[quote=CA renter]BG, you’re more informed than I on the intricacies of CFDs and the cozy relationships between developers and city leaders, but Prop 13 has at least as much of an effect as the new developments. As you know, I fully support the notion that long-time residents not be taxed out of their homes, but why are taxpayers (and public sector workers who are being blamed for the mess) having to subsidize the profits of landlords, commercial property owners (especially those who’ve skirted reassessments on new purchases via LLC loopholes), and mega developers/owners of large tracts of land — all of whom are not paying market rate property taxes. We are losing billions of dollars every year because of these taxpayer subsidies; it’s a much bigger problem than the “pension crisis,” though nobody is addressing it. If we ever intend to fix our state’s finances, repealing Prop 13 protections for these parasites should be job #1.
Additionally, the land owners/developers should be the ones to DIRECTLY pay for the infrastructure (no Mello-Roos/CFDs to push payment into the future). If that means they have to pay less for the land, or charge more for the houses, so be it. The property taxes from these new developments should be more than sufficient enough to pay for the ongoing maintenance and services required by these new areas. If not, then the finances are not being managed properly.[/quote]
Yes, CAR, I completely understand the inequity of it all. Especially when the average 4-unit apt (flat) building in SF rakes in on avg over $140K annually in rents with a virtually zero percent vacancy rate.
Tenancy is longer on average in SF as well, as tenants fear they can’t give notice until they can firmly can secure another unit in the city. If this is not possible (as has been the situation for the last few years), they stay.
SF would be a “poster child” for repealing props 58 and 193 (the progeny of Prop 13) which provides for pre-April 1978 owners to pass ownership to their children (Prop 58) and grandchildren (Prop 193) upon their deaths free of reassessment. Title can be in the form of a trust, LLC or partnership as long as the principals of the LLC or partnership have filed their true names when obtaining a fictitious business name (FBN) with the county clerk/recorder of the county the subject property is situated in.. These “loopholes” in Prop 13 prevent many thousands of extremely valuable multifamily and commercial property owners in SF and throughout the state from being reassessed upon title transfer to a qualified family member into perpetuity as long as the “rules” are followed to the letter.
The average annual tax bill on such a 4-unit multifamily property in SF today (with a ~140K annual income) is approx $1400!
A 4-unit complex (my “example” here) is very typical on nearly EVERY block all over the city! The VAST MAJORITY of these complexes qualify for this “special” tax treatment because SF was primarily rebuilt between 1907 and 1917, after the fire which engulfed most of the city which was caused by its gas lines blowing up due to a massive earthquake. Only a small percentage of these parcels have changed hands (in an “arm’s length transaction”) since 1978 (for obvious reasons).
The descendants of those post-quake owners of the “rebuilds” are now the owners of these income and comm’l properties and these thousands of parcels in SF are among the most valuable in the state.
I believe that the repeal of Prop 58 and 193 will go a long way towards shoring up CA’s budget but I don’t see our Legislature enacting a voter-approved repeal retroactively. The current descendant-owners will have to die before their properties are reassessed.
Still, a good start would be putting a repeal of Props 58 and 193 before CA’s voters with a clear explanation in the Voter Guide of exactly who is benefiting from these laws and why.
Those still benefiting from an extremely low property tax due to the passage of Prop 13 (pre-April 1978 owners who still own the same property today) will eventually die. Without Props 58 and 193 on the books, their property will be reassessed upon their deaths (whether their “heirs” decide to keep it or not) if they do not sell it before they die.
I think the repeal of these laws would also have the side effect of bringing more RE inventory to market as the only reason many “heirs” are keeping their parents/grandparents property instead of selling it is not because they particularly “like it” or “want to live there” but because its taxes are only a few hundred per year (making it a cash cow for them) and for no other reason.
The passage of Props 58 and 193 was NOT in keeping with Prop 13’s original intent of “keeping seniors from being taxed out of their homes.” They are nothing but vehicles used for “unjust enrichment” of able-bodied young worker-heirs, enabling them to avoid tax of propertie(s) they inherited based upon their market value at the time of death of their parent/grandparent (plus 2% anually thereafter).
I completely agree that all the new infrastructure of new developments in CA should have been paid up front by the developers and then factored into the cost of the each home, instead of having a separate Mello Roos bond to pay (that many owners can and do default upon, anyway). The problem is in calculating forward the cost of rendering future public services accurately for each parcel in the development and also tacking that cost onto the cost of each property. This would be very difficult to calculate, IMHO, and would tend to discourage development, because developers would realize that they had to “charge too much” to the end user and fear they couldn’t compete with the resale market.
This is all fine with me but the “horse has already left the barn door” in this regard :=0
