| WIKI | FAQ | Tech FAQ | |
 http://csua.com/feed/ | |
| ||||||
| 5/24 |
| 2007/4/23-25 [Reference/Tax, Politics/Domestic/California/Prop] UID:46415 Activity:very high |
4/22 What exactly is the "maler-roos" on new properties? Why is the
property tax rate close to 2% instead of 1%?
\_ A little history on CA tax:
1978: Reaganomics advocates-- "Tax cut is good for everyone! "
Prop 13 of 1978 will cut slacks for existing land &
property owners, allow self-reliance, force government fat
to be cut, and kick start trickle-down economy!
\_ Were you here in CA in 78? Your version of how this
went down has nothing to do with reality.
1979-1981: Uh, we fucked up. We lost so much revenue that we no
longer have money to fund government fat like public parks,
new transits, new bike lanes, and public schools.
\_ New bike lanes? I'll bet they stopped funding linux too!
Schools got as much/kid then as now. It is *how* it is
spent that matters, not the total number. And the *how*
is that it is being pissed away on excess administation
and fake special programs while the bulk of students get
crap education.
\_ reference for school spending, please
\_ CA state budget is higher than ever before. 40% of
budget is mandated to be spent on schools, which was
not true in 1978. Do math.
\_ Your claim was based on $/kid; please provide a
reference. (Extra credit if it's adjusted for
inflation.) -tom
1982: Henry Mello & Mike Roos-- It's ok! We'll double the
cost of property tax for *future* homeowners and since
they're not here to speak for themselves, the Mello-Roos
Community Facilities Act will get passed easily and save
all of our problems!
\_ Because forcing old people on fixed incomes to sell their
homes so they could eat is always a good idea and the
morally right thing to do.
\_ This is, and always has been a red herring. The largest
beneficiary of Prop 13 tax cuts is not old people on
fixed incomes, but corporations. If we really cared
about old people, we could have made Prop 13 apply
only to residences, but that's not what it's about.
Corporations not only own more valuable property, they
also resell property less often. -tom
\_ I ask again: were you here in CA in 78? I was. There
were for sale signs everywhere. People were leaving
the state young and old because they couldn't afford
their property taxes. If corporations got a free ride
along the way, so be it, they weren't the ones who
voted on it, nor were they the ones who came up with
the idea.
\_ People were leaving the state because of complex
reasons. Property tax was simply one of the
many components. Trying to fix the root of the
problem by adjusting proprety tax is like
the Feds trying to stabilize an extremely
complex & globalized economy with 10000 of
knobs and switches with this single knob
called the interest rate knob. It's absurd.
\_ Were you here in 1978? I was. When your
neighbors tell you they are selling because
they can't afford it and it's the same story
in the newspapers, tv, everywhere, I'd go for
that long before I'd accept your "well there
was other stuff too but I won't mention any of
it, just claim that your thing is absurd".
None of this stuff is a big secret. Apply
browser.
\_ You keep repeating this unverified claim
that you were here in 1978. Who are you?
How old were you in 1978? How does your
anecdotal evidence outweigh all other
input to this discussion? -tom
\_ Real estate is not a large part of expenses for
most businesses. It's labor, of course. For most
corporations it's in the noise and they are
depreciating the properties anyway. Many of them
lease, too. Do you know what the average property tax
rate was before Prop 13?
\_ Throwing a lot of stuff at the wall there, aren't
you? None of it sticks; if corporations don't
mind paying more property tax, Prop 13 is totally
stupid, since it gives them more tax benefit than
it does homeowners. And whether corporations
buy or lease their space, they receive the benefits
of the lower property tax. Non-residential
property taxes *dropped* by 5% from 1991 to 2001,
during the largest increase of property values
in CA history. -tom
\_ Who gets more of a benefit?:
Me, saving $2K of my, say, $100K salary or
a corporation saving $50K of their, say, $100
million revenues? I think it's clear I do.
I am not sure I understand your last
sentence. Are you saying total revenues
dropped? You do realize that the commercial
property market was not part of 'the
largest increase in property values',
right? It's very possible that commercial
property taxes might rise even as residential
home values fall. In fact, I predict that.
\_ You really have no idea how much corporate
real estate is worth, do you? Property
taxes on a big commercial building go
into the millions of dollars. So, you
saving $2K get hurt because you lose more
than $2K worth of services due to Prop 13
and the relief it gives corporations. Plus,
cities then do things like raise sales tax
(CA: highest in nation), which, guess what,
you pay! -tom
\_ How much do you think commercial real
estate is worth? The most expensive
skyscrapers sell new for a few
hundred million dollars. Most
buildings are far less. So even if I
own 100% of the TransAmerica building
(whose property taxes are paid for by
many tenants and not just one) then
the property tax is still only a
couple of million per year. How much
in revenues is generated there? Your
typical industrial building is only
worth a few million, which is at
most 10x a house, and yet revenues
are likely much more than 10x higher.
As for sales taxes, CA's are not that
much higher than anywhere else.
\_ No matter what the corporations pay in
taxes it will get passed down to the
consumer. And corporations doing well
isn't necessarily the horrible thing you
imply considering how much retirement
money is invested in these same corps and
how many people they employ, etc. The
anti-corpo screed is insufficient to make
an honest claim that prop 13 was bad for
the people of california.
\_ It's clearly bad for everyone who
doesn't own property in CA. It's
very likely bad (negative total
ROI) for residential homeowners. It's
not even clear that homeowners pay
less tax, overall, due to Prop 13.
It's clearly good for major commercial
real estate holders. -tom
\_ It reduces carrying costs for
real estate holders, which
means they can charge less rent
and/or develop the land more
intensely. I am guessing that this
is a net benefit to the economy in
terms of taxes. Imagine if
property taxes were back at 20%
like they were. Who do you
think would be doing business
here? What would the tax base be?
Low property taxes are even
good for people who don't own
land, because they (renters and
consumers) carry the costs
anyway, as alluded to above.
\_ Corporations don't just "pass on"
costs. They charge what the
market will bear, no more and
no less. It is important to
understand the difference between
the two ideas. -ausman
\_ I understand economics, but
property tax is a fixed
cost. It will be paid
even if the land lies
fallow. (In fact, for
this reason high property
tax encourages sprawl,
since the cost of holding
land is high.) There can
be no market at all and
yet the taxes are still
due. This is different
from most expenses. The
tax represents pretty
much the baseline cost of
holding the property. If
an owner were to lease
for less than the taxes
owed, he'd rather just let
the property go rather than
take a loss on it to hold it.
So when the tax increases, so
does this "minimum rent".
E.g., I have to rent my
house for ~$400/month just
to cover the property taxes
- $700/month if I just
bought it. This is *with*
Prop 13 if I paid *cash*
for the house.
\_ BofA building just sold for $1B:
http://www.csua.org/u/ijt
\_ Which is too expensive and unusual,
as the article says. The most expensive
building in LA just sold for $600 million
and most of the office towers are ~$300M.
But even using this ($1B) figure, it's
still just $10M/year in tax. I pay
~4% of my income in property tax. If
I bought my house new it would be
~8%. So the equivalent in revenues
is still around $200M/year. I am
guessing that the businesses housed
there will have more than $200M in
revenues per year for the operations
based in that building. I am
guessing a *LOT* more, given the
(presumably high) salaries of people
working there. Actually, doing the
math in the article (1.3M sq feet @
$75/foot) shows they are hoping to
lease it for $100M/year, which means
10% of the rents would go to property
tax. Using my own house as an
example, I pay ~$24K/year rent and
$4K/year in property tax so my
burden is higher. Why would you want
to eliminate Prop 13 when it helps
me more? (Being I have a higher tax
burden.) Now factor in that most of
the corp tenants (other than the landlord)
are probably paying much less as a
percentage of revenues in property
taxes. If you double property tax
then my burden goes to, say, 33%
(where it was in the 1970s) and the
landlords goes from 10% to 20%. Who
will be more hurt by that? BofA or me?
Now, if you want to eliminate Prop
13 for commercial buildings (as some
propose) that is something else
entirely.
\_ "You're talking a lot, but you're
not saying anything."
\_ Prop 13 benefits homeowners
more than businesses. That's
the gist. To say otherwise is
ridiculous and to repeal it
completely would be ludicrous.
1990-2007: Future homeowners paying 2X property tax-- Why the
fuck is my property tax bill near 2X my parent's rate?
\_ The rates are known before you buy your house and directly
impact the sales price. If property taxes were lower the
house base price would be higher. Your monthly wouldn't
change.
\_ Google will find you more info under "Mello-Roos"
\_ The Mello-Roos Community Facilities Act of 1982 was a reaction
to 1978 Prop 13's cutting of property tax for existing home
owners while not cutting back on government spending.
In layman's explanation, Prop 13 in 1978 cut taxes while gov
fat remained so money had to come from elsewhere. Thanks to
rich people like you, your 2% prop tax (w/ Mello-Roos)
benefits everyone else, including those who are only paying
1% tax on nice (but older) homes. Thanks rich guy!
\_ This is not true. Mello-Roos is a special assessment that
applies mostly to new development, to pay for things like
sewers, roads and schools in new areas. The beneficiaries
of the tax pay the tax.
\_ Yes, it is true that the beneficiaries of the tax pay the
tax. In theory, that is absolutely correct.
\_ To some extent. In the future, the bonds will be paid
off and future owners of the same house may not pay
the tax despite being beneficiaries of it. |
| 5/24 |
|
| www.csua.org/u/ijt -> www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/09/23/BUGG9ES41E1.DTL SFGate Technology: It's a high-tech world - - we just plug you into it... Hudson Waterfront Associates, a partnership led by Hong Kong property moguls Henry Cheng and Vincent Lo, has signed an agreement to buy the 18-million-square-foot BofA office complex from Pacific Gold Equities, a New York group headed by Mark Karasick and David Werner. It would also be the largest real estate investment made by Asian buyers in the United States in the last five years. But the BofA sale could be stalled by a protracted real estate soap opera pitting the super-wealthy Cheng and Lo against Trump, star of TV's "The Apprentice." A New York State Supreme Court judge ruled against Trump earlier this month, but Trump has appealed the decision. In the meantime, Cheng and Lo are reinvesting proceeds from the Manhattan sale in a tax-deferred exchange for the BofA complex, a transaction that will allow them to avoid paying capital gains tax. "Trump has already tried twice to preclude the reinvestment of the proceeds, and he has failed miserably both times," said Jonathan Lerner, a partner at Skadden, Arps, Slate, Meagher & Flom, lead attorney for Hudson Waterfront Associates in the Trump litigation. "There is no reason to believe he will do any better in any future attempt." Cheng and Lo are well-known Hong Kong businessmen with vast property holdings in Asia. Lo, chairman of the Shui On Group, even has a Hong Kong television show called "The Winner," which was inspired by Trump's success on TV. Bob White, president of the research firm Real Capital Analytics in New York, who is familiar with the proposed BofA deal, said the sale would be "the first significant Asian purchase (in the United States) that I'm aware of in quite a while." The BofA center, which includes a 52-story tower and banking hall at California and Kearny streets and two small office buildings on Montgomery Street, is 96 percent leased. For years, it was co-owned by Bank of America and the San Francisco realty giant Shorenstein Co. But the bank and Shorenstein each sold their 50 percent stake last year, to take advantage of the booming market for institutional-grade office property. The buyer in both cases was the Karasick and Werner group, which paid $800 million for the entire complex. "I think it confirms the perception that there is a globally held belief in core markets," said Grant Lammersen, a sales broker for the Cushman & Wakefield services firm in San Francisco. Many tenant advocates say the huge premiums paid by office-building buyers are out of line with the San Francisco's low commercial rents. At the end of the second quarter, the average Class A rent in downtown buildings was $31 per square foot -- about the same as rents 20 years ago, when adjusted for inflation. "The underlying leasing market absolutely does not support the assumption that buyers are using to justify the prices they're paying," Dan Mihalovich, principal at Mihalovich Partners, a San Francisco firm that represents tenants in lease negotiations. "The new owners must be anticipating an average of $70 to $80 per square foot in rents from 2006 forward. The billion-dollar building Highlights of the Bank of America building's 35-year existence. In the beginning: The BofA headquarters is built in San Francisco in 1969, amid some controversy, rising 52 stories above the Financial District and covered in carnelian granite. Building double: The structure has a brief brush with fame when Hollywood uses its exterior to represent the entrance to "The Towering Inferno." Even the all-star cast, featuring Steve McQueen and Paul Newman, were dwarfed by the fictitious, 138-story Glass Tower that goes up in smoke in the movie. Stone cold: The north plaza features a polished black granite sculpture by Masayuki Nagare, dubbed "The Banker's Heart" by a disaffected citizen. A matter of feet: The BofA tower and the 48-story tapered TransAmerica Pyramid vie for the title of San Francisco's tallest building. The Pyramid comes in at 853 feet, compared with 779 feet for the BofA tower. But the Pyramid's needle is 212 feet, which BofA partisans insist shouldn't be counted. BofA is the 49th-tallest building in the United States, 136th-tallest in the world. BofA bails out: In September 1985, Bank of America sold the building to Walter Shorenstein for $660 million, at that time the highest price paid for a single office complex in US history. The bank needed the money to shore up its capital because of mounting loan losses. Claire Giannini Hoffman, daughter of BofA founder AP Giannini, resigned as an honorary director, calling the sale "appalling and unpardonable." Big mistake: One of the partners of the architectural firm that designed the tower publicly slammed the building a few years after it was completed. At a panel on urban design, Nathaniel Owings, a partner in the firm Skidmore, Owings & Merrill, said: "What we need in our cities is people. Now you tell me what the hell the Bank of America building has to do with one little human being." |