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June 18, 2013 at 7:56 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762994June 18, 2013 at 7:41 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762992
bearishgurl
Participant[quote=CA renter]No, increases in California’s revenues don’t just come from GDP growth. In California, property taxes have always been a significant contributor to state and municipal revenues. It became a much smaller component after the passage of Prop 13.
…
In 1977-78, the last fiscal year before the imposition of
Proposition 13, nearly 28 percent of state and local
general revenue generated in the state came from
property taxation. California’s property tax reliance was 26 percent greater than the reliance exhibited in
all states in 1977-78.
1
By 2005-06, the most recent fiscal year for which data is available, California’s
reliance on property taxation as a source of state and
local general revenue had fallen to less than 13
percent. This was 24 percent below the property tax
reliance occurring throughout the rest of the United
States in 2005-06.http://www.csus.edu/indiv/w/wassmerr/denial.pdf
———
Again, just adding to the population does not mean that productivity is growing, per capita, and it doesn’t mean that the new growth is self-sustaining (not taking more in govt services/infrastructure than what they contribute in taxes).[/quote]
Excellent post, CAR.
June 18, 2013 at 7:35 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762991Participant[quote=SK in CV] . . . Your argument that population growth is primarily non property tax payers is wholly fallacious. Much of the growth is organic. And all new residents need a place to live, so it doesn’t matter whether they own or rent. They’re still living somewhere. I’d be surprised if half of all residences in the state were built post 1978.
And the argument that they’re paying 1/10th of 1% of value is BS. If 1% of the state has valuations that low I’d be surprised.[/quote]
SK, I didn’t argue that CA’s population growth is primarily non property taxpayers. Of course, everyone needs a place to live. I really don’t know what the percentage is of “newcomers” to CA (with <10 yrs residency) who own their residence versus those who rent. But I suspect those percentages vary wildly depending on micro-area.
That's not the issue I was discussing.
There are a millions of property taxpayers in this state paying taxes based on an assessment equal to 1/10th of the current market value of their property. This is especially pronounced in lower-tier SFR areas and multifamily bldgs in high-priced coastal areas (ex LA and SF). It is not uncommon at all to find an owner today who is paying $400 to $600 annual tax (incl all voter-approved bonds and agency fees) whose property is now worth $300K to $500K. When you look at the ad-valoreum portion of their bill, their actual assessment is equal to 1/10 of their current market value (or $30K to $50K). In SF, the disparity of the tax bills between old and new owners is even more pronounced due to the skyrocketing values of former SFR’s which have been turned into 2-4 units (flats) over multiple decades in which EACH unit (regardless of size) now rents for $1700 to $3600. Do the math x 2, 3 or 4 units. And it’s not uncommon at all to find that some of these districts were upzoned to light commercial in the past, making them even MORE valuable in the eyes of a buyer. For example, it’s not uncommon to find a property tax bill in SF for $850 to $2200 annually for a bldg which now has a market value of $1-$2M+.
This doesn’t even include the millions of CA property owners whose assessment is equal to ~11% to ~65% of the current market value of their property … that is, those who purchased between 1978 and 1999 and still own that property.
Prop 13 (and its progeny, Props 58 and 193) have had far reaching ramifications for state and local governments ability to finance their day-to-day operations, the largest being the inherent instability created by not knowing precisely how much they can expect to recover year to year from property tax coffers.
Other states, who reassess all properties every year or every two years, don’t have this huge disparity between similarly-situated owners’ tax bills. Thus, their local governments are able to plan better and they are less subject to the vagaries of boom/bust microeconomics which tend to be all concentrated in a handful of areas (in CA, read: *newer* areas). This boom/bust cycle ends up spreading to adjacent, more established communites where there was little (if any) distress. This happens insidiously thru extremely low sold comps in adjacent *newer* areas during a “bust” cycle, causing buyers to shun the established areas to bottom-fish in the newer areas where same-size listings abound at 40-50 cents on the dollar (nearly 100% “distressed”). The REASON for the depth of the bust (besides “creative” financing) has a LOT to do with the huge disparity of carrying costs between a similar-sized older and newer property (largely due to MR/HOA dues and disparity in assessments).
The above is what happened in Chula Vista between 2007 and 2012.
In other states, developers have to pay for all their infrastructure up front as a condition of permitting. So they have to charge enough for the homes in their new subdivisions to pay for all of this. If a project doesn’t “pencil out” for them, they don’t build. They don’t depend on “bond money” concealing part of the actual purchase price from buyers, allowing them to build freely without using their own funds for the necessary pre-construction infrastructure and then letting their buyers sort their finances out after COE (and they’ve closed up shop and left), as CA developers do.
Yes, the original assessment basis used at the time Prop 13 was passed was that of the ’75/76 FY assessment (which was the assessment in effect at the time of its writing) … before election day 1977.
Perhaps the reason why half your old haunt (in the western half of DC has changed hands since 1978 is because of the many canyon rim and “view properties” there which were/are VERY marketable and allowed their owners to “retire” who otherwise would not have had the funds to do so 🙂
Try the same plat map exercise in Allied Gardens, Clairemont, LG, LM, EC, Talmadge, Rolando, College area, Mission Hills or the interior of PL (ex Loma Portal, Plumosa Park). Just pick a couple of random streets which have single-family units (preferably 50+ yrs old) and tell us of your findings. CA state and local governments have been losing BILLIONS for decades (just as CAR stated earlier here) by not periodically reassessing parcels of every stripe, as other states do.
June 18, 2013 at 3:19 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762967Participant[quote=all]People living in CFD areas are not excused from paying the sales and property taxes. It is more likely that the sales & property taxes collected in my area sponsor your facilities than the other way around.
I’m fine with scaling back the taxes and the services for everyone and then empowering communities to decide if they want their libraries open or closed.[/quote]
craptcha, the sales and property taxes collected in your area (excepting MR) benefit ONLY the residents in your city. If you reside in the county, they benefit ONLY SD County residents who do not live within the jurisdiction of a city. If you regularly shop brick-and-mortar retail in a jurisdiction which you don’t reside, NONE of your sales tax collected from you there benefits your community. It benefits only the city/county in which the retail establishment lies.
I’m also okay with scaling back public library, pool and day camp hours, etc (rec depts). But I’m NOT okay with the direction the state courts are going or cutting back water, sewer and street services. And I think the People’s Ordinance should be abolished and SFR residents of the City of SD should pay for their own trash pickup. I think law enforcement/fire is probably staffed adequately although I don’t know how much in overtime these agencies are still racking up.
I think CA jails and prisons should be scaled back and Joe or Jane Shoplifter (three-striker) should be trying to work to pay off his/her fines and restitution and support his/her kids. I don’t want to support non-violent prison and jail inmates, nor do I want to support their kids. I think the prison industrial complex in CA has seen its heyday in the rear-view mirror, and, collectively, CA voters have much more important issues to ponder going forward than paying into oblivion to keep this huge segment of the population warehoused away in light of the fact of the passage of Prop 26 last November.
June 18, 2013 at 2:46 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762961Participant[quote=all]The point was the fact that you don’t take advantage of particular service does not mean a thing. I have no use for retrofitting sidewalks to accommodate disabled and elderly, airplane carriers and campsites. Few services are universally appreciated which is the reason MR exists – people who want to pay for extras can buy in the area where the extras are offered.[/quote]
craptcha, FWIW, my kid(s) and I DID take advantage of the library for a long time. But its late fees have quadrupled in recent years and they have resorted to hard-handed tactics to collect money when all they would have had to do is call me or send me a notice that I still had the book and I would have brought it in and paid the late charges.
If your “new, modern, high-tech” library was paid for with MR bond money, keep in mind that it is staffed (salaries) and run (utilities/maintenance) with ALL of our property tax money if it is county-run and ALL of the property tax money collected by a city if it is city-run. This includes money collected from parcels not lying within the CFD(s) the library was built to serve. Thus, it cannot discriminate in who they issue library cards to, as long as they reside within the City or County where the library is situated. And the library is open to any individual who wishes to use it.
Public facilities lying within CFDs cost ALL local taxpayers dearly in public salaries, utilities and maintenance even if they were built with MR bond money.
June 18, 2013 at 2:19 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762958Participant[quote=no_such_reality][quote=SK in CV][quote=bearishgurl]
We can’t have it both ways … that is … 40%+?? of CA’s landowners paying 1/10th of 1% of the current market value of their properties due to artificially low assessments which will NEVER catch up to even being close to the market value…[/quote]Do you know this 40% number is right or are you just guessing at it? I have no idea. [/quote]
She’s guessing. As is anybody blaming Prop 13. The simple truth is that property tax collections, have risen faster than inflation and population growth since before prop 13 was passed.
In other words, adjust the property taxes collection just before prop 13 passed for inflation and population growth and we collect more now.[/quote]
Your forgetting a major elephant in the room here, NSR. All the CA population influx since 1978 has to be served by cities, counties and the Federal government.
How much of a portion of CA’s population influx actually pays any property taxes at all? And what is the percentage of CA’s landowner population influx since 1978 that pays market rate taxes for their parcel(s).
And even if a CA home-owning family IS paying market-rate property taxes of say $5,700 yr (no MR), are located in a municipality which offers them sidewalks, street lights and storm drains and have two kids in public school, how much do you think it costs annually for all levels of gubment to service this family?
Take a stab at it, NSR.
June 18, 2013 at 2:09 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762956Participant[quote=all][quote=bearishgurl]For instance, I’m finding that the vast majority of residents don’t really give a damn (incl myself) if the library is only open 4-5 days per week for 2-3 hours per day. Less employees can now work in two or more local libraries to get at/ least 32 hours per week and thus keep their benefits. Each library can stagger their opening hours to coincide with other local libraries’ closing hours.[/quote]
That is a function of your lifestyle. Our local library is busy place with lots of people taking advantage of the programs and resources offered there.[/quote]
craptcha, per chance was your library paid for with MR bond money? (CAT 5 wiring, kiosks, community meeting areas, etc) Just wondering …
And if your library is run by the county, the county hasn’t had to cut back their library hours as much as some cities have had to, such as Chula Vista. Why has ChulaV had to cut back its services so much? Because they (stupidly) issued tens of thousands more residential permits than they should have during the millenium boom. When all those *newer* subdivisions went bust starting in 2007, so many of their homeowners applied for assessment appeals that the county had to bring in three FT appraisers to its (closed for biz except to collect taxes 2X annually) South County Assessor’s Office to reassess downward ALL the parcels in those *newer* subdivisions. Yes, ALL of them.
The MR bonds in were only used to BUILD all that mess (along with ancillary street improvements). They didn’t and don’t pay for maintenance or city services for all those new residents. The property taxes are supposed to but the city has gotten so much less for its portion from the state because the parcel tax collected was in many cases 50% less than the tax collected prior to the bust.
When a CA county assessor collects property tax (not incl MR or agency/school bond fees), the ad-valoreum portion of the tax bill collected reverts to the state for later distribution to the jurisdictions from whence it came.
No matter how much property tax is recovered by a city for any given fiscal year, it STILL needs to provide for basic law enforcement, fire and municipal services.
June 18, 2013 at 1:51 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762954Participant[quote=SK in CV][quote=bearishgurl]
We can’t have it both ways … that is … 40%+?? of CA’s landowners paying 1/10th of 1% of the current market value of their properties due to artificially low assessments which will NEVER catch up to even being close to the market value…[/quote]Do you know this 40% number is right or are you just guessing at it? I have no idea.[/quote]
I’ve done a few surveys on older blocks in SD Metro, East and South County and found a few of them to have as much as 77% prop-13 protected assessments, including blocks surrounding me. In the City and County of SF (VERY populous) and older counties such as Marin, Los Angeles, San Mateo and (western) Alameda County, the percentage is very, very high, regardless of whether owner occupied or not … as it is in some desired rural counties where landowners tend to hang onto property (i.e. Mendocino). As I posted earlier, a few CA coastal enclaves (incl several districts in the City and County of SF) have “rent control.” The vast majority of the LL’s within them have Prop 13 protected assessments, making “rent control” entirely feasible in these jurisdictions. In addition, there are hundreds of agricultural landowners in the San Joaquin Valley who “inherited” their properties, whose assessments are not only protected by Prop 13, but protected by agricultural (tax) waivers, as well. Some of this land is no longer used for agriculture and thus possibly could be made available for zoning changes to future subdivisions (assuming a buyer market and jobs are there). If this should occur, their land could become much more valuable and they would lose their agricultural (tax) waivers but still keep the prop 13 assessment for the portion(s) they elected not to subdivide.
Even though it appears as if CA is drowning in newer subdivisions (because we all have to use the same roads and public facilities), the more desirable, already built-up areas by the year 2000 greatly outnumber the parcels with newer construction (built since 2000), especially in its coastal counties.
Unless they added permitted square footage or obtained rezoning along the way, current property owners who purchased from the last quarter of 1978 until 1999 ALSO have below-market taxes, ranging from 15% of market value to 65% of market value.
The vast majority of current SD County owners who bought since 2000 have had their assessment adjusted downwards in the last three fiscal years in accordance with Prop 8, but it can be raised back up part way or all the way as the assessor sees fit. I see this happening to a LOT of parcels with the ’13/14 tax bills being mailed out the third and fourth weeks of September.
I was taking an educated guess here that it is close to or over 40% of assessments overall in CA which are artificially very low in accordance with Prop 13.
In your spare time, why don’t you order up some plat maps at $2 pg in your old stomping ground (Del Cerro/Allied Gardens?) and take a look for yourself, SK? As you know, the first three numbers of a parcel number is the number of the map to order. Some maps have two pages. These links will get you started:
http://arcc.co.san-diego.ca.us/services/parcelmap/search.aspx
https://www.sdctreastax.com/ebpp3/(5mbsnv551yqju2i24yc5qmrv)/Start.aspx
You might be shocked at what you find :=0
June 18, 2013 at 1:13 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762951Participant[quote=The-Shoveler]Well I think this is where the City of Los Angeles
(the 800 pound gorilla in the room standing in the corner), is going to be pivotal and set precedence for the entire country IMO.Because eventually (unless possible Fed intervention or voluntary pension and pay reductions), L.A. is going to be insolvent.
Heck they can’t even stop the 5.5 percent raise that is due in January.
We will see what transpires fairly soon IMO (my guess within 10 years)
Interesting times.[/quote]
Shoveler, the City will just “fix” it all year by year by not hiring replacements as employees retire, thus lowering their payroll expense … as they HAVE BEEN DOING in recent years. In CA, March 31 and June 30 are popular retirement dates for state and local civil servants for a variety of reasons. It’s time again for a slew of new City of LA retirees to be cut loose on terminal leave … and later, their pensions.
A much smaller government at all levels is the “new normal.” CA residents will just have to be content with LESS services going forward in the absence of agreeing to wholesale or piecemeal repeal of Prop 13 and its progeny.
For instance, I’m finding that the vast majority of residents don’t really give a damn (incl myself) if the library is only open 4-5 days per week for 2-3 hours per day. Less employees can now work in two or more local libraries to get at least 32 hours per week and thus keep their benefits. Each library can stagger their opening hours to coincide with other local libraries’ closing hours.
I just bought a *new* $45 “computer operating-system bible” on Amazon for $6.52 (including $3.99 for postage – it weighed 2.5 lbs). This is less than the library would have charged me had I accidentally kept it for two weeks past its due date, which has happened to me several times, one time of which I received a letter from a collection agency with no prior warning (to pay for a borrowed book I threw in my entertainment center and forgot about). Sure, the Amazon book took a week to get to me and the cover wasn’t completely perfect around the edges but what do I care? Now I have it handy to use it whenever I need it 🙂
I can’t say the same for the state courts. The current CA Superior Court situation is ba-a-a-ad … so much so that the “system” doesn’t really work anymore due to its severely-reduced employee head count, IMO. I feel really sorry for residents who find themselves having to litigate today in our state system. Perhaps it is more efficient in CA’s rural counties but it is terribly overloaded in CA’s populous counties and there is no solution in sight.
We can’t have it both ways … that is … 40%+?? of CA’s landowners paying 1/10th of 1% of the current market value of their properties due to artificially low assessments which will NEVER catch up to even being close to the market value and expect top-notch, responsive government agencies. It’s not going to happen because 40%+ are VOTERS and they’re not going to vote themselves into paying ten times the property tax they currently are, REGARDLESS of their ability to pay market-rate tax. And when they die, their (Prop 58/193) “heirs” won’t vote in a Prop 13 repeal, either and thus the initiative(s) will never receive 66.66% of the vote.
So what we have is essentially the longtime residents who stayed put in one residence (and their heirs) benefiting from the same local services mostly paid for by the newer residents residing in the same locale. Nothing has changed.
Participant[quote=earlyretirement]…BG, to your knowledge, has any CFD areas ever had their bonds extended past their original pay off dates?[/quote]
NO! But in 1987-1991, it was not common to use exotic vehicles and/or I/O loans to fund the MR construction bonds. In addition, the community got three fire stations and a YMCA out of the deal. All but one fire station was built in 1992 or prior. Building costs and materials have gone up exponentially since then.
ParticipantHLS, I saw a piece on “60 Minutes” a while back where former Countrywide (later folded into B of A) loan officers and servicers were interviewed who stated they (as loan officers) were compensated judicously (mostly with usurious points charged the [often subprime] buyer and the use of YSP’s). The servicing employees in their divisions which ran the HAMP mod program and “Deed in Lieu Plus” programs had absolutely NO CONTROL over their employees in the loss mit division, who would be initiating simultaneous foreclosure on the same property. So what was going on was that borrowers working with the servicing dept to apply for and process a mod were being foiled by the loss mit dept who was initiating the steps of foreclosure on their property with their trustee (“Recontrust” in CA). Of course, most “trial mod” and some “deed-in-lieu” applications never got approved and processed because the delinquent trustors lost their homes to foreclosure in the interim. To the untrained eye, this all looks like a “comedy of errors” perpetrated by the right hand opposing the left hand. But it was all part of a grand plan for B of A to “pretend” to be “helping” delinquent borrowers by publicizing their “help-line” phone numbers. This was also borne out by my own experience assisting a delinquent Countrywide loan-mod applicant AND a Countrywide “Deed in Lieu Plus” applicant, BOTH of whom got foreclosed upon mid-stream. Only the deed-in-lieu applicant received $3000 about ten days after their foreclosure to vacate the property and leave it “broom swept.” The dissed loan-mod applicant received nothing, and, in any case, had already vacated the property and moved away at the time of the trustee sale.
This would all be palatable to JQ Public if B of A didn’t receive any TARP funds, only to screw with borrowers minds’ in attempt to prolong the foreclosure mess for the rest of us.
Participant[quote=earlyretirement]…You just have to remember BG that there are a lot of people that wouldn’t accept to live in certain parts of San Diego even if you gave them a free house. They would much rather live where they do paying a mortgage vs. taking a perfectly fine house in an area like Chula Vista. In fact, I’m one of those people. Even if you gave me the option of a FREE perfectly fine house in Chula Vista and promise to pay all property taxes…. I’d opt not to take it and pay a mortgage instead along with any applicable taxes. Nothing wrong with that…it’s just the way it is.[/quote]
ER, I’m not sure if you are aware of this, but about 5/8 of Chula Vista’s residential property owners pay MR. It WAS more like 2/3 of the population as recent as 2006, but since May 2007, ChulaV subdivisions have been retiring their MR bonds one by one.
FYI, developers within the City of Chula Vista (such as Lane Kuhn, Fieldstone and McMillin) DEBUTED the use of MR bonds in San Diego County. The next city to adopt them was Poway. The earlest ChulaV subdivisions built with 20 and 30 yr MR bonds with the first phases being sold in May 1987 (3 subd in Eastlake Shores) and 1991 (2 subd in Eastlake Hills) which have already paid off their MR bonds. RDR-II paid off their (20 yr) street bonds in 2012.
Having worked alongside several of these owners from the beginning, I’ve seen it all, first hand. The monthly HOA struggles, the HUGE property tax impounds, etc. A few of them hung in there and made it through to the retirement of the bonds but I’m not sure if this makes their properties more “valuable” than similarly-situated ChulaV properties which do not lie in MR areas OR if their kids got a “better” education than they would have had they attended schools in non-MR areas of the same district.
So, in a nutshell, I “get” the concept of MR but don’t know/can’t measure its true long-term fiscal value to an affected homewoner.
ParticipantER, I viewed three of your SantaLuz videos last night. SantaLuz cannot be compared to the Del Sur tract that the newswoman is investigating for MR overcharges as they are apples and oranges for a variety of reasons.
SantaLuz (the SFRs at least) are situated on spacious lots, thus you aren’t listening to your neighbors’ toilet flush. A (renowned?) golf course designer came into the picture early on (before housing was even in the picture) and created a world class golf course to run with the lay of the land. You have a full-service gym/spa on site as well as a restaurant which serves only the residents and their guests. I think it is interesting that young families (mostly newcomers to SD?) ultimately decided to buy into SantaLuz and the comaraderie among neighbors is very good due to all of the organized community activities. However, I personally would not like living behind a guarded gate (and we DO have a few of these type of subdivisions in South County, btw). Insomuch that your neighbors cannot store their non-running vehicles in front of their houses, for example, is a blessing, you are paying HIGH HOA dues ($440 mo for a SFR?) for enforcement of those covenants, conditions and restrictions. But you are correct in that you are getting tangible services (cable TV, broadband internet and trash P/U) for the money as well as the full service gym with classes, pool and jacuzzis (along with availability of on-site trainers, golf pros and masseuses, for example) is very nice. I don’t golf but would find the rest very convenient. And I was intrigued by the round-lot concept, capturing distant ocean and surrounding views since the development appears to sit up pretty high.
And for you (unlike the masses who purchase[d] elsewhere in 92127), I would leave the public schools issue out of the equation because you made an early payoff of your obligations to the CFDs encumbering your property and it was formally accepted as “paid in full.” Whether or not a buyer will pay you for your trouble and expense is immaterial in your case, IMO. The reason being that the PUSD is in deep sh!t and will remain so far into the future (which is not your problem anymore). You have kid(s) who are or will ostensibly attend the public schools there and so ~$60K is not that great of a cash outlay in light of the fact that you state will hold your property longer than ten years.
From your videos, it truly DOES appear that buyers in SantaLuz buy into a “convenient lifestyle” over buying just a home. However, I’ll bet if you ask your “buddy” in LG whether he would choose to buy in SantaLuz (if he could afford it) knowing it would cost him an additional ~$940 month in MR/HOA, that he would say no. I can see how younger buyers with minor children took the place of the “empty nester” buyers the development originally expected would be its target market. No matter how “well-heeled,” the mindset of many “empty nesters” who are already retired to soon to be retired is of conserving funds, not throwing ~$940 month to the wind. Especially in light of the low-interest environment we have today. You have to take into account that not only does this group not know if they will ever be able to enter the job market again (even on a part-time basis), they don’t know how long they will live and thus how long their funds need to last. For these reasons, it is folly for many in this demographic to throw ~$940 month out the window (or even $800, considering they were going to pay for cable/trash elsewhere) to live in a development where they may or may not regularly use its amenities.
I did enjoy the videos and thought your community was well-planned, ER. Many of your “brethren” in the rest of 92127 are no doubt paying just $100 to $150 less than you are every month in MR/HOA and not getting anywhere near level of amenities you are privy to OR the spacious lots. For this reason alone, I think you got a good deal for the house and lifestyle that you and your family wanted.
June 17, 2013 at 7:41 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762916ParticipantIf Prop 13 is repealed but for ONE owner-occupied property per taxpayer, I see longtime multifamily owners banding together in cities such as Santa Monica and SF and flexing their municipal muscles to abolish “rent control” by threatening to pull their flats/apts out of residential use or reconvert their properties to SFRs. It is only because of these many thousands of building owners’ artificially low property taxes (as CAR has mentioned before here, approx $1800 annual tax for a $1.5M+ property) which allows them to comply with rent control laws in these cities.
If the Piggs think rents in SF are high now, I shudder to think of what they would be if Prop 13 was piecemealed in this fashion. Regardless, a repeal of Prop 13 won’t affect the desirability or number of applicants for each soon-to-be-vacant unit. Prospective tenants will continue to line up to apply for digs where the ad just appeared on CL this morning and will pay whatever the market will bear. The residents who will be hurt by it are those many thousands of long-term tenants who have enjoyed “rent control” all these years and who would have moved out of the city long ago were it not already in place. This (large) group will undoubtedly find themselves having to relocate.
ParticipantER, I think it is wonderful that MR is garnering this much public attention through the local media. In the past, especially during the millenium boom, which occurred during and just after the biggest building boom in SD County history, young buyers signed up for new homes in developers’ offices en masse (mostly using a 1st and 2nd TD and putting little to nothing down) and the majority had no idea how much MR was going to cost. Not only did their mortgages (predictably) reset a few years down the line, many of them were completely surprised months after move-in at the monthly outlay they found themselves having to come up with to satisfy MR twice yearly in combination with HOA dues (over and above their regular property taxes and insurance payments). In post 2000 construction, it is not at all uncommon for the combination of MR and HOA to top $700 per month, even for PUDs and condos. As these millenium-boom buyers’ loans reset, they stopped paying their mortgages but many stopped paying their taxes, MR and HOA a few months before that in attempt to satisfy their new, higher mortgage payment. Within 8 months of the reset (or often much sooner), their mortgages went into default.
As we all know, $700 can buy a few months worth of diapers and formula, pay for a couple of elementary-age kids’ afterschool care, or buy enough gas for a couple of parents in a family to commute their separate ways every weekday or plow into their retirement funds.
If just ONE thing goes wrong in Joe6p’s family (complicated pregnancy requiring unpaid maternity leave, involuntary cutback of work hours, loss of ONE of the parent’s jobs, uninsured medical expenses, for example), their property taxes (incl MR), homeowner’s insurance premiums and HOA dues are the first to go delinquent even the absence of an exploding mortgage reset. I’ve seen this phenomenon time and time again on new construction tracts purchased btween 2004 and 2006, where impounds were not common because a PM 2nd TD holder put up the 20% downpayment for the buyers.
This is Joe6P and his family we are talking about here. The “wealthy” aren’t attracted to stucco boxes situated 6-8 feet from one another out in lizardland, and, in any case, can send their kids to private schools of their choosing.
The news commentator in the link you provided has it right. The title to her investigative series is “Mello-Roos, the Tax You Choose.” I’ve been saying here all along that MR is the “tax you choose” given all other housing choices we have in this huge county. The law allows the bond repayment managers of the CFD’s to stretch out the repayment period if it is just repaying the same amount of principal but possibly initially had variable interest rates or I/O terms and they now seek to begin paying on the principal or pay more on the principal, whether or not they refied the loans or are able to refi them.
ER, the reason the bulk of the affected homeowners don’t care if the bonds will be paid off in 20, 30, 35 or 40+ years is because they have no intention of owning the property anywhere near that long, so will just pass along whatever duration of the payments left to their buyer. The buyers and new owners who have intentions of owning the longest are those who have two or more children close in age who are just starting public school or about to. If their kids are currently 0, 2, 4 and 5, then the longest they would have to stay to get all their kids through the public school system would be about 18 years. A LOT of families buy into these tracts when their kids are already enrolled in school and thus, would only need to own for 10 years or less to get their kids through school. After the kids are done with school, there is no reason whatsoever to continue to pay exorbitant MR, such as in that Del Sur tract which was the original subject of the news investigation.
The VAST majority of buyers signing up for MR, especially MR over $100 per month, are those with children who will attend the newer schools that the MR was used to build. All other subsets of buyers have no “need” to throw all that money (in MR) every month down the drain. I find it sad that so many homebuyers today feel they have to pay hundreds of dollars per month over and above their property tax bills just for the privilege of their children attending a PUBLIC school. It’s akin to extortion in my book … but then you have all these “willing participants” who “choose” to pay it in light of all the available alternatives :=0
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