Hugo Hotel in San Francisco (
“A push to replace a vacant building with furniture famously bolted to its walls on Sixth and Howard streets with housing and stores will be discussed today by The City’s redevelopment agency, which is considering legal efforts to forcibly purchase the property.
The 144-room, 99-year-old Hugo Hotel has been empty since it was gutted 20 years ago by fire, according to a city staff report for today’s meeting. In April, the redevelopment agency offered to buy the property for $3.25 million, but it was turned down by the Oregon-based owners, who sought $7 million, according to the report.
Redevelopment agency Executive Director Fred Blackwell said the hotel blights a key corner of the Sixth Street corridor and should be turned into affordablehousing units with stores at street level.” (City may use eminent domain to claim historic hotel)

78 thoughts on “JustQuotes: Eminent Domain For Affordable Housing On Sixth Street?”
  1. Patel cites the building’s 50-foot height restriction as a way for the city to keep her property’s value low. “It is unfair that I don’t have the same development opportunities as everyone else,” she says by way of explanation for the property’s dilapidated state.
    According to Patel, the building has garnered “a lot of interest” from developers over the years, but, “When they learn the problems with the city’s height restrictions, they immediately back off.” Patel claims her family wants to develop the property or sell it. “We’re not deadbeats. I’ve been talking about the zoning restrictions with the city for seven years now. It’s not a secret,”
    or perhaps they just wanted some government cheese…

  2. The Patel Family lives in Oregon an hasn’t done a damn thing with their building except let it rot for the last 20 years, harboring feelings of abandonment for all of 6th Street. I used to live at 6th and Bryant and driving past that thing everyday was disheartening.
    Money grubbing deadbeat landlords, get off your duff and do something with your builkding or sell it for a fair price – 5 floors is plenty to redevelop for 3.5 Million, you don’t have to always go skyscraper or go home.
    These people make me sick.

  3. Assessed Tax value of this property: $474,894.00
    Taxes due to SF yearly by the Patel’s: $7,269.58
    Owned since 3/24/1998 with no changes to the property.
    You guys suck. I pay more taxes to SF for my house. I’ll use the phrase Slumlord thanks.

  4. This is an argument for repealing Prop 13. If this place is worth $7 million, the owners should be paying property taxes on $7 million. If they were paying their fare share of taxes, this building wouldn’t have been vacant for 10 years.

  5. While “Slumlords”, “deadbeat” and ‘Patel’ may well be synonymous, there is no arguing with the fact that the City is remiss in requiring a 50ft ceiling, whereas all over Soma old buildings regularly give way to highrise buildings. I don not claim to know all that is involved with the building, but if the owners were named Shorenstein or any of the other monikers that friends of Gavin go by, would their fate be any different? Only a blind, deaf and dumb person could be oblivious to the shortcomings of the SF Planning Department.

  6. I’m surprised none of the furniture blew off the sides of the building a few Fridays ago with those strong winds and rain.
    Was $3.5 million a fair offer?

  7. They’ve always marketed the building touting it’s high zoning height limit which is just absurd. It’s barely feasible to develop in a sketchy location like that and it gets less feasible the taller the building as your development costs go way up when you switch from wood frame to concrete and steel construction at over 4 stories.

  8. “This is an argument for repealing Prop 13.”
    Absolutely right. But repealing Prop 13 would likely result in a LARGE drop in SF housing prices. How large is anyone’s guess, but I’d bet that repealing it would be good for an additional 15-25% off. That is one of the reasons why Prop 13 is a sacred cow, and is not likely to be touched.
    As I’ve said, Prop 13 is a renter’s best friend, because it incentivizes long-term owners to rent their vacant properties rather than sell them, thereby keeping rental prices artificially low. It is the (new) buyer’s worst enemy, because it restricts supply of housing and keeps purchase prices artificially high.
    The distortions become enormous when you mix in “good” versus “bad” school districts. We are starting to look in Marin for a nice rental property. The rent versus buy up there is off the charts crazy. We are expecting to find a place that would sell for about $2MM to rent for about $3.5K per month (plus or minus a few hundred). To put this in perspective, annual rent will be only about 1.5 times the tax bill ALONE (were we to buy). So our child can attend some of the best public schools in the country for “free”, while our new neighbors subsidize his education to the tune of $25-30K per year. The system is just crazy.

  9. Satchell is right and it fits in with what I see down in the Marina where many of the homes on my block are empty or with an old widow who “cannot afford to move”. Two doors down from my place is a house that has been empty for 4 years as the owner (in her 80’s) lives in her condo in Rancho Mirage (Palm Springs area) because there are no stairs in that house. I feel that Prop. 13 is unfair to younger people and it stops properties from being made to full potential. There is a misconception that the Marina is rather young, but it does not hold true for most of the single family homeowners who had children that left their homes for college in the early 70’s.

  10. There are dozens of schemes you could come up with to repeal Prop. 13 and still shield homeowners from the brunt of the increase in their tax burdens.
    One way to do it would be for the government to place a lien against the homeowner’s house for the excess taxes owed after repeal — in effect, extend a loan to pay the taxes — at an interest rate of, say, 6%/yr. Since it would be a senior lien you’d be guaranteed repayment. Each year, all the tax liens across the state could be bundled into a security and sold to investors who would then be repaid when the houses changed hands or the owners paid their back taxes. Easy way to use your home equity to pay off property taxes (and you’d only need 1.06% per year capital gains on the property to offset the taxes!).
    Just one example of an easy way to repeal a regressive, grossly unfair tax while keeping the “elderly grandmas on social security” and (more importantly) wealthy landlords from having to pay additional taxes out of pocket… while not bankrupting the state by starving it of property tax revenues.
    Not that anything like this will ever happen, but its nice to think about.

  11. I hope for the sake of the City that the 50 foot height limit for new developement cited extends up and down the street, covers the neighborhood and doesn’t just apply to the Patel’s lot. Otherwise, the City might be in a similar position to Half Moon Bay, where insisting on calling one developer’s property a wetland has bit them back big time.

  12. PS, if you want to see the most egregious example of Prop. 13 abuse by the ultra-rich, check out the listing for 2901 Broadway — $55M asking price, taxes paid in 2006 $7,127 according to Redfin.
    Fair taxes on that place would be about $750,000/year — the current owners, no doubt extremely wealthy, are ripping off the rest of us to the tune of $743k per year.
    I heard the house was vacant, too, since the owner moved to a $8M condo recently.

  13. I agree with the anti-Prop 13 comments. I am anti-tax (in general), but the distortions and disincentives from Prop 13 need to be fixed. Satchel is right on target with his Marin analysis. Renting there (anywhere – Tiburon, Mill Valley, Sausalito) is way less costly than buying. I recommend the Reed Union School District (Tiburon) – absolutley top notch for K-8. Make sure you’re east of Blackfield Drive to be in the RUSD district.

  14. Maybe Swartzenegger should try to reform Prop 13 as a mechanism to solve the budget crisis, as opposed to further cuts to the school system and state parks.

  15. Satchel you have on more then one occasion used the example of being able to send your kids to school for “free” by renting in Marin as compared to buying. The State of California provides the majority of school funding; the majority of revenue the state receives is from INCOME taxes, not property taxes. So your repeated gloating that you would being sending your kids to public schools for “free” by renting while the new buyer chumps next door would be paying the bill because of Prop 13 is a misrepresentation of how the school funding system works in this state.
    Prop 13 has a lot of problems but you do not need to make red herring arguements in order to argue against it.

  16. The reality is that the tax structure (Federal and State) is not going to change dramatically in our lifetime.
    So what? Take advantage of it! Get rich. Anyone who does not legally maximize their income and minimize their taxes is a flat-out fool. Buy a home and be happy 30 years from now when the property tax is a mere $15k a year on your multi-million dollar appreciating asset.

  17. Before Prop 13, most school funding came from local property taxes, provoking a law suit, because districts with high property valuations spent more more per student than in lower valued areas.
    Prop. 13 changed this, for better or worse, by cutting local taxes sufficiently that the state had to take over the lion’s share of school funding.

  18. As an old lady, with limited income, I am in favor of proposition 13. Retirees across the state would be out on the street without Prop 13.
    The Patel’s should face eminient domain. There were plenty of people who made good faith offers on this property or attempted to contact the owner or a variety of listing agents and were ignored.
    Is that sign with a fax number still on the building?
    The city knows how to take control of property that is rotting. They do it all the time. The city needs to be prompted to step up and do there job.
    Maybe we should create a list of rotting properties that encourge, blight, drug users, squatters, mold and vermin and forward them to our local elected officials.
    I live across from a building that has been vacant and derilect for decades. Since the storm of 2008 has has blown down my trees, I see it everyday from my computer.
    The owners of these buildings are creating waste and nuisance on the city. Drug addicts hide in them, thieves go inside and steal wiring, copper, and doorknobs, trim, whatever they can hock.
    Start writing letters to your elected district supervisors, the Mayor and the Tax Assessors Office.
    Its not about how much they paid for the building and what they pay the city, (Let’s tax renters while we are at it)it is about the nuisance the owners caused by not maintaining their property, and causing an obvious blight and health and safety issue in neighborhoods.
    This is a classic local political problem. Don’t forget to vote. I say skip flowers in hanging basket in front of City Hall and more money for the city attorney’s office to help the city take over guardianship of these properties.

  19. Someone should tell the “old widow who can’t afford to move” (who I seem to read about every time someone b*tch*es about prop 13) that 55 or older can usually transfer their prop 13 base once if they move within california: see prop 60 and 90.

    I disagree repealing prop 13 will cure budgetary woes, make housing affordable, and fund awesome public schools. I could make counter args to almost all scenarios presented (but I won’t bore you — short argument: state governments are poorly run, and “extra money” won’t go where you think it will).

  20. I benefit from Prop. 13, too (though my income tax is higher that it would be without Prop. 13, since school funding was shifted to the state).
    Prop. 13 has created great inequities in taxation. One neighbor pays $400/year on his house, while another neighbor pays over $15,000/year in taxes on a smaller home. It’s unrealistic, though, to think that Prop. 13 would be repealed for residential property. But it’s just common sense to repeal Prop. 13 for large commercial properties. Corporations and land trusts don’t sell their property every few years, like most families sell their homes. Why should an oil company or a bank still pay 1975 valuations (plus 2%/year) on their property? Commercial and industrial property should be reassessed every year or two, and taxed at market value.

  21. The answer seems pretty simple to me – repeal prop 13 on anything but the primary residence…

  22. dub, dub — I’m with you on the point that eliminating prop 13 would not be a cure-all. But it is a terribly inequitable system that taxes owners of identical properties vastly different sums. I just don’t feel much for the “old widows who can’t afford to move” given that the source of their “woes” is that their property has increased in value tremendously (I’m so sorry for your terrible misfortune . . .) It’s a horrible law, but it’s not going anywhere (it’s been upheld by the Supreme Court and short-sighted homeowners won’t repeal it) — complaining about it is no different from complaining about the weather.

  23. 50 ft height restriction for 5th and Howard is RIDICULOUS. They *should* be allowed to build 120ft as they claim zoning used to be before city’s 50ft insistence. A block from there and away from downtown SOMA Grand and the Federal building are how tall?! Miles – why should 6th street have pathetic 4-story wooden construction, in the 21st century?! Clearly developers found it prudent to build SOMA Grand in the area just as “sketchy”! Of course, if Board of Supervisor cronies insist on keeping the area for the junkies and homeless just like they insist on preserving Tenderloin for them, and only talk about imminent domain and “affordable housing”, the area will remain sketchy forever. Don’t blame the landlords for *that*!

  24. As an old lady, with limited income, I am in favor of proposition 13. Retirees across the state would be out on the street without Prop 13.
    I don’t buy this argument for a second. With the advancements in mortgage financing that have come since the 70’s, it’s ridiculous to say that someone who has gained hundreds of thousands of dollars in equity could not pay their thousands of extra in property tax bills.
    Why is it so hard for people to comprehend taking money out of their house’s equity for property taxes, but not hard to comprehend taking it out to buy a boat?

  25. Prop. 13 hurts new buyers, same as rent control hurts new renters as both are subject to the market. If prop 13 should be repealled or modified to market values, it should also apply to renters and not just owners. If a one-bedroom apartments sell for $500,000 then the tax on that apartment should be the same as if it were being purchased, roughly $5,700, and so on. However, I don’t think renters would ever agree to that, certainly not when it’s their money. There was a similar discussion sometime ago around the same damned issue and some comments suggested that its’ only 1%, and called the “rich” homeowners stingy and not wanting to pay their fair share for taking advantage of the benefits of living in California, specially San Francisco. Here is YOUR fair share!

  26. The reason this eyesore remains is that David Patel is impossible to deal with. The last time I tried, he said he wanted $50,000 up front to talk.

  27. Old Checker, because it’s their money to use however they want. Why would you take it from them, they have already worked and basically accumulated what they have based on the market realities that they faced living in this City. Grow up and do the same!

  28. Back to the topic in question, I’ve lived within one block of this building for the last 15 years, and the owners have consistently and repeatedly refused to sell for market price. For instance, someone offered them $400K back in 1997, and they wanted $750K. Now the state wants to give them $X million and they want >$2X. The owners are just being greedy and holding up a surprisingly-successful-so-far redevelopment and beautification effort, and I think they are going to find karma to be a real bitch.
    Height restrictions? Please…the developers of 436 Clementina (1/2 blk) found those to be pretty easy to get around. Same with the Intercontinental (1 blk).

  29. practically the entire south of market has a 50′ height limit, and it has for decades. drop all your conspiratorial theories. In fact, the Planning Dept has proposed raising the height limit in that vicinity to 85′.

  30. I’d be more than happy — delighted, even, if Prop. 13 and Rent Control were simultaneously repealed! Let the free market reign!! (It already does for me– my building is newer than June 1979 therefore no rent control applies). Bring it on … if prices get higher than I’d like, I’m free to move (as are those “poor” (rich) old ladies and mr. view lover!!).

  31. jamie: fewer people live in oregon+nevada than live in the entire greater bay area. Historically, the kleptocracy grows with population 😉

  32. Dub Dub…”Usually” being the operative, if not wrong word. Prop 60 is only good within your county and Prop 90 added only 7 other counties where you could take your tax with you. Check it out: Your short argument leaves out important details.
    So really, this isn’t ideal for all seniors. My Mo-in-law wants to cash out of her home to buy a smaller home (with no stairs) here in the city to be near family…but guess what? She can’t afford the taxes she’ll pay on a small condo even if she paid it out right because SF doesn’t accept your old tax even if you are over 55.
    And we should care about our Seniors…we are all going to be old one day too. Prop13 is just stupid. Other states that don’t have it and were able to reap the benefits our recent skyrocketing housing markets because they found other ways to skin a cat.
    I’m not an expert on this, but this is what I know from my own experience.

  33. “I’d be more than happy — delighted, even, if Prop. 13 and Rent Control were simultaneously repealed! Let the free market reign!!”
    You’re exactly right with that thought, Jimmy (Bitter Renter)! But the free market does not reign for you, just because your building is post-1979. Rent control has distorted the WHOLE market, and has led to a chronic undersupply of rental units at the margin – that is, rental units in multifamily structures that would be subject to the controls. Therefore, marginal rent prices are too high on those units, while AVERAGE rents are too low. I strongly suspect that if rent controls were abolished, rents at the margin would FALL, not rise, as more rental supply comes on to the market. AVERAGE rents would probably rise a bit, but it is tough to say.
    Exact opposite with SFH. Prop 13 ensures that marginal rents are too LOW, as Prop 13 lowers the implicit carry cost of the asset (the home), leading to an oversupply of the good (the ability to rent a nice SFH). It’s really not so difficult.
    @dub dub – I like your idea about the kleptocracy. When government engages in redistributive schemes (like Prop 13 or BMR subsidization or rent controls) it is always robbing Peter to pay Paul (among other objectives). As long as you (the government) are engaged in the business of theft, why not steal a bit for yourself and your friends?

  34. sf apartment association estimates nearly ten percent of the units in the city are voluntarily kept vacant by small building owners who would rather not deal with rent control for fear of losing control of their homes. therefore i would conclude that both marginal AND average rents would come down were rent control to be repealed. unintended consequences are almost always worse…

  35. i completey agree with all the talk about repealing prop 13. I cant believe a tax law this unfair is even legal, not to mention the poor economic sense it makes.
    speaking to this property in particular, there is no way it would stay vacant for anywhere near this long if the owners were incentivized to sell via higher property taxes.
    while there are probably a handful of retired over 65 yr olds who might be driven out of their home (unless exemption made), fort he most part this just helps to keep the divide as wide as possible between the haves and have nots.
    this type of regulation has the opposite effect of its intended consquences. i say we fix the mess now and get the economic gloom and doom over with. the state could use the money and the housing bubble is still 50% inflated. this would hep it find its true eqlibrium.

  36. “As an old lady, with limited income, I am in favor of proposition 13. Retirees across the state would be out on the street without Prop 13.”
    No, retirees would have a choice of extracting equity from their homes to pay their taxes or they could sell their homes and move to a less expensive place. A big jump in taxes would only occur for those who have benefited from a big increase in value and available equity. Ever heard of a reverse mortgage?
    I second Old person checker’s comment: “Why is it so hard for people to comprehend taking money out of their house’s equity for property taxes, but not hard to comprehend taking it out to buy a boat?”

  37. That windfall will be taxed when the property is sold. It is so easy to spend other people’s money. What problem will be solved by taking away the old persons home? Miraculously you bunch of socialist will be able to afford a home? Please, if you can’t do it now, you won’t be able to do it later since the prices may come donw, but your monthly tax bill will go up, so your monthly outlay will not get any better, and you still won’t be able to afford a place. Deal with the market realities and stop blaming others. Bust your ass working, save and jump into it, but stop making excuses and providing hypothetical solutions to your own personal market crisis. If you want equity, just raise more taxes on everyone that has any assets, not just real estate, spread the revenue base for the state into a more equitable system, eveyone pays more, regardless of whether you own or rent. Take part in financing the socialist values you preach so much.

  38. I am the old lady. I am also a Realtor. 50% of my clients are retired. I have helped clients with Prop 60 and know enough about prop 60 and 90.
    Here is something you hear a lot of older, retired people, who live on fixed incomes, say all the time.
    “I do not want to leave my house.” Or, “I only want to leave in a pine box.”
    I also do not want to move. So a trade is meaningless. Nor do I have hundreds of thousands in equity. I have debt.
    How do you think people put on new roofs, and remodel bathrooms, get new windows and pay for dryrot and new stairs and victorian paint jobs? Mend fences? How do you think they put their rugrats through Town School or B school or med school?
    The thought of paying more in property tax is absurd. I probably pay more in tax to the County of SF than Chevron does.
    I still am enamoured with idea of taxing renters, or more accurately, all residents, locally, equally.
    I find it amusing that so many people on this site assume just because someone is old and owns property that they have wealth. It is only wealth if you can trade it away. Trading your home away makes you homeless.
    I just moved a client into a SNF this week. She owned her home free and clear, buoght it at 30 was 82, but it was not enough wealth to put her into a decent nursing home. I dont know what happens if we lives past our money. In LA I think they give you a taxi to nowhere.
    God Bless America.

  39. Geez, everyone in this post (or who posts on this site in general, probably) is bitching about paying income taxes, property taxes, all kinds of taxes, but I bet most, if not all, of the posters on this site vote for the … DUMOcrats, right? It’s the DUMOcrats who rob Peter to give to Paul so Paul could continue to thrive on Welfare, get Section 8 housing and food stamps. If you’re tired of paying taxes, then vote Republican. Otherwise, quit whining about it.

  40. Was it the DUMOcrats that got us into a trillion dollar war? At least DUMOcrats will tax you to your face, the republican’ts prefer taxing future generations (i.e. your children and grandchildren) to pay for their little pranks.

  41. “I find it amusing that so many people on this site assume just because someone is old and owns property that they have wealth.”
    I thought owning a home in San Francisco was an incredible investment? Buy, sell, repeat, retire right?

  42. @Careful, repealing prop 13 doesn’t help your in-law ( > 55 “cashing out” of property *outside* SF and buy in SF county, which does not honor prop 90).

    If property goes down (I believe an incorrect assumption), her taxes go up. But if she can afford to buy “outright” then she can afford the taxes (which are high either way). With prop 13, her taxes are limited to the +1-2% a year, so it’s actually good for her long term!

    Or she could take her windfall, invest it conservatively, and rent in SF! Given the housing bubble, what is wrong with renting?

    She could also move to alameda county (prop 90 ok), and with the money she saves, hire a driver to see her kids in ritzy, one-of-a-kind, incomparable SF whenever she wants! You know, alameda — those smelly looking lights flickering (laughing?) at you in the hills across the bay!

    If you are intellectually honest and take out prop 13 with rent control in all its forms (I don’t think the two are the same, but that’s another discussion), guess what? You still won’t be able to buy anything. What is wrong with renting!?

    There are better ways of spending life than blaming prop 13, and waiting in your bunker for everyone to stop accepting fiat currency (that was for you, satchel 😉 😉 ).

  43. S&S – I think the number of fiscal conservatives in the Bay Area is vastly underestimated. Most people that I know want lower taxes and LESS government. There are many fiscal conservatives with a libertarian bent who are wary of the religous right. Most think the war in Iraq has been a disaster as has the whole Bush foreign policy. Sure Bush cut taxes, but he has also spent irresponsibly. He is a crony capitalist and his cronies are war profiteers. However, most of us think that the Democrats would be worse. We don’t want Hillary care, higher capital gains taxes, or any new govt programs. Does anyone feel that the government in San Francisco, Sacramento, and Washington DC is doing a good, cost-effective job at anything? Does anyone really feel that their total tax burden is too low?

  44. 20 years of vacancy? I could of live in the building all this time and no one would ever know.
    I wonder if there is any homeless in there since its a hotel. The building looks very interesting but creepy at the same time.

  45. dub dub: why do you think property prices won’t take a hit if Prop 13 is repealed?
    It’s pretty obvious that it will — it’s the same effect as increasing mortgage interest rates or anything like that. The net monthly/annual out-of-pocket costs to buy a place goes up for homeowners.
    You know that economics theory that government spending drives out private investment? Well, here it is.

  46. Viewlover – Don’t bet on the property taxes being paid when the property is sold. Ever heard of a 1030 Exchange? Well these owners will buy something else and defer their tax payments until they die – leaving their heirs to deal with it.
    The country won’t see the taxes from this sale for another 30+ years.

  47. secki, perhaps,however, in a like exchange there really is not a windfall to tax. It is still an exchange of one home for another of equal (theoretical) value. Nothing is really gained other than a transfer of market value which is on paper.

  48. Someone please explain to me why renters should be separately assessed for property taxes on buildings they don’t own. I pay my landlord’s property taxes indirectly through the check I write every month. I’m buying a service. Perhaps you just mean that in addition to federal, state, social security, medicare, and sales taxes I should pay a poll tax entitling me to San Francisco residency? We could call it that for the sake of honesty.

  49. @Usually — You are probably right, but my point is if taxes go up “to compensate” and people still cannot afford to buy, what has been accomplished (besides the obvious)?

    It makes more sense to not allow undocumented loans in the first place, rather than to pick on prop 13, whose benefits are available to everyone who decides to live and build a community in california.

    There’s a difference between the two neighbors paying different taxes: one helped build the community the other is now taking advantage of. It’s not as outrageous as many are claiming (of course, reasonable people can disagree).

  50. “Someone please explain to me why renters should be separately assessed for property taxes on buildings they don’t own. ”
    dub dub: good point.
    DavidQ:If we didn’t have rent control, I would agree with your statement.
    However, for buildings under rent control, given San Francisco’s tenant-friendly policies, I would imagine that the increase in property tax from repealing Prop 13 could not be passed to renters, thereby making it even more uneconomic to be a landlord.

  51. Redseca2 – my understanding of the eminent domain law indicates that the HMB case is very different from a downzoning issue. The city is entirely within its rights to downzone a property even if it reduces its development value substantially. As long as the remaining lot is feasible/profitable to develop then it is not inverse condemnation. Even if the potential profits from a development are reduced in a downzoning, this is still not considered inverse condemnation. The case in Half Moon Bay made the land worthless and undevelopable and hence the inverse condemnation claim was made successfully. Otherwise the only possible zoning changes would be to upzone everything all the time and that is just not possible. Regardless, the zoning in most of the SOMA has been the same since the 80’s although it is undergoing a potentially major revision with the Eastern Neighborhoods plan.
    Sashook – while I won’t jump into the debate about how dense development should be in various parts of the city, I’m just stating what I know from looking at the current zoning maps (as well as their possible changes in the Eastern Neighborhoods rezoning). The zoning and height limits change dramatically from the South Financial District to the Yerba Buena area to this section of SOMA so this property has a vastly different zoning than say the Intercontinental Hotel property just one block away. And again – typically you develop less dense/lower properties in less desirable areas and more dense/higher buildings in more desirable areas due to the economics of building costs in relation to their achievable prices.

  52. Honestly David Q, the portion you pay towards taxes is for the current tax base which is the issue around the debate on prop. 13. If this were repealed, then the landlord would have more taxes to pay and as a renter, this would be passed on to you and rightly so, the product costs more. Prop. 13 may not be the best thing out there, but it is what it is and the market has managed and responded to it with it being part of the mix. To change that now would create a hardship on many owners now, not everyone is sitting on the anecdotal points like the $55million mansion. My main issue with the debate is that there are some who very casually make a point about things that can be done by the homeowner effected in order to pay the higher taxes, refinance, take out home equity loans, etc.. My point is WHY SHOULD THEY! To correct a problem that once corrected would create others? There is an area in Houston called West University that was once primarily small homes and had an elderly population. It became popular and market rates skyrocketed and since taxation is based on market values, the $90K home is now worth $600K and many older residents were forced to move. That would happen here as well, and quite frankly, that is not right in my honest opinion.

  53. It became popular and market rates skyrocketed and since taxation is based on market values, the $90K home is now worth $600K and many older residents were forced to move. That would happen here as well, and quite frankly, that is not right in my honest opinion.
    Please explain to me how they were “forced to move” if they gained $510K in equity.

  54. View lover: I’m sure you already know this, but property taxes are assessed on the property’s market value. If a person bought the property for $90K that is now worth $600K, obviously, the property tax is going to adjust upward significantly.
    Sure, the owner could take out the equity to pay the taxes, and as equity might seem like “free money,” it really is not; it is still a loan that needs to be paid back. And, for an elderly person who is likely in retirement, s/he may not be able to afford that.

  55. I hear terrible stories about ‘normal'(not super rich, not elderly, etc) people living in other states where they buy a prop, and 5-10 yrs down the line, all of a sudden taxes go up through no fault of their own. I shouldn’t have to go back and pay a revised tax on a piece of art just because the artist up and dies and his work becomes valuable.
    But, I’d be okay with an adjustment of Prop 13 on rental property IF somehow those costs can be transferred in some way to the tenants. Otherwise, you think you’ve seen a lot of TIC/Condo conversions? You’d see a bunch more.

  56. “Sure, the owner could take out the equity to pay the taxes, and as equity might seem like “free money,” it really is not; it is still a loan that needs to be paid back. And, for an elderly person who is likely in retirement, s/he may not be able to afford that.”
    Ever heard of a reverse mortgage? No payments until the property is sold or the owner passes away. Of course it’s not “free money”, it’s the cost of living in a appreciating neighborhood.

  57. ^^^Michael beat me to it. An elderly person who just gained $510,000 in equity should be able to get a reverse mortgage that pays for their property taxes plus some living expenses for decades and decades.

  58. view lover checker? Excuse me but I don’t need a shadow buddy. Besides, you miss the entire point. It’s not like fixing prop 13 will make housing affordable. The mortgage payments may come down,maybe, but the taxes will increase. If you can’t afford it now, this will not change things.
    Also, if you ever get to own property, the last thing you will want is for the gov’t. to keep taking more of your money or having it dictate where you can live. Once you are old the options are less, and for all of the kindness that SF people think they have, the approach to have people on fixed incomes suffer or spend their assets to pay for more gov’t services or else, is somewhat contradictory to the LOVE flowing in SF.
    And what is gained? More state spending because the state can never get enough. I’m surprised that no one seems to notice that while the state revenues increased due to property taxes, so did the budget. Come on,it’s an animal that can’t be satisfied. And really, this is not going to change, so why not just stick to the practical reality as opposed to the hypothetical, which in this case, is why the building can’t or won’t be sold.

  59. “Besides, you miss the entire point. It’s not like fixing prop 13 will make housing affordable.”
    I think you’re missing the point. I already own.

  60. I’m not advocating overturning prop 13 to make housing more affordable – I own a house, I benefit from prop 13. But prop 13 makes situations like the one in this post happen, because property taxes act as a great incentive to redevelop underutilized properties.
    Do you really think this place would have been vacant for 20 years if the property tax bill kept increasing as the value of the property increased?
    Also, I was picking apart your notion that somehow prop 13 keeps seniors from “being forced to move”. That’s a huge red herring. I’m fine with limiting the property tax rate – just not limiting the actual taxes paid. If a property value goes up, corresponding increases in maintaining infrastructure in the area also increase – so taxes paid should. The rate charged by the government doesn’t need to change. As the costs of items increase, the government shouldn’t get more money? That’s insane! Only you are free to benefit from inflation?

  61. Prop 13 should be repealed for all but primary residences. Rental units should be valued based on the rents they produced so people that own rent controlled units can appeal their property valuations based on the artifically low rent which is limiting the value of the rental property. If/when the renter leaves and a new renter comes in at a higher rent the value of the property would increase when revalued next year.

  62. Do you really think anyone wanted to live in this dumpy area during the last 20 years, or even now if suddenly this was a beautiful condo, if so, why is SOMA Grand only 30% sold.
    Only I should benefit from inflation? What kind of voodoo economic argument is that? Just because prices rose irrationally during the last couple of years does not mean the the infrastructure changed at the same clip. Technically, the cost of gov’t should have a lag as the true basket of goods did not increase at the same rate as housing alone which is not even market driven but speculative. So how can you directly correlate the “needed” increases in govt’ spending with irrational prices increases of the real estate market?
    And by the way, I also own properties. On top of that, the city keeps increasing the value of the property every year but as we all know and see with some of the examples in socket-site, prices are not going up. Per your argument, when are the infrastructure costs coming down?

  63. Viewlover, you’re talking about the last five years. I’m talking about since the advent of prop 13 in the 70’s. The last five years were clearly an anomaly.

  64. “Do you really think anyone wanted to live in this dumpy area during the last 20 years…And by the way, I also own properties.”
    Obvoiusly you are too affluent to want to live on Sixth Street, but there are plenty of people who do. There is a renovated building and a new building on 6th St offering affordable housing, and each has a wait list.

  65. I’d be fine with Prop 13 – all they’d have to do to fix it to be reasonable is index it to the CPI.
    Same with Rent control.
    Since public assistance is already tied to CPI, problem solved.
    (I’d still prefer both be abolished – if you want to protect the poor elderly, then write a law to protect the poor elderly – it ain’t rocket science.)

  66. “Prop 13 and Rent Control go hand in hand. You can’t have one without the other.”
    The vast majority of California is not on rent control, only San Francisco, Santa Monica, and maybe one or two other cities. This “bottom line” statement doesn’t make a lot of sense.

  67. I live in Seattle, but I was born in SF and my sister lives on Telegraph Hill now (in a sweet rent-controlled apartment.)
    Prop 13 makes me glad I live in Washington, where we have no income tax and a comparable sales tax to SF. The supply of housing isn’t better than SF, but at least the taxation is more equitable.
    Seattle has a senior citizen 50% reduction on property taxes, but it doesn’t apply to homeowners with above average income.
    California could easily update prop 13 with a similar senior citizen exemption that offer lower taxes for poor old widows, while taxing rich professionals fairly.

  68. So you want to pass property taxes onto renters, eh? OK, as soon as all deductions for property ownership are revoked, including the welfare-state’s biggest joke — the mortgage interest deduction. Renters already pay a higher percentage of their income in taxes than owners because they can’t write off their housing costs. This remains true even when you factor in property taxes (also a deduction). The tax burden on renters makes it harder for them to save up a down payment and join the aristocracy. Kill the mortgage interest deduction and Prop 13, watch the prices fall, the “welfare” owners sell under duress, and the working stiffs finally have a realistic chance to buy. Until then, as others have pointed out, renters will pay property taxes every time they sign a check to the landlord. The deduction, of course, will go to the landlord.

  69. Maggie,
    “Renters already pay a higher percentage of their income in taxes than owners because they can’t write off their housing costs.”
    Where’s your data? How about that investment banker making hundreds of thousands of dollars living in a rent controlled place in the Marina laughing at that statement.
    I’m sure you can bring up an equally anecdotal example. Back up that statement — no way any of us can take that statement at face value.
    Money out of pocket is money out of pocket, regardless of whether or not it’s a deduction. That’s been the whole debate of buying vs. renting, unless you’ve been ignoring that discussion that’s been going for the last 5 years or so.
    Tax deduction is a red herring.

  70. Tally all the renters in this city who contribute nothing at all parcel tax wise.
    If property taxes were allowed to be proportionally passed on each year to the renter, we would se a lot less costly propositions on the ballot every year.

  71. “Tally all the renters in this city who contribute nothing at all parcel tax wise. ”
    That’s only because of rent control. If you got rid of rent control, this wouldn’t be an issue.

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