Within the city of San Francisco, rent control is a staunch disincentive for
property owners to rent out their apartments or to invest in the
construction of new ones.
Rent, perhaps. But the rest is pure idiocy.
Rent control does not apply to post-1979 construction. And anybody who knows anything about sf rental laws knows that. And rent control laws don't inhibit construction of buildings to which they don't apply.
Jane Kim, currently the leading candidate for State Senate for San Francisco's district, says "There is no doubt we need wholesale reform of Costa-Hawkins", the law restricting rent control:
The "in theory" part is the assumption that laws will stay as they are. The "in practice" is that Bay Area development regulations are a one-way ratchet, where more and more restrictions and costs are imposed over time. First something is proposed; then the government starts offering incentives for it; then it becomes mandatory; then it becomes stricter and stricter.
Eg., take subsidized housing units ("inclusionary housing"). At first, the state offered an incentive to build them, through the state density bonus law. Then San Francisco made 15% subsidized units mandatory in 2002. Then it went up to 25% earlier this year. And now you can't even get the state density bonus, because San Francisco will just pretend it doesn't exist, and dare you to sue them if you bring it up.
And all you do is put up with having those "affordable" units for a couple years, then you wander in one day and tell the tenants you'll evict anyone who doesn't sign a piece of paper to convert their apartment to a condo with an 8000% monthly increase to keep living there.
The Terrible, Horrible, No-Good Very-Bad Socialist Soviet Liberal Big Government Regulations Nanny State Market-Hater's Utopian People's Republic of San Francisco basically only exists in comments like yours.
Or should I say: in theory you're right, but in practice you're not.
Um, hi. I have tone feedback on your comment, if you want it. I am of course some internet stranger to you, with the unimportance that carries; this is just a request, not an insult or a demand or anything like that.
I found your comment more unpleasant to read than the non-sarcastic form would have been. I think that sarcasm often obscures meaning in a way that makes conversation less productive, and I think that happened in this case. It seems you weren't attacking the principle I proposed; rather, you were questioning whether it applies to San Francisco (specifically: whether the probability is non-trivial). Without sarcasm, it would have been easier to state that directly. You could have made explicit that you think the 37-year history of no new rent control is better outside-view evidence that it won't happen than the inside-view evidence that the earlier commenter brought up: https://ww2.kqed.org/news/2015/12/15/aaron-peskin-proposes-e...
If that's what you meant, we'd be talking about that. As the article says, "Peskin, who was sworn in as a supervisor last week, says he will ask the City Attorney’s Office to study an idea he thinks will get around the state ban on extending rent control. He wants to explore the possibility of imposing controls on new developments". If there's an interesting conversation to be had about whether Peskin's proposal is impossible considering the history, we could be talking about that, but the sarcastic form of argument doesn't naturally lead to that.
So I request that if we interact again, please refrain from initiating sarcasm and other forms of hostility. (Again, this is just a request; you are of course free to say whatever you want.)
Well, to put it simply: politicians "propose" and "study" and "ask to consider" things all the time. The fact that a politician has done such a thing should probably not significantly impact one's estimate of the probability of the thing proposed/studied/considered actually happening.
Instead you simply presented it as a "non-trivial probability", presumably self-evidently, and then proceeded to lecture someone who made a similarly short and unsupported reply to you. I would encourage you to stop doing those things.
That was just one sentence among many examples of how regulation of the rental market causes problems. And even if only a part of the property base is under rent control, it is a part of the market, and has impact on the whole of the market. Moreover, attempts to increase the scope of rent control are also a risk for potential developers and thus decrease the incentive for construction.
However, outside the usual Assar Lindbeck quote, I wouldn't believe that rent control is the biggest thing in SF area - regulation of construction, the difficulty to get zoning and permits, is the biggest problem. I don't live there but in Europe, but we suffer from the same problems: politicians are unwilling to acknowledge the existence of market forces, [edit]
or they imagine and pretend that they can control those forces merely with a because-we-say-so, so they speak of rent control, but the real solution is to allow more construction.
I tend to agree. It doesn't look like a rent control issue to me. I live on the Peninsula where there is no rent control, and rents are skyrocketing just as much as in the City.
Instead it seems to me like there are just too many mechanisms (zoning, environmental review, etc.) whereby homeowners and incumbent landlords can act on their (eminently logical, but self-serving) concerns that 'cheap housing will destroy my property value' and prevent housing from being built, or limit the density of new development.
Something I am surprised not to see discussed more often is the effect on the market of "affordable housing" which in the political lingo refers specifically to means-tested below-market-rate housing. By splitting the housing market into market-rate and below-market pools it actually props up prices of the former and seems like it may (I haven't seen any good analyses on this to be honest) prevent new construction from having as strong of a restraining effect on rents overall as it otherwise might.
That's because the article is pretty much boilerplate. It's the same hackneyed arguments that's always trotted out with no attempt to actually analyze the very real problems in San Francisco and the surrounding area.
Cases in point: The author blames two classic boogeymen: control and tenant protection laws. As you pointed out, rent control simply doesn't apply here. As far as tenant protection laws scaring off landlords, even that doesn't hold up to even the most cursory analysis. As the meme says, "The Rent is too damn high." If landlords were really holding apartments vacant at sizable rate, the rents would increase even higher and The Market(tm) would simply bring the vacant apartments online because the expected value of the apartment would simply be too great to ignore. Finally, if you follow the link that says "thousands of units are simply being kept off the market", you find out that the unit in question is actually rented to family instead of perfect strangers. Which is to say, the unit isn't vacant.
"That's because the article is pretty much boilerplate."
That's Reason magazine.
SF has had two housing crashes in the last 30 years. This discourages building large numbers of apartments. There's a tall apartment building near Twitter HQ which was vacant for over a decade. It takes a long time to pay off an apartment building. The boom may not last. Check out the Pink Slip Parties of 2001, when it collapsed last time.[http://www.sfgirl.com/gallery_pink/pinkslip4/ps4.html].
It will all start tumbling down when Twitter goes under. Their stock has gone from 70 to 18 in the last year and a half, and they're not profitable. Figure that anything that's large and not profitable at this stage in the cycle is headed for trouble.
San Francisco real estate famously did not crash in in 2001 nor in 2009. Prices remained steady and started increasing rapidly again within a year or two.
The behaviour of the politicians is not a baffling as the Reason authors make it seem. Money-making industries can be troublesome for their locales.
When I lived in London I thought it was a great city but felt there was "too much money" in it. I.e. finance people could drive up prices for the rest of us. But then again, it was that very money that made the place great.
So while zero-sum leftism is silly, it is still in the interest of San Fransicans to try and grab some of the IT bonanza through taxes. A vindictive one-indsutry only tax is ugly, but property-value taxes would get right to the heart of the problem.
It's in there interests of the people who bought housing under the current regime to block new supply. Otherwise, when prices come back to reasonable, they lose a gigantic amount of home equity.
It's in the interest of anyone who lives in the city, doesn't work in tech, and doesn't make enough money to compete with those who do. That covers most renters.
Tech workers have this Napoleon complex going on where they react as if they're still in the high school cafeteria, being pushed around by the folks at the top of the social hierarchy. Times have changed.
It isn't "NIMBYs" or politicians or rich landowners or anyone else who caused the SF housing crisis: it is, quite objectively, the fault of way too many wealthy workers, crammed into a tiny space, in a few years' time. There's an easy demand-side fix for that problem, but yeah, it isn't going to please people who work in tech.
These high prices are definitely not in tech’s interest.
The way I see it, tech is the only way I can live here independently. Lucky that my brothers and I have the inclination for it. But even we have difficulty finding housing in this market. We look around, and it is the entrenched interests, the old money, that are holding us back, preventing new housing from being built. Despite appearances, techies are actually a small minority, especially in the voting population, and that’s how we still get pushed around.
The market problem is that housing and transit have been growing very slowly, nowhere near what is needed, and not matching the growth in jobs and office space. The problem goes back decades, really taking off when Howard Jarvis passed Proposition 13, followed by Mayor, now Senator, Feinstein passing the rent control ordinance. The problems continue, as every significant housing development requires endless studies and community input before it gets built; in the meanwhile the market has risen again.
When I was growing up, San Francisco was actually very anti-tech. Startups were always fleeing to the Valley when they became successful. Still, housing prices were high and rising; housing was ridiculously difficult to build. I remember the case of somebody buying an empty lot, just a normal-house-size rectangle in a normal-size block. It took many years of studies and litigation and multiple architectural plans before it could get built, and I don’t know if the owner ever succeeded. It’s hard to find the article again when the Google results are packed full of plenty of other, bigger, projects that are facing unfair difficulties.
Likewise, there’s now a lovely new library building at North Beach, but Aaron Peskin (one of the politicians implicated in the Reason piece) used eminent domain to prevent that land from being turned into affordable housing, with the excuse that it should be a park. It lay fallow until he was term-limited out of the way and later supervisors at least built a library there. And then the old North Beach library is still sitting there, retroactively declared to be a historic landmark, so that is a suboptimal use of space.
Tech only sped up an existing, broken process. If even the Huffington Post is posting about the multi-decade housing problem, then maybe, just maybe, it’s not the techies’ fault.
I believe Prop 13 forbids the property-value taxes you are suggesting. This is the main reason why cities are not incentivized to build housing. The rather build office buildings, malls, etc. There is just more money in it.
I don't know anything about Californian law except what I read in comment threads on the interweb. But I have heard that Prop 13 capped the absolute amount paid.
So a new home or a new resident in an old one could pay a tax proportional to the high land value when the transaction happened. Wouldn't that create an incentive to encourage such transactions?
Prior to Proposition 13, the property tax rate throughout California averaged a little
less than 3% of market value. Additionally, there were no limits on increases for
the tax rate or on individual ad valorem charges. (“Ad valorem” refers to taxes
based on the assessed value of property. ) Some properties were reassessed 50%
to 100% in just one year and their owners’ property tax bills increased accordingly.
Proposition 13 Tax Reform
Under Proposition 13 tax reform, property tax value was rolled back and frozen at the
1976 assessed value level. Property tax increases on any given property were limited
to no more than 2% per year as long as the property was not sold. Once sold, the
property was reassessed at 1% of the sale price, and the 2% yearly cap became
applicable to future years. This allowed property owners to finally be able to estimate
the amount of future property taxes, and determine the maximum amount taxes could
increase as long as he or she owned the property.
Exactly. I don't think you can talk about rent control in California without acknowledging property tax control. In the long term, this reduces landlords' expenses, which is a savings they ought to be able to pass on to their renters.
If they had renters, they could pass those savings on. The article discusses how landlords are keeping units empty because it has become too risky/expensive to rent them.
When the law has become so restrictive that people would rather not engage in commerce at all, then it is broken. This isn't helping anybody.
London also has another problem, non-domiciled residents who only have to pay a flat fee income tax on global income and a non-existent property tax scheme. The combo leads to an explosion of real estate as bank account and very wealthy people moving into the key city of London, making it impossible for even the upper middle class salaried briton to buy property.
You might as well call the entire UK rainy Monaco.
On top of that, the finance types have been there for quite a while, but it's only in the recent few decades that have made london extra crazy.
Other regions of the USA have had economic booms, but it hasn't ended up with hyper growth in property prices because they have less supply restrictions in development.
Property-value taxes discourage people from building anything valuable on land and instead encourages them to hoard it hoping the value will go up, or to sprawl development outwards. Land-value taxes (tax on the unimproved value of the land, ignoring whatever's built on it) help to capture the ground rent -- the value that's gone up because of what everyone around it is doing (ie, the positive externalities generated by the community rather than the landowner) -- without discouraging the land owner from building densely on it, which is precisely what we should be encouraging people to do if we want to solve the housing crisis.
As a technical matter. Once a property is built on, how do you distinguish between land value and the building value-add without some arbitrary valuation?
my opinion is that valuation is always subjective, but there's a whole industry and a whole field of economics dedicated to answering that question.
conceptually, land value is just market price of the property minus building cost. building cost is a little more objective to estimate than market price but it's not an exact science either (i formerly product managed the cost estimator used by most US taxing jurisdictions and many international ones).
Is it so strange that perhaps maybe the volatile tech industry that has had a spectacular crash before may have another one in the near future? And if so, wouldn't it be better that the tech industry not completely fuel the Bay Area economy and create a potential oversupply of housing at the same time? Would it not make more sense to tax this anomalous sector to keep things more balanced (i.e. disincentivize further growth) before the area ends up in a potentially similar situation as Detroit?
I don't live in the Bay Area, so I'm observing this from the outside. And I don't know much about the Bay Area economy either, so these aren't rhetorical questions, nor necessarily informed ones. But to me, the actions of these politicians, regardless of motivation, on the surface kind of seem rational in a long-term hedging-our-economy kind of way.
New York City's financial industry went through a devestating crash in 1929. Fifteen years later, would you have believed it better for the city to not become the world capital of finance?
> Five years after the boom, it's time for San Francisco to ask the tech companies to pay their fair share.
I read a comment like this and I ask what the heck I'm paying taxes for? I'm getting ripped in both state and federal taxes. If the cities aren't getting their fair share of the money then they should take it up with he state, because somebody is sure getting paid!
It's infuriating. Higher salaries = higher taxes. Tech is already paying more than its fair share of taxes. These same politicians are trying to blame tech success as the sole cause of high housing costs, ignoring their own failures to deal with poor regional transportation and the regulatory impossibility of building enough housing.
This seems like a wildly outdated article. I haven't heard anything off late on the bus situation and I believe the tide is turning when it comes to housing. There are still some clueless opposition like the Aron Peskin and the Palo Alto mayor, but a consensus is rapidly developing that more housing is needed. Also, other than SF, most cities in Peninsula and East Bay go out of the way to court tech. Look at Mt. View granting land to LinkedIn or Fremont creating Warm Springs corridor.
They could also build a larger road for the most popular commuter route. Or even some form of public transport that's good enough for people to want to use. I realise that the idea of spending tax funds on improving infrastructure is considered radical in California, but I feel that it has some weight of historical evidence behind it.
"The Reason Foundation is an American libertarian research organization[3] founded in 1978"
No wonder the whole article reads like a political campaign from the insanity party.
The whole article spouts rhetoric against a trivial level tax yet waits until the penultimate paragraph to tell us it doesn't even exist. So just an excuse to spout politics, and poorly at that.
As someone that is soon moving to san francisco for a job, can someone explain to me why tech jobs are still located there? are tech workers really resistant to moving out of that horrible city and state? I will take a 10% reduction in salary to live in Miami, Atlanta or New York over San Francisco. All of those are cities with actual vibrant culture and the rent is actually lower.
The single unique thing about California, and therefore SF/Silicon Valley/the Bay area is that by long standing public policy, non-competes are unenforceable for employees like you, making it a very liquid market for talent.
This Wikipedia item is on the front page right now: https://news.ycombinator.com/item?id=12372315 i.e. the "traitorous eight" (https://en.wikipedia.org/wiki/Traitorous_eight ); we wouldn't even be here discussing all this if Shockley had been able to keep his dissatisfied employees from working in the brand new field of semiconductors when they could no longer stand working for him, ditto when they left Fairchild Semiconductor to e.g. start Intel, which besides the microprocessors was the first company to commercially sell DRAMs.
On the other hand, Texas Instruments managed to be a leader in all of the early stages of all this while based in Texas, even created the standard TTL logic family used by just about everyone to make computers until microprocessors became capable enough. And in several stages Motorola was competitive without as far as I know having a significant Silicon Valley base.
Along with what others suggested, there's also the amazing weather, liberal culture, exciting food scene, and close proximity to lots of great outdoor activities like skiing in Tahoe, wine country, etc.
Moved here from Chicago and I am so done with winter, even with the reduced spending power from the higher cost of living.
I hate to say anything positive about DC, but here we go. DC has grown significantly faster than San Francisco since 2000. And because it's relatively low regulation, that growth has been relatively painless. There is a ton of construction everywhere: 12-14 story buildings popping up left and right.
I cant say much about SF, since I'm rarely there, but in the South Bay there has been a ton of construction going on. Near where I live in Sunnyvale, there has been a dramatic amount within the past few years. 1 and 2 story buildings have been getting replaced with 4 or 5 story ones, and much of construction is near the rail corridor, major highways, or El Camino (a major non highway road).
Not all of the Bay Area is stuck with regressive development regulation. Caltrain electrification (supposed to be completed in 2020, which is probably realistic now that funding is finally in place), BART expansion (ongoing, not sure final completion date), and other various transportation improvements like bus rapid transit will all also help improve the region.
This article leaves out the people, and that makes it a weak rote-Libertarian rant. Very disappointing.
The politicians wouldn’t have power without local support. In San Francisco, the power is centered in individual neighborhoods. Especially when you take into account campaign contributions, community organizations, and voter turnout.
The article mentions Campos, Mar, and Peskin, all representatives of majority old, rich, white neighborhoods. When David Chiu left to go to the California Assembly and Ed Lee appointed the business-tolerant Julie Christensen in his place, Peskin managed to out-spend and out-organize her and returned to the Board of Supervisors.
On the other hand, Supervisor Tang represents a district with a lot of Asian families who are discovering that without new housing nearby, their grown children have to stay at home indefinitely or move far away. I’m not sure what motivates Scott Wiener; I don’t interact with his district much. So, there is diversity among the politicians, but the majority are propped up by narrow-minded local interests.
62 comments
[ 4.1 ms ] story [ 128 ms ] threadRent control does not apply to post-1979 construction. And anybody who knows anything about sf rental laws knows that. And rent control laws don't inhibit construction of buildings to which they don't apply.
https://ww2.kqed.org/news/2015/12/15/aaron-peskin-proposes-e...
http://www.beyondchron.org/will-peskins-rent-control-expansi...
Jane Kim, currently the leading candidate for State Senate for San Francisco's district, says "There is no doubt we need wholesale reform of Costa-Hawkins", the law restricting rent control:
http://janekim.org/2016/07/13/compassion-clause-costa-hawkin...
The fact that some politicians have talked about proposing changes to the current status does not change the current actually-true situation.
Eg., take subsidized housing units ("inclusionary housing"). At first, the state offered an incentive to build them, through the state density bonus law. Then San Francisco made 15% subsidized units mandatory in 2002. Then it went up to 25% earlier this year. And now you can't even get the state density bonus, because San Francisco will just pretend it doesn't exist, and dare you to sue them if you bring it up.
And all you do is put up with having those "affordable" units for a couple years, then you wander in one day and tell the tenants you'll evict anyone who doesn't sign a piece of paper to convert their apartment to a condo with an 8000% monthly increase to keep living there.
The Terrible, Horrible, No-Good Very-Bad Socialist Soviet Liberal Big Government Regulations Nanny State Market-Hater's Utopian People's Republic of San Francisco basically only exists in comments like yours.
Or should I say: in theory you're right, but in practice you're not.
The mere fact that it hasn't happened in, say, 37 years is unrelated.
I found your comment more unpleasant to read than the non-sarcastic form would have been. I think that sarcasm often obscures meaning in a way that makes conversation less productive, and I think that happened in this case. It seems you weren't attacking the principle I proposed; rather, you were questioning whether it applies to San Francisco (specifically: whether the probability is non-trivial). Without sarcasm, it would have been easier to state that directly. You could have made explicit that you think the 37-year history of no new rent control is better outside-view evidence that it won't happen than the inside-view evidence that the earlier commenter brought up: https://ww2.kqed.org/news/2015/12/15/aaron-peskin-proposes-e...
If that's what you meant, we'd be talking about that. As the article says, "Peskin, who was sworn in as a supervisor last week, says he will ask the City Attorney’s Office to study an idea he thinks will get around the state ban on extending rent control. He wants to explore the possibility of imposing controls on new developments". If there's an interesting conversation to be had about whether Peskin's proposal is impossible considering the history, we could be talking about that, but the sarcastic form of argument doesn't naturally lead to that.
So I request that if we interact again, please refrain from initiating sarcasm and other forms of hostility. (Again, this is just a request; you are of course free to say whatever you want.)
Instead you simply presented it as a "non-trivial probability", presumably self-evidently, and then proceeded to lecture someone who made a similarly short and unsupported reply to you. I would encourage you to stop doing those things.
However, outside the usual Assar Lindbeck quote, I wouldn't believe that rent control is the biggest thing in SF area - regulation of construction, the difficulty to get zoning and permits, is the biggest problem. I don't live there but in Europe, but we suffer from the same problems: politicians are unwilling to acknowledge the existence of market forces, [edit] or they imagine and pretend that they can control those forces merely with a because-we-say-so, so they speak of rent control, but the real solution is to allow more construction.
Instead it seems to me like there are just too many mechanisms (zoning, environmental review, etc.) whereby homeowners and incumbent landlords can act on their (eminently logical, but self-serving) concerns that 'cheap housing will destroy my property value' and prevent housing from being built, or limit the density of new development.
Something I am surprised not to see discussed more often is the effect on the market of "affordable housing" which in the political lingo refers specifically to means-tested below-market-rate housing. By splitting the housing market into market-rate and below-market pools it actually props up prices of the former and seems like it may (I haven't seen any good analyses on this to be honest) prevent new construction from having as strong of a restraining effect on rents overall as it otherwise might.
Cases in point: The author blames two classic boogeymen: control and tenant protection laws. As you pointed out, rent control simply doesn't apply here. As far as tenant protection laws scaring off landlords, even that doesn't hold up to even the most cursory analysis. As the meme says, "The Rent is too damn high." If landlords were really holding apartments vacant at sizable rate, the rents would increase even higher and The Market(tm) would simply bring the vacant apartments online because the expected value of the apartment would simply be too great to ignore. Finally, if you follow the link that says "thousands of units are simply being kept off the market", you find out that the unit in question is actually rented to family instead of perfect strangers. Which is to say, the unit isn't vacant.
That's Reason magazine.
SF has had two housing crashes in the last 30 years. This discourages building large numbers of apartments. There's a tall apartment building near Twitter HQ which was vacant for over a decade. It takes a long time to pay off an apartment building. The boom may not last. Check out the Pink Slip Parties of 2001, when it collapsed last time.[http://www.sfgirl.com/gallery_pink/pinkslip4/ps4.html].
It will all start tumbling down when Twitter goes under. Their stock has gone from 70 to 18 in the last year and a half, and they're not profitable. Figure that anything that's large and not profitable at this stage in the cycle is headed for trouble.
When I lived in London I thought it was a great city but felt there was "too much money" in it. I.e. finance people could drive up prices for the rest of us. But then again, it was that very money that made the place great.
So while zero-sum leftism is silly, it is still in the interest of San Fransicans to try and grab some of the IT bonanza through taxes. A vindictive one-indsutry only tax is ugly, but property-value taxes would get right to the heart of the problem.
that's the nice thing about the "law" of supply and demand: there are two ways to promote balance.
Tech workers have this Napoleon complex going on where they react as if they're still in the high school cafeteria, being pushed around by the folks at the top of the social hierarchy. Times have changed.
It isn't "NIMBYs" or politicians or rich landowners or anyone else who caused the SF housing crisis: it is, quite objectively, the fault of way too many wealthy workers, crammed into a tiny space, in a few years' time. There's an easy demand-side fix for that problem, but yeah, it isn't going to please people who work in tech.
The way I see it, tech is the only way I can live here independently. Lucky that my brothers and I have the inclination for it. But even we have difficulty finding housing in this market. We look around, and it is the entrenched interests, the old money, that are holding us back, preventing new housing from being built. Despite appearances, techies are actually a small minority, especially in the voting population, and that’s how we still get pushed around.
The market problem is that housing and transit have been growing very slowly, nowhere near what is needed, and not matching the growth in jobs and office space. The problem goes back decades, really taking off when Howard Jarvis passed Proposition 13, followed by Mayor, now Senator, Feinstein passing the rent control ordinance. The problems continue, as every significant housing development requires endless studies and community input before it gets built; in the meanwhile the market has risen again.
When I was growing up, San Francisco was actually very anti-tech. Startups were always fleeing to the Valley when they became successful. Still, housing prices were high and rising; housing was ridiculously difficult to build. I remember the case of somebody buying an empty lot, just a normal-house-size rectangle in a normal-size block. It took many years of studies and litigation and multiple architectural plans before it could get built, and I don’t know if the owner ever succeeded. It’s hard to find the article again when the Google results are packed full of plenty of other, bigger, projects that are facing unfair difficulties.
Likewise, there’s now a lovely new library building at North Beach, but Aaron Peskin (one of the politicians implicated in the Reason piece) used eminent domain to prevent that land from being turned into affordable housing, with the excuse that it should be a park. It lay fallow until he was term-limited out of the way and later supervisors at least built a library there. And then the old North Beach library is still sitting there, retroactively declared to be a historic landmark, so that is a suboptimal use of space.
Tech only sped up an existing, broken process. If even the Huffington Post is posting about the multi-decade housing problem, then maybe, just maybe, it’s not the techies’ fault.
http://www.huffingtonpost.com/entry/san-francisco-housing-cr...
So a new home or a new resident in an old one could pay a tax proportional to the high land value when the transaction happened. Wouldn't that create an incentive to encourage such transactions?
Prior to Proposition 13, the property tax rate throughout California averaged a little less than 3% of market value. Additionally, there were no limits on increases for the tax rate or on individual ad valorem charges. (“Ad valorem” refers to taxes based on the assessed value of property. ) Some properties were reassessed 50% to 100% in just one year and their owners’ property tax bills increased accordingly.
Proposition 13 Tax Reform
Under Proposition 13 tax reform, property tax value was rolled back and frozen at the 1976 assessed value level. Property tax increases on any given property were limited to no more than 2% per year as long as the property was not sold. Once sold, the property was reassessed at 1% of the sale price, and the 2% yearly cap became applicable to future years. This allowed property owners to finally be able to estimate the amount of future property taxes, and determine the maximum amount taxes could increase as long as he or she owned the property.
When the law has become so restrictive that people would rather not engage in commerce at all, then it is broken. This isn't helping anybody.
You might as well call the entire UK rainy Monaco.
On top of that, the finance types have been there for quite a while, but it's only in the recent few decades that have made london extra crazy.
Other regions of the USA have had economic booms, but it hasn't ended up with hyper growth in property prices because they have less supply restrictions in development.
And we know the lack of property tax rule is real.
As a technical matter. Once a property is built on, how do you distinguish between land value and the building value-add without some arbitrary valuation?
Otherwise it's pretty much whatever number the tax man decides. Note that in many jurisdictions property tax values are only assessed periodically.
conceptually, land value is just market price of the property minus building cost. building cost is a little more objective to estimate than market price but it's not an exact science either (i formerly product managed the cost estimator used by most US taxing jurisdictions and many international ones).
I don't live in the Bay Area, so I'm observing this from the outside. And I don't know much about the Bay Area economy either, so these aren't rhetorical questions, nor necessarily informed ones. But to me, the actions of these politicians, regardless of motivation, on the surface kind of seem rational in a long-term hedging-our-economy kind of way.
I read a comment like this and I ask what the heck I'm paying taxes for? I'm getting ripped in both state and federal taxes. If the cities aren't getting their fair share of the money then they should take it up with he state, because somebody is sure getting paid!
San Francisco Housing Action Coalition http://www.sfhac.org/
San Francisco Planning and Urban Research Association http://www.spur.org
And there are smaller efforts such as:
GrowSF http://www.growsanfrancisco.org
SF Bay Area Renters’ Federation http://www.sfbarf.org
No wonder the whole article reads like a political campaign from the insanity party.
The whole article spouts rhetoric against a trivial level tax yet waits until the penultimate paragraph to tell us it doesn't even exist. So just an excuse to spout politics, and poorly at that.
This Wikipedia item is on the front page right now: https://news.ycombinator.com/item?id=12372315 i.e. the "traitorous eight" (https://en.wikipedia.org/wiki/Traitorous_eight ); we wouldn't even be here discussing all this if Shockley had been able to keep his dissatisfied employees from working in the brand new field of semiconductors when they could no longer stand working for him, ditto when they left Fairchild Semiconductor to e.g. start Intel, which besides the microprocessors was the first company to commercially sell DRAMs.
On the other hand, Texas Instruments managed to be a leader in all of the early stages of all this while based in Texas, even created the standard TTL logic family used by just about everyone to make computers until microprocessors became capable enough. And in several stages Motorola was competitive without as far as I know having a significant Silicon Valley base.
Moved here from Chicago and I am so done with winter, even with the reduced spending power from the higher cost of living.
Not all of the Bay Area is stuck with regressive development regulation. Caltrain electrification (supposed to be completed in 2020, which is probably realistic now that funding is finally in place), BART expansion (ongoing, not sure final completion date), and other various transportation improvements like bus rapid transit will all also help improve the region.
The politicians wouldn’t have power without local support. In San Francisco, the power is centered in individual neighborhoods. Especially when you take into account campaign contributions, community organizations, and voter turnout.
The article mentions Campos, Mar, and Peskin, all representatives of majority old, rich, white neighborhoods. When David Chiu left to go to the California Assembly and Ed Lee appointed the business-tolerant Julie Christensen in his place, Peskin managed to out-spend and out-organize her and returned to the Board of Supervisors.
On the other hand, Supervisor Tang represents a district with a lot of Asian families who are discovering that without new housing nearby, their grown children have to stay at home indefinitely or move far away. I’m not sure what motivates Scott Wiener; I don’t interact with his district much. So, there is diversity among the politicians, but the majority are propped up by narrow-minded local interests.