
Palo Alto considers subsidized housing for salary up to $250K - sampo
http://www.reuters.com/article/us-california-rent-idUSKCN0WQ0CB
======
natrius
In most of Palo Alto, it's against the law to build anything but the most
expensive kind of housing—single family homes with big yards. People who
already bought in get to enjoy their walled-off neighborhoods at the expense
of families with less money. It's nice that they feel bad enough about it to
do something, but instead of legalizing cheaper housing on less land, they're
trying to fund a lottery as a totem to make themselves feel better about the
artificial affordability crisis they've created.

~~~
dimino
Why is it "at the expense of" others, to own a home now?

I've been trying for years to understand the concept of "everyone should be
able to live everywhere" but I just cannot wrap my head around it, or it's
cousin, "I shouldn't ever have to move, regardless of geopolitical changes".

Why are people so attached to any particular place that they'll suffer
immensely to keep that particular place theirs?

~~~
nshelly
Well, on a purely economic basis, many of those homeowners, including
investment funds, are paying < 0.1% in property tax and sitting on properties
that are worth millions in value. As an example, the homeowner of one property
with a market value of $7M was paying 0.04% in tax.[1]

Property taxes help pay for streets, police, ambulatory services, schools and
maintaining parks. These essential services are paid for "at the expense of"
renters and new homeowners. Of course, this deeply vested interest group also
manifests itself in roadblocks for new developments that would mitigate the
drastic increases in housing costs.

[1] [http://www.zillow.com/homedetails/1536-Bryant-St-Palo-
Alto-C...](http://www.zillow.com/homedetails/1536-Bryant-St-Palo-Alto-
CA-94301/19497046_zpid/)

~~~
JustSomeNobody
Oh. So it is somehow the homeowner's fault that the property values have
increased around them?

~~~
nshelly
Not their fault, but it is their gain. One of the other posts here mentions a
few solutions that wouldn't force retirees or those on fixed incomes out of
their newly valuable properties. The coastal areas of California are unique in
the US in that vast discrepancies exist between market value and what long-
time property owners pay.

    
    
      - Apply market-rate taxation only for values over a certain threshold, say $1m+ and non-owner occupied
      - Defer tax payments until the property changes hands (aka they sell the property or pass it on)
      - Reverse mortgages

~~~
burfog
It's completely messed up that a change in regional average property value
could cause a change in total tax revenue. This causes a city's tax income to
vary wildly. Cities take on obligations (bonds, salary increases, pensions) in
good times and then hit disaster in bad times.

We fight this in a stupid way. We limit tax increases for a property, with a
reset upon sale. This discourages people from moving closer to work, causing
our roads to be clogged with commuters.

The right way is to say that assessed home value relates to the total portion
of the city budget that your taxes must support. Your tax bill then wouldn't
change unless the city budget changes or the relative value of your property
changes. Subjecting the total city budget to voter approval is OK.

Basically the problem is millage rate. The dollar value of your property
should not directly (by simple multiplication or division) translate into a
tax amount. It should instead translate into a portion of the total. That is,
it should represent your share.

------
whyenot
> _The plan is a among a series of proposals being mulled by the Palo Alto
> City Council to provide affordable housing to those considered middle class
> in the area - families making between $150,000 to $250,000 annually._

As a point of reference, starting salary for a teacher in the Palo Alto
Unified School District is $57.5k. Someone who has taught in the district for
30 years with significant post-credential grad school makes double that.

~~~
onion2k
There's an implied assumption that a "family" will have two incomes.

~~~
jon-wood
And because of the way the free market works despite the average family
working twice as many hours as one in the fifties they're no better off, and
in a lot of cases worse off, in terms of what they can actually afford. And
kids never get to see their parents.

I don't know what the solution is long term but I have a feeling someday this
experiment in free market capitalism is going to be considered in similar ways
to the USSR's experiment in communism a few decades from now.

~~~
Hondor
When people have the opportunity to earn more, they do, no matter how hard it
is for them. Then they find things to spend that extra money on that they
wouldn't otherwise have spent it on, like a house in a more expensive
neighborhood and they end up still not having much money. It's just a personal
choice. Ask if your wife is willing to not work, buy a house in a cheap town,
buy a used Japanese import car and carry on living a comfortable 50's
lifestyle if you want. But you won't want because you'll see all that money
waiting for you.

~~~
bmj
_When people have the opportunity to earn more, they do, no matter how hard it
is for them._

Citation needed.

It really depends on how you view the world. If that view is all about money
and consumption, then, yeah, you probably won't leave money on the table.
There are, however, competing worldviews that offer different versions of the
good life, and in my experience, there are plenty of willing to leave money on
the table because of it.

------
mc32
Consolidate bay area government (ABAG) and come up with a comprehensive and
cohesive growth plan (housing, transportation, taxes, zoning, etc.) Piecemeal
reactive and Nimby policies are antithetical to the needs of the area. Forget
about 1960s idyll. It's the 2010s, act like it. The area doesn't have to do
growth Chinese-style, but we could to growth Singapore-style/Korea-style with
North American values (i.e. less patronizing and more community involvement,
up to a point)

~~~
uola
I think that train already left the station as Apple, Google and Facebook are
building new sprawling campuses. There's unlikely to be any significant
infrastructure growth without dense business districts.

~~~
TulliusCicero
What does this mean? The large tech companies are no fan of NIMBY policies,
they know the insane housing prices make it harder to recruit.

Google in particular has expressed interest in developing high-density housing
(by south bay area standards) in Mountain View now that the area around its
campus has been rezoned to allow housing.

~~~
vidarh
He's suggesting the corporate campuses needs to be condensed too. I haven't
been in the Bay Area for years, but when I was there last at least, it was
noteworthy given the property prices, how much low-rise commercial property
there was. Frankly, a lot of the problem would be solved with a few highrise
districts.

I live in London. My road here has much smaller plots than a typical Palo Alto
street. Yet the my road with 660 houses, takes up ~40,000 square meters of
land (including the road and gardens). Near our local rail station they're
building a few developments that will include at least one 55 story tower.
Combined they will house about as many people as our road on maybe about 1,000
square meters of land. High density can solve a lot of problems if done right.

~~~
TulliusCicero
But that, too, is a symptom of NIMBY policies that push sprawl. Google would
love to have fewer, taller buildings (if nothing else, it'd make their shuttle
system a lot easier to manage), but Mountain View won't let them.

------
topspin
Palo Alto property owners rejoice; subsidizing demand is a sure-fire way to
drive up prices.

~~~
rollulus
Exactly. Here in the Netherlands, housing is also subsidized: you can roughly
subtract the mortgage's interest from your income before tax is calculated.
The only result is that houses are more expensive.

~~~
runholm
The purpose of that system is to have more people owning their own home and
fewer people renting. It assures that there is a cap on how much of the
housing is owned by companies for the purpose of renting it out.

------
eru
Why won't they just implement a land tax, and reform zoning?

(Of course, because these two sensible policies would not be in favour of
landowners. Subsidies demand is.)

~~~
gaius
Land tax penalizes retirees is why.

~~~
eru
Not really.

Two solutions: either rely on the private sector to provide `reverse
mortgages'. Or let the government offer the same product, ie allow people on
low income but with lots of land value to defer payment until death or sale.

In addition, phase in land tax over a decade so that people have time to
adapt. If you phase out other taxes at a similar rate, you will even get a
great increase in land values.

(Basically, land in a jurisdiction that charges less eg income taxes or sales
taxes is great for doing business on. So people will bid up its price.)

~~~
gaius
"phase out other taxes" is the gaping hole in that argument.

Property isn't just a market - its peoples homes and communities too - thats
the other gaping hole. Why should Grandma need to move away so some Unicorn
startup can move in?

~~~
eru
Why should some old people who managed to get lucky a few decades ago be
allowed to sit on some of the most desireable real estate on the planet and
not pay the community for it?

Anyway, grandma is a red herring.

> "phase out other taxes" is the gaping hole in that argument.

See eg [http://www.georgistjournal.org/2012/10/16/the-unplumbed-
reve...](http://www.georgistjournal.org/2012/10/16/the-unplumbed-revenue-
potential-of-land-part-3-atcor-all-taxes-come-out-of-rents/)

When taxes fall, real estate prices rise by enough to make up for it.
Capturing that rise is simple with a land tax. (See
[https://en.wikipedia.org/wiki/Henry_George_theorem](https://en.wikipedia.org/wiki/Henry_George_theorem)
for how that's a rather orthodex statement. Nothing outside the mainstream of
economics here.)

The whole process is very economically efficient. Swap taxes on elastic
economic activity like work or investing for taxes on inelastic land.

~~~
lttlrck
Why should some young people who got lucky in a unicorn startup get to push
out some old people that helped build that community?

~~~
gaius
Right, this is why gentrification gets people's backs up. You're not just
buying property as a physical asset, you're buying into the community that
made that area desirable/up-and-coming/trendy/call it what you will. If they
hadn't been there, you wouldn't want to be there either. But a piece of
community isn't something you can own without contributing back to it, and if
you don't, it destroys it.

~~~
eru
Gentrification is awesome for landowners. Makes their investment go up.

------
nharada
The middle class STARTS at 150K?

~~~
mifreewil
Yeah, I think this is a bit exaggerated. Housing is a lot more expensive in
Palo Alto/Silicon Valley than the rest of the US - but not that much.

~~~
davidjnelson
Single family homes with 3 bedrooms, 2 baths, 1,500 sq ft, 2000 sq ft yard,
built after 1980, recently sold prices on zillow:

Palo Alto: Averages roughly $4,000,000.

[http://www.zillow.com/homes/for_sale/Palo-Alto-
CA/fsba,fsbo_...](http://www.zillow.com/homes/for_sale/Palo-Alto-
CA/fsba,fsbo_lt/house_type/26374_rid/3-_beds/2-_baths/any_days/1500-_size/2000-_lot/1980-_built/37.484257,-121.973992,37.279106,-122.297059_rect/11_zm/0_mmm/1_rs/)

Austin, Texas: Averages roughly $400,000 (10x less)

[http://www.zillow.com/homes/for_sale/Austin-
TX/fsba,fsbo_lt/...](http://www.zillow.com/homes/for_sale/Austin-
TX/fsba,fsbo_lt/house_type/10221_rid/3-_beds/2-_baths/any_days/1500-_size/2000-_lot/1980-_built/30.737704,-97.13974,29.846004,-98.432007_rect/9_zm/0_mmm/1_rs/)

Orlando, Florida: Averages roughly $400,000 (10x less)

[http://www.zillow.com/homes/for_sale/Orlando-
FL/fsba,fsbo_lt...](http://www.zillow.com/homes/for_sale/Orlando-
FL/fsba,fsbo_lt/house_type/13121_rid/3-_beds/2-_baths/any_days/1500-_size/2000-_lot/1980-_built/28.707753,-80.91362,28.253888,-81.559754_rect/10_zm/0_mmm/1_rs/)

Chicago, Illinois: Averages roughly $800,000 (5x less)

[http://www.zillow.com/homes/for_sale/Chicago-
IL/fsba,fsbo_lt...](http://www.zillow.com/homes/for_sale/Chicago-
IL/fsba,fsbo_lt/house_type/17426_rid/3-_beds/2-_baths/any_days/1500-_size/2000-_lot/1980-_built/42.026088,-87.4086,41.641361,-88.054734_rect/10_zm/0_mmm/1_rs/)

Philadelphia, Pennsylvania: Averages roughly $400,000 (10x less)

[http://www.zillow.com/homes/for_sale/Philadelphia-
PA/fsba,fs...](http://www.zillow.com/homes/for_sale/Philadelphia-
PA/fsba,fsbo_lt/house_type/13271_rid/3-_beds/2-_baths/any_days/1500-_size/2000-_lot/1980-_built/40.200117,-74.794922,39.804579,-75.441056_rect/10_zm/0_mmm/1_rs/)

Seattle, Washington: Averages roughly $1,000,000 (4x less)

[http://www.zillow.com/homes/for_sale/Seattle-
WA/fsba,fsbo_lt...](http://www.zillow.com/homes/for_sale/Seattle-
WA/fsba,fsbo_lt/house_type/16037_rid/3-_beds/2-_baths/any_days/1500-_size/2000-_lot/1980-_built/47.787094,-122.021714,47.439002,-122.667847_rect/10_zm/0_mmm/1_rs/)

Palo Alto is definitely _much_ more expensive.

~~~
burfog
Even your cheapest examples are expensive. It's about $150,000 ($100,000 to
$250,000) in Palm Bay, FL. That's normal peaceful USA, with tech jobs and even
kind of near the beach, not some decaying hellhole.

So make that a factor of 30, without even looking at bad places.

~~~
davidjnelson
Nice, that's a great deal! What's the percentage drop in salary an experienced
software engineer would have if moving there?

~~~
burfog
It's really hard to say, but certainly nothing compared to the savings. It
depends on what you mean by experience. :-)

Glassdoor says that Harris pays $113,051 for a "Software Engineer IV". Most
Harris jobs are in that area.

Payscale says $96,955 for a "Senior Software Engineer" in Melbourne, the next
town over. Hmmm, Palo Alto is only $135,305 for this. That's less than 40%
extra, but you're paying 3000% extra for the house.

Note that overtime is not normal for the area. You work 40 hours. Spend the
rest of the time with your family.

Also note that everything else is cheaper too. There is no state income tax.
The sales tax is 6.5%. Power is about $96 per month for those using 1000 kWh
per month, and $137 for those using 1400 kWh per month. You'd pay 20% more in
Palo Alto. Gasoline is dirt cheap: it's only $2.14 in Palm Bay, but about
$3.05 (large variation) in Palo Alto. I could go on forever really, but it
gets silly comparing everything from nail polish to turnips.

------
VeejayRampay
The noob question cause I feel like I don't understand the issue: Why are
companies not pushing for remote workers? Are the downsides overweighing the
positive or is it a cultural thing?

~~~
CardenB
Spontaneous interaction is just a huge boon for productivity. That's how I've
ever understood it.

~~~
douche
That's the propaganda line, anyway...

I'd much prefer deliberate and well-planned interactions, with plenty of
distraction-free time in between to actually get some work done.

------
mickrussom
Good idea. Too little too late. I suffer horribly with my small family and two
good jobs. One job basically pays for the taxes. And housing is so expensive I
cant get over the hump to get a mortgage to see any tax benefits. Its really
crushing to not be a landed gentry here. We rent is a good school district and
have a kind landlord but we cannot build housing equity besides having good
jobs.

------
alexc05
This seems like a bad idea (gut check). Won't the availability of public money
for private housing help to drive prices up?

Everything I see seems to indicate that the price of housing expands to fill
the amount of money available.

Cheap interest rates managed to change the base price of homes such that the
mortgage payment is roughly the same. Now it is individuals & condo developers
collecting that difference rather than banks.

Or am I totally off base here?

Increasing property taxes shifts the burden of ownership to the people who
have money... though suppose that would get passed through to renters as well.

~~~
calpaterson
> Everything I see seems to indicate that the price of housing expands to fill
> the amount of money available.

This applies to many many other areas too. The price of anything in short
supply expands as far as possible to change consumer surplus into producer
surplus.

If it were apple juice in short supply more people would start selling apple
juice and eventually the price would fall. Presumably in Palo Alto you can't
just throw up more flats/houses in 6 months and put them up for sale though

------
mtgx
This lead to the sellers accounting for the subsidy and increasing their
prices accordingly.

~~~
runholm
They are building new housing and renting it out below market price. You don't
get a check in the mail.

~~~
chii
unless they build enough to curb demand to equal supply, i dont see the
housing costs decrease significantly.

------
hobaak
Folks, this was dismissed as misinformation to public by the city.

------
bettyx1138
NYC needs this too.

~~~
joeblau
I have some co-workers from NYC (Queens/Brooklyn) and from what they were
telling me; Only Manhattan is really crazy, not all of NYC? I'm not sure how
accurate that is as I've never lived in NYC.

~~~
havetocharge
NYC is in a much better situation than SF or Palo Alto. A lot more choice
here, both in and around the city. You do have to be OK with apx 1 hr commute.

~~~
qmr
I don't understand why people are content to absolutely waste 12% of their
waking hours commuting to and from a job. Boggles the mind.

