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Looming Disaster: The Downsides of LA’s Exploding Property Tax Revenue

ONE MAN’S OPINION-After mass murders occur, a lull is to be expected. Wall Street’s swings and the blathering about tariffs on China permit the average person to slumber.

Wall Street and even trade wars with their long-range implications for consumers are not as immediate as being shot dead at Walmart. Rather, most of the country is paying attention to summer’s end and preparing for the school year. Nonetheless, a substratum of accumulating disasters persists. Bad forces continue to operate under the threshold of our consciousness. 

Leaving aside for a while the lethal impact of Trumpolosi’s Group Rights and Americans’ belief that killing other people is a good solution to problems, there are other forces that we ignore at our peril. One complex problem which we are blind to is the seemingly beneficial impact of extremely high property tax revenue. 

Property Taxes in Los Angeles County 

Virtually none of us analyzes the bed rock issue of property taxes. The media is silent about the threat to the entire economy caused by rising tax revenue. Yes, the increase in Los Angeles County property tax revenue poses a long-term danger to our well-being. 

Between 2009 and 2019, Los Angeles County saw a $541 billion increase in taxable property. That is more than 50 percent in the decade where the “new urbanization,” i.e., Manhattanization of the city of Los Angeles has been most aggressive. Much of the increased property value is based on hype, is specious, and the result of fraud. A major fraud which raises residential property values is spot zoning. As former Director of Planning Gail Goldberg observed in 2006, the corrupt practice of allowing developers to set the zoning for properties leads to disaster. (And she was a density hawk!) While still City Council President, Eric Garcetti, working with the forces of avarice made certain that Gail Goldberg was ousted in favor of the fool and Garcetti tool, Michael LoGrande, who has now been hit with an ethics violation fine of over $280,000. 

Spot zoning fraudulently increases residential property values by allowing developers to “re-zone” property to suit their desires. In this sense “re-zone” means that the developer may build whatever he wishes even when the actual zone itself does not change. Any construction which is not “by right” yet receives unanimous city council approval has been spot zoned. As a result, other nearby residential properties’ values rise to the “developer value.” That’s the role of “comps” in setting listing prices which result in higher purchase prices. 

Psychology plays a significant role, too. When a real estate agent shows potential buyers three or four homes that recently sold for $1.2 million (which a few years ago would have sold for $500,000), the buyers feel safe in paying such high prices. Without spot zoning, residential real estate prices would be at the lower “living space” value because developers would know that they could not bribe their way to construct higher density. Without the corruption of spot zoning, overall property tax revenue would be lower, but it would reflect actual value and not a non-existent value based on fraud, which will dissolve in the next recession. 

Politicos always overspend as they use all the new revenue to pay off their cronies. When the recession comes, there is an abrupt crash in property tax revenue and the city cannot fund its basic services and new programs. That is why the current high property revenue is a submerged harbinger of disaster. 

Downward Re-assessments in Recession 

In addition to the fact that a significant number of property owners will lose their jobs and simply not pay their property tax bills, others will demand a downward reassessment. As the economy falls, property tax revenues will decline even faster, but government expenses will remain constant or increase. The super high property tax revenues which we see today will have locked us into unsustainable spending patterns which will be a disaster – just as Gail Goldberg said. 

Mini Disasters are Already here 

The homeless crisis is a mini disaster, unless you’re one of the homeless in which case it is a major disaster. As previously explained, the homeless crisis was manufactured by the Manhattanization of Los Angeles and other cities that have followed similar “new urbanization” plans. All new urbanization areas experience escalating housing costs and increase in homelessness; LA is particularly bad because LA is especially corrupt. Who even wants to visit Los Angeles City Hall knowing that Cal OSHA has cited the city for the disease-ridden filth through which one must tread to get inside the building? Of course, the threat of disease to the occasional visitor is nothing compared to the sickness, suffering, and death which homeless people are experiencing. 

LA Media Does One Thing Well – Concealing the Substrata of Disaster 

The Los Angeles media has a unified approach to the homeless issue. Their mantra has become that homelessness is the fault of the dirty, unwashed, lazy, drug addicted, criminal, mentally ill homeless and has nothing to do with lack of homes. Increasingly, one hears the LA Times and others spew this foolishness, pretending that homeless people like to live on the streets and that it is actually very hard to get them to move indoors. Of course, Pravda West and the rest of the media never draw a correlation between Garcetti’s destruction of the rent-controlled homes of 65,000 poor people and homelessness reaching a state of crisis. 

This crisis, with its rats, fleas, human feces and diseases, is related to the happy news about huge property tax revenue increases. A considerable portion of the increased tax income is based on the destruction of rent-controlled properties in order to build fancy high rises. You won’t find Garcetti’s chief sycophant NBC’s Conan Nolan asking the County Property Assessor Jeffrey Prang any questions about the downside of high tax income. 

When property tax revenue is based on destroying the homes of the poorest people, a legitimate news organization would let Mr. Prang know in advance that it will be asking him about the extent to which destruction of these properties played a role in increasing property tax revenues. Mr. Prang would need to be forewarned of the questioning so that he could gather the data. 

We need to be smart enough to realize that the recent increase in property tax income comes at the cost of making the substrata of disaster significantly worse. When the recession occurs, not only will the new revenue disappear, but the results will exacerbate the Dickens Era-like victimization of the poor.

 

(Richard Lee Abrams is a Los Angeles attorney and a CityWatch contributor. He can be reached at: Rickleeabrams@Gmail.com. Abrams views are his own and do not necessarily reflect the views of CityWatch.) Image: Detroit Free Press. Edited for CityWatch by Linda Abrams.