Recognizing the signs of disruption in our urban habitat | Hacker News Reader

Recognizing the signs of disruption in our urban habitat

strongtowns.org

203 pointsoftenwrong171 comments

This kind of economic dysfunction is often cited as the reason to switch to a Land Value Tax, which is explained pretty well on Wikipedia[1].

It's also why so many people were interested in SB-50[2], which would have overridden local zoning controls to allow higher density development around transit stops.

I think the biggest challenge is the transition. The current system is broken, but we typically look at changes in terms of the desired end-state, and when we look at it that way it's clear that the change will be very disruptive to a lot of people who are benefiting from the status quo. Those are the people who turn out and ensure that the changes cannot go through - even if they might agree that the long-term outcome would be better.

Strong Towns has done a good job emphasizing incrementalism in its approach to urban problems[3], but I'd love to see more of a conversation around this in a legal / regulatory context. Are there ways that we can undo the harm of bad regulations and transition to better ones that aren't so disruptive to the people who have built their lives around the current rules? What would those look like?

1: https://en.wikipedia.org/wiki/Land_value_tax

2: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

3: https://www.strongtowns.org/journal/2018/9/5/incrementalism

One way would be to buy people off: figure out the net economic benefit to the city, county or state of changing the rules, and as part of the rule change grant some fraction of those dollars to those who change in the way we want.

I can see two bug problems with this, one practical and one political. The practical one is that estimating benefit is a black art — we really can't trust anyone, partisan or non-partisan, to make accurate predictions of future economic benefits (there's a secondary practical sub-problem, which is that such an estimate would be ripe for capture). The political problem is that we'd end up rewarding those who have been benefiting all these years (e.g. all the homeowners with unrealistically low property taxes for the last four decades).

I'm in Seattle, and my house only a couple of blocks away from a new light-rail transit station that is opening. My neighborhood has been rezoned for MRU (condos and apartments vs the single family homes that are here now). Plus, the city is widening the main road my house is on (overdue anyway, but will definitely be further needed with the traffic to the rail station).

So we're either going to be bought by a developer or bought by the city, whichever comes first.

It's been an exercise in details for me, because I generally am not a NIMBY-ist and support the sorts of changes that will be moving us from our home. My objections are not to the fact that this will happen...but there's been VAST uncertainty.

* Will be forced out? If so, on what terms? (City is currently saying "relocation" rather than "property purchase", but only vague terms so far)

* Will a developer offer us enough money to match the way real estate costs have soared in the area? Would this be a nice payout, a basically flat deal, or a net reduction in convenience/comfort?

* And the real kicker...When? We've been told more info would be available in 6-24 months for...at least 2 years, probably 3. As it stands now, other than more certainty that staying is not an option, we still don't have any answers, certainly not enough to make plans for. I've let house repairs and maintenance lapse (overdue for a new roof and the electrical system is woefully inadequate. Drainage needs to be improved, and our fence has started to sag. A tree came down and we've just left it.)

When reading these sorts of debates I always imagined it was just a matter of "suck it up and accept that you have to have some inconvenience for the greater good". In practice, I didn't realize it would be years of uncertainty. Not knowing where you will live and what your resources will be like has been a real source of stress for my wife and I. Having a house that is creeping into disrepair and not knowing if you will put up with it for a year or 5 years before it is all torn down is a big pain. It puts another light on why someone might push back.

I'm still in favor of the greater good - but the cost has not been "I have to move". It's been much more.

As someone very much in the YIMBY camp, I'd love for housing to be kind of 'boring' and 'steady'. I mean, it'd be good if prices in some places (the bay area) dropped a lot, but by and large it'd be nice if they became fairly steady and predictable so that people could move around without playing the 'but what will it be worth tomorrow?' game.

Hope you get some certainty for your own situation soon.

Sorry to hear about your situation and impacts! Definitely sounds like a lot of stress!

Is the uncertainty because of eminent domain that the city is planning to use to force the relocation? If that’s the case, I don’t know that all that many on here are arguing in favor of the government forced sale.

It doesn’t sound like you’d be forced to sell because of the potential appreciation in property alone, as that would be somewhat in your control.

It's a split. There's the eminent domain question from the city - they need space for the road, which would eat my front yard and put traffic a few feet from the front door. There are various kinds of eminent domain (some other comments have discussed the more speculative kind), but this is the more straightfoward "take your land, give you something of theoretical equal value, and use your land for city improvement". The uncertainty there comes in:

- If it would happen at all. The city (technically Shoreline, not Seattle, but I'm literally across the street from Seattle) can't afford it, but it got federal funding to make a plan. Following the plan would take another infusion of cash from somewhere, but there are potential sources. Potential. Or maybe the street will just get more congested because they can't afford to fix it.

- If it does happen, what form will it take? They are now talking "relocation", which I imagine would be easier on the city budget since they could use properties they own that have value on paper without having to find a way to make that value "real". But info is scarce, and until there's a real offer it will continue to be scarce. If it was an outright purchase there would still be questions (how much, when, would there be an interim where we can live/rent while finding a new home) and with the relocation it gets more uncertain (where, when, etc)

Then there's the flip side of the coin: If the city doesn't use eminent domain, or does so in a way that leaves the property usable (perhaps my front yard is halved), there's still the chance where I'm not "forced" to leave, but I may be stupid not do. My neighbors and I are considering selling to a developer as a block. Developers, sure to be able to build a profitable apartment/condo on what was multiple single lots, could pay a decent amount per sq/ft. I have no idea what numbers to trust, but the middle of the range of what I've heard being speculated about could very well put us in the "dumb not to take it". I like my house, and it is convenient and awesomely close to the light rail when it opens, but I'm not so attached I wouldn't sell, particularly if traffic on the street will get worse and louder (and possibly closer). In such a case, the house itself is meaningless, they just want the land. But this is also fully speculative. I don't know if there will be real offers, if there are I don't know what they would be, and I don't know how the _possible_ eminent domain would impact it.

And there's no real way to get answers to those questions without waiting out the clock. Which is what we've been doing. For years, and probably another year or two to go.

Thank you! That paints a very clear (and clearly stressful) picture.

Hope it all works out for you and yours in the end!

As a comparison, an acquaintance of mine lives in Moscow, Russia, and their old apartment building is going to be demolished as a part of a large development program.

They are offered two options. One is getting an apartment somewhere on the outskirts of the (vast) city, but the size and number of rooms will be the same or better as in the old apartment. The other is getting an apartment nearby in a newly built house, but likely smaller, with an option to upgrade it to a better apartment by paying the difference at a discount rate.

While this is not ideally fair, I like that a choice is offered.

This sounds a bit like the sort of nonsense that goes on in London. It makes no sense to me.

You're basically giving up an 80sqm flat in a small building for a 50sqm flat in a large building. The former is way, way more valuable in most cases.

In Moscow I'd suspect you give up a 80sqm flat in a shitty soviet era building for a 50sqm flat in a modern building.

Are there not people you can sell to who like the risk/uncertainty of the situation? Development speculators?

Great question - how would one find those? I can't look for anything without getting spammed by the buy-your-house-cheap not-quite-scammers, but anything else is pretty light.

That said, I suspect they'd pay less than we'd need to get anything comparable. The Seattle market has been insane for years, and I got extremely luck when I bought right after the crash.

I assume talk to a realtor, but I'm not sure. Maybe a big national one would have people on staff who specialise in this scenario and have the appropriate rolodex?

I just try to operate on the philosophy that if I wouldn't buy it if I didn't already have it then I should probably sell it. Sounds like this house fits that for you in that you probably wouldn't buy a house with government development looming over it.

If you're not able to get much now its because you wont get much later anyway.

Being treated equally may seem like a punishment when you've become accustomed to special privilege.

Suppose property owners have been benefiting from the tax shelters for 10 years. That was the payoff. Don't dally around asking what their next hand out should be. They've been riding the gravy train for years. Now the perks need to end. Welcome to a level playing field.

Sure, but then they will vote against you, and you won't get your way, because they are more civically-active than you, or out-number you, or whatever.

Do you want to be right, or do you want to get your way?

There's also an issue of fairness, in that people made choices based on the deals they were offered under the rules which were active at the time.

-1) rip out street parking or a lane on all arterial roads and install a bollarded buss lane.

0) remove single family zoning in the city of los angeles and remove height restrictions on parcels a 10 min walk to a metro station

1) enact an actual property tax to fund transit

2) 1% sales tax on cars and luxury goods to fund transit

3) watch the egregiously inflated housing prices tumble to rational levels

4) buy property and build elevated rail above

5) enjoy the lack of smog

Would this replace income and capital gains tax as well?

Based on polling SB-50 had the support of roughly 2/3 of Californians [0]. If we actually decided things democratically like we pretend to we wouldn’t need to worry so much about strong interests coming out against this.

The people benefiting from the status quo have made hundreds of billions of combined dollars over the past decade alone at the expense of everyone else. They’ve built metaphorical walls to keep everyone else out of their cities except themselves. It’s long past time they were stopped from doing that. Who cares if they don’t like the transition? Everyone else doesn’t like the stranglehold they’ve been living under with the status quo.

[0] https://www.google.com/amp/s/sf.curbed.com/platform/amp/2019...

This reminds me of a similar land use issue I've seen a hundred times over. In major cities, in the middle of some of the densest, most trafficked, most transit-oriented neighborhoods, you'll find vacant lots and storefronts that sit there for years. Places that could, presumably, bring in many thousands of dollars every month in rent instead bring in $0 month after month. And the prime real estate sits unused, despite the thousands of residents and tourists that walk buy every single day. I've seen it in many different cities and towns.

Maybe there is some real-estate-specific knowledge I lack that can explain this phenomenon?

The land value appreciates over time regardless of use. Why worry about setting up a business and trying to make money when you could do nothing and make a lot of money 10 years down the line when you sell?

The value of commercial real estate is also tied directly to what it can rent for so you’re encouraged to wait to maximize rent which may mean leaving it abandoned or vacant.

That's the ironic part. The more valuable the local market is, the more incentive there is for some people to sit on their asses.

That tells me that taxes are too low. Not necessarily taxes for used property, but vacant/unused property could be taxed more effectively to promote development.

Would love to see a gradually increasing tax on unused/underused property - so small time landlords who lose a lease aren't screwed over but no one should be leaving storefronts empty for years

It's terrible in Toronto, you'll see complete sections of the street literally empty since there's so many tax benefits for empty commercial-retail space

Where in Toronto? I don't really notice this phenomenon.

You could also rent it out and make money in the 10 years you're waiting for it to appreciate.

Yeah, but you can’t sell it at moments notice any more when the value crashes for some reason.

It often comes down to the laziness of the owners. Both offices I've rented in the Bay Area were owned by family trusts, where the children of the original owner were getting a check every month but nobody was interested in doing the work to fix the place up and find higher value tenants.

There's a huge amount of that real estate dark matter around here. It takes some legwork to find such buildings and rent them. And if you fix them up, the landlord might notice and raise the rent.

It's an inefficient market, waiting for disruption. Some startups are trying.

I live near a place with a similar story (not in California). The owner comes from a wealthy family and doesn’t care to rent it out at the moment. It has been empty for years.

"Thank You From a Land Speculator"

https://www.youtube.com/watch?v=xqQhoZgFZgk

I haven't seen this anywhere on the scale that I see it in California. It's largely due to tax reasons. Prop 13 allows property to not ever have the property tax exceed a certain percentage of the ORIGINAL purchase price. If you bought a half acre parking lot in Hollywood for $20k in 1960 -- even though it's worth $20M today -- your tax bill is likely less than $1k a year.

You might look at these places and see wasted capital. Why not cash out? Well, what would you do when cash out? Invest the money and try to make a better return than you're currently making.

Yes, these parking lots don't make much money WRT to their value. No body would buy a half acre land today and put a parking lot on it. So why do they exist?

The little money they make is usually more than they can get as a percentage of the value invested in any other safe asset. For example, a parking lot of that size might only make $2K profit per day, but because the taxes are essentially $0, you're generating a return of 4% per year. That might not sound impressive compared to equities, but you have to remember that the land is also increasing in value -- currently at about the same rate as equities.

Further, you have to consider that profits from land sales are taxed as capital gains. The return on equities includes dividends, which are taxed as income, which is taxed at a higher rate.

I'm not as familiar with New York tax code, but it might have similar laws to appease aristocrats. Other than these areas, it's really a pretty recent phenomenon for land to be as expensive as it is and increasing in value at the rate it is. I'm sure a lot of it is just owners unsure of what to do in this strange environment.

Take Texas for example -- until very recently, land was plentiful and very cheap. If you had a poorly utilized piece of land, there wasn't a lot of reason to try to figure out what to do with it.

Except for that property taxes in Texas are quite high for the US and there's no equivalent to prop 13. So, mostly you're right, there hasn't been as much pressure to use the land well, but as urban centers have appreciated there is more pressure than there would be in California.

Rapidly speeds up gentrification, to boot. The net results are all debatable, but no denying that it happens.

The property might be tied up in a court dispute, a bankruptcy, or inheritance. As an example, a building near where I work sat vacant for years; I did a web search for the building's address, and found an article mentioning that the company which owned the building had been bankrupt.

You can also get cash out of an asset like land by using it to back loans. So you get the advantage of land appreciation and borrowing money on a tax deductible basis at very low interest rates.

If the land is appreciating at 10%/year then it is a no brainer to borrow against it at 4% (pre tax)

In central areas of Hong Kong island locals who inherit stores at ground level sometimes never bother opening them at all, instead going to banks and using those properties as bargaining chips to get comfortable loans they’d basically live on and/or invest.

This was a point in a presentation about issues in local urban communities I attended a couple years ago. (The dynamic is not great for a community.)

There was some economist on the business TV channels blaming CCP for letting this happen by letting the businesspeople run Hong Kong untrammeled and how that was contributing to the protests

In theory this situation is avoidable under the letter of Chinese property law (the government could decide that your use of property harms public interests and take it from you, though that would be a very extreme interpretation). In practice I imagine banks are just as willing to issue property-backed loans under that system, while the associated corruption and lack of security in own future cause arguably bigger issues in city communities of communist China.

In general the non-use is not very widespread, and partly thanks to 唐樓 architecture there are plenty active small businesses in residential areas (I haven’t seen such abundance while staying in mainland cities). I believe the reason I saw it come up is the existence of active and conscious members of the community who are more invested in its future and sensitive to upcoming issues.

There was an article I probably saw here on HN a couple of years ago. The problem is that rents can't lower to what the market will bear, because that would lower the property value. The loan that was used to buy the property is based on that value, and if the value drops the owner may suddenly need to come up with a pile of cash to make up the difference. It makes more financial sense to leave it unrented at a high price than to rent it out lower.

You're about to "see the cat" dude.

https://henrygeorgedevon.wordpress.com/2013/02/01/do-you-see...

At least in west la it seems there is like no commercial vacancy it They just cram little shops and groceries and restaurants and swap meets on top of little shops and groceries and dispensaries with even more people selling under canopies on the sidewalks. Fruit is sold everywhere. The place has a pulse, 4 million+ live in la after all.

I'm glad the article brought up Prop 13. It is my belief that Prop 13 is the biggest cancer on the state of California, and one that we will almost never be rid of. Prop 13 is why people don't move. Prop 13 is why California occasionally has budget issues. Prop 13 makes my parents home property taxes 1/4th the amount of my own, despite their home being 4x the value of mine.

Prop 13 was a reaction against confiscatory taxes that broke an important social contract.

The contract: If you save, invest, and pay off your home mortgage so that you own it free and clear, later in life when you are retired and living on a fixed income no one can come along and confiscate the property that you bought and paid for fair and square.

The contract breech: Property taxes going up so fast that the only possible solution was to sell your home. Now, of course the value of the home was going up, which was what was driving the taxes. But forcing pensioners to sell their homes, disrupting/destroying a life-time of plans and work was never going to be a smooth ride -- who could have thought that it would be?

The government pre-Prop 13 was viewed as kleptocratic by a sizeable portion of the population, with arguably good reason.

So, do you have a better solution that has empathy for pensioners that played by the rules all their lives and have plans to settle into modest enjoyment of their so-called "golden years"? Prop 13 was an attempt to stop perceived thievery, a crude bludgeon, perhaps, but a sufficient number of desperate people saw it as a solution to get it enacted.

>The contract breech: Property taxes going up so fast that the only possible solution was to sell your home. Now, of course the value of the home was going up, which was what was driving the taxes. But forcing pensioners to sell their homes, disrupting/destroying a life-time of plans and work was never going to be a smooth ride -- who could have thought that it would be?

Financial instruments that prevent that already exist. If your home is worth millions of dollars it's not that hard to find a way to pay the property tax. "Having more money" is rarely a real problem.

> a sufficient number of desperate people saw it as a solution to get it enacted.

No, people who's material interests are in direct conflict with a functional society pushed for it. It passed through a combination of "think of the elders" concern-trolling and libertarian dark money.

Your solution is to make real estate into just a rental from the state.

That’s not a great one either.

Specifically, you could use a reverse mortgage to pay property tax. A similar solution that has been proposed is that unpaid property taxes could accumulate as a lien and thus be paid when the house is sold.

I thought this was standard-it happened to many properties after Katrina

Just because a solid majority of people think something is a good idea doesn't make it a good idea. That's the problem with Prop 13, and with democracy in general.

It’s hard to have sympathy for people whose home has skyrocketed in value and they now “can’t afford” the property tax on their multimillion dollar homes.

What it needed is a way for people whose homes had only gone up a small amount from getting budget busting increments. Once your home has doubled in value, there are other financial mechanisms to solve that problem and you can afford to pay the increase.

Why do you have no sympathy?

If you are a retiree who has worked hard the paper value of your home if you were forced to sell is not a real gain.

There are other options beside selling e.g. reverse mortgage or heloc

Because they own a multi-million dollar asset? They can, worse case, take out a reverse mortgage and live happily ever after. There are better financial options available than a reverse mortgage but anyway you look at it they are rich.

What do you mean by "is not a real gain"?

Asset gains only become real when the asset is sold. That’s what I mean.

Also - a financial instrument based on the value of collateral can easily go south if the value of the collateral falls.

There is no guarantee that home values will remain stable nor that whatever assets you put the loan into will perform adequately too.

Given that retirees typically don’t have the ability to correct for investments gone wrong out of future earnings, your recommendations would be foolhardy for most.

Simply buying a house to live in is fine.

The only reason we are having this discussion is that the people complaining about prop 13 want a mechanism to force older people out of their homes so they can take have them instead.

> Also - a financial instrument based on the value of collateral can easily go south if the value of the collateral falls.

That's not how a reverse mortgage works: https://en.wikipedia.org/wiki/Reverse_mortgage

> The only reason we are having this discussion is that the people complaining about prop 13 want a mechanism to force older people out of their homes so they can take have them instead.

That's just not true. We want baby boomers to pay their fair share of taxes and not squirrel away their wealth for their heirs at our expense. In addition, because of Prop 13 (and similar programs else where) mean OTHER tax payers are paying a higher rate than they need to in order to cover the short fall.

If you were worried about wealth being passed on to heirs, you’d be focussed on estate taxes rather than just trying to tax people who just want to live in their own homes.

Also, what about all of the other people lives you’d destroy? I live in Oakland in a neighborhood where most homes are either rented, or owned by families that are neither boomers, nor high income tech employees.

Any honest discussion about this has to admit that these are would be hardest hit and their communities decimated so that beneficiaries of the tech boom can buy them out.

Honestly, I'm talking about Toronto, where similar attempts to keep our taxes low "for the poor widow in her house she raised her five children in" has resulted in an inability to properly fund our transit system. This is a systemic problem as boomers retire and look for ways to minimize the contributions to a society they are no longer interested in funding.

You are clearly very emotional about this topic but it's NOT about "techbros" "stealing" property from "poor" retirees on a fixed income.

Thanks for clarifying.

It’s clear that you don’t care about the consequences to anyone who owns a home other than the ‘Boomers’ who you want to make pay.

I didn’t say ‘tech bros’. But I did mention tech. I stand by that but I agree that it is narrow - It’s a stand in for anyone who is young and in a position to have high future earnings.

> It’s clear that you don’t care about the consequences to anyone who owns a home other than the ‘Boomers’ who you want to make pay.

It's clear that you are so emotional about this issue that you can't help but personally attack those who disagree with you. Let's leave it here.

The personal attacks started with you calling me ‘emotional’.

You could have actually answered my point about the people who were adversely affected instead doing that.

Instead you chose the intellectually dishonest route.

Let’s leave it there instead shall we?

It would force those older people to build an apartment building that would not only allow that old person to live there but also a dozen other (equally old?) people.

Why should the people that saw the biggest increase it net worth be protected from the taxes everyone has to pay?

A better solution would be offering up a property lien instead of taxes. The govt collects when the property is eventually sold. People get to stay in their home and property taxes remain fair.

That's an interesting idea, but I see three main problems:

1) It doesn't solve the immediate revenue problems of the taxing authority

2) It doesn't provide any more incentive to move than the current situation in California

3) It exposes taxing authorities to risk in a housing market downturn where people may start surrendering their property rather than sell because selling would net them little money, or even cost them money.

It's better than the status quo, and reduces the lost taxes to a far smaller number of units (every corporation and person vs some older people). Solutions don't have to be %100, especially when you can stack them to get to a target revenue number.

It also allows older people to move without 'losing' a prop 13 tax benefit, since they can retain more value of the large house they don't need anymore with a smaller lower maintenance condo.

> It's better than the status quo

Without putting more thought into it, I don't know. I don't see how this changes the revenue picture.

> reduces the lost taxes to a far smaller number of units (every corporation and person vs some older people)

That is independent of the tax lien idea.

> It also allows older people to move without 'losing' a prop 13 tax benefit, since they can retain more value of the large house they don't need anymore with a smaller lower maintenance condo.

This I can see. I know Florida had issues with people who wanted to downsize but couldn't afford to because of the tax jump from selling their homesteaded property.

That said, I'm not sure this alone would open up enough inventory to actually reduce prices.

>I don't see how this changes the revenue picture.

The government gets all of the deferred taxes on the next sale. That’s immensely better than the current scenario where they don’t get any reasonable amount.

So, they go from getting a reduced amount each year to getting nothing each year with the expectation of a larger lump sum at some indeterminate point the future. I'm not sure that's a good deal in a housing market where turnover is low, and I don't see anything in a simple tax lien plan that is going to drive increased turnover.

It removes the incentive to stay in a home to keep the low tax rate. That’s a big deal.

And the deferred revenue can be significant. A friend bought a house where the owner was paying $600 per year when the rate for the same home should have been $11,000 per year.

Government can apply prop 13 style 'minimum payments' along with the deferred payment. Or make people do reverse mortgages and make the market sort it out.

Usually although, you have provide some sort of incentive to people adopt something, and no taxes vs some small amount taxes is attractive to a voting block. And democracy is getting enough voting blocks to get you over the pass rate.

Also since government works over large numbers and is very long term, they can do actuarial calculations to see when revenue would kick in and issue fairly reliable bonds based on it.

No, stop assuming the stupidest way to implement it and then attacking that implementation. People get the same annually capped increases and then the lien of the remainder of the normal increase.

Because there are a thousand other practical solutions people have presented that you're ignoring in deference to your ideological motive that you don't like taxes.

I’m quite happy with taxes on investment gains and income and even estates.

I don’t like taxes being used to take away property from people just because you want what they have.

> I don’t like taxes being used to take away property from people just because you want what they have.

This is just a variant of "the left is just jealous of rich people" argument. That's not an argument and I'm not jealous, I'm actually quite rich by most standards, I just don't think it's earned or justified, especially in a country with a vivid history of genocide.

That is why Prop 13 will not go away in a foreseeable future, but the whole idea of tying all your savings to your house is flawed. Apart from putting all your eggs in one basket, it also creates all sorts of bad incentives like Prop 13.

Are you proposing that there is something safer than your house to put your savings in that would either allow you to outpace property taxes if prop 13 was abolished, or trivially move if it were?

It’s not meaningful to say something is a bad strategy if you can’t articulate an alternative.

There are many existing alternatives like 401(k).

Those are projected to underperform and are vulnerable to mismanagement in a way that owning your own home is not.

That is until homes eventually get properly taxed

Sending the post-work population to a nice quiet farm upstate doesn't sound so bad to me...

It's hard for me to have much sympathy for the dream of keeping your home forever when the great majority of people I know have basically no hope of ever owning a home in the area.

Why don’t you go upstate then?

(Serious question - how do you justify sending retirees away from their homes, rather than simply working somewhere else?)

I'm reminded of all the boomers who said that one should simply work a summer job to pay for college, and then simply get a job when the degree is done...

My impression, as a person under 60, is that the older land-owning generation largely had things much, much easier, and have been blissfully unaware of the changes society has undergone. Or else perfectly aware, but unwilling to recognize their debts to society and circumstance and pay it forward.

Those low property taxes translate directly into booming tuition, as the state funding for higher education has been systematically gutted. The higher tuitions, in turn, imply massive student debt. Simply get a summer job, rite?

As for me? I work where it makes most sense for me to work. Not-working can happen anywhere.

So for retirees, my advice is this: Sell the house, take the millions of dollars in windfall, and go to Bali or Florida or something already. I'm sorry if you have to make new friends; please consider this outcome the next time you settle for a societal structure without robust community. But in getting out, you'll reduce the demand pressure slightly, improve the depressed tax base, and have enough money for a long, long vacation.

Higher education costs has zero to do with property taxes. One pitchfork at a time.

> Higher education costs has zero to do with property taxes

In California they are linked, in that property tax rollback and the procedural impediments to raising other taxes at either state or local levels were part of the same initiative constitutional amendment.

I've gotten offers from places like this, the pay deduction is staggering. If I got an offer that paid even the median of what I can make on the coasts, in a place like upstate New York I would get out of the coasts in a heartbeat and buy a house.

How do you justify people occupying extremely valuable land that they aren’t using to anything close to its potential, while also not paying anything close to their share of the taxes that keep the local government afloat?

How do you justify anyone owning anything and not using it to it’s ‘potential’?

More importantly who do you think should decide what the ‘potential’ is for what you own?

The market value is a pretty reasonable way to determine the potential.

That seems like a great argument for abolishing property taxes.

My big problem is not merely keeping their own land under-developed, but that there is a huge overlap between these squatters and NIMBYism to prevent me from using the land to its potential, even if I manage to buy property from one of their neighbors.

Ok, so it is about using taxes to push people you don’t like out?

What makes a particular property owner into a ‘squatter’?

They pretty clearly said that it’s about being prevented from using their own property the way they want.

Sure - but this is just indication that there is a small group of people that the poster has a beef with vs the huge group who would be adversely affected I.e. all homeowners.

Unless you take seriously the idea that most homeowners in California are squatters and NIMBYs.

It is not about using taxes to push people out. The feudal nature of Prop 13 is a problem, but people eventually leave anyway. Once the owner leaves, the new owner should be able to bring it to its full potential by building apartments and condos. In most of the country, including the vast majority of the land in every city in California, this is illegal. The only way to maximize the value of the land is to turn it into luxury housing.

Prop 13 is a blunt instrument that rewards speculators more than it protects homeowners. What would be a much better system is some sort of forbearance, that the owner does not have to pay the full property tax until the property is sold, and then the back taxes are paid from the profits.

Immortal entities like corporations should not have Prop 13 protection.

> to a nice quiet farm upstate doesn't sound so bad to me.

Just so you're aware, the phrase "sent to a quiet farm upstate" is a euphemism for "killed", usually applied to animals like family pets.

When you put it that way, the solution is obvious - the state government needs to spend less money.

Note well: I said "obvious", not "easy" or even "politically possible". But I think it's useful to note that, in important ways, California is doing this to itself.

> When you put it that way, the solution is obvious

When it's put in an ideologically biased way that ignores practical solutions to paying taxes on an increasing property value, it implies another ideologically biased solution that favours the material interests of the rich...

Sure.

Note that "the government has to spend that money, so here are some ways that you can manage to afford to pay your taxes" is also an ideologically biased viewpoint. (It's the current default viewpoint, but it's still ideologically biased...)

Of course, everything is ideological. I'm a socialist so I'm plenty familiar with going against the status-quo and my HN karma reflects that.

I'm arguing against hiding your ideological motive (lower taxes) under the guise of 'logical deduction' or 'obviousness'.

HN is open to sound arguments against “the status quo” (whatever you think that is). If your karma suffers it’s likely because you’re not actually making well reasoned comments but are instead just spewing ideology.

It's not so much that HN isn't 'open', but there is a wide double-standard in the evidence required for libertarian-right arguments vs leftist arguments.

See this thread:

https://news.ycombinator.com/item?id=20780064

Lots of right-wing arguments upvoted with almost no evidence:

> [The city] grant[s] de facto immunity to homeless people committing petty crime, stop all police enforcement of drug laws, and shame everyone who dares to complain.

This isn't an argument, and has no sources other than a vague 'feeling' by the poster. It even includes a bit of a cut at the left ("shame anyone who dares to complain").

I'm not really complaining about that individual comment, but it's also upvoted and contains no argument or substantive discussion. Similar comments I've made are always deeply downvoted.

This has a chilling effect on discourse from leftists, where it feels like it's not worthwhile to write a substantive comment only to have it downvoted with nothing other than pithy right-libertarian ideological comments in return.

So I haven't really bothered with this account, hence spewing ideology.

How do you tell that a comment was upvoted? "Not downvoted" is the most that you can tell (unless you know something I don't).

> So I haven't really bothered with this account, hence spewing ideology.

You just told us to ignore anything you say.

If anything, your HN karma reflects that your comments are largely political: > Please don't use Hacker News for political or ideological battle. That destroys intellectual curiosity, which is what the site exists for.

Note that AnimalMuppet was also downvoted for the same reasons.

> Prop 13 was a reaction against confiscatory taxes that broke an important social contract.

> The contract: If you save, invest, and pay off your home mortgage so that you own it free and clear, later in life when you are retired and living on a fixed income no one can come along and confiscate the property that you bought and paid for fair and square.

That doesn't explain why Prop 13 applies to commercial, industrial, and rental properties.

Helping large-scale property owners to collect unearned economic rents was the primary motivation for Prop 13. Crippling the state and local governments’ democratic power to collect taxes was the secondary motivation.

Sob stories about retirees on fixed incomes getting taxed out of their homes was only the propagandistic sales pitch, a clever way to convince a majority of voters to support the referendum.

The wealthy anti-tax activists who promoted prop 13 didn’t actually care about unwealthy elderly people per se. If such people had been the main focus, it would have been straightforward to come up with a much less dramatic remedy.

We cannot halt society's progress because a small amount of wealthy people's privilege will be injured.

I am sure there are reasonable solutions other than: "Do nothing and let the country rot."

This is not an adequate explanation for why Prop 13 tax basis can be inherited or why it is valid for commercial buildings. The "sell their homes" rhetoric does not work for investment properties either.

That's true everywhere that property taxes exist. Why was it only banned in California?

California is unique in applying this limit to all real estate. Many states have taxable value caps for owner-occupied residences.

Also, nothing is "banned" by Prop 13.

Annual assessment of real estate value is banned under prop 13.

No, it isn't. The increase is just capped at a low number.

I am pretty OK with not forcing pensioners to sell their homes in order to pay ever-increasing taxes.

It also seems nice to not tax small businesses out of existence.

On the other hand, it would be nice to not have as many closed storefronts and vacant lots in prime locations.

> The contract breech: Property taxes going up so fast that the only possible solution was to sell your home. Now, of course the value of the home was going up, which was what was driving the taxes.

The State of California offers another solution. It's called Property Tax Postponement: https://www.sco.ca.gov/ardtax_prop_tax_postponement.html

"The State Controller’s Property Tax Postponement Program allows homeowners who are seniors, are blind, or have a disability to defer current-year property taxes on their principal residence if they meet certain criteria including 40 percent equity in the home and an annual household income of $35,500 or less."

The taxes are deferred until a change of control, like due to a sale or transfer to next of kin. Many or most high-cost-of-living jurisdictions have similar programs.

So the future home purchaser ends up paying all of those deferred taxes? Yikes.

No, the future purchaser pays market price, but some portion of the money that the seller gets from the sale goes to paying back the deferred taxes they owe.

That’s a really low annual household income, particularly for California. But perhaps it's tweakable.

This is aimed at elderly people making a living from a pension, social security, etc. Not for people currently earning a full-time salary.

Yeah, but $35,000 from one's pension/401(k)/Social Security is still peanuts for California. That's got to be well below effective poverty level for someone living in San Francisco, LA or San Diego, even without rent.

Then we can talk about changing that limit. Several states have programs like this and they work just fine, eg. https://www.state.nj.us/treasury/taxation/ptr/

It's a totally different problem from prop 13.

If home taxes keep go up as your incomes goes down for people 65+ it has a very negative effect. It makes sense to me that taxes on property stay low and fixed.

In texas we only have property taxes. Commercial property tends to be undertaxed because the appraisal districts are not allowed to see actual sales prices. Property taxes tend to be around 2-2.5% and for non homestead properties there is no limit to the increase.

We regularly hear about older people getting taxed out of their homes (though there are programs to somewhat hold their taxes constant).

In austin we are starting to have an affordability crisis, whereas cities like houston are doing much better.

The taxation is the same, what is different is the restrictive zoning in austin. In austin permitting can take 6-9 months and single family zoning restricts what can be built. The city council tried to revise zoning and failed due to NIMBYs, but they are trying again this year.

This is a reminder that the more competing systems of laws we have the better. Every program implemented at the federal level only gives us one chance to get it right. The state level gives us 50 chances and the local level gives us thousands of chances.

Florida lacks an income tax too. Property taxes are distorted due to a law called Save Our Homes. SOH limits increasing assessed value of home prices to inflation (Consumer Price Index) or 3%, whichever is lower.

This mostly shift the tax burden to new home buyers and renters.

You get odd effects like in 2009, when property values dramatically fell due to the market bubble bursting, taxes actually went up because the assessed values were so much lower then the just market value.

In 2016, a 6.9 million dollar house was only taxed at 2.8 million. Source https://www.jacksonville.com/photogallery/LK/20170125/PHOTOG...

No opinion on the specific issue at hand, but wouldn't you eventually want to take the winning system of laws and implement it on federal level? Or would you expect better performing systems to naturally spread over? Are there any examples of that actually happening?

I think it is not state spread vs. federal, but more like state spread -> federal. Disclaimer: talking about the US.

For something simple that can stand on its own, that was what we saw with gay marriage and, I personally believe, what we will see with cannabis legalization.

For something as complex and interconnected as property taxes, I don't think it will be that easy to convert it to federal, so state spread is what we can hope for in the near future. An example of a similar issue is income taxing, where we ended up with a two-tiered solution: one federal (same for every state) + one state (differs for each state, with some having none at all).

You're assuming there'd be a winning system, that's a bad assumption, different systems would be acceptable to different sets of people. There isn't one right answer, there are many and people will gravitate to the ones they like. It's good that states can compete for citizens with each other.

>In austin we are starting to have an affordability crisis, whereas cities like houston are doing much better.

>The taxation is the same, what is different is the restrictive zoning in austin. In austin permitting can take 6-9 months and single family zoning restricts what can be built. The city council tried to revise zoning and failed due to NIMBYs, but they are trying again this year.

Austin's problems are straight out of a California textbook on what not to do.

To be fair, and not to hate on H-town, but Houston’s concrete sprawl is not exactly endearing, and it’s relaxed permitting may have played a roll in its increased impervious cover and flooding.

I agree that Houston's concrete sprawl isn't endearing and that it's suffering some externalities, but in some respects I also see it as some sort of harbinger for Austin.

I like Austin, and would love to live there, but I'm timid about moving there in the short term because the transit, roadway, and housing situations don't seem very sustainable with all of this growth thrown on top.

FWIW, at least per numbers from proximityone.com (and I'm not certain how well-sourced the data is...) the Austin MSA is significantly less dense than Houston's:

> Geography. The total land area of the Houston-The Woodlands-Sugar Land, TX MSA is 8,265.8 SqMi with water area of 1,178.1 SqMi. The metro ranked 21st among all metros based on total land area. With 2017 population density of 833.9, the metro ranked 20th among all metros (based on land area). http://proximityone.com/cbsa/1/cbsa26420.htm

> Geography. The total land area of the Austin-Round Rock, TX MSA is 4,221.7 SqMi with water area of 58.4 SqMi. The metro ranked 96th among all metros based on total land area. With 2017 population density of 501.2, the metro ranked 49th among all metros (based on land area). http://proximityone.com/cbsa/1/cbsa12420.htm

Around Seattle, people bought up land in anticipation of light rail coming in a decade+ later. The gambling ones bought up the land before the propositions to fund light rail to those areas had even passed.

One of my friends took that gamble, in another decade it is going to pay of handsomely.

Is there no way that the government can buy large plots of land around planned stations, build the railroad and then sell back the land?

The government can, via eminent domain. This is how private railroads in the US were financed in the 1800s. The companies paid for land at pre-development prices via eminent domain, then built the railroad, then sold the much-improved land at higher prices. Basically, the land appreciation covered the capital costs, and fares only covered the operating costs. Japan and Hong Kong still use this strategy, and the new private railways in the US are attempting to do it as well. (Virgin Trains and Texas Central)

Yes, with the caveat that none of those are fast and this is the kind of thing that can easily lose elections.

Wouldn't that drive up the prices of the land?

The only thing that could drive up the land prices is that some landowners try to hold out to demand unreasonably high prices. So what you need is a kind of squeeze-out mechanism like "If 2/3 of the landowners are willing to sell their land for price X, then the remaining 1/3 must sell for the same price".

That is happening as well, land owners go to court to delay development, solely to wait for prices to increase. There are places were price to build out transit have skyrocketed because of this exact tactic being used.

Sure the government could do it. But any city council that tried to do this would likely find themselves voted out.

Case in point: it was a tough push to get AB 2923 through the CA legislature. It allowed BART to build dense housing on their own parking lots. Thankfully common sense prevailed. The bill was approved and BART is now using their power to plan for more transit oriented development.

> Sure the government could do it. But any city council that tried to do this would likely find themselves voted out.

Who votes them out and with what arguments?

Mostly people who moved into what was a sleepy suburb 30 years ago wanting it to remain a sleepy suburb.

Sleepy suburb with Sun headquarters.

This makes it not just unnatural but an injustice.

The sleepy suburb gets the commercial revenue from having a major tech firm, and then most of the workers leave and the residentialists get to keep the revenue for their city services.

The service workers who had to drive until they qualified, they go home to more far-flung suburbs with financial problems and poor services. This is segregation by deliberate policy.

But it’s starting to fall apart. When there were still nearby orchards to pave to put up parking lots, the new homes were cheaper than they are today, and the rich suburb could still hire workers to provide the services. Now that there’s not enough room for both new single-family homes and parking lots, and they are refusing to allow sufficient multi-family housing, the housing supply is not keeping up with demand and the service workers are increasingly refusing to take the jobs. This is manifesting as chronic short-handedness in the schools, in the police and fire departments, in the transit agencies. By greedily holding onto commercial revenues, these suburbs are destroying their own ability to provide services.

if you're interested google "transit value capture", its a re-emerging trend in infrastructure finance and development.

It was refreshing to see Seattle finally get serious about public transit. Even though I moved out before I could enjoy its benefits, having light rail connections all the way to Everett, Redmond, Issaquah and Tacoma is going to be a big help for the housing problem within the next 5-10 years.

Until buses get reserved lanes it's hard to say Seattle is serious. Last-mile is still terrible.

I like the concept of living near strong connectivity; however there are other downsides that NEED to be addressed.

1) The building code isn't good enough. I should not be able to hear my neighbors, let alone the train, at all when things are closed. I should also have fresh air that doesn't smell like laundry, perfumes, the garbage chute, or whatever cooking experiments are happening in other apartments.

2) Outside of cities cars are still needed; more so in America. That rail network needs to connect to multiple potential 'apartments for my car'. Those are also the places that would be a dropoff / interface for external to the city users to drive to and then take transit infrastructure the rest of the way in.

There's an argument that outside of actual safety issues, maybe it's best to leave this up to the market.

My wife and I looked at a house once in Padova, where we lived, that was right next to the train tracks. You couldn't help but feel the trains go by, let alone hearing them. It was not for us, but it was super cheap, and might have been an option for someone without a lot of other good options - or a great option for someone hearing impaired who didn't care too much.

I can speak to the NJTransit example briefly buzzed past. In NJ, train stations are not destinations. Most people I see get off the train and into either an Uber or some other NJTransit vehicle.

Edited because of a misclick.

In NJ, train stations are not destinations.

Isn't that the point the writer is making? That they should be bustling hives of residential, retail and commercial activity.

Yes, and the issue is that the trains were put in places that never were destinations. You would have to change the long-standing habits of businesses and commuters to alter that. Even they light rail doesn't change that. Mass transit fits in the edges and cracks here, and is something of a "necessary annoyance" to the state. For proof, look no further than the aggressive privatization of bus lines to companies who can't or won't run the buses on the schedule set by NJTransit. And they aren't being penalized in any meaningful way.

Most aren't. Some towns are trying to change that. On the Montclair-Boonton line Bloomfield and Montclair (Bay Street) have higher-end apartment and mixed-use complexes either right next to the station or within a short walk.

I know the Main-Bergen line pretty much fits that description, though. Hell, there's one "station" that is just a half-ass strip of asphalt that passes for a parking lot.

I can think of three that fit that description. Or the ones up a bunch of stairs, with no parking and no real signs.

Those are commuter stations where you might live a couple miles away. Would you take an uber when you are a 10 min walk away? What if you had a bike lane and that became 3 mins with a scooter? All it takes is a place open at 6 am and a place open from 5pm on for an area like that to completely transform. People using uber is the fault of the transit area being zoned improperly.

There might be a stigma associated with being close to a railway.

It's a meme in some movies - someone is staying in a run-down apartment or hotel near railway tracks and train will go by at night causing dust to shake loose from the ceiling.

Caltrain stations are subject to these kinds of noise and vibration - during the day the baby bullets bypass stations at 60 mph, and at night endlessly long freight trains barrel past.

That's probably more of an effect than a cause. In European cities it is often advertised how close an apartment is to a train station.

I just wanted to say that you should have used the word trope instead of meme.

Yes, you're right (I would change my comment but missed the edit deadline)

> They made the striking observation that at station after station, the immediately adjacent land uses are remarkably low-value. Parking lots. Vacant lots. Strip malls, auto body shops...

>> Caltrain stations are subject to these kinds of noise

These trains mean someone has to wear earplugs to get a good night's sleep. No wonder the rich dont want to live near it.

This is only a problem for a very few areas of the United States. Remember, US population is leveling off. The current growth rate is 0.8% per year. Without illegal immigration, that number will go negative, as it already has for Japan and most of Europe. The current US fertility rate is 1.8. 2.1 is breakeven.

New York City had about the same population in 1950 and 2000. Chicago, Detroit, St. Louis, Pittsburgh, and Cleveland have all shrunk. New York was once the largest city in the world; now it's in 9th place. Nationwide, there's no great need to build.

Remember the 2008 recession in the Bay Area? FOR SALE signs everywhere? No traffic jams? It's coming again, probably within the next year.

Japan is also having a concentration effect. Japan might be shrinking, but tokyo is growing as everyone moves there. There is no signs of this general trend abaiting. Recessions are also only a few years long, the growth trend is the status quo for the majority of the time.

Yes, Tokyo and Osaka are up. The rest of Japan is emptying out.

You’re cherry picking numbers and doing Apples to Oranges comparisons.

The Midwest has been losing people for a long time Illinois, Michigan, and Ohio are some of the worst. The Dakota’s are only gaining due to fracking booms.

New York City expanded outside its historic area and into Jersey and any surrounding areas cheap enough to build on.

https://www.csgmidwest.org/policyresearch/0616-demographic-f...

Fortunately America isn't Japan or even in large part much of Europe in that it has a long history of constant immigration from often very culturally disjoint places.

Countries like India, Nigeria, etc won't crest their growth for decades and in that time they will add another 1-2 billion people to the planet. Even after the cresting going below replacement will take another generation or two. So for at least the next hundred years there will be plenty of people in the world to import if you want to keep your population pyramid from changing.

That is all aside the fact that its well established now that demographics are shifting even in limited population growth scenarios. Urban migration continues because the availability of productive labor anywhere except at the highest concentrations of human capital continue to diminish. There is no more gold rush of raw resources to establish whole states over and all the industry we have for resource extraction is getting automated away.

In the next hundred years we should see the gradual centralization of human populations for purposes of survival. And as the available job pool shrinks, until the jump is made to a UBI / socialist / post-scarcity model in the future the increasing pressure basic necessities have on people will keep forcing the cost of labor to stay stagnant as it has been for 40 years and thus inflation will pressure people into living more efficiently.

Right now having a car and commuting 4 hours a day from a 3000 square foot house with a yard you need to maintain, where in part you need to pay for all the roads you traverse, all the infrastructure wired to your house, the services required (fire, medical, police) is insanely expensive and insanely inefficient compared to people living in condos, apartments, etc with public transit in a proper metro. Automation will keep gnawing away at median disposable income until the median is forced to forgo luxuries like split housing.

Those transitions and shifts will require legislative support, which given the fact those shifts will be made because of outdated state policy probably doesn't bode well for it being a smooth migration.

Nationwide, on average, sure. But California is short by millions of homes and just needs the zoning and labor to produce.

This is definitely not true for older cities like NYC and Chicago. The land around train stops is valuable there. Chicago area grew outward from the train lines before cars showed up. Each stop has a town with its own higher density downtown.

North Sydney around Ryde used to be like this. Low density with lots of shuttered shopfronts. But Sydney has undergone a massive apartment development boom and the areas around these train stations often have high rise apartments now. The shops are all occupied. Eastwood even has a minimum height requirement for new buildings.

Low density notwithstanding, the Menlo Park example does seem like a nice, walkable downtown area near the train station.

(And apparently the Menlo Park station was built in 1867, making it one of the oldest passenger rail stations in California!)

Keep in mind, Redwood City will be literally underwater along with the rest of the Bay Area in a few decades.

If the Bay is still relevant at that time, then all it would take is a few hundred million to contain the rising water levels, in the form of barriers, flood walls, etc.

Who's paying?

How about the property owners whose property this build will protect.

If nola can make a levee surely the richest city on this side of the pacific can too.

The levee that broke and destroyed the city?

Because of the topology of the Bay we would basically have to build a levee all the way around it. IANACivil Engineer, but that seems like a big deal.

All I'm saying is that if you're looking to buy or build in the Bay Area do your homework.

A couple of years ago I was looking at buying a condo on the water in Redwood City and it dawned on me that, by the time I paid off the mortgage, it would be underwater both literally and figuratively. ( https://www.nolo.com/legal-encyclopedia/what-is-underwater-m... )

It doesn't make sense to build up new urban sites along CalTrain if we don't also deal with the effects of climate change, eh?

(I wonder if we could build a lock across the Golden Gate!?)

https://en.wikipedia.org/wiki/Lock_(water_navigation)

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