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- …

  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. Ledswinger Silver badge

      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 Silver badge

      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

      1. tkioz

        Re: I hope...

        @Old69

        Sucks to see that, yet it isn't always the case.

        A Tasmanian judge overruled a hospital that wanted to sell some cottages that were suppose to be used for 'spinsters' and the income to go to a hospital. The trust managing them wanted to sell them, the judge said no.

        http://www.abc.net.au/news/2015-02-07/court-rejects-proposal-to-sell-spinsters-cottages/6077596

      2. h4rm0ny

        Re: I hope...

        The RSPB lost their way quite some time ago, unfortunately. I used to be a financial supporter of theirs until I found where much of my money was actually going. They put as much effort into promoting wind-farms and killing birds (to prevent species interbreeding - essentially a Genetic Purity effort) as they do actually looking after birds anymore.

        Better off supporting smaller independent conservation projects than the RSPB. They're there if you look for them and they actually, you know, protect birds and habitats.

  14. warwick.sullivan@paradise.net.nz

    Go into partnership with the city

    I think he should take the lower figure but continue to own a percentage of the land equal to the difference in market value in some trust arrangement with the city. This meets the aims of the city but preserves Joe's interest. As long as the city acts in the spirit of the sale it does not have to pay more. But when in the future, as it often does, policies change and the city decides to sell, the city does not gain the full windfall based on the earlier reduced amount - part of this goes back to Joe or his estate.

  15. Anonymous Coward
    Anonymous Coward

    $39m isn't doing badly...

    A lot of the people living there are there because of the excellent schools - there's really no affordable housing in the Palo Alto school catchment areas. Turfing the residents out (even with cash compensation) isn't going to help them get their kids to a great school.

    If the site gets sold and cleared, there will just be another set of multimillion dollar homes built, indistinguishable from all the others around it...

    (My kids go to the elementary school just up the road from the park)

  16. jake Silver badge

    Palo Alto is weird.

    I know. I was born in Stanford Hospital, raised in Palo Alto (with a side-trip to Yorkshire for me "O"s and "A"s). The first house I bought was in Johnson Park (North of University Avenue, West of Middlefield Road and South of San Francisquito Creek). Purchased for an exorbitant $US140,000 in 1980. Sold for an astonishing $US1,500,000 in 1995. It's on the market now for $US2,750,000. (Seriously? A .25 lot, three bed, single bath, attached single car garage, bungalow? Really? WTF!)

    Palo Alto it is the epitome of "melting pot". For whatever reason, some folks who have emigrated here seem to think that zipcodes make property more valuable than they really are ...

    1. Picky
      Happy

      Re: Palo Alto is weird.

      35 years ago I lived in East Palo Alto - also known as "Whisky Gulch" because it was 100 yards outside of Palo Alto and all the local booze stores setup there!

    2. Ledswinger Silver badge

      Re: Palo Alto is weird.

      I know. I was born in Stanford Hospital, raised in Palo Alto (with a side-trip to Yorkshire for me "O"s and "A"s).

      Mr Curtis, perchance?

      1. jake Silver badge

        Re: Palo Alto is weird.

        "Mr Curtis, perchance?"

        Nope.

  17. Anonymous Coward
    Anonymous Coward

    I would like to live in subsidised housing too.

    If it cost me a fraction of the going rate.

    Why should those residents get preferential rent treatment? I certainly don't. I'm not jealous, but if some people get favourable rents why shouldn't everyone be offered them too? A bit like the tube drivers pay deal, an exclusive club many would like to do but impossible to enter.

    Disclaimer: I live in one of the most expensive cities on the world where my. 900 sqft flat is worth $1.5M and rent is about $4000pm

    1. Triggerfish

      Re: I would like to live in subsidised housing too.

      My friend lived in Denmark for a while and they had some form of rent control in action, which meant the apartments where he lived there was a mix from high earning professionals all the way economically down to unemployed, he said it seemed to lead to less ghettoization.

      1. LucreLout Silver badge

        Re: I would like to live in subsidised housing too.

        he said it seemed to lead to less ghettoization.

        I assume then your friend wasn't living in Aarhus. Certainly not near the outer ring.... Denmark has ghettos to rival those of London. It's a great place to live, but it isn't the promised land or paradise.

        As an aside, things like mortgage interest are tax deductible in Denmark, so while the tax bands seem initially high, they net out very close to our rates of tax. Things like Jante law have a far greater impact upon Scandinavian societal cohesion than rent control and income distributions.

  18. Anonymous Coward
    Anonymous Coward

    "Why should those residents get preferential rent treatment?"

    Their rents are not being subsidised. The owner is presumably running the site at what he regards as a reasonable profit.

    Housing land is only worth whatever someone will pay for that location because of its transport or social advantages. In turn what people can afford to pay will depend on what they earn, or have inherited, or get as employment perks.

    The park was presumably established when the factors that set the price were not in big demand. The new people moving into the area are prepared to outbid each other to live in that location. The inflated prices they are prepared to pay have nothing to do with the established rents in the park.

    1. Anonymous Coward
      Anonymous Coward

      "...worth whatever someone will pay..." I bet he's getting less than 'market price' for the trailers now, or maybe not.

      I imagine not having broadband would make property around there unsellable.

    2. Nigel Whitfield.

      We see this sort of argument in London too, where somehow "not being treated as badly as I am" gets turned into "they're being unfairly subsidised", followed by demands to either a) punish people for not being ripped off (like the 'spare room subsidy' that was invented by the DWP) or b) force people out, so they can be replaced by a new set of people who'll be treated equally as badly.

      The logic often seems to be "I can't afford to live in area X, so I don't see why poor people who've been there for years and built up a community shouldn't be tossed out and replaced with wealthier people"

      1. LucreLout Silver badge

        @Nigel

        We see this sort of argument in London too, where somehow "not being treated as badly as I am" gets turned into "they're being unfairly subsidised", followed by demands to either a) punish people for not being ripped off (like the 'spare room subsidy'....

        The Spare Room Subsidy applies only to subsidised housing. Social housing must be subsidised by law, with rental rates capped at a maximum of 80% of the market rate, and a minimum of 60% of it.

        I have no issue with social housing being allocated based on current and temporary need, but lets face it, people like Bob Crow were millionaires - any perceived need they had was long since past. And thus we get to the root of the problem - who should be subsidised, for how long, and to what extent. And what are the 2nd and 3rd order consequences of that?

        I can't afford to live in London (no really, I can't) so where is the fairness in my subsidising others to do so though the tax system? My public transport isn't even tax deductible as a compromise. To ask me to pay for someone to live closer to work than I can afford to myself, you'd need to make a really compelling case, and that is not being made today.

    3. fishman

      "Their rents are not being subsidised. The owner is presumably running the site at what he regards as a reasonable profit."

      My guess is that there is some sort of rent control keeping the rates so much lower than market value.

  19. Anonymous Coward
    Anonymous Coward

    Common sense here sees through the con.

    39m then as residents leave either through job loss/death/late with rent one month you build nice houses/flats and gain at least 1.5m for each one. 100 * 1.5 = 150m.

    This is not some happy joy joy act of altruism it's plain and simple capitalism either way those residents will be pushed out and never replaced with normal people.

    This is the way of the world now, exclusive zones for the rich are becoming more and more common.

  20. Anonymous Coward
    Anonymous Coward

    Sadly I think you'd have to take the $55m because a pound to a penny the $16m wouldn't buy the residents a secure future. As soon as the county runs a bit short of cash they'd sell that land for development to the highest bidder. All will would have achieved by walking away from $16m is a temporary reprieve.

  21. thedarke

    Of course there is the alternative business model he's neglected.

    Should just sucker out some of the tech bros by renting a few of the trailers as authentic retro rustic eco-friendly living compartments for $5,000 a month. Easily top that $55 million offer in a decade given the rubes who throw money around the Valley. Lesson when it comes to property- 'clever people' get real stupid, real quick.

    1. ecofeco Silver badge

      Re: Of course there is the alternative business model he's neglected.

      Too true. What is it about property that does this to people?

  22. J.G.Harston Silver badge

    44 years old? He's got another 50 years of existance to pay for. I'd keep it and live off the income. What's he getting, what, $150,000-$200,000 *A* *MONTH*. Convert that income stream into capital, what's that after sales taxes, capital gains taxes, whatevers? $30,000,000 ends up as $50,000 a month.

  23. Michael Habel Silver badge

    I'm gonna have to agree with our rodent overlords on this one!

    I mean, yes idealism, yes the dignity of pure research, yes, the pursuit of truth in all its forms, but there comes a point I'm afraid where you begin to suspect that if there's any real truth it's that the entire multi-dimensional infinity of the Universe is almost certainly being run by a bunch of maniacs; and if it comes to a choice between spending another ten million years finding that out and on the other hand just taking the money and running, I for one could do with the exercise

  24. Bernard

    I don't trust the county to stick to the bargain for more than a few months before quietly hawking it around to friends and family of local officials.

    I could tolerate a $39m sale provided I got a cast-iron legal guarantee that in the event of it being flipped for a profit I got the original value plus interest and fees. Similarly, if it were hawked out to private developers at a rate lower than market value i'd retain first refusal on repurchase of the property.

    The county would likely never agree to it, and so he'd be a fool to take their appeal to his ethics at face value.

  25. NanoMeter

    Go for the $39m

    I would not trust the county, so I would have written something in the sales contract to prevent the county from selling it with a profit later, or selling it at all the next 50 years, or building something on the area.

  26. psychonaut

    Joe jizzer??

    Ahh septic names....fnarr!

  27. sgp

    Best way of achieving this?

    Here we have a law that requires all property developers to reserve a certain percentage of their project for social housing. This to stimulate a social mix of residents rather than having segregated neighbourhoods. I think this system could solve some of the problems described better than just requiring developers to pay a tax which is then used to battle those same developers for land.

    Secondly, and it has been stated above already. I don't understand why it's impossible to live at least a bit denser.

    1. Anonymous Coward
      Anonymous Coward

      Re: Best way of achieving this?

      "Here we have a law that requires all property developers to reserve a certain percentage of their project for social housing."

      If that's London you are talking about then see a recent article detailing the relaxed rules that allow developers to sidestep that provision when building luxury homes.

      http://www.bbc.co.uk/news/uk-england-london-30126518

      http://www.theguardian.com/business/2015/feb/14/battersea-nine-elms-property-development-housing

      .

      1. Nigel Whitfield.

        Re: Best way of achieving this?

        In London, certainly, the percentages are often not enforced properly, or the builders are allowed to fudge things by saying "Well, we'll certainly build some affordable housing, but we'd quite like this to be an exclusive development, so how about we put the affordable homes in Ilford or Barking?"

        The result, of course, is that the social mix doesn't happen, as all the less well off are shoved out to the suburbs and expected to endure long commutes. Even where they do include affordable housing in a development, it's often now done with 'poor doors' where the social tenants have a separate entrance, separate lifts, and so on. The argument is usually that it means the 'nice' people can have a concierge and marble lifts without the social tenants having to contribute large amounts to the maintenance, but that seems specious to me - it should be quite possible to draw up agreements that have different maintenance charges based on tenure. It's really all about the segregation, imv.

        1. LucreLout Silver badge

          Re: Best way of achieving this?

          @Nigel

          It's really all about the segregation, imv.

          Well, yes. And I think it does the developers a great disservice to pretend otherwise. Lets just be honest about it - nobody is going to pay full market rent for a flat to live next to someone paying a little over half that.

          Its decidedly unPC/lefty to say it, but segregation is the only way to keep the nice parts nice - the social part always gets vandalised by bored and ill-disciplined kids or knackered by people that just don't care. I'm not saying that covers everyone in social housing (it certainly isn't true of my folks), but it only takes one rogue family to break the whole development, and social tennants are a bugger to shift. Private ones get their marching orders quickly if things get broken.

          1. Alan Brown Silver badge

            Re: Best way of achieving this?

            "It only takes one rogue family to break the whole development, and social tennants are a bugger to shift. "

            That depends on the country, but if you go anywhere in the world and look at troublesome neighbourhoods, the police will invariably tell you everything revolves around 1-3 families.

      2. sgp

        Re: Best way of achieving this?

        I meant under Belgian law, I have no idea how this is enforced here but probably not very different to the situation you describe. Interesting articles, thanks.

    2. Mark Exclamation

      Re: Best way of achieving this?

      Sounds similar to the attempts to get multi-cultural people to live together. What could possibly go wrong?

    3. Anonymous Coward
      Anonymous Coward

      Re: Best way of achieving this?

      John Prescott of the last Labour government was responsible for that particular piece of legislation, and as with many of their bleeding heart best intentions it has unintended consequences.

      Where I live there's been tens of thousands of houses built applying this rule, the outcome? High burglary rates in these large developments, where one set of people know that another set of people's houses have no one in them in the daytime (because they are out at work) but are full of nice things.

      Buyer beware too. I know someone who bought new build off-plan and was a doctor at local hospital, and bit left leaning and though "mixed housing" sounded fair; then down the line had trouble selling his "5 bed executive home" because next door either side were stereotypical social housing: (literally) car on bricks one side and rubbish strewn and overgrown front garden the other side.

    4. Anonymous Coward
      Anonymous Coward

      Re: Best way of achieving this?

      They also have this in California and Palo Alto, the problem is the developers can choose between building a number of low income housing for the development to satisfy the requirement OR pay into a pot for low income housing -- which is where the original $29 mil came from, $14.5 from county, $14.5 from city.

  28. Jason Hindle Bronze badge

    Me? $39,000, but it really is his decision

    I know little else of his circumstances, or his family. It's a personal decision. That said... When an area becomes to expensive to live, I think one should always have an plan (or at least an idea, stored away at the back of the mind) to move on. No point in fighting economics.

  29. Paul E

    Start a new park?

    Would the 39 million not be better spent building a bigger, better park somewhere a bit further out and so not on such a prime location?

    1. Anonymous Coward
      Anonymous Coward

      Re: Start a new park?

      That was my line of thinking. Take the 55 million. Buy some land 15 miles down the road for 5 Million...do something to make it more desirable to keep everyone happy.. and aim for the have your cake and eat solution! If you get lucky the money might even follow you 15 years down the line and then you can do the whole thing again!

  30. Anonymous Coward
    Anonymous Coward

    Don't do anything, yet

    Just wait another 10 years or so, He'll get an offer even better than 55m. During which time tenants can find suitable accommodation elsewhere.

    He has all the leverage, otherwise investors wouldn't have given him an offer where tenants are left undisturbed.

  31. Anonymous Coward
    Anonymous Coward

    "Would you make 400 people homeless for an extra $16m?"

    Yes. The people in the trailer park are Americans and although it would cause them great hardship and distress their 'American Spirit' would soon shine through, and with their 'Can Do Attitude' they would be able to put this behind them and 'Forge Ahead' to build a better tomorrow in the 'American Dream'.

    Yours sincerely

    Mr D Trump

    Vote Trump, A vote for Trump is a vote for common sense.

    1. Alan Brown Silver badge

      Re: "Would you make 400 people homeless for an extra $16m?"

      Trump (british slang): To pass wind loudly.

      Yup. That about sums him up.

  32. Anonymous Coward
    Anonymous Coward

    Take the $55M

    I'd take the $55M. Mainly because I wouldn't trust the council to not actually be shonky, and figure out a way to resell it themselves.

    Sure they may wait a year to two for political correctness... but after that... sale time. :(

  33. David Webb

    Personally

    I'd take the lower offer, but with the stipulation that I continue to own a percentage of the land (not properties on the land) to the tune of $16m at current prices (where the land is valued at $55m). Then, if in 10 years time they are offered $100m for the land, he would get his cut of, what $30m?

    It's not as if the dude is short on cash though, paying $4m back then, adjusting for inflation is $9m in current money, so it's not as if he can't afford to take a hit, but if he can continue to own a percentage of the land (again, not property, if he don't own the property he don't have to look after it) then it's a bit of a no-brainer.

  34. TechnicalBen Silver badge

    I'm not voting on a decision, but...

    I don't trust the offer from someone saying "they will keep it for the people" and offering under the odds payment. Why? That smells awfully fishy to me, that they want to turf out the residents at some point and make the profit themselves.

    It's happened here with "common land" that "accidentally" got sold to the "local supermarket" development.

    PS, as anon above said...

  35. ecofeco Silver badge

    He feels bad?

    Bullshit. If he feels that bad, he can take the money and then pay to move them all. What will that cost? About a million at most? Maybe 2? That will leave him with a minimum of $37 million. Oh what to do, what to do.

    He's a liar who IS going to sell them all out and leave them behind. I hope he proves me wrong, but I doubt it.

  36. James 100

    Better uses for the $39m?

    On the other side of the coin, would preserving the status quo here be the best use of the $39m? Someone pointed out earlier that the development would mean a huge increase in the taxes paid for that site each year, as well as providing housing to more people than it does now; better perhaps to invest that $39m in improving services to all the area residents instead. (Another post points out that even the $39m option would have meant both some evictions and some additional investment to bring the site up to compliance, too - making that a worse deal than it looked at first.)

    Take the $55m - and pressure the council to put the $39m into providing a decent park and ride service or something so people can commute there from more affordable areas.

    (Personally, I find it hard to understand these areas getting so insanely overpriced and overcrowded: why are all these businesses and startups jammed into such a tiny area? Startups could locate elsewhere far more cheaply; the likes of Google could relocate half their CA staff to another state and give them a far better standard of living for less money, a win all round - yet we have Apple building their new flying saucer thing in CA to squeeze in yet more, even as they cite the datacentres elsewhere.)

  37. Frank N. Stein

    I'd take the $39 mill, but with the written stipulation that they cannot sell the land to developers and must allow the residents to remain living there with no rent increase for a minimum of 20 years. I wouldn't take anyone's "word" that they'd do what's right. I want it in writing. They breach that contract, the instantly owe me $16 million on the remaining value of the land. Far too many instances of public officials claiming they'll do the right thing just to get what they wan, only to turn around and sell the land to developers for a profit, which would be the difference in the value of the land minus what they are willing to pay him for it. They should be offering him market rate or more. Not less. That alone makes the deal highly suspect.

  38. Anonymous Coward
    Anonymous Coward

    "The average income is $213,500"

    What's the median income?

  39. Andy Tunnah

    He ain't rich

    That's a lot of money. I'd take the lower amount in a heartbeat. Realistically I'd never know the difference in those amounts, and the fact I could live with myself makes it a simple choice.

    It'd be like evicting family. I really can't see him taking the higher amount

  40. JustNiz

    I like what someone said earlier, he should tell the city he''ll take the 39 mill but only if they also give him a tax break so the after-tax difference between taking the 39 mill and 55 mill would be effectively zero to him.

    I'd be surprised if some corrupt city official wasn't playing the "think of the residents" card while already drooling at the thought of being able to buy it cheap then get in exactly the same developers for a nice profit. I'd therefore also require a written legal contract that the city has to keep it as cheap housing for at least say 25 years.

  41. Anonymous Coward
    Anonymous Coward

    Hmmmmm...

    Take neither, and instead set up a scheme along with the county of Santa Clara and the city of Palo Alto whereby they co-develop both low-income and higher-income units with the big developers on the same land..

    Ensures integration and encourages humility and aspiration - what's to lose?

    1. ecofeco Silver badge

      Re: Hmmmmm...

      You're trolling, right?

  42. Paul Hovnanian Silver badge

    Best use of funds

    At $39 million, the county will be buying land at $8.7 mil/acre to provide subsidized housing for 400 people. Problem is; it's prime real estate. Even at that discounted price. Can't the county go find a 4.5 acre parcel for less than $39 mill within a reasonable distance, move the residents* and put the savings to better use? Maybe house another hundred or so needy folks.

    *These houses have wheels under them for a reason.

    1. earl grey Silver badge
      Unhappy

      Re: Best use of funds

      Is it just me or can someone tell me why everyone ignores the "it has a good school system" part of this. You're NOT going to get a good school system "just down the road", or "over in the next country". Good school systems are why people MOVE TO places and away from other other places.

      Maybe you don't have that on the other side of the pond and all your schools are a delight to the eye and brain; but somehow, i doubt it.

    2. Michael Wojcik Silver badge

      Re: Best use of funds

      These houses have wheels under them for a reason

      Apparently the homes in this park are single-wides, so it's possible they're relatively mobile, but often "mobile" homes in the US have been modified to the point where moving them is an expensive proposition. It's worse with double-wides than it is with single-wides, but even so I wouldn't count on this plan being particularly feasible.

      Can't the county go find a 4.5 acre parcel for less than $39 mill within a reasonable distance

      Probably only for pretty large values of "reasonable distance". Property in the Bay Area is expensive. Certainly I'd think it very unlikely that someone could find a suitable plot that would offer similar commute times and other amenities to the residents. They're right on El Camino Bignum now.

  43. Arion

    The way this is phrased makes it a loaded question. Alternatively stated, would be would you make effectively a $16m donation to keep people in their homes, and personally I think that is too much to ask.

    I do like the idea where he takes the 39m, but retains a pro-rata interest in the place.

    1. h4rm0ny

      >>"The way this is phrased makes it a loaded question. Alternatively stated, would be would you make effectively a $16m donation to keep people in their homes, and personally I think that is too much to ask."

      Well there are reasons why it's phrased the way it is. This isn't an exact parallel to someone suddenly being asked one day if they'd like to donate $16m to help house people. It's actually his decision and responsibility. You could go round dozens of rich people in your version asking each but in this case he owns their homes and the profit he stands to make is from selling those people's homes. It's not a passive act, he has to make an active decision as to whether he's going to get a huge amount of money and let people keep their homes, or get 140% a huge amount of money by kicking them out of their homes. When the money is coming from you selling where people live, that's different to just being asked for money for people who have nothing to do with you.

  44. Anonymous Coward
    Anonymous Coward

    City needs to up it's ante

    Can't get rid of the trailer parks - those are Tornado insurance.

  45. Anonymous Coward
    Anonymous Coward

    Need More Housing

    200 apartments sounds like a better use of land than 100 mobile homes. Housing is expensive because the anti development crowd artificially restricts supply. Every city should be required to have as many housing units as they have jobs. No city in Silicon Valley does and neither does San Francisco. If they did there wouldn't be cities trying to spend half a million dollars to keep dirt under what is really just a large trailer.

    Take the $55m and help the community.

  46. niio

    Need More Housing

    200 apartments sounds like a better use of land than 100 mobile homes. Housing is expensive because the anti development crowd artificially restricts supply. Every city should be required to have as many housing units as they have jobs. No city in Silicon Valley does and neither does San Francisco. If they did there wouldn't be cities trying to spend half a million dollars to keep dirt under what is really just a large trailer.

    Take the $55m and help the community.

  47. maxregister

    If the guy feels that he has a moral obligation to help out his tenants, he should take the higher sum, and use the $16M difference to build a better trailer park in a nearby area.

  48. GeekiestWoman

    TAKE THE MONEY

    As a real estate investor, if I didn't want to hold the land longer, I'd sell to highest bidder. Actually I already sold all my CA properties due to the FACT that I know several BETTER 'silicon valley' areas other than the California one. California is on its way 'out' as a 'great place to live and work'. I own property now in TEXAS (and North Carolina). Texas is on its own power grid, the FED buys our STATE UTILITIES. Gasoline is 1.50 LESS than CA, NO TEXAS STATE TAX on payroll, bought a brandnew 2700 sq ft house last year for $167,500 CASH, I rented it out for 1700 a month plus $100/mo for lawncare (I have a lawncare biz too). You can pay more for a house, up to 300-400K in good neighborhoods each home with a big fenced yard, or up to $1M for a big house but barely ANY yard & maybe a small pool.

    I buy in Keller area, very nice area fairly close to DFW Airport. Texas is BOOMING, there's no racism here (no matter how much the 'media' LIES about that, areas are mixed-race, BFD. I'd NEVER go back to CA for ANY REASON. Sure the summer here can be hot, but hey my condo complex has a very nice waterpark onsite (I buy houses and rent them out but I wouldn't live in a big house anymore. As for the people in the trailer park, who's stupid enough to live in a TRAILER park for '30 years'??? If you don't have the moxy to BUY a home in 30 years, I would say as the land owner (even in this case, inheritor of the land) I have the right to sell and NOT WORRY ONE SECOND ABOUT THE TENANTS. However, if the owner sees these people as 'friends' then he can pay for their move and give them a couple thousand as 'stress reduction'. That would equate to about 2M to 2.5M for 400 residents. He can write that off but THEY will be taxed on it as income. Good deal all around. I have no sympathy for people who are close to my age and NEVER SAVED ANY MONEY. I worked my BUTT off literally and figuratively to get what I have today. I have NO sympathy for people who were grasshoppers not ants.

    1. h4rm0ny

      Re: TAKE THE MONEY

      >>"I have no sympathy for people who are close to my age and NEVER SAVED ANY MONEY. I worked my BUTT off literally and figuratively to get what I have today. I have NO sympathy for people who were grasshoppers not ants."

      Or alternatively prioritized raising families, lower-paying careers they cared about such as teaching, or had more dependents than you, or etc.

      Incidentally, your caps key appears to be broken.

      1. Anonymous Coward
        Anonymous Coward

        Re: TAKE THE MONEY

        You are completely uninformed if you think a teacher in the state of California does not make a far better income than most "low income folk." Even the beginning teaching wage in California is better than most "low paying careers" like McDonalds. Even then, most Palo Alto low tech businesses have to pay a higher wage than those outside the Silicon Valley area just to get respondents.

        If you were talking about Alabama, Missouri, Mississippi, etc. you might have a point; but not California.

        As a sidebar, if there were a font management tool for these forums, people would not have to resort to capital letters in order to emphasize specific words.

        1. earl grey Silver badge
          Flame

          Re: TAKE THE MONEY

          Anyone who thinks working at McDonald's is a career needs to re-think what they're doing with their life. The only position there that even MIGHT be a career, would be store manager. The rest are (and rightly so), low-paid "starter" jobs that most normal people will work up and out of before they finish school.

          1. Dan Paul

            Re: TAKE THE MONEY

            It seems that Obama and the whole $15 minimum wage crew calls that a "Career", so why not me? And you say we Americans don't understand satire. Now I just wish we had a President that understood business or even anything at all.

            No kidding these are "Starter Jobs" but someone has to provide housing that is affordable enough for people with even those meager paychecks to live in or there won't be any fast food or convenience stores to work in.

            Truth be told, years ago McDonalds in Massachusetts ALREADY put up it's employees in small motels during the week and rent free to boot. And they paid better than minimum wages.

            In 1977, I worked at a Burger King in Vail, Colorado slinging burgers and lived on the side of the mountain under a tarp.

            Minimum Wage was $2.30 per hour and we were paid almost $7 per hour because of "free market forces". And guess what, the price wasn't significantly higher for the food.

  49. Robert Grant

    I'd sell to the local authority at the lower rate

    But also lend the authority the difference as a loan (with no interest on that amount) to be repaid over say 20 years. Good bit of income and allows the land to stay as it is in a way that won't break the bank.

    1. Anonymous Coward
      Anonymous Coward

      Re: I'd sell to the local authority at the lower rate

      The property is not up to code and the tax basis (prop 13) is set at a 30 year old $4m+ valuation. Worse, thanks to ShallowAltoans do good intentions, the rents are fixed at well below current market rates.

      Now the property gets sold to the local authority for ~$40m.

      The tax basis goes up an order of magnitude, the property still needs significant deferred maintenance, and the rates can't be raised and <where is the income to pay for it all?>

      Sounds like the son of the original buyers gets a huge cashout and the govt gets stuck holding the bag.

  50. DataGeek

    Compromise

    The owner could also choose to establish a partnership with the non-profit to convert the trailer park to low-income housing in order to expand the number of homes available. He gets say $30M to start and then a percentage of each unit as they are occupied, providing an income until the land is developed. The end result should be somewhere between the $39M and $55M and ensures that the non-profit couldn't sell the land for profit without the owner's permission.

  51. Maijay

    Plan C

    ask the 400 residents if they'd be happy leaving but with a share of the $16m

  52. deconstructionist

    and the good fairy will save them all

    Love all the rubbish about making the right choice ?...so after years of mismanagement on housing by the state he should lose 16 million because of poor choices by less than stellar politicians ..Disney channel fairy tales......take the money and run.

  53. Michael Wojcik Silver badge

    Google Translate could probably tell you what the "El" means

    the El Camino Real

    "The the royal road", eh?

    And it's not like the Bay Area's El Camino Real is the only one in the US - there are a couple others in California, and New Mexico's El Camino Real de Tierra Adentro is a good 85 years older than that newfangled one that runs through Palo Alto. Not to mention the ones in Mexico, other former Spanish colonies, and Spain itself. The Spanish royals were all about establishing roads.

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