially what happens is that the state collects taxes and doles the monies out to cities and counties at their discretion.
- wahern 7y agoFrom what I've read municipalities dislike residential because of the increased costs, not because of the poor tax revenue. Both commercial and residential can bring it windfall revenues at today's market prices, and Prop 13 applies to commercial property, anyhow. Residential simply has higher infrastructure costs--schools, heavier water & sewage usage, etc. Plus office complexes don't enrage NIMBYs the way residential projects do. Dense office space equates with rich commuters; dense residential space equates with young and poor people. So commercial pencils out better fiscally, and politically there's less pushback.
- dredmorbius 7y agoRetail generates sales tax. Residential doesn't.
- Gibbon1 7y agoCalifornia's property tax rate is too low to cover the services that residents use. That's the rotten pistachio right there.
- hlarsen 7y agocorrect, however the city now has to support these residents with police, firefighters, hospitals, and the like. everyone who works in an office goes home and a different city has to worry about it.
- aaronblohowiak 7y agoSchools are more expensive than residential property tax raises — this is due to state-mandated limits on property tax rates, rate increases and such (prop 13 related.)
- ericd 7y agoProp 13 makes it so that revenue from residential doesn't keep pace with costs over time. Parking lots don't really add much in terms of city services costs - no schools, parks, water treatment, etc.
- r00fus 7y agoNot in CA - Prop13 + corporate shell board of director transfers means the tax rate never increases, and after 40+ years, that means a lot of properties essentially pay a fraction of the taxes they should. Prop13 has had a LOT of unintended consequences.
- inferiorhuman 7y agoProp13 has had a LOT of unintended consequences. No, those were intended consequences.
- mktmkr 7y agoRight. Howard Jarvis, the face of Prop 13, was a lobbyist for the Apartment Owners' Association. Prop. 13 was for landlords by landlords.
- opportune 7y agoYes, true. But it had a lot of hidden consequences that most actual voters didn't think of. The spirit of the law could be sustainably maintained by closing up applicability to businesses, only letting it apply to primary residences, and reassessing on inheritance
- beamatronic 7y agoI don’t think anyone back then could have imagined property values going from say, 30,000 to 3,000,000. Can you imagine it now? Could we ever reach the $10 million mark for a single family Bay Area home? That’s the kind of leap you’d be asking them to make if you went back 40 years or so.
- inferiorhuman 7y agoI don’t think anyone back then could have imagined property values going from say, 30,000 to 3,000,000. Prop 13 was sold to the voters on a "granny is losing her home because of skyrocketing property taxes" argument. So, yes, I think that a 100x increase in value was predictable. And, yes, I could see $10 million homes becoming the norm within my lifetime.