Tag: prop 13

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An Answer to Prop 13

Many people [including #SFMayor candidates] who haven’t owned a home for more than 10 years are against Proposition 13 that capped property taxes for home owners in California and took money from the schools. There are lots of people who want it repealed either because either they don’t like the the fact that people who have owned homes for a long time don’t have to pay as much taxes as new homeowners or because they’re parents with kids that see them suffering in the school system. I think I’ve come up with an answer and I hope at least one person besides myself will forward this on the our Governor Jerry Brown.

I have a friend who lives in New York and his mother recently died leaving him with a house in upstate New York. It’s not a big house, two bedrooms I believe, but it’s on 12 acres of property. He pays $8000 per year in property taxes and he asked me when we were talking recently how much I paid in school taxes. School taxes? I don’t pay school taxes. He pays $4000 per year in taxes used solely to benefit their schools. This started my mind thinking and as I usually do I started to run the numbers. Here’s the formula if California started collecting taxes for schools and I’m going easy on y’all. I’m rounding down numbers.

California has a population of 38,000,000 people [rounded down]. The median income adjusted for cost of living is $44,000 per year [rounded down]. If California charged every person  a 1/2% tax off the top before everything else was taken out of their paychecks that would give the State of California 7,357,000,00 per year just for the schools [amount adjusted for 12% unemployment]. For those who have trouble reading numbers that is 7.357 billion dollars per year. There are 9324 public schools within California. I’ll let the private schools fend for themselves since they charge parents to send their kids there. If you divide the income by the number of public schools each school would receive $789,000 per year [rounded down]. Think about what the schools could do with that money.

Say I’m Joe SixPack who wants to be able to make $250,000 per year without getting taxed too much. If you were making that much per year how bad would it hurt to lose $24 per week when you’re bringing in $4800 per week [rounded down]? California is the 8th largest economy in the world. Don’t you think we could put into effect a tiny tax that would help our schools immensely? I know I am simplifying the allocation of funds incorrectly as say Los Angeles County has more students than say Bell County, but still, it would better serve our students educational needs.

If you pull Prop 13 it won’t drop prices on homes in California. We’re called the Golden State for a reason. Everyone wants to come here. If anything it might actually raise the property taxes for new home buyers and that new income isn’t guaranteed to go to the schools. It would probably go into more pork barrel politics where the politicians are trying to get the biggest piece of pork out of the barrel [yes that is where the term comes from for you young whippersnappers]. If we had what I call a polite tax to benefit our schools, no one would go hungry for it. Schools wouldn’t have to keep asking parents to purchase supplies and our own state and local governments wouldn’t have to worry about why our great state has schools that are in such need and cannot supply a decent education to our children.

PLEASE! I urge you to think about this and pass this article along to your friends, neighbors and especially politicians. I know I am going to. We might just change the quality of education in our state and step forward to show other states how to do it right. We are the most populous state in the Union so we should be able to convince everyone regardless of part that a polite tax like this would help give California the leading edge in education it needs. Besides, it will also mean that everyone you interact with at the businesses you interact with will be better educated.

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Phil Ting for Mayor: My Thoughts

I have tried to post regularly, but now with a crazy work schedule and creeping overtime I have had to pull back a little. Once I get adjusted and settled in this should change. Now onto the article.

When I first heard that Phil Ting was running for Mayor of San Francisco I decided to keep an eye on him. He was the county assessor, so he knew about real estate, finance and taxes. He started off with a great title for his campaign, Reset San Francisco. I kind of liked that idea. He also talked about Muni reform, score again. It wasn’t until I attended my first Mayoral debate that a few questions started to rise.

He stated that while he has been in office that the city has come in under budget every year. OK, then why is our city in the red? Is someone budgeting more funds than we can afford to pay for? In my mind I don’t care whether or not San Francisco comes in under or over it’s budget, but whether or not San Francisco comes in at the end of the day in the black.

His statement that Muni needs to change is something everyone is talking about. When I worked downtown I didn’t have too much problem with Muni. The buses and streetcars I usually get from my house take me downtown in about 40 minutes without much walking. I have other friends such as Greg Dewar [@njudah] who would beg to differ with me, but he doesn’t use the same Muni route as I do so I won’t argue with him on that. Apparently the N-Judah has lots of problems that need to be fixed since it is the busiest muni route in San Francisco.

Where Phil Ting really got me was on his repeal of Prop 13 so that people of San Francisco would be paying the real property taxes they owe. I took offense at this because the comment was targeted at me, even though not only is everyone in California benefitting from Prop 13 and that it is a state law that a Mayor cannot overturn his comment was aimed at those people who purchased a house before the first dot.com boom and have lived in them ever since. It takes about 10-15 years after purchasing a house to notice a difference in your property taxes. That is, if your home value continues to increase. Currently we’re in a down swing so it might take closer to 30 years now.

Phil used this as the excuse for why we are so low in state school ratings for achievement. I suppose he forgot that when the California State Lottery went into effect that a major portion of the profit was to go towards school funding. It was originally specified that it could not be used for teacher pay raises, but that’s where it went at first because the teachers were so underpaid that not too many people wanted to be teachers.

But let me move back to Proposition 13. Currently the taxes on your house can be raised only 1.1% per year. People are saying that is the reason that San Francisco is one of the most expensive cities to live in. I did a check of  the top 10 most expensive cities in the US to live in and yes, San Francisco was listed as number five, but out of the 10 cities only two were in California and those were San Francisco and Los Angeles [which according to the report is even more expensive to live in that San Francisco], so can Prop 13 be blamed for the failing of our schools and how expensive it is to live in California? No. New York City, Honolulu, and Miami are the top three. All in states without a Prop 13, but much higher taxes. I have a friend who I am sorry to say that his mother died recently and he received his mother’s house in upstate New York along with her rent controlled apartment in downtown Manhattan. The rental property is a deal since his mother has lived there for many years and due to rent control he doesn’t even pay $1000/month for his gorgeous almost penthouse like view of Manhattan. The two bedroom house on the other hand he has to pay $12,000 per year in property tax as well as $4,000 per year in school tax. His parents have owned the house upstate for many years longer than when my parents purchased our house in the Sunset District back in 1954. My friend has also been unemployed for longer than myself and he has to pay $10 for a pack of cigarettes in downtown Manhattan. This is not a cheap place to live and even though they have no equivalent of Prop 13, it is still the most expensive city to live in. Two bedroom condo’s sell for close to $2,000,000 there not including the HOA monthly fees. My friend has about enough cash to last him a year and half and then he’s in big trouble if he can’t find a job.

So let’s say we repeal Prop 13 like Phil Ting wants to do and say property taxes increased to 5% each year with a reassessment to bring homes benefitting more it being brought up to modern day reality. I could possibly live with that even though it would triple my yearly property tax, but from what I understand, if you home goes down in value the tax doesn’t really, it just doesn’t increase. The idea behind prop 13 was to help residents remain in their homes by not having to pay more in taxes as they got older and on a limited income. This was hijacked by businesses who got added in and they don’t want to sell their spaces they own because they can rent them out for more [rental control doesn’t apply to businesses] and gain more on their investment. Since we have a much higher turnover rate in businesses who are renting their locations in California, not just San Francisco this means that business property owners gain more than homeowners.

Therefore, I think Phil should start by speaking more directly about his plans for prop 13 by trying to amend it to include only homeowners and not businesses. That way some of the businesses that were cheap in say the SoMA area when they were purchased that now charge a fortune to rent out would be paying more into funds of the state so that which would trickle down to San Francisco and San Francisco wouldn’t have to tax businesses to be here like most cities in the US. This would help San Francisco more than a total repeal of a state law that an SF Mayor can’t do, but Phil Ting could work toward that. If prop 13 were removed completely people would start to leave San Francisco, but not by a lot so property prices might drop a bit because of the tax increase. It could also theoretically drop California from it’s current ranking as the 8th largest global economy. Phil, keep this in mind.

Monday, I will announce my official endorsement for the Mayor of San Francisco and my reason why.

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Owning a Home in San Francisco

There’s been lots of articles in the paper recently about owning a home being a bad thing. I was always scratching my head about this until I realized I’m one of the few people left that was born and raised in San Francisco and is STILL HERE. Most of the people you’ll find in San Francisco are lucky to have lived here for twenty years at most, so it’s time I gave you a little history lesson about San Francisco real estate.

Now for most people here they don’t remember the time when a house was affordable because they aren’t, well, old like me. I was born in 1962 and my parents had bought their four bedroom house in the Sunset in 1954 for a whopping $18,300. Yes, you saw that right, there isn’t a couple of extra zeros on that number. The builders, McKewan Construction were asking $23,500 and my parents underbid the asking price and got it. The early 50’s was a buyer’s market.

My parents never thought of selling the house and moving on. It was a home to them and you didn’t sell it every couple of years to turn a profit only to move into a bigger home that you’d again turn and sell at a profit a few years later again.

My Grandmother was always the business savvy one in the family and she consulted her lawyer who worked out a deal that because I was living in the house when I turned 18 that I could have my name added on the the title as an owner so that when everyone was gone there would be no inheritance. Smart move and if you have kids you should think about doing this. There’s nothing illegal about it and it gives your kids a pretty priceless place to live in California what with Prop 13 and all that.

Now housing prices rose a bit over the years, but it wasn’t until around the late 80’s that the prices started to soar. In the 70’s you could get the same house for around $50,000. That’s pretty much close to the cost of a Lexus today with add ons and closing costs. Somewhere around the mid 80’s the prices started to skyrocket. When my wife and I got married you could get a two bedroom for around $215,000 out in the Sunset. I know, we were looking into the idea at the time. Our first landlord got a two bedroom house with a 1 bedroom cottage house in 1994 for $205,000. It wasn’t a fixer upper either.

Prices kept going up and right before the dot bomb of 2000 my Mom’s best friend who was in real estate told us we could easily get $1.5 million for this house. Great, we were millionaire, but still trying to struggle to pay the bills. I remember having to write the check for my Mom for the property tax that year and it was $650. We were paying twice that for our two bedroom house we were renting at the time.

My friends from High School, the few that stayed around and ended up in a similar situation to myself are all doing pretty good. I’m happy for them. We had parents that thought ahead. Others can’t fathom this and the fact that the people writing for the Chronicle and Examiner never take this into account shows that they aren’t either. Probably because they weren’t born and raised here. There are lots of people who want to do away with Prop 13 so that the state can get more money from home owners, but I’m not going to stand with that group. I plan on dying in this home, probably not literally, but I want to pass this house on to our daughter when we go.

I used to hate the crotchety old guys who would sit out in front of their houses in a lounge chair watering their lawns talking about why, I remember back when we… fill in the snide comment of your choice. I want to be that guy when I’m in my 70’s. I guess it’s all because I’m a Sunset redneck at heart and I want to be around to remind people about that.

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