STANFORD — THE POWER OF A $20 BILLION PORTFOLIO
The university dominates the rankings for academic, commercial and residential land
In Los Altos, Silicon Valley’s largest property owner snapped up the city’s newest apartment complex, then jolted aspiring renters by reserving every unit for its own employees. In Palo Alto’s tony College Terrace neighborhood, it spent tens of millions to buy almost three-dozen singlefamily homes — but puzzled neighbors by leaving many of them empty. Nearby, it continues raking in cash from its high-end mall, where shoppers ogle luxury goods from Hermes and Coach.
The force behind these eye-catching moves is not a development firm, tech corporation or landed billionaire — it’s a university. Stanford’s $19.7 billion taxable property portfolio dwarfs the more celebrated acquisitions of the area’s tech titans and has an outsized but little-understood impact on how valley residents work, shop and live.
A year-long reporting project to identify Silicon Valley’s largest property owners revealed Stanford as the top owner not merely of academic buildings and sprawling campus land, but nearly every other type of property as well. While the university’s role in churning out billion-dollar companies such as Google and
Hewlett-Packard — minting both the engineers who power them and the inves- tors who fund them — has long been acknowledged, this analysis reveals a hid- den picture of influence springing from the university’s immense real estate footprint.
Stanford’s holdings include $14.7 billion in academic, medical, commercial and other nonresidential land, $1.1 billion in single- family homes — that’s more than 700 houses — $881 million in multi-family res- idential buildings and $3.1 billion in equipment, ma- chinery and other taxable property, according to the first-of-its-kind analysis by a collaboration of local and national media, including this news organization, of every parcel in property records for the 2018 fiscal year in Santa Clara County.
“People think of Stanford as a university with a foot- ball team and two basket- ball teams, I guess. But it’s a corporation with enor- mous land ownership, and it functions in its relation- ship to the surrounding communities as a corporation,” said former Mountain View Mayor Lenny Siegel, a long-time housing advocate who attended Stanford.
The value of Stanford’s empire is larger than those of Google, Apple and Intel combined. Apple, the runner-up with just under $9 billion in taxable property, doesn’t even come close.
Property is power in Silicon Valley, where land is scarce and priced at a premium. And Stanford’s power has been felt throughout the Bay Area for more than a century — from its early shaping of Palo Alto into the uberwealthy industrial and residential enclave it is today, to its influence over local governments across the county, to its impact driving up prices and constricting housing availability in nearby neighborhoods and the larger real estate market.
But now controversy is building over Stanford’s contribution to the valley’s problems and its obligation to provide solutions. While the university has made tremendous strides in housing its own students and professors, some local leaders argue it’s done nowhere near enough for the thousands of other employees who work on Stanford land on and around campus.
The recent culmination of a years-long battle between Stanford and county officials underscores just how divisive the issue has become. Stanford on Friday withdrew its plans for a 3.5-million-square-foot expansion, after a contentious back and forth over the county’s demand that it take unprecedented steps to offset the strain the additional Stanford personnel would put on the area’s roads and housing market.
Arguably, no other major landowner is as wellpositioned to help solve the housing crisis as Stanford — a behemoth that controls 8,180 acres of land, some of it spreading into San Mateo County — and an endowment of $27.7 billion. That gives Stanford a big responsibility, argues Santa Clara County Supervisor Cindy Chavez: not only to build enough homes for its workers but to be the leader that inspires other large local companies to do the same.
“You’ve got to make sure you have a roof over the head of the brilliant dean or professor you want, and the janitor you want to not have to drive 50 miles a day, and the graduate student, irrespective of where they’re from in the country or the world,” Chavez said. “So this really requires them to play a leadership role in addressing the most significant challenge of our region.”
But Stanford must balance its housing efforts — costly as they are — with funding its primary mission: education, said Martin Shell, Stanford’s vice president and chief external relations officer.
“We’ve got issues right now, clearly, around the challenges of housing,” Shell said. “But we also want to make sure that Stanford continues to be the most affordable place it can be because education continues to be the greatest way to change economic mobility in this country.”
At the same time, Stanford is limited in where it can build. The university preserves about 2,000 acres of its land in the foothills as open space, protecting it from development.
Why Stanford is unique
Mind-boggling though the assessed value of the university’s holdings may be, the nearly $20 billion figure vastly understates their actual worth — Stanford has owned most of its land for many, many decades, meaning California’s Proposition 13 has held its tax base far below market value.
And because it is a university, much of Stanford’s $19.7 billion in property — including classroom buildings, student housing, faculty rental housing and medical centers — is exempt from property taxes. Stanford was not required to pay taxes on $13.3 billion of its holdings during the 2018 fiscal year, according to data from the Santa Clara County Assessor’s Office, which determines what Stanford’s exempt properties would be worth if they were taxed. It’s the largest exemption in any county in California.
The university’s tax bill wasn’t even in the top 10 in the county for the 2018 fiscal year — a list topped by Apple, PG&E and Google, according to the Santa Clara County Assessor’s Office.
As a result, local schools are missing out on tax dollars — even though they must make room in their classrooms for children who live in Stanford’s taxexempt rental housing, said Todd Collins, board vice president of the Palo Alto Unified School District. As part of a deal in 2000, Stanford agreed to make a onetime payment of $10 million to the school district to cover part of the cost.
Stanford’s management of its residential real estate portfolio also is unique. The vast majority of the university’s residential units are offered exclusively to Stanford students, faculty and staff — a perk that helps mitigate the impact of the local real estate market on its own employees, allowing them to live on or close to campus.
“Addressing the issues of housing and opportunity is something we’ve been focused on since our founding,” Shell said.
But by buying and reserving off-campus homes exclusively for Stanford personnel, the university removes them from the com
munity’s already meager general housing stock — a tactic critics say is making the housing shortage worse.
“In essence, they are robbing the general populace of potential housing,” said Erika Enos, a real estate agent who lives in Palo Alto’s College Terrace neighborhood, next door to the university.
Given its scale, the impact of any move Stanford makes in the real estate market is outsized. In addition to being the biggest overall property owner in Santa Clara County by dollar value, Stanford also tops the list in commercial land, is the largest owner of single-family homes and comes in seventh in multifamily residential. Stanford is the fourth-largest owner overall by square footage.
Stanford University, the developer, is born
Stanford University has been rich with land since its founding in 1885, when railroad baron and former California Gov. Leland Stanford and his wife, Jane Stanford, converted their horse farm into a university. They did so to memorialize their 15-year-old son, Leland Jr., who died of typhoid fever the year before.
Upon their deaths, the Stanfords left about 8,000 acres to the university — with the condition that the land could never be sold. By the 1940s, the university had used less than 2,000 of those acres. Cows and horses grazed on the rest, and for a while, some of it was used to grow flowers to sell. But the university faced a conundrum — it was strapped for cash and forbidden from selling its most valuable asset.
Stanford enlisted alumnus Alf Brandin to tackle the problem, and soon the Navy veteran came up with an innovative solution — lease the land, instead of selling it. So Stanford in the 1950s began leasing chunks of its off-campus land to developers who built the Stanford Shopping Center — bringing high-end retail to the South Bay — and Stanford Research Park in Palo Alto. They also built residential neighborhoods in Menlo Park for the general public, taking advantage of the post-war boom in housing demand.
It was a pivotal moment for Stanford, giving it a cash infusion that helped set it on the path to becoming one of the world’s most distinguished universities, said UC Berkeley Professor Emeritus Richard Walker, an urban development expert who grew up on Stanford’s campus in the 1950s and 60s.
It also was a pivotal moment for Silicon Valley. Stanford’s new research park housed companies such as Hewlett Packard, Varian Associates, Lockheed, General Electric and Fairchild Semiconductor — pioneers who made groundbreaking strides in microwave, radar and nuclear technology on Stanford land, often employing the brainpower of Stanford graduates. All that activity helped spark the tech boom.
At the same time, Stanford played a key role in shaping how Palo Alto, Menlo Park and the surrounding communities developed — as low-density, car-oriented, campus-centric suburbs. And the university’s stature helped drive up home prices in the region.
“Stanford helped give it a hub,” Walker said. “Stanford helped give it prestige, which kept people there when Silicon Valley was nowheresville.”
But by building the research park — which now holds more than 150 companies — in an area that did not have enough housing for those workers, Stanford also helped sow the seeds of the housing crisis, Siegel said.
“The reason Palo Alto has the worst jobs-housing imbalance of any community around here is largely because of the Stanford Research Park,” the former mayor said.
Palo Alto had 3.54 jobs for every housing unit as of 2017, according to the most recent census data available. That compares to 1.98 jobs per housing unit in Cupertino, 1.72 in Sunnyvale and 1.25 in San Jose. The unincorporated area of Stanford had the worst ratio of all — 5.38 jobs per housing unit.
Stanford wouldn’t disclose how much money it makes from the research park and its other commercial real estate holdings, and its financial records are not public. But the revenue is used to help subsidize tuition, research and other university costs, with the largest percentage going to support affordable housing programs for university employees, according to spokesman E.J. Miranda.
Buying up a neighborhood
Stanford also is one of Silicon Valley’s largest employers, with a workforce including more than 13,000 staff members and 2,200 faculty last year. Like other big employers, it faces a hiring challenge: Many of the brilliant professors the university would like to attract are unable or unwilling to pay the region’s high prices.
So Stanford uses subsidized housing as a recruitment tool — and recently has found itself needing more homes.
To help solve the problem, Stanford set its sights on College Terrace — a narrow, 12-block-long neighborhood sandwiched between the Stanford campus and Stanford Research Park, full of charming bungalows dating back to the early 1900s. The university quietly has bought about three dozen houses there over the past several years for professors who otherwise couldn’t afford to live near campus. Stanford has spent at least $68.6 million on those transactions, according to real estate service MLSListings. That figure doesn’t count homes that may have been willed or gifted to the university, sold off market or otherwise aren’t listed in the MLS database.
But the way Stanford has conducted its buying spree has rankled some residents, who point to Stanford’s “occupation” of College Terrace as a case study in the university’s insensitivity and heavy-handedness. The university is remodeling or tearing down and rebuilding many of the homes, which residents say saps the character from their neighborhood and disrupts their lives.
“We’re just kind of drowning in construction noise, mess and all of that,” said Pria Graves, a College Terrace resident of 34 years and the volunteer “Stanford Observer” for her neighborhood residents association. “We’re ready for them to go away for a while.”
The university also has left many homes it buys vacant — some for years, neighbors say — despite the acute need for housing in Palo Alto and beyond.
Today Stanford owns 32 homes in College Terrace, plus at least another seven in the surrounding neighborhoods — most of which were purchased in the past five years. Stanford-owned homes make up less than 5 percent of College Terrace, but there’s at least one university house on almost every block. People are living in fewer than half of them.
Most of those vacant homes are under construction or in the pre-construction planning process, and the rest should go up for sale soon, according to Stanford. The university ultimately plans to place an employee in every house it owns in College Terrace, Shell said.
“It is in our interest to get any house that we have, that we own, occupied, given the pressures that are existing in this area,” he said. “It’s something that we’re absolutely committed to.”
To Shell, the hostility toward Stanford in College Terrace is evidence of a communication problem — which he intends to solve.
“We probably haven’t done as proactive a job as we should have, as an institution, to engage our neighbors close by,” Shell said. “And that’s something that clearly we’ve made note of.”
Stanford also recently built 180 single-family homes and condos next door to College Terrace, in a development dubbed University Terrace, and started moving in faculty in 2017. University officials note that development took 15 years to get city approval, a delay that propelled its need to buy so many existing homes. While Stanford has not revealed what its longterm plans are for College Terrace, it shows no sign of slowing its buying frenzy.
In a sense, Stanford’s recent purchases in College Terrace are fulfilling a 150-year-old dream of the institution’s founder. Leland Stanford tried to acquire the land where College Terrace now sits in the 1870s and 1880s, but the owners, German farmers Frederick Weisshaar and Peter Spacher, refused to sell, hoping they’d get more money if they held out. They ultimately sold in the late 1880s to a farmer named Alexander Gordon, who subdivided the land into the small lots that make up the current neighborhood.
Some of the houses in College Terrace were given to Stanford as gifts or left to the university after the owners died. Most Stanford bought — sometimes going toe-to-toe against other prospective buyers.
In at least one instance, Stanford competed for a College Terrace house against one of its own employees and won, according to someone with knowledge of the deal.
“Stanford usually wins,” said Enos, “because Stanford has the strongest offer.”
Since Stanford started buying homes in bulk in College Terrace about five years ago, median home values have jumped from $2.09 million to $2.7 million, according to Zillow. But local real estate agents don’t blame the increase on Stanford’s buying streak — values have leapt about that much across Palo Alto.
A tale of two Stanford employees
When Johan Ugander got a job teaching management science and engineering at Stanford in 2015, he was thrilled at the prospect of joining one of the nation’s premier universities. But there was one problem: the Bay Area’s notoriously high cost of living.
He and his wife made the move anyway, living in San Francisco for a while and then renting a two-bedroom apartment with their now 2-year-old daughter in a Stanford-owned building in Palo Alto. But when his wife got pregnant with their second girl last year, they needed — but couldn’t afford — more space.
That’s when Ugander won one of Stanford’s “housing lotteries” and got the chance to buy a threebedroom, College Terrace home for $1.8 million — about half of market rate. Under a standard deal offered to tenure-track faculty, Stanford retained control of the land beneath the house. The university also provided low-interest loans that called for a 10 percent down payment (instead of the typical 20 percent) and manageable monthly payments.
Ugander and his wife moved into their new home in June.
“It’s pretty incredible,” he said. “It’s a huge perk of the job.”
Still, it’s not perfect. Though Ugander got a discount on the sale price through Stanford, he’ll have to pay property taxes on the full market value of both the house and the land — likely shelling out close to $37,000 in the first year. Ugander will have to leave his house 10 years after he retires from Stanford or 51 years after he moved in — whichever comes first — at which point he will sell it back to the university, making a modest profit (appreciation is capped at about 3% per year). That means he can’t pass it down to his daughters.
“There’s something emotional about that,” he said. “Your kids are going to drive down the street and say, ‘Oh we used to live there, but we got kicked out when my father left Stanford.’ ”
But for Ugander, those trade-offs are more than worth it — as they seem to be for the 207 faculty members Stanford houses using that type of ground lease. But housing lotteries like the one Ugander won are competitive, with an average of 35 applicants per home.
The situation for nonfaculty employees is less opportune. They are able to live in some of the university’s rental units — such as Stanford West Apartments, just off campus. But there aren’t a lot of those units, and they can be pricey. Only faculty and executive-level staff are eligible for loans and other home-buying assistance.
As a result, of the 1,273 members of SEIU Local 2007, the union that represents Stanford service workers, fewer than a dozen live in Stanford housing, said union spokesman Richard Patrone. Many of the rest can’t afford to live on the peninsula at all and instead commute from Tracy or beyond.
Eulises Flores, a lighting technician who has worked at Stanford for 12 years, was forced to leave his East Palo Alto home last year when the yearly rent increases got to be too much. To save money, Flores and his two daughters moved in with his brother and sister-inlaw in San Lorenzo. It’s a lengthy commute to and from campus — up to two hours with traffic. He has to get his 3-year-old up before dawn so he can drop her off at her great-grandmother’s house in East Palo Alto on his way to work.
“I can tell it takes a toll on her,” said Flores, who is on the waiting list for one of Stanford’s 180 low-income rental apartments. “By the end of the day, she’s just so tired.”
Stanford may take a more active role in housing its non-tenure-track employees in the future. The university launched an affordability task force last summer, which is expected to issue recommendations later this year.
“We are looking at how do we provide specifically income-qualified opportunities for people in a more complete way than we maybe have done historically,” said Jean McCown, associate vice president of Government and Community Relations. “Because that’s clearly a huge need.”
Stanford’s reach
Stanford faced another major turning point this year, as Santa Clara County officials weighed how much the university can grow through 2035 and what measures it must take to ease the traffic and housing impacts of its expansion.
The university had applied to build an additional 2.275 million square feet of academic space and 2,600 student beds as part of its new general use permit — the largest land-use application ever received by the county. County officials demanded a hefty price of Stanford in return, including building homes for every one of its new employees — an extra 2,172 units — and making sure its expansion did not result in new traffic congestion.
“What I hear from the community is a view that is pretty consistent with my own, which is, of course, we value Stanford’s continued success, we just don’t want their continued success to unduly burden the surrounding communities,” said Santa Clara County Supervisor Joe Simitian.
Stanford argued that the county’s proposal was unreasonable, and in the end, decided to withdraw its development application rather than comply.
“I’d love to see some examples of other corporations or not-for-profits or any other entity that houses every member of its workforce,” Shell said. “One hundred years ago, that was the company town. And I think we’ve seen that movie, and it didn’t play out all that well.”
Stanford says — and the numbers show — that it’s already providing a lot of housing. By 2020, the university will control 17,900 residential units in Santa Clara and San Mateo counties — indeed enough housing to make Stanford a small town.
For professors like 75-year-old Jim Sweeney, who has lived in a six-bedroom house on campus for 35 years, the housing program is a great perk.
“I love living on campus,” said the energy and environmental economics professor, who also leads the Stanford Campus Residential Leaseholders Association. “I love the home. I like the neighbors. I like the walk to work.”
It’s a boon for students, too. As of the fall 2018 quarter, 6,555 undergraduate and 6,120 graduate students lived in Stanford-provided housing, according to the university. Stanford guarantees all freshmen housing for four years, and about 97 percent of eligible undergraduates live in university housing.
But Stanford’s housing mostly serves only Stanford. The university offers just 1,340 residential units to the general population.
That imbalance leads some local residents to wonder, with all the university is doing to house its own, what responsibility does it bear to help ease the broader housing crisis?
In Los Altos a few years ago, residents eagerly awaited the completion of the 167-unit Colonnade Apartments, hoping it would help fix the city’s housing shortage. But they got a rude awakening when Stanford showed up on the scene. The university preleased the entire building before construction was finished and then bought the property in 2017. Now the units are for Stanford employees only.
“I remember at the time, people were saying, ‘Wow, this is going to be great — we finally have the kind of development where maybe our entry-level teachers, public safety people and so on will be able to live in town,’ ” Los Altos Councilwoman Anita Enander said. “And then before the project was even completed, the announcement was made that Stanford had leased the entire complex.”
That purchase had a significant impact on the Los Altos housing supply. At the time, the Colonnade made up more than 10 percent of the city’s multifamily units, Enander said. But Stanford officials argue that if university workers weren’t living in the Colonnade, they’d just live somewhere else in the area — taking the same amount of housing stock off the shelf.
The issue resonates differently on El Camino Real, where on a recent evening dozens of RVs and vans were parked along the busy, six-lane highway at the edge of Stanford’s Palo Alto campus. Underneath a massive, red-and-white billboard advertising Stanford football, a mother left an RV with a baby in her arms, an older child following behind. Down the street, a 40-yearold German traveler with a business degree, trying his luck at launching a startup in Silicon Valley, unloaded his bicycle from the back of a school bus converted into a tiny house.
Some of them are intimately familiar with the mega-landlord next door — they’ve worked on Stanford’s campus.
Mike Reed, a 53-year-old plumber, was a contractor on the university’s Escondido graduate housing village for about a year, finishing the project last summer. He’s been living in a trailer on El Camino since March.
The trailer lifestyle works for him, Reed said, but it has its downsides. His home rocks back and forth whenever cars come flying by, and police regularly force him and his neighbors to temporarily relocate, especially on game days.
And while Reed doesn’t think it’s Stanford’s job to provide housing for him and the others living on the street just beyond the university’s doorstep, he wishes Stanford would do more. If nothing else, the university could make more of its land available for low-income housing, he said.
“They aren’t doing anything for anybody,” Reed said, “except people that attend Stanford.”