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and enforce the day-to-day rules with the tenants " in a reasonable but firm manner . " It must take care of the complex ' s physical plan , and underlining all of this is financial management of the project . Subsidized housing has different problems than the private sector , he said . Sometimes people can ' t pay the rent , Wand you ' ve got to see whether its correctable- -sometimes , not often, you evict them. " As a part of selection , management must see whether they will take seriously the responsibility to pay rent once a month . In interviewing management firms , Mr . Goldsmith suggested that project sponsors check out their past history . Now the PAHC is looking for a second project , this time toward the private sector . The housing law was written particularly to encourage the private sector , with strong tax incentives , Mr . Goldsmith said . "Limited dividend" sponsors of Section 236 housing are permitted a six-percent return on their ten-percent equity investment in a project , he said , but they get all of the depreciation . While only straight-line depreciation is allowed in the regular housing market , " limited dividend" sponsors of subsidized housing are allowed double depreciation . Over a three-year period they will get more write- off than the money they put up . But , after profiting from a few years of accelerated depreciation , a private enterprise sponsor may "walk away" from a project if it isn ' t working well . A nonprofit group can sell out to a limited dividend sponsor and thereby get a "considerable contribution" to their operations , Mr . Goldsmith said . Assistant City Manager Smith asked why the private sector hasn ' t been more active in providing low/moderate income housing . Mr . Goldsmith said that the reason was that land was too expensive . Mr . Goldsmith said that the city of Palo Alto has done subsidized land for low/moderate income housing- -at the Lytton School site in downtown Palo Alto . When the school was declared obsolete two and a half years ago , the school board expected to realize $1 million by selling for high-rise office development . But the PAHC suggested that legally , with unanimous school board agreement , the city could buy the land from the school district without public auction and use it for housing . When the school board failed to agree , the city condemned the land for $600, 000 . Now Palo Alto is selling the land for 5450, 000 to church sponsors of housing for the elderly on the site . Mrs . Henderson asked where the city got the 5600 , 000. Mr . Goldsmith said that Palo Alto has surplus funds available for such uses , much of which comes from Palo Alto ' s city-owned utilities . (As the subregional employment and shopping center , Palo Alto reaps large financial benefits from the Stanford Industrial Park and the Stanford Shopping Center , where most of the employees are not Palo Alto residents and cannot afford Palo Alto homes . In 1969, according to a Stanford University press release , tax and utilities revenues generated on Stanford lands contributed $5 million to the Palo Alto School District , or half its yearly budget , and $3 million to the C ity, , or a third of its budget . Employees whose labor creates these revenues go home to surrounding communities where they pay high taxes for schools and city government , while Palo Alto taxes are low, and its high-quality MINUTES HOUSING CONCERNS COMMITTEE FEBRUARY 23 , 1972 PAGE 3 OF 4