How You Foot the Tax Bill for Affordable Housing Landlords

Prop 13 is under constant attack. Every election cycle, Sacramento politicians and radical urbanists demand we strip property tax protections from working families and retirees. They claim homeowners are hoarding wealth and starving local budgets.

They are pointing at the wrong problem.

Before we even expose the real grift, we need to kill a massive lie. Counties like Santa Clara County do not have a property tax revenue problem. Between 2012 and 2024, the county's collected property tax receipts more than tripled. Revenue surged from $775 million to over $2.4 billion. That 212% growth completely obliterated the 44% regional inflation rate over that same period, outpacing it by a massive margin.

So this is an insane amount of revenue, and yet homeowners are constantly attacked being told that they're not paying their fair share because of Prop 13. Excuse me, what? I would argue some are paying much more than a fair share. But you know who isn't?

In Santa Clara County, qualifying apartment projects classified as low income housing are wiping their entire properties off the tax rolls. They pay absolutely $0 in property tax. Do I need to repeat it again? Massive apartment complexes worth well over $100 million paying $0 in property tax. And this is why I tell people to eat dirt when they say I'm not paying enough at my over $12,000 a year for my little infill house.

They do it legally under Section 214 of the Revenue and Taxation Code, known as the welfare exemption. To pull this off, the property must be owned by a nonprofit or a limited partnership with a nonprofit managing general partner. The catch that makes this a grift? The housing must exclusively serve households at or below 80% of the Area Median Income.

In most of America, that means helping the working class. In our region, it has mutated into a massive tax loophole for the upper-middle class.

Because the Bay Area is packed with tech and finance jobs, the official median income has been distorted up to an astronomical $195,200 for a family of four.

That means a junior financial analyst, an IT support specialist or an early-career corporate recruiter pulling down $111,700 a year legally qualifies as low income. A household making $156,000 qualifies too.

Projects that meet these strict rules can remove the entire multi-million dollar property from the local tax rolls. Yet under current market conditions, the restricted rent caps on these units can still reach roughly $2,800 a month.

The result? Developers collect thousands of dollars a month in rent from early-career tech and finance professionals. They get full tax relief designed for genuine charities while operating highly profitable assets that serve white-collar workers.

Meanwhile, San Jose recently updated its Inclusionary Housing Ordinance. For new rental developments, the city requires 10% of units on site to count as affordable. That breaks down to 5% at 60% AMI and 5% at 80% AMI.

Notice what is completely missing. There is zero requirement to build units for households at the 30% or 50% median income levels. Developers can fulfill their entire city obligation by targeting early-career corporate workers and securing massive tax exemptions.

We need more housing built in California. But these projects can pencil out without permanent zero property tax treatment under the welfare exemption. The Legislature could require deeper affordability for the working poor as a condition for that tax relief. Instead, Sacramento keeps the loophole wide open because the corporate landlords who benefit are major political donors.

Is this not a clear enough indictment of our elected leaders? The politicians we elect to represent us continue to completely neglect the vital teachers, farmers, construction workers, janitors, bartenders, chefs and nurses who actually keep our communities alive. They are forced to work multiple jobs or commute two hours each way just to survive while their taxes subsidize massive complexes worth over $100 million that pay exactly $0 in property tax and are explicitly not built for them.

So next time some politician, special interest group or urbanist tells you how evil Prop 13 is, you can ask why they keep attacking homeowners, our retirees and our veterans while these mega corporations get to be giant landlords and pay $0 in property tax straining county resources.