Stanford University has sued Santa Clara County over taxation of certain faculty residences on its campus. In its lawsuit, the University contends these properties should be taxed – or exempted – in the same way as other educational facilities across the state.
While residents of Stanford’s facilities purchase their property, the University remains the owner of the land and its founding documents forbid the institution from selling it off. Due to this arrangement, the property owners cannot implement any improvements without the University’s permission and can only sublet to enrolled students. The result of these circumstances is , as the University contends, that the assessed value of the property should be split 75%-25% between “faculty interests” and “college interests,” respectively. The latter of which the University argues should be exempt from property taxation.
While Stanford’s lawsuit only grapples with the County’s denial of a $9,000 refund claim for a single property at 838 Cedro Way, the Superior Court’s decision could lead to much more significant ramifications with fiscal impacts to the County and some school districts. Santa Clara County Counsel James Williams indicated to Palo Alto Weekly/PaloAltoOnline.com that the University’s pursuit of similar refunds across the County could result in a loss of nearly $5 million in annual revenue, including a $2.3 million loss for the Palo Alto Unified School District.
As public school districts and private educational institutions seek to offer their faculties affordable and on-campus housing in the face of a statewide housing crisis, issues related to exemptions will continue to arise.