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The good burghers of Palo Alto are entirely insane
They're willing to pay for value they created themselves
Wait, there's more
One of the potential buyers is taking the unusual step of offering $16m under the market value of $55m. That buyer? The county of Santa Clara and the city of Palo Alto. Supervisor Joe Simitian of Santa Clara County wants the trailer park kept as it is, fearing that turfing out the residents will be just the latest shift in an area becoming a haven of the rich. The county and city believe the park's residents will be forced to move down the coast or across the Bay if the land is sold to private developers – so they want to purchase the space and keep it as-is.
The pair have been building up a stockpile of cash that's ring-fenced for providing housing for low-income citizens: developers have to throw some dosh on to the pile every time they build on undeveloped land. In June, the city council agreed to match the county's $14.5m pot, bringing the total fund up to $29m. The idea would then be to put the prime real-estate into the hands of a non-profit corporation that would continue to charge reasonable rents and use the money to maintain the site. That company, Caritas, operates other mobile home parks in California and said it would issue a $10m bond, raising the available funds to $39m – the figure on offer to Jisser. Sigh.
By far the largest portion of that $55 million (or even of the $39 million) is value created by the city of Palo Alto by their zoning it as land that you can build housing upon. That they are then intending to pay for the value that they have created at a pen stroke is simply nuts.
So, let's think about what should be done instead. Here's a listing over in San Jose. OK, this is 5 or 10 miles away, not entirely and absolutely local. But it's 20 acres for $1.25 million. Sure, some of that price difference is location, but most of it is that this land is zoned for one single house and one single house only.
One could imagine a sensible local council going and buying that land, getting the zoning changed and then making it available for low-cost housing. Or a mobile home park even. Or, possibly, even tip a wink to Jisser that if he were to cycle some of his $55 million into that property, then zoning would be granted for a mobile home park.
Except, of course, Palo Alto doesn't have the power over zoning over in San Jose. And it is a little bit out of the area. So, possibly an alternative. Let us use one of the local products, (at least, next town over) Google Maps. The search string “Palo Alto, CA, USA” gives you the city boundaries on that map. And a quick eyeballing suggests that a goodly 50% of the city is in fact “open space preserves” and the like. Rather like our Surrey golf courses, something that we might think has greater value as housing for people rather than occasional places for hikers to wander.
Or maybe not. Maybe places to munch granola bars and trail mix really are important. And those areas are the other side of 280, which would be a terrible penance for poor people to be stuck beyond.
So we could look a little closer in. Again, eyeballing it, but there appears to be – just the other side of the Stanford Medical Centre, then a hop over the VMWare campus – a 20 acre-ish bit of scrubland between Coyote Hill Road and Deer Creek Road, if we then leap over Tesla there's another similar area of not very much leading up to 280 itself.
If Palo Alto wants more land to be used for low-income housing, then it should zone one or more of these areas that are within the city limits for low-income housing. But for it to buy land that already has such zoning is simply insane.
For the value of that land lies in the fact that it is so zoned, something that the city council created itself, for free. For it to then purchase it is economics of the most absurd kind: it's paying a private citizen for the value it has created at a penstroke. The answer is for the council to buy some land not currently zoned for such housing and then so zone it.
Just like we Brits should do to rather more of Surrey, in fact. ®