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What do other universities do?
Many large private universities in “college towns” make voluntary annual payments to their towns and schools. They have found this is the only sustainable solution. Some universities with annual payments systems in place include Princeton, Harvard, Brown, Yale, Cornell, Boston University, and Dartmouth. Note that all of these universities have substantially LESS faculty and staff rental housing than Stanford, but all make substantial annual payments.
What about other California universities – do they make payments?
Stanford is unique in California in providing large amounts of faculty and staff housing. The only other large private university in California, USC, has about 30 rental units for faculty and staff – Stanford currently offers almost 700 rental homes for faculty and staff, and will build hundreds, or even thousands, more in the coming years.
Has Stanford made this kind of payment before?
Yes. In 2001, Stanford made a one-time $10 million payment to PAUSD to mitigate the impact of the enrollment from the newly built Stanford West housing. In 2017, Stanford paid $1.5 million to the Menlo Park public schools to mitigate the impact of rental housing planned on El Camino Real that was expected to generate just 39 students.
Didn’t Stanford donate land for Palo Alto schools or provide low-cost leases?
No, this is a widely-held misconception. Four PAUSD schools are located on land formerly owned by Stanford – Paly, Gunn, Escondido, and Nixon. All four sites are owned outright by PAUSD, purchased between 50 and 100 years ago. All except the Paly site were purchased through eminent domain, which requires the buyer pay fair market value. The Paly site was purchased in two parts, one in the 1920s, the second in the 1950s. You can see the deeds for all four sites here.
Stanford says they pay a lot of taxes on the Mall and Research Park – doesn’t that cover their costs?
First, the fact is that Stanford itself pays only about $1.5 million in taxes to PAUSD each year, based on analysis of county tax records. This relatively low number is due to the little known fact that Stanford owns only about 10% of the Research Park buildings and 0% of the Shopping Center, having long-term ground leased and sold the buildings over the last several decades for hundreds of millions of dollars. The taxes are paid by the building owners, not by Stanford. For instance, Simon Properties of Indianapolis paid over $300 million for the Shopping Center in 2003; they pay all the property taxes.
Second, our school system requires BOTH commercial and residential property owners to do their share. There is no concept of a commercial property owner getting a “free ride” if they are also happen to be a residential landlord.
What about the many single-family homes on Stanford’s campus – do they pay taxes?
Yes, these homes are owned by their residents, with long-term ground leases, and pay property taxes just like everybody else. Note that in all cases, the owners, not Stanford, pay the taxes. This applies to condos as well. Only rental properties pose a problem.
How many students come from Stanford rental housing today?
About 400. Stanford West is home to about 250 students, while Escondido Village and Olmsted Terrace house another 100-150. Stanford also owns and rents out over 50 single-family homes, both on its campus and nearby, such as College Terrace; another 25 students live in those homes.
How much money are we talking about?
Today, Stanford pays $450K in rental housing property taxes to PAUSD for approximately 400 students living there. That’s $1.1K per students, which is 6% of the average PAUSD cost of over $19K; the annual shortfall for these students is over $5 million.
Stanford’s original GUP proposal forecast 275 new students coming to PAUSD. At $20K per student, the unfunded cost would be $5.5M a year, in addition to the existing $5M shortfall. The County has studied scenarios where Stanford is required to add housing that would generate up to 1500 students, at an unfunded cost of $30 million a year.
For comparison, Palo Alto’s educational foundation, PiE, through its extensive efforts raises just under $6M a year.
Does Stanford pay bond and parcel taxes on its rental properties?
Tax exempt properties, including Stanford’s, do not pay bond costs. They do pay parcel taxes, though multi-family rental complexes are typically treated as a single large parcel, paying the same amount as a single-family homeowner. Stanford West, with 628 housing units, is a total of three parcels. Altogether, Stanford’s bond and parcel tax contributions on its residential property is negligible.
Can Stanford afford to make these payments?
Yes. Just like any property owner, paying for schools and city services is part of the cost of ownership. Stanford has billions in annual revenue and over $23 billion in endowment – like other leading universities, they are capable of paying their share.