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The Great LA Housing Scam

CITY HALL--Los Angeles City Hall is making pawns out of its homeless. It’s a shameless mess, but it isn’t that the way it always is – the poorest are the most abused? 

The problem from the City Hall viewpoint is that developers are not making enough money. As City Hall watchers know, tending after the profits of real estate developers is City Hall’s mission in life. CityWatch wrote about one example back in 2013 and a follow-up article in 2014.  

As the City’s own HCID department noted in November 2015, there is a 12% vacancy rate among apartments constructed in the last decade. That segment of the market is particularly important as it reflects the newest additions, frequently in dense areas such as Hollywood. As we may recall, for years the W Hotel condos could not sell even 20% of their units even after a dramatic price slashing. 

Some people call the manic CRA building in Hollywood the “Edsel Mistake.” In the mid 1950's, Ford Motor Company came out with the Edsel, but it entered an overly saturated market.   Also, it looked like an Oldsmobile sucking a lemon.   So too with these Hollywood Projects. Built in the modern 'Dreck' Architecture style, they also were aimed at a market which was saturated. 

Just as Millennials were reaching the family rearing age, the expensive Hollywood units came on-line. Like all prior generations, Millenniums move away from apartment living when they start families. Thus, all these projects, which were based on the false data that City Hall was feeding developers in the early 2000's, are still in the construction pipeline. But, the Millennials are already leaving. 

Ford was smart enough to stop constructing Edsels, but Los Angeles developers were not as bright. Thus, they continued with all their plans to build, build, build. In the developers’ defense, however, it was easier for Ford to retool the factories to produce different automobiles than it was to shelve a 10 year old plan to build a massive mixed-use project. 

As we recently learned, City Hall hit upon a brilliant idea. Demolish old rent controlled units and create a Homelessness Crisis. Then, the Mayor can ride to the rescue with hundreds of millions of dollars in federal Affordable Housing subsidies for building Affordable Housing. Wisely, Mayor Garcetti did not phrase the program in terms of Hundreds of Millions of Dollars for Billionaires. He’s not dumb. He’s helping the homeless — by giving hundreds of millions of dollars to billionaires. 

As we recently learned, the plan is working to perfection. The Mayor has a plethora of homeless people for photo-ops and he has a grand cause – give more money to the developers or more housing for the homeless. One must admire the ingenuity. 

Just where will the Homeless live while these fabulous new accommodations are being constructed? The streets, preferable back alleys. We need just enough homeless visibility so that voters are duped into increasing their taxes in order subsidize the building of luxury units while pretending to help the poor. 

City Hall has one overriding concern – more profits for developers. Everything at City Hall is seen through this lens. They cannot help it. For 15 years, the City has singled mindedly pursued this objective, and each year Los Angeles deteriorates a little more. In 2016, Los Angeles leads in all the bad indicators and lags in all the good indicators. 

Salt Lake City housed its homeless. Let’s not make the most vulnerable among us into pawns in a real estate shell game. Have we no shame?

 

(Richard Lee Abrams is a Los Angeles attorney. He can be reached at: [email protected]. Abrams views are his own and do not necessarily reflect the views of CityWatch.)

-cw