[kinofcain]

One of the reasons that cities build office space while ignoring residential is Prop 13 which fixes residential property taxes. Taxes on equivalent office space and the business it generates are a better source of revenue over time for cities than the fixed taxes from housing. This disincentivizes balanced planning.

One thing that also should be mentioned: while it's perfectly ok to want your city to stay the same, it's not practical to put the burden of growth on other cities. And it's also not legal. California law actually requires municipalities to plan for and support their share of new housing[1]. Something many cities are not doing.

[1] http://wwwww.ppic.org/content/pubs/report/R_203PLR.pdf

[nickjarboe]

Prop 13 actually fixes commercial property taxes as well so long-lived corporations end up paying very low tax. In addition, one can also pass the lower property assessment value on to ones children (principle residence and up to $1,000,000 other property)[1]. California has been slowly building up a landed aristocracy.

[1]http://www.leginfo.ca.gov/.const/.article_13A

[raincom]

True that. In fact, every set of buildings have their own legal entity. So, when these buildings are sold, prop 13 does not impact them. That's because the legal entity remains the same even though the controlling interests are changed. Maybe, it is time to buy a home through a legal entity and sell that entity, so that the future buyer doesn't need to pay the tax on the increased price.

[amscanne]

I thought that loophole was closed? Doesn't a change in controlling interest cause the revaluation?

[nickjarboe]

What might stand up to a legal challenge is creating an entity that owns say ~1000 houses and when you want to buy a house you buy a very small fraction of the company with what your house would cost to purchase. Then the company would buy the house and let you live there until you want to sell. Maybe these already exist as a weird residential coop REIT.

[amscanne]

Isn't that a condominium corporation? I believe there are special regulations that apply there.

[PrimalDual]

I like that you bring the legality of these housing restrictions into question. I understand that there is a use for zoning laws in maintaining neighborhood quality; however, I think that what the Bay Area has is a defacto immigration control system. Notice that this doesn't mean expensive neighborhoods are illegal in general. The problem comes when government regulations are the direct cause of elevated housing prices that stop the majority of Americans from being able to live there. I'm probably wrong but I'd like to know of its even theoretically possible for the federal or state governments to do something about this.

[scruple]

I'll be the very first person to tell you that I am quite ignorant to many things in life. However...

> California law actually requires municipalities to plan for and support their share of new housing[1].

...I've watched this exact situation unfold in numerous cities in California, over the last 14 or so years since I landed here, and I think that it's a stunningly stupid decision that only benefits developers, municipalities, bureaucrats, etc... So...

> Something many cities are not doing.

Why should they want to? Genuine question.

[rsync]

"Taxes on equivalent office space and the business it generates are a better source of revenue over time for cities than the fixed taxes from housing. This disincentivizes balanced planning."

I am not sure either of your conjectures are true...

First, "over time" the tax returns from residential and commercial property, even under the prop 13 regime, should even out - since eventually everyone dies or moves out ... eventually all of the residential property changes hands (and resets to current taxation levels).

Second, brand new residential property gets immediately taxed at the current tax rate. So in the very short term that doesn't seem to be (relatively) disincentivized.

I'm oversimplifying, but it would seem that only in the medium term does prop 13 affected residential housing (relatively) underperform commercial property - in terms of (relative) tax receipts.

[kinofcain]

Sure but it's always "medium term": Taxes weren't fixed once, they are fixed at time of house purchase (and some other events).

It would only be revenue neutral if they had raised the absolute rates to make up for the fact that an increasing number of people are paying under the current rate.

[runamok]

Anecdotally I have heard that there are various machinations like shell/holding companies and partnerships which let you functionally prevent the commercial property tax from changing and is very common because the incentives are so large.