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Stanford University recently surpassed the Getty Museum in Los Angeles as the largest recipient of property tax exemptions in California. The university received more than $16.8 billion in tax exemptions last year for its various campus properties, nearly half of the $35.2 billion of property tax exemptions in the county, according to the Santa Clara County Assessor.
Local leaders say the tax exemptions are depriving neighboring cities of much-needed revenue because there are fewer tax dollars to support local public schools, community colleges, special districts like VTA, and county and city governments.
As Stanford considers plans to build more student and faculty housing and continues buying off-campus homes for faculty, some local leaders are concerned about the university’s impact on their cities.
“Every time (Stanford) buys a home, that home potentially comes off the property tax rolls,” Palo Alto Council member Tom DuBois told San Jose Spotlight. “That’s kind of a big deal because it means their property will never be reassessed.”
The Santa Clara County Board of Supervisors voted earlier this week to accept a report from the university and local stakeholders outlining expansion plans in several areas, including building more housing for students and faculty. Before accepting the report, some officials expressed their own concerns about the university’s impact on cities like Palo Alto.
“It’s a double-whammy,” County Supervisor Otto Lee said. “It’s taking housing stock from the public. And two, it’s now the county … (that) is also losing out on that (revenue).”
Since the 1980s, Stanford and Palo Alto have had an ongoing agreement under which the university compensates the city for utilities, police and fire assistance and public transit. DuBois and Vice Mayor Lydia Kou said they’re interested in exploring models similar to those followed by some Ivy League universities, in which the universities pay more for city services as a way to recoup lost tax revenue. The funds could be used for increasing local library hours, subsidizing child care programs and expanding public transit systems, Kou said.
“Palo Alto’s needs have not been fully vetted,” she said. “I think it benefits all of us if we all work together.”
DuBois and Kou also have urged the university to build more housing for its service workers and contribute to Caltrain’s electrification project, which would help students and faculty who live far from campus to access the university more easily.
“The exemption supports the university in fulfilling its mission of research, education and service to the benefit of the region, country and world,” Stanford spokesperson Luisa Rapport said. “Stanford has also devoted significant lands in the Stanford Research Park and at the Stanford Shopping Center to commercial uses that are not exempt and generate significant tax revenues for the Palo Alto Unified School District, the city of Palo Alto and the county of Santa Clara.”
Private universities, hospitals, religious organizations and public schools are among the organizations eligible for property tax exemptions under state law. The spirit of these exemptions is that the loss of tax revenue is recouped through community services provided by these organizations.
Stanford’s recent moves to buy up local homes for its faculty has sparked a separate controversy at the county assessor’s office.
“The people in Palo Alto make the argument that Stanford doesn’t pay their fair share, and that’s understandable,” Assessor Larry Stone said.
Stone said Stanford has sold homes to its professors at below-market rates. Those professors have then expected their homes to be assessed at those below-market rates.
“The professors are all up in arms with my office,” Stone said. “They say we should assess them at the purchase price. We tell them no. The job of the assessor is assess all assessable property at its fair market value.”
Rapport said the assessments have created economic hardship for its professors. In response, Stanford has requested further tax exemptions on those homes to make up the added costs of those assessments.
“It is critical to Stanford’s educational mission to provide housing that is affordable for faculty,” Rapport said. “We have met with the Santa Clara County Assessor’s Office, and we welcome working with them to identify a resolution on this issue.
This story, from Bay City News Service, was originally published by San Jose Spotlight.
Thought the City wanted affordable housing for those who worked at Stanford – and now they’re objecting to Stanford providing that for it’s faculty? Interesting.
It’s called good business practice on the part of Stanford University.
Tax avoidance (legal) and tax evasion (illegal) are two different things.
Nearly everyone in their right mind chooses to avoid paying additional or any unnecessary taxes.
Affordable housing for hourly workers is not the same as housing for professors.
I can understand the argument for houses that Stanford purchases outside of Stanford-owned land and then resells to faculty below market value. Stanford should compensate their professors enough to handle the taxes at regularly assessed value; it’s just part of the cost of living and employing here, and it’s much smaller than the article’s 16 billion total. The city should get fair compensation for services it provides. But it sounds like Palo Alto wants to go well beyond that, and that’s just a plain money grab.
I added up how many housing units Stanford is contributing to the PA community based on PAO reports and subtracted the 795 Oak Creek apartments it just removed and came up with 114 units BEFORE counting the number of homes Stanford bought up in Coillkege Terrace and elsewhere.
Given Stanford’s never-ending expansion, that’s pathetic given that the populations of Stanford U, Stanford Hospital and Palo Alto are practically identical.
Speaking of Stanford Medical, Stanford’s so greedy they won’t even staff their own hoispital adequately thus endangering patients and the nurses. A friend who was on the negotiating team to settle the strike was horrified that not one Stanford rep had any awareness of what their jobs were or ANY experience with medicine or health care! Just greedy bean-counters. Shameful and dangerous.
@AGMidtown,
“The city should get fair compensation for services it provides.”
Just to be clear, services are not infrastructure. I would hope that Stanford can figure that out.
It’s o-b-s-c-e-n-e that these tax breaks go out PER YEAR in CA which talks life as if it’s Switzerland, with transportation infrastructure that is dismal, pathetic, fill in the blank.. where everyone needs a car and where the buses only take dollar bills. Caltrain can’t even master signage, has anyone around here ever tried to get around on train or a bus? Or is the Tesla enough goodwill.
The key to happiness (in any city) is to tune out local politics. Especially in “certain” cities. You should be able to be community minded without crushing your soul. When it leads to addiction to politics, it’s even sadder. It’s to the detriment of your own well-being.
@Jennifer,
“The key to happiness (in any city) is to tune out local politics.”
This article is also about state politics. Since you’ve indicated you moved out of Palo Alto, does your city have as much politics as Palo Alto?
“The key to happiness (in any city) is to tune out local politics. Especially in “certain” cities.”
The key to happiness re local politics is to have responsive city staff and elected officials who are represent the community they’re supposed to be serving, not their own interests and future political ambitions. They’re supposed to be “minding the store” and ensuring OUR money is well-spent because they know the “buck stops” with them — in the OLD sense of the phrase.
resident3 – No, our city is about the same size as PA (60,000 plus), but it’s not political at all compared to PA. We are PA taxpayers/homeowners.
My point was PA is a very nice city, but the dominance of Stanford creates oppression to some residents, and it doesn’t have to be. Let the city leaders/elected officials deal with the politics and enjoy your life personally/professionally without letting politics destroy your mental well-being. Voting is important but getting all “caught up” is to the detriment of your happiness.
I think Jennifer is right. Local politics is crazy-making b/c ridiculous stuff goes on and there’s pretty much nothing residents can do. The answer should be “but you can vote” but somewhere along the way, CC relinquished control of the City to the City Manager and we do not vote for the City Manager. This broken dynamic is getting increasingly problematic and expensive.
CC: take back your control!
@Online name,
“They’re supposed to be “minding the store”
I agree, and unfortunately the “store” is tied to our wallets. So, who knew that half of Palo Alto’s property owners like Jennifer aren’t here. The happiness score for distant landlords must be off the charts, rising property prices, no politics, no need to upgrade much and also some extra cash on the side if you do AirBnb or VRBO.
Stanford is a UNIVERSITY that does enormous public benefit. Good for them!
Yes, Stanford is a UNIVERSITY but like university towns all over the country, the towns in which they’re located are suffering although few are growing as rapidly or as well-endowed as Stanford (which hasn’t made them more public-spirited.)
Check out what’s happening in towns like Princeton, NJ. But even Princeton’s not expanding into other counties and other surrounding towns.
Stanford, you are acting like a little jerk for not paying the full impacts of your development, whether in taxes, for housing, schools, city services, infrastructure, transportation, etc.
Grow up, you’re acting like the entitled elitist institution you are. Time to stop sponging off the town folk and start paying your own way.
16.8 billion is 168 million in property taxes each and every year. 45% of property taxes funds PAUSD – $75 million per year if there were no exemption. instead, the palo alto and los altos hills property owners make up for this by paying an additional parcel tax.
8% of property taxes goes to the city – 13.4 million if there were no exemption. instead the palo alto residents pay either through service reductions (hours libraries are open, etc).
Stanford doesn’t need to plead poverty either with a 27+ billion endowment, income from Stanford Research Park, Stanford Shopping Center, and administor salaries well into the $300,000 – $1,000,000 range.
So I do think it’s time for Stanford to pay it’s fair share.
Maybe this is partly a federal issue — of looking at what types of organisations should be tax-exempt (or tax-reduced?)
https://smallbusiness.chron.com/nonprofit-organizations-pay-property-taxes-61900.html
It’s maddening to read this. I don’t often agree with Lydia Kou but her proposal to charge Stanford more for services sounds right, especially if it’s a vetted model used by other communities with an extremely wealthy university in their midst.
Good for Vice Mayor Lydia Kou. Remember that we — the resident taxpayers are — subsidizing Stanford’s refusal to pay / do its fair share in the form of constantly rising utility rates funneled into the General Fund while we’re STILL awaiting the restoration of pre-pandemic services like at our libraries.
Palo Alto leaders have a short memory. As a native Palo Altan, the city has gained its stature and importance as a result of Stanford’s global accomplishments and contribution. Business and tax revenues have benefited from Stanford’s success, and now Palo Alto wants more. Start helping small retail business back to downtown and Calif. Ave. instead of offering incentives to start-up office spaces that contribute nothing to the city.
@PalyJim,
“As a native Palo Altan, the city has gained its stature and importance as a result of Stanford’s global accomplishments and contribution.”
The main driver for growth have been jobs; Stanford isn’t the only employer nor is Palo Alto the only city to choose from, but if there’s a standout reason the City has attracted people to plunk millions for small cabins, it’s because of K-12 Palo Alto schools. People with a longer term commitment to the City.
Offices, and the transient office and start up population are a completely different crowd, I don’t think they even shop here. Oh wait, maybe only food. Does Stanford really help? I think it mostly attracts the temporary population.
@resident3,
Thank you for your comments; I do not agree that Stanford has some kind of enduring obligation to Palo Alto’s economy, rather one of coexistence whose agreements already exist. From my observation, a significant group of people “schooled” in Palo Alto choose to remain, but that is not the primary purpose of a quality education. Without Stanford, Palo Alto is really just another wealthy small city on the Peninsula, thus inappropriate to seek new ways to exploit our relationship with the University.
@Paly Jim,
“I do not agree that Stanford has some kind of enduring obligation to Palo Alto’s economy, rather one of coexistence whose agreements already exist….. inappropriate to seek new ways to exploit our relationship with the University.”
What I saw on Palo Alto’s list of demands for coexistence are about planning for infrastructure, transportation, and issues tied to Stanford’s growth. Not about growing Palo Alto’s coffers or to exploit. If there’s no planned growth for Stanford, regionally or for the state, no need to plan that much. Is Stanford committing to not growing?
With a growing Stanford, Palo Alto is a small city on the Peninsula whose citizens have to carry the cost burden of providing them with enormously expensive local infrastructure and services their growth demands if they will not. This needs to be a symbiotic relationship, and planning for this growth requires good faith negotiation. Stanford, in recent years, has taken a dismissive and confrontational approach to the community–perhaps that is because they are expanding facilities in other communities who are also asking for mitigations and their resources are stretched. I wonder if they may have overreached, and so they want us to foot the bill for their local growth needs. (Dear friends in San Jose and Redwood City and elsewhere, take notice of this behavior. Your new neighbor will do the same to you.) Stanford, you undermine your brand and your relationships with this behavior. Reach out to problem solve with your neighbors. Your confrontational posturing is making former community partners frustrated and angry. That is no way to start any negotiation.
This article is filled with falsehoods, dis- and mis-information.
Every university town has a town-gown ‘problem’. It has ever been thus. The comments, above, seem to indicate the commenters don’t understand this evolution.
Stanford and the political/government neighbors re-negotiate a new general use plan, on a more or less regular period. Tom DuBois should know this. The reporter should know this (but apparently, either nether of them know this — or, they are being disingenuous for the purpose of ‘positioning’, and influencing public opinion through a fake narrative, in preparation for the next set of negotiations).
Former Stanford President John Hennessy, shortly after passing the reins to the new President, expressed relief and satisfaction that he would not have to lead the next general use plan negotiation. Implication: it is one of the biggest, most difficult, parts of the Stanford President’s job.
In other town-gown situations, *any* property owned by the university, which generates income, is subject to tax. Dormitories fall under this category. Sports venues which charge admission. Faculty and staff housing which is either rented, or in some manner subsidized.
Santa Clara County’s Assessor is responsible for assessing property taxes on leased Stanford lands, and on structures erected upon Stanford lands. See: https://www.sccassessor.org/property-information/resident/domestic-partners-2.
This article is one-sided and incomplete. The reporter should do a better job of explaining the context. If one googles {does stanford pay property tax?}, one will find an article last September, wherein Stanford is reported to be seeking additional property tax exemptions. This article, in that context, is a sort of ‘rebuttal’ by Palo Alto.
IMO, the Stanford Daily has done a better job of objective reporting. See, for instance: https://stanforddaily.com/2019/11/01/after-years-of-fighting-for-its-approval-stanford-withdraws-general-us
It’s all about posturing and positioning.
I think Stanford should contribute to pay their impact on local community ESPECIALLY to PAUSD, our local K-12 public school district.
I regret that they purchase local single family homes outside of their campus, competing with the public.
Stanford has one of the largest university endowments in the world. Please work with us, Stanford
– from a highly taxed PA taxpayer
I’ll go along with taxing universities only when the government starts taxing churches. Only in one of the wealthiest communities in the US are people complaining that a neighboring university that provides open space for hiking, access to art, culture and sporting events, programs and events of every sort, a continuing education program and more is not paying their fair share. It’s so shockingly myopic it’s just unbelievable.
Stanford was recently described as a land-use developer and financial accumulator, ($37+ BILLION dollar endowment) with a university as a side business.
That description is more and more true.