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Does Stanford need or deserve a $37 million dollar property tax reduction?

Original post made by morris brown, Menlo Park: Park Forest, on Sep 30, 2014

(Also appearing in the print edition of the Almanac just out (Oct 1st, 2014)

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Does Stanford need or deserve a $37 million dollar property tax reduction?

It does not seem to be widely understood, but the 8.4 acres of land along El Camino that Stanford owns and which is part of the Specific Plan, were under 50 year long term leases to auto dealerships and have never been reassessed since Prop 13 came into effect.

The net result is these properties have a very low assessed valuation. The current assessed value for these properties is about $260,000 per acre. The land at 1300 El Camino recently purchased by Greenheart and thus reassessed, has a value of $7.5 million per acre.

From these numbers is easy to do a comparison of the property taxes generated by current valuation vs. the taxes if the properties were reassessed to current value.

For the current year Stanford would have to pay about $610,000 more in property taxes. Over a twenty year period, the total difference would be about $15,000,000. Over a 40 year period, the difference would be about $37,000,000.

Reassessment of parcels was certainly brought up during the Bohannon Gateway project. It could be achieved by having proposed projects subject to a development agreement, which would enforce a reevaluation of the parcels.

The Specific Plan, developed with a consultant who at the same time worked for Stanford does not contain such a mandate. It should have been included.

This represents a large amount of lost property taxes that would help fund the City and other districts, in particular the School Districts. Yet where is the outcry that Stanford will be allowed under the current plan to evade fair property taxes, yet enjoy the huge up-zoning in density that the Specific Plan permits.

Morris Brown
Stone Pine Lane
Menlo Park

Comments (9)

Posted by Menlo Voter
a resident of Menlo Park: other
on Sep 30, 2014 at 12:23 pm

Menlo Voter is a registered user.

Morris:

I'm sure you well know it doesn't require a mandate. As soon as Stanford develops those properties the tax base will be increased and the property tax collected will go up. that is, unless, you and savemenlo have their way and get measure M passed. Then who knows? They'll either develop each parcel separately to avoid the 100,000 sf triggers. Then we'll see increased property tax. If they decide it's not worth it the property continues to sit idle and the tax base doesn't increase. That's just another unintended consequence of measure M. Oh well. [Portion removed. Please discuss the topic without negative characterizations of those you disagree with.]


Posted by retired teacher
a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Sep 30, 2014 at 3:14 pm

Menlo Voter...
Measure M puts a total limit on commercial office development of 240,820 square feet within the DSP boundary. It also limits total non-residential development within the DSP boundary of 474,000 square feet. These development limits are taken directly from the 30 year build-out scenario in the Plan's Environmental Impact Report.

I don't understand how Stanford can "develop each parcel separately to avoid the 100,000 sf triggers". Can you explain?

Mr. Brown...is Menlo Voter correct that when Stanford develops their El Camino property it will be reassessed or will they get/continue to get the corporate benefits of Prop 13?


Posted by morris brown
a resident of Menlo Park: Park Forest
on Sep 30, 2014 at 4:41 pm

Menlo Voter:

You write:

"I'm sure you well know it doesn't require a mandate. As soon as Stanford develops those properties the tax base will be increased and the property tax collected will go up. that is, unless, you and savemenlo have their way and get measure M passed."

Menlo Voter: As so much of the writings you post here, you are dead wrong here.

Only the improvements (buildings, etc) will be reassessed upon being re-developed. The value of the land will stay the same, only escalating at a maximum of 2% per year.

If you still don't believe me, I suggest you contact the planning department of Menlo Park to confirm my posting.

retired teacher:

I hope the above reply to Menlo Voters, answers your query. Property is assessed on both land value and improvements. Upon redevelopment only the improvements are reassessed. The land value stays the same.

In the case of the Stanford parcels, the Prop 13 protected land value is extremely low, at $260,000 per acre. Current value of this land is $7.5 million per acre.

Development of the Stanford parcel will not result in a reassessment of the land to present value under the present mandates in the Specific Plan.

I hope this is clear --- thanks for you question.




Posted by Menlo Voter
a resident of Menlo Park: other
on Sep 30, 2014 at 5:04 pm

Morris:

what will the annual property tax be on $500 million in improvements. yes the land doesn't get reassessed, but $500 million in improvements sure brings a lot of property taxes. Doesn't it? Of course we could see NONE of it if you and your savemenlo buddies get measure m passed and Stanford chooses to sit on their land. No tax increase. Brilliant! You guys are just brilliant.


Posted by Menlo Voter
a resident of Menlo Park: other
on Sep 30, 2014 at 5:14 pm

retired teacher:

as usual Mr Brown ignores the substance of your question. The DSP requires review of projects of 100,000 sf or more. Stanford has five separate parcels. Their current proposal is to combine those parcels and build the project that they have submitted and which the council subcommittee negotiated with them over. That negotiation brought the elimination of medical offices as well as a number of other things. Medical offices are allowed under the DSP, but they are high traffic generators.

If measure M passes that negotiation goes out the window. Stanford can build anything allowed by the DSP on their parcels, including medical offices. Stanford will likely develop each parcel separately which will create 5 separate entrances as opposed to the single entrance with the current Stanford proposal. That's really bad for traffic.

On the other hand, Stanford could decide not to develop their property at all. There in lies the loss of property taxes on $500 million of improvements. Seems like an awful lot of taxes to pass on doesn't it?

These are just a couple of unintended land mines built into measure m. there are many more.


Posted by Menlo Snark
a resident of Menlo Park: Central Menlo Park
on Sep 30, 2014 at 8:18 pm

Morris, what on earth is your point? Like it or not, Prop 13 is the law, so how could Menlo Park circumvent it? Even if you think commerical properties should be reassessed to market rate regardless of sale, that couldn't be approved without a vote of the people who originally voted to approve Prop 13!! That actually completely validates the Anti-M warnings about how **voter control** can result in UNINTENDED CONSEQUENCES and FUTURE COSTS. Do you even think about things before you write them?


Posted by Menlo Snark
a resident of Menlo Park: Central Menlo Park
on Sep 30, 2014 at 8:28 pm

You know what, better yet-- let's play Morris's opinion out FOR MORRIS HIMSELF. Since Morris kindly notes his name and street in this letter, google "morris brown stone pine lane". Do public records reveal his specific address? OK, if so take that to the county assessor:

Web Link

Note that property's assessed value. Got it? OK, now go to Zillow:

Web Link

Punch in the same address and get Zillow's market rate estimate. Are they the same? Or is Morris getting a $1.4 MILLION subsidy? Morris, will you lead by example and have your home voluntarily brought up to market rate?!


Posted by morris brown
a resident of Menlo Park: Park Forest
on Sep 30, 2014 at 8:46 pm

Menlo Snark:

You really don't understand dealing with developers. Prop 13 is indeed the law, but there is absolutely nothing that requires any need for a vote of the people to have the land as well as improvements reassessed when a parcel is redeveloped.

I thought my article was quite clear. What should be included in the Specific Plan is a provision that all projects could be subjected to a Development agreement. The Development agreement, a contract between the City and a developer (property owner), would include the provision that the land as well as improvements would be subjected to reassessment upon completion of the project.

Development agreements are quite common in many cities and have been also used here in Menlo Park. A recent example is the Bohannon Gateway project.

I hope this will clear up you miss-understanding.

Again, there are those who don't trust what I write. To those of you, contact the MP planning department and ask them if what I write is not indeed the truth.


Posted by retired teacher
a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Oct 1, 2014 at 7:00 am

Thank you Mr. Brown for answering my question.


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