back to article Would YOU make 400 people homeless for an extra $16m? Decision time in Silicon Valley

A trailer park owner faces an unusual conundrum: sell his property for $39m and keep the long-term residents on his land in their homes – or take $55m and watch property developers tear it all down. That's right, it could only be Silicon Valley. Joe Jisser's parents bought the park's 4.5-acre site 30 years ago for the not- …

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  1. oldtaku

    Oh, he's not a Bay Area tech bro or VC... that makes it harder. Those guys wouldn't hesitate an instant, and would then grind the now homeless residents into soylent for an extra $160k.

    1. BillG Silver badge
      Holmes

      This is Silicon Valley. Sorry, but I believe that if he sold to the non-profit for $39M, that non-profit would expect to be approached by the same developers for that same $55M, earning the non-profit a cool $16M in profits. That's not including the under-the-table fees that would be passed to make the deal "go smoother".

    2. Anonymous Coward
      Anonymous Coward

      If this was the same story in London would anyone bat an eyelid about the property being sold to the highest bidder??

  2. cirby

    Or...

    Take the $55 million and give each resident $40,000 from the overage?

    Might even be able to use it as a tax break...

    1. diodesign (Written by Reg staff) Silver badge

      Re: Or...

      Sadly, 40G won't last very long in SV. Even if you take $125k per household, that covers just under three years renting a median one-bedroom apartment in San Francisco. I suppose you could find another trailer park for chunk of cash.

      C.

      1. Anonymous Coward
        Anonymous Coward

        Re: Or... Not 40G

        Tax would probably eat significantly into the $40,000 and the seller would have hassle. Do you pay the same amount to someone who has just moved in as to the longest standing resident.

        Also splitting the difference would be a common approach so it could be $20,000 less taxes.

        Not an easy choice.

    2. Anonymous Coward
      Anonymous Coward

      Re: Or...

      The buyout for current residents to evict is a set amount $25k+ plus paying difference in rent from current amount for a year in nearby area.

      If the land is sold @ $29 mil, the park would have to be brought up to code which it currently is in violation of, meaning not everyone would be able to stay. It's a very difficult situation as the land is so valuable :/

    3. AbeSapian

      Re: Or...

      Sadly U.S. tax laws would treat any payment to residents not financially vested in the property as gifts. Gifts over $14,000 are taxed. The tax is paid by the grantor, not the recipient.

  3. Anonymous Coward
    Anonymous Coward

    Take the $39m, you can still live the rest of your life without doing a thing, and help out your neighbors.

    1. wolfetone Silver badge

      He's an American. He won't think like that.

      1. Mpeler
        Unhappy

        American?

        Bull$hit. I'm an American, and I don't think like that, nor do most of us. And it doesn't require being socialist or Marxist to "love thy neighbor".

        Having lived and worked in the silicon valley, along with having family members in some of these mobile home (not "trailer") parks, there are very few places for the (mostly elderly) residents to move to.

        Managed care facilities run in the THOUSANDS of dollars per month, and most of the other mobile home parks in the area are full, many with waiting lists.

        No, the problem is like most of the other problems in Kalifornistan - the few pockets of prosperity are no longer affordable for the folks (and their parents) who made it so.

      2. casinowilhelm

        Sadly right now London is full of exactly the kind on venal developers who would be all over kicking these people out in a heartbeat for a few extra quid. They have already wrecked a lot of places I enjoyed going to only 10 years ago. It's definitely not just an American thing.

      3. Triggerfish

        @ Wolftone

        Seems a of a bit harsh judgement of Americans.

    2. Triggerfish

      25 million and a clear conscience seems like a win to me.

      1. h4rm0ny

        Yeah, the way you'd feel with £25m and calling yourself a good person beats how you'd feel with £39m and doubting it. And you're going to be free to relax and do what you want either way.

        Plus the world could sorely use some examples of putting compassion ahead of profit. That has a knock on effect on people's lives too.

    3. cs94njw

      He'd make $35m profit.....

      Unless he's got some huge plans for cash, he might as well take the lower amount, ensure a clean soul, get a statue built in his honour, and live it up in Hawaii guilt free.

    4. Super Fast Jellyfish

      be nice to your neighbors

      Have an upvote but I'm curious as to why you posted AC, are you worried fellow USAians will hunt you down for not wanting to get the last dollar from the system?

    5. Suricou Raven

      There comes a point when money ceases to be a tool of resource acquisition and becomes a means of keeping score.

  4. Ketlan
    Happy

    No choice really.

    I'd have to go with the $39m. My conscience wouldn't let me do anything else especially if some of the residents are friends.

    1. Yet Another Anonymous coward Silver badge

      Re: No choice really.

      How many condo towers are they going to build on the land?

      If you can fit 100 mobile homes on the site then you can probably build a couple of 80 storey condo towers with 4 units/floot = a lot more homes for people than a trailer park

      1. Number6

        Re: No choice really.

        This is probably Earthquake Country liquefaction land, you're not going to want anything much above two or three storeys or the cost of construction will be excessive. The way things work with the property taxes is that the land at the moment is probably paying no more than $100k/year in taxes. I assume if he sells it for $55m, the annual taxes will be $550k plus the added value of what's built on it. So you might fit more people on the land but they'll be ones who can afford rent that's several times higher than the current residents are paying. The county is attempting to stop the low-income families from being displaced.

        1. JoeT

          Re: No choice really.

          I used to rent a place 1500 feet from that trailer park and passed it every day on the way to work. It isn't earthquake liquification land, but just a historical oddity.

          Trailer park rents very strictly controlled; Palo Alto itself completely forbid any rent increases at all 14 years ago. At the time, the place was run down and needed improving; it's simply gotten worse. To put it in perspective, rent for a nearby 1170 square foot 2 bedroom apartment (1960's construction) is currently listed $3400/mo, and I paid $1600/mo for 800 square feet during the last recession (also 1960's construction, in all it's ungrounded outlet glory). Current trailer park rent for a single-wide mobile home spot (single-wides area maximum of 1600 square foot but sizes can widely vary) is ~$750/mo.

          It currently houses 117 units; the original plan the owners proposed was to replace it with 180 condo units. Yes, they were clearly going to be unaffordable to the current residents, but the problem isn't a lack of *affordable* housing, it's a lack of *any* housing. There is a large enough segment of Palo Alto voters who disagree with any change that the land use has become insane. Consider this lovely empty lot at 575 Maybel Avenue (https://goo.gl/maps/CfKU5)... Palo Alto voters explicitly shot down a plan for 12 single family homes and 60 units of affordable senior housing 2 years ago. So instead of, say, 100 people having a place to live, there is still a fenced-in weed filled lot. Or consider 4146 El Camino Real (https://goo.gl/maps/RRo24)... Google Earth shows it in one of the few times it's ever been plowed, but it's about an acre of fenced-in weed-filled lot, and except for a lone billboard, has been so for over a decade.

          And both of those are within a kilometer of the trailer park.

          Palo Alto, the Bay Area, and California have a bad land use problem. It makes no sense for a place as run down as 3775 Laguna Ave (https://goo.gl/maps/WeIHQ and it looks a lot worse in person) to be worth an estimated 2.2 million dollars. London has a terrible affordability problem, but at least in London people renovate their dearly valued buildings and go denser. Palo Alto seems to want to stick with single-story separated houses (with minimal attempt to upgrade the quality from the shoddy post-WWII construction binge) for all time.

          1. Anonymous Coward
            Thumb Up

            Re: No choice really.

            @JoeT - just to let you know: if I could upvote your clear and logical explanation of the situation more than once, I would.

          2. ecofeco Silver badge
            Thumb Up

            Re: No choice really.

            JoeT, thanks for the insight and background.

            I wonder if they realize just how bad they have screwed their future by banning more housing?

          3. Tom 13

            @JoeT

            So based on your remark, that means the REAL humanitarian solution is to sell it to the the commercial developers with a caveat: All the current mobile home owners get to convert their mobile to one of the condos and keep the same rate for rent until such time as they sell their condo. Maybe the price goes down a bit from the $55, but it is the best overall solution.

            1. Number6

              Re: @JoeT

              But where do they live while the park is being developed?

          4. Alan Brown Silver badge

            Re: No choice really.

            "There is a large enough segment of Palo Alto voters who disagree with any change that the land use has become insane"

            Similar things have happened in the UK (Greenbelt Madness and "Areas of outstanding natural Beauty"[*]), which is why (sub)urban land pricing is so ridiculous.

            At some point things will snap (ie, supply will pick up) and house price bubbles will pop. Until then, demand outstrips supply by an order of magnitude so any attempts to control prices is doomed to failure.

            "Palo Alto seems to want to stick with single-story separated houses (with minimal attempt to upgrade the quality from the shoddy post-WWII construction binge) for all time."

            Simple economics: If building more dwellings at higher density is allowed anywhere then it becomes almost impossible to stop it spreading and existing average prices will decrease, leading to a decrease in apparent worth of the residents. On that basis most will oppose any changes through sheer naked self-interest.

            People leverage the paper worth of their houses/shares/yachts/cars/investments in order to acquire/spend more money. If the paper value decreases then they run the risk of being overgeared and banks start attempting to claw some back. In extreme cases (such as 1987) you may as well wallpaper your house with worthless stock or land certificates.

            It's entirely possible that a small decrease in Palo Alto house pricing would lead to a rash of foreclosure sales in the area (which drives down prices and creates more foreclosures) - and also entirely possible that stirring up fear of that is what drives the opposition to denser housing.

            [*] There is nothing "natural" whatsoever about these areas. Farmland isn't natural, nor are artificially planted forestry plantations. Using the name is a classic example of doublespeak that makes it harder for anyone to challenge them - "You oppose nature! Sacrilege!"

      2. Bitbeisser

        Re: No choice really.

        Sorry Bubba, but the area is also prime earthquake country, so you can forget about those 80 story condo towers...

      3. Alan Brown Silver badge

        Re: No choice really.

        "= a lot more homes for people than a trailer park"

        And those homes will cost a lot more than people in mobile homes can afford. Developers in SillyValley are simply out to make as much money in as short a time as possible. (I saw something similar happen in Belmont. The trailer park residents were left with a few months to "go somewhere else or be evicted anyway")

        The USAian model doesn't do social housing as a private obligation (even as a sale caveat it's easy to get nullified)

        The UKian model says it will do social hosuing and then renegs on the deal after getting that signed off.

        So far, councils have repeatedly bent over and taken it when developers have lied about their social housing obligations.

        It's not just elderly in trailer parks. As with social housing in the UK the vast majority of residents are working people, not unemployed bums.

  5. jgarry

    Sell 50M keep airspace put trailer park on top.

  6. Number6

    I assume he'll be paying some sort of capital gains tax on it - is there any way he and the council can work out a good way to offset the loss (given that charitable donations attract tax relief, he's donating $16m to a good cause). I'd go back to them with that proposal, let them pay the legal bods to see what can be done. Or see if he can charge them the full $55m but loan them the other $16m. If all else fails, just accept the $39m, it's probably more than he'll need.

  7. Mark 85 Silver badge

    He's made his choice...

    It sounds like the money got his attention and he's selling. Me, I'd either keep it or sell it to the county just to make a statement. Given the way governments run things however, if I had friends there or people I cared about, I wouldn't sell.

  8. Gene Cash Silver badge

    Can you trust the county?

    I've seen 'em do things like this "for the good of the citizens" then up and sell a year or two down the road.

    1. Anonymous Coward
      Anonymous Coward

      Re: Can you trust the county?

      I've seen 'em do things like this "for the good of the citizens" then up and sell a year or two down the road.

      It may be unfair to the council, but that was my exact thought when I saw this.

      1. Number6

        Re: Can you trust the county?

        That's where a word with a lawyer in advance to see if he can enforce a sell-on clause might be useful: "if you sell this within 10 years for more than $39m then I get half of the excess up to a maximum of $16m". That stops them trying to make a fast buck.

  9. John Savard Silver badge

    Fairness

    I don't want to see people kicked out of their mobile homes, but I don't think one individual landowner should have to pay for this. The city of Palo Alto and the county of Santa Clara are governments that collect taxes. They can come up with the rest of the $55 million. It's their job to protect low-income people, not that of any one person.

    1. johnaaronrose

      Re: Fairness

      I'm assuming that Jisser does not have debts or other commitments he needs to pay. If Jisser sells for the $55 million, then it just shows that he's another greedy swine. I would like to ask a simple questions: how many $millions does one person need / be entitled to have?

      1. Anonymous Coward
        Anonymous Coward

        Re: Fairness

        I would like to ask a simple questions: how many $millions does one person need / be entitled to have?

        All of them? All the $millions in the world! In my bank. Which I own!

      2. LucreLout Silver badge

        Re: Fairness

        @JohnAaronRose

        I would like to ask a simple questions: how many $millions does one person need / be entitled to have?

        To which my answer would be this:

        1) How many potential millions are there?

        2) Who doesn't want to be a millionaire?

        It'll not be popular in these shires, but the fact remains that most people in the west have more than they need. My house is bigger than it strictly has to be, my car faster, and I have more than a few months cash at bank.

        I'll probably not feel secure until I reach the following situation:

        A) Mortgage free property large enough for my family within good schhol catchment areas.

        B) Enough income to live comfortably after taxes are paid, without working (I'll get sick, then I'll get old, and I can't work forever).

        Ok, so will I stop building wealth when I'm secure? Nope. Sorry. I'd probably continue while I could to help set my children up with housing deposits or uni fees, that sort of thing. After all that.... well, I'd really love to own a Ferrari.

        The list of things that consume money is realistically endless. So how much of it do I feel entitled to? None/nothing. But I have and will continue to earn my way, probably beyond any strict sense of need. Life is about more than need.

    2. Tom 13

      Re: Fairness

      I don't agree that it is their job to protect low-income people. But to the extent that they claim that power, I agree that it should be borne equally by all those supporting that government.

  10. Anonymous Coward
    Anonymous Coward

    Cash in on the value - Build multi use / income building

    Here is how I would do it.

    Manage the project myself, not selling it out.

    Take the equity available in the land to finance construction projects.

    Grant all current tenants in the trailer park "rent control" with clauses for financial liability for coercion to move out. Only clause for non-payment or wilful destruction of property, and a proper mediation to approve the eviction or court appearance.

    The site will support a lot more people as a proper apartment/condo project, and better living conditions for the current residents.

  11. Henry Wertz 1 Gold badge

    I'd take the $39 million

    I'd take the $39 million. It's plenty to retire on anyway, and a good way to avoid people losing their homes (or, since mobile homes are after all mobile, having to move it to another mobile home park.)

    And as a practical matter, who is going to fill these $40,000 a year jobs if there's no affordable housing in the area for them to live in?

    1. Anonymous Coward
      Anonymous Coward

      Re: I'd take the $39 million

      And as a practical matter, who is going to fill these $40,000 a year jobs if there's no affordable housing in the area for them to live in?

      There's plenty of people who need a job, they'd just have to commute a long way, adding to the long, poorly paid hours they already work, and eating up more of their low wages. This is how it works in any city with sky high property prices, be it LA, SF, New York, London etc etc.

      Just part of the way that the rich get richer, the poor get ever poorer. In this case the rich have more premium apartments, and fewer poor neighbours, the real workers get even crappier homes and have to spend more time and money to get to jobs shovelling shit for the rich.

    2. Anonymous Coward
      Anonymous Coward

      Re: I'd take the $39 million

      "[...] since mobile homes are after all mobile [...]"

      If they have been parked for many years then it is likely that they are no longer roadworthy. - even if they are small enough to be towed. They might not even be sufficiently mobile to load onto a trailer easily.

    3. Phuq Witt
      Thumb Up

      If $39 Million Isn't Enough to Last Several Lifetimes...

      ..you're spending it wrong.

      1. casinowilhelm

        Re: If $39 Million Isn't Enough to Last Several Lifetimes...

        "I spent 90% of my money on women, drink and fast cars. The rest I wasted"

        - George Best

  12. Roq D. Kasba

    $39M, and caveats

    Just wondering if it'll end up like the 'right to buy' of former council properties ending up in the private rental sector at 4x the price to councils. If the land is valuable for its convenience, then local high earners buy themselves a local trailer crash pad, others follow suit pronto, and you end up subsidising rich kids party zones (driving out more legit residents).

    Alas those 100 households probably supply a lot of the service staff for businesses the local elite rely on, and people need somewhere to live. If it can be ring fenced, that has to be a good thing for everyone.

    My suggestion that he'll never read? Join the consortium of state, county, social housing NFP himself throwing $16M of equity into the project. He gets to retire wealthy, but has an active interest in the community and if the city/state do decide to cash in in 20 years, his kids see some of that benefit too.

  13. tkioz
    Thumb Up

    I hope...

    Hmm I'd take the $39m, it's a lot of bloody money, more than enough to live on for the rest of your life. Hell stick it in a *bank* account, not an investment account, and you can live on the *interest* alone from that much cash (2.5% interest, about 975,000$ a year).

    Of course I'd make bloody sure that the contract with the local government was airtight and they couldn't just turn around and sell the park in a few years when some bright bulb gets elected.

    I don't know about America but there was a case in my own town about a woman who left some prime real estate to the town almost fifty years ago, on the condition it was used as a place for mothers to rest and look after their kids. About ten years ago the council tried to sell it, since the land and building were worth millions at that point, being right in the middle of town, and they almost got away with it until a local lawyer stepped in and had a court look at the original will.

    I'd also stipulate that the local government wave as much of the costs involved in the sale (legal fees, etc) as possible.

    I do hope he takes the lower price, because those people shouldn't be forced out of their homes. Housing prices are just out of control in a lot of places.

    1. BongoJoe

      Re: I hope...

      I don't know about America but there was a case in my own town about a woman who left some prime real estate to the town almost fifty years ago, on the condition it was used as a place for mothers to rest and look after their kids. About ten years ago the council tried to sell it, since the land and building were worth millions at that point, being right in the middle of town, and they almost got away with it until a local lawyer stepped in and had a court look at the original will.

      I wish that they did that with the London Olympics. The allotments were given to the people as a thank you for their efforts in the war and were promised to be left so for eternity.

      Then some mega-corp waved a wedge of notes under the noses of the authorities. Of course, considering the government of the day all legal objections were overruled.

      My point? Even if it's all set in stone and watertight the government can come in and change the rules at the last minute.

    2. Old69

      Re: I hope...

      The RSPB charity was in a similar situation of wanting to sell bequeathed land for development - against the deceased's explicit wishes for it not to be developed.

      http://www.telegraph.co.uk/news/earth/greenpolitics/planning/11655089/RSPB-ignores-widows-wishes-and-looks-to-sell-land-for-housing.html

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