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HOUSING CRISIS - On April 1, the Los Angeles County Affordable Housing Solutions Agency (LACAHSA) will officially open its doors, at least metaphorically. It will be the first Southern California regional agency tasked specifically with creating affordable housing solutions, including tenant protections.
It’s about time.
In a county with a population greater than Sweden or Austria, we work together to deal with transportation on a regional basis; we cooperate regionally about water supply; and we also deal with other issues, including health and infrastructure as regional matters.
Not working together regionally when it comes to affordable housing never made any sense, and the worst example of housing policy not making sense is the discredited, broken RHNA (Regional Housing Needs Allocation) system, which forces cities to look at housing on a city-by-city basis rather than regionally. In continually attempting to justify their preemption of the housing policies of individual cities, Sacramento declares that housing “is a matter of statewide concern,” yet then leaves cities to deal with housing on a city-by-city basis rather than as a contiguous region. It’s mind-blowingly absurd (until one considers the deep-seated corporate interests behind the policies; in point of fact, most so-called “housing bills” are in reality “real estate bills”).
That could and should change, at least to some extent, with LACAHSA, and I’m excited to have been elected to serve on the LACAHSA Board as one of the founding directors. I don’t want to wait until April 1, so I’m going to present some ideas here after providing some background on my election.
My City’s press release announcing my appointment was to the point and included the following text:
“I’m honored to serve as a founding board member of LACAHSA,” said Councilmember Mirisch. “I’m looking forward to working towards real housing solutions to help real people. Housing is for living in, and affordable housing should not be a tool or Trojan horse for corporations, hedge funds, and speculators to profiteer. LACAHSA represents an important opportunity to create affordable housing without the distraction and distortion of Urban Growth Machine greed.”
SB 679, supported by the Beverly Hills City Council and signed by Governor Newsom into law last year, established LACAHSA to provide for significantly enhanced funding for new affordable housing production and for affordable housing preservation, as well as for safeguarding tenant rights in Los Angeles County.
“As a LACAHSA board member, I intend to fight forcefully for meaningful and actual protections for renters, beyond the lip service of many real estate-backed and dark money funded groups who only purport to care about tenant rights,” added Mirisch.
The straightforward press release unleashed a torrent of unhinged vitriol from a rogue’s gallery of tetchy, unremitting, raging, developer shills, whose Twitter comments mainly served to underscore their tetchiness.
As writer Aaron Sorkin has noted, “A mob’s a place where people go to take a break from their conscience [that is, if they have one].”
Evidently, so is Twitter.
Clearly, my comments touched a nerve with this motley assortment of Wimbys and urban supremacists, something that can only be considered a fringe benefit of my election to the LACAHSA Board.
The Twitter-mob included the hysterical radiologist whose bedside manner is so bad that he doesn’t see real, live patients anymore, but who wants “more neighbors” next to his $3 million Craftsman home.
In addition to the “I got my $3 million California Craftsman house with a garden; now you can live in a small, shitty rental apartment down the street” radiologist, we evidently also had a number of people feeding at the Urban Growth Machine trough, including radical libertarians who are quick to make common cause with anti-government, anti-environment right-wing extremists.
Another mobber evidently attacked me for being a proponent of steady-state economics and a member of CASSE, the Center for the Advancement of the Steady State Economy (note to trolls: sadly, I don’t have a lot of time to wade into the Twitter cesspool, aside from a few brief feints, and I’m hearing most of this second- and third-hand, so I won’t have a chance to respond to each of your heartfelt insults individually).
Indeed, I am a proud signatory of the CASSE position statement and acknowledge, as someone who cares about facts must, that we live on a planet of finite and depleted resources. Like fellow-Swede Greta Thunberg, I reject the notion of “fairy tales of eternal economic growth.” I acknowledge and understand that climate change is just a subset of the larger problem of ecological overshoot, and that we are depleting the planet’s resources at an unsustainable rate.
No wonder the City’s press release also elicited a snarky meme from a dude who earns millions by -- to use the words of Swedish writer Jan Guillou -- “opinion-shitting like a Canada goose.” This is the same urban supremacist, ecological overshoot denier, and Manifest Destiny revivalist who thinks the US should have (cue Austin Powers) a billion people and who equates the elimination of all zoning with “freedom.”
Some of the criticism leveled at me personally by the Twitter mobbers referenced the lethargic efforts of the City of Beverly Hills at creating affordable housing. Evidently, these critics are unaware of how local government works or of my criticism of the City’s track record, along with my own efforts over the past number of years to create and fund affordable housing. They are clueless about my role in finally passing meaningful tenant protections within our City (that is, before some of the backsliding by the Council majority).
What the peanut-gallerists also don’t know is that after finally passing robust tenant protections, our Council received a treasure trove of Soviet Communist swag from the executive director of the Apartment Association of Greater Los Angeles (sadly, my ushanka didn’t fit).
The good news is that we seem to finally be making some real progress on getting our own affordable housing on City-owned land. I say “seem” because one never knows with our Council majority, which sometimes seems better at happy talk than a lot of other things. One way or the other, I will keep pushing. Sometimes persistence does overcome resistance.
But this is all a distraction: the Wimbys’ goal isn’t affordable housing and never was. As I intimated in the press release, these people (a number of whom work for dark money funded AstroTurf groups) simply want to pursue their Urban Growth Machine agenda and use affordable housing as a means to eliminate zoning, to eradicate single-family neighborhoods, to force density and unsustainable growth upon cities, and to allow their developer and corporate buddies to run riot with the profiteering.
It’s clear that people whose motto is, “I don’t care how much money developers make” view housing differently from the rest of us. They look at housing as an investment vehicle, as a means to profiteer. Contrast that with those of us, including mission-driven nonprofit housing organizations, for whom housing is, first and foremost, a place to live. In other words, the ultimate goal of nonprofit housing organizations is housing itself. The ultimate goal of the Wimbys’ for-profit developer pals is… money.
One day, and that day will certainly come, likely soon, we will have the opportunity to deconstruct the vocabulary and explore the lexicology of the Wimbys, as well as the agnotology of Wimbyism. But for now, and with apologies to our Urban-Growth-Machine-shill friends, let’s get a jump on the official launch of LACAHSA and take a look at some policy suggestions.
Funding LACAHSA
When the state created LACAHSA with SB679, it didn’t provide any funding, despite the best efforts of the bill’s author then state senator (now Congressperson) Sydney Kamlager-Dove. Somewhat pathetically, initial funding for LACAHSA is coming from a nonprofit foundation.
In a way, this is emblematic of the larger housing ecosystem. Perhaps the biggest challenge for affordable housing in general is funding, and one of the incipient agency’s biggest challenges will be to find and create funding to further the goal of the preservation and production of affordable housing within LA County. It seems that the strategy is to use citizens’ initiatives to generate funding for the agency, which allows for some flexibility and creativity in how to provide affordable housing resources through taxes.
As a fellow incoming LACAHSA board member remarked, it probably isn’t a good idea for an affordable housing agency to generate funding by making housing less affordable. Across the board parcel taxes, or other taxes that mainly impact the middle class and discourage homeownership (notwithstanding the Urban Growth Machine’s goals of turning us into a nation of renters), are not the way to go, and you won’t find any such proposals for generating funding for LACAHSA on my list.
A countywide TOT (transient occupancy tax) surcharge
A surcharge of, say 2%, on the hotel bed tax would be a way to generate revenue for affordable housing. I recently voted – as the lone vote – against a major luxury hotel project in Beverly Hills. I had proposed an affordable housing TOT surcharge of 5% for the project, and this would have generated earmarked revenue for the City to finance our own projects. This was a unique project where the average nightly stay is projected to cost over $2000, so a 5% surcharge would be an extra hundred bucks for well-heeled hotel guests who can well afford it.
A countywide progressive, sliding-scale TOT surcharge for affordable housing would also be worth discussing.
Corporate/Big Business Taxes
Major corporations are experts at tax avoidance. We often hear discussions about the impact of the jobs/housing imbalance in creating housing affordability problems. The current taxation system causes cities to compete against each other for commercial tax revenue, while housing (i.e. more residents) generally ends up costing cities money. This can cause cities to approve additional commercial and business activity without a plan for providing housing.
In fact, strengthening CEQA could actually help avoid the unintended consequences of the way cities currently fund services, and hopefully the LACAHSA Board can make recommendations to the state legislature about systemic ways to fix the jobs/housing imbalance, ways that avoid attacks on the state’s unique and diverse communities.
Big businesses and corporations often try to pit cities against each other as leverage in negotiating unfavorable deals (for cities, that is), and city councilmembers often don’t know how to say “no.” Sure, corporations could threaten to leave the county, but we finally need to collectively stand up to attempts of corporations to blackmail our cities; countywide business taxes would help stop the race to the bottom that is a major factor in exacerbating the jobs/housing imbalance.
A countywide corporate tax could be structured in a number of ways.
We could look to follow the lead of Palo Alto, which recently overwhelmingly passed a tax on Big Tech and other major corporate interests, while not placing additional burdens on small businesses. The Palo Alto tax was based on the square footage of office space: 7.5 cents per month for each square foot over 10,000 square feet. However, especially considering the ubiquity of remote work, we could also structure a tax based on headcount, payroll, or revenue.
Addressing the jobs/housing imbalance by calling on big businesses and corporations to pay their fair shares could also take the form of commercial property parcel taxes, which would only apply to commercial plots and which would exempt small businesses.
Personally, I still like my five-year-old proposal for a corporate wealth tax on major corporations who are in so many ways responsible for our cities’ housing problems and who are not paying their fair shares.
Vacancy/Airbnb taxes
While there are numerous urban supremacists who are vacancy deniers (likely many of the same people who claim that luxury condos don’t fuel gentrification, but somehow “prevent” gentrification), vacancy taxes can both raise revenue for affordable housing, as well as discourage vacancies so that the existing supply of housing is actually being used as… housing. Again, here we encounter the potential conflict between housing as a place to live in and housing as an investment vehicle.
Airbnb, in jurisdictions where it unfortunately is still allowed, should also be heavily taxed, as it takes housing off the market and turns housing from a place to live into a commercial activity.
A countywide vacancy/Airbnb tax would both raise money for affordable housing and tenant protection services, as well as serve the policy function of treating housing as, first and foremost, a place for people to live.
Second-Home Tax
LA County real estate is a particularly attractive investment for global speculators looking to park (or in some cases launder money). People who use LA County real estate for these purposes and who aren’t renting out their properties should pay additional taxes (beyond property taxes), which, again, would both serve a policy purpose and provide funding for LACAHSA.
Progressive Documentary Transfer Taxes
Amending Prop 13 to allow for the reassessment of commercial properties failed, which means the squirrelly use of LLC’s to avoid property taxes will continue until the loophole is plugged.
Supplementary progressive documentary transfer taxes should be levied any time money (or stock) changes hands: the higher the sales price, the higher the percentage of the supplementary tax, which would go directly to LACAHSA.
I voted against a luxury condo project in our City because it generated zero units of inclusionary housing and zero dollars earmarked for affordable housing. (My suggestion, that an additional 2% fee for affordable housing be charged each time a condo sold – the projected average price of a condo at the time was $13.5 million – was roundly ignored by the rest of the Council, who didn’t want to offend the developer).
A countywide supplementary documentary tax would ensure that even if the addition of luxury condos is not a preventative measure against gentrification (except in some people’s wildest fantasies), it would at least provide funding for affordable housing.
Progressive supplementary documentary transfer taxes would apply to both commercial and residential properties above a certain level (for property owners selling multiple properties within a determined timeframe, the level would be based on aggregate sales). For residential properties, the level of the supplementary documentary transfer tax could be enhanced for those who have neither lived in their properties nor rented them out as housing.
Measure ULA, LA’s “Homelessness and Housing Solutions Tax,” (which was also known as the “Mansion Tax”), could in some ways be a model, though ULA only has two levels of taxes rather than a more extensive sliding scale.
According to real estate investor representatives, “It's called the ‘Mansion Tax,’ but commercial investors will feel it the most, according to attorney Lee Kaplan of Harvest LLP.”
Kaplan continues: “The brunt of the measure’s impact is, therefore, likely to be felt by professional and institutional property owners and investors.”
Although Kaplan’s statements are clearly meant as a dire “warning,” in addition to the obvious benefits in providing resources to fund affordable housing, if the measure can help cool down market speculation and ends up stabilizing or even somewhat depressing the markets for investor-owned housing, that would actually be a very good thing.
Kaplan also, unsurprisingly, raises the knee-jerk threat that additional costs resulting from Measure ULA will be “passed on to tenants,” once again showing us why robust rent-stabilization policies are so necessary.
However, Kaplan conveniently forgets that the addition of BMR (below market rate) housing financed by public resources means that additional housing would be available, which would provide competition for corporate landlords who are working at the lower end of the market. If anything, this additional supply of subsidized housing would place downward pressure on the for-profit market.
If the tax itself, along with the additional supply of dedicated, quality affordable housing ultimately results in lower acquisition prices for new landlords, then why aren’t we hearing that these savings would be passed on to the tenants?
Why indeed?
When are institutional landlord savings ever passed on to tenants?
Additional Capital Gains Taxes
Fans and tools of the Urban Growth Machine love to blame homeowners for the lack of affordable housing. They love to ignore the crucial and elemental role that rising income inequality plays in the entire housing equation. And any time someone suggests implementing anti-speculation policies, they are quick to defend Wall Street, hedge funds, and other real estate speculators. Notwithstanding these Wall Street ass-kissers’ disingenuous defense of corporate greed, once again we come to the dichotomy of housing as a means to profiteer (Wall Street) and housing as a place to live (most of the rest of us).
Again, big businesses, major corporations, and big financial institutions are experts at tax avoidance (and, evidently, at getting the kinds of bailouts that aren’t available to any of the rest of us).
Tax loopholes must be closed for big businesses and corporations, and, in addition to transfer taxes, these corporate speculators should have to pay advanced levels of capital gains taxes, also using a progressive sliding scale, to provide funding for LACAHSA and permanent affordable housing.
The LACAHSA Board should support state and federal legislation aimed at ending corporate and institutional investor speculation, such as the Stop Wall Street Landlords Act, which was introduced last year by three members of Congress from California.
Anti-Flipping Taxes
Anti-flipping taxes would aim to curb speculation and behavior that leads to increased housing costs.
Canada has led the way with a number of anti-speculation housing policies, including a moratorium on foreign speculators, and, yes, anti-flipping taxes. Again, anti-flipping taxes can help cool down a housing market that has become hyper-financialized, as well as raise funding for LACAHSA.
TOPA/COPA Policies
I tried – unsuccessfully – to get our Council, which like many other Councils seems less interested in expanding tenant protections and more interested in FSD, to enact TOPA (Tenant Opportunity to Purchase Act) and COPA (Community Opportunity to Purchase Act) policies. These policies effectively give tenants and/or the Community the right of first refusal when a multifamily rental property comes up for sale.
For TOPA/COPA policies to work in any meaningful way, there needs to be funding. Enter LACAHSA. With a successful and well-funded LACAHSA, these policies, if enacted countywide, would allow existing housing to be turned into permanently affordable housing. Under COPA, the County, LACAHSA itself, and/or local Community housing trusts could purchase existing housing. Under TOPA, with potential subsidies from LACAHSA, tenants would have the opportunity to become homeowners.
The LACAHSA Board should push for statewide TOPA and COPA legislation.
Vienna
Many affordable housing advocates point to Vienna as a model of how we should look to create affordable housing. Much is different in Austria, including a tradition of looking at the relationship between the government, companies, and labor unions as a “social partnership,” and simply copying Vienna without regard for the different contexts would likely not work.
But surely there is much we can learn from Vienna (and Austria and Sweden and…) when it comes to affordable housing (not to mention when it comes to the relationship between the government, business, and labor unions). The first and most important lesson is pretty simple: the unfettered Market can’t and won’t create housing affordability.
In fact, most housing in Vienna is owned by the municipality (which at the same time is a federal state). Even when private sector companies are involved in housing, profits are strictly limited at each step of the process of creating housing, from land acquisition to what landlords can charge for rent itself.
In California, the exact opposite is in effect. Government agencies can’t even require pro formas from developers or any actual budgets, despite density bonuses being supposedly based on projects “penciling out.” In other words, for-profit developers can build in whatever level of profit they or their investors desire without having to justify their actual expenditures or prove what their actual costs are. This is about as un-Viennese as greeting someone with a fist bump.
If we really want to get all Viennese about affordable housing, then we would establish limits to profit levels that developers are allowed to make on all levels of housing. This, of course, would have the Viennese effect of creating more housing affordability “at all income levels” even though it would transgress against the Wimby credo of “not caring how much money developers make.”
A Social Housing Agency
There has been discussion about creating a California state agency for social housing. It’s a very worthwhile idea, but the devil will be in the details. LACAHSA should actively support the creation of such an agency, provided that it isn’t yet another cover and alibi for market deregulation and provided that it would operate under the principles of subsidiarity. The state social housing agency should work with the various regions and counties throughout the state, providing funding and resources for regional and local mission-driven nonprofits, and, of course, agencies like LACAHSA.
Working together with a statewide social housing agency, LACAHSA could fund and promote the production, preservation, and development of pro-people housing policies, along with land banking and working with regional and community-based, mission-driven non-profits. The state social housing agency would provide resources to LACAHSA, which in turn, would use a variety of methods to support local communities within LA County in creating a variety of various forms of permanently affordable housing, working all the way down to hyperlocal community land and housing trusts.
LACAHSA should have a major voice in the formation and working of a statewide social housing agency.
Giving renters a choice
The standard Wimby trope is to “blame homeowners” for the ills of the world, including the lack of housing affordability and homelessness.
Instead of looking to encourage and expand homeownership, many of these urban supremacists decry homeownership – some even going so far as to suggest owning a home turns an individual into a “bad person” – and attempt to hold forth on the supposed benefits of being a renter.
Of course, there’s nothing wrong with being a renter; one of LACAHSA’s remits is to strengthen renter protections by providing information and assistance to renters. It is my hope that LACAHSA can go further and sponsor legislation in Sacramento, which would strengthen tenant protections throughout the state. The true litmus test for those who truly care about renters and those who just want to keep up the appearances of their “progressive” bona fides are the repeal of Costa Hawkins and the Ellis Act. I’m hoping we can make an unequivocal recommendation to repeal these anti-tenant laws.
I’m hoping we can eliminate no-fault evictions within the county, and, ultimately, statewide, as we have done in Beverly Hills.
But the fact remains that a vast majority of Americans of all stripes would like to own a home someday and a vast majority of those who would like to own a home want a home with a garden.
The Wimbys are likely going to call for punitive taxes to attack homeowners and would-be homeowners. They will likely support parcel taxes for owners of modest homes and regressive property taxes with the goal of forcing homeowners to sell to institutional investors. Yet as mentioned earlier, it’s not a good idea to raise revenue by making housing more expensive (that is, for those who are actually using housing to live in).
Clearly, the Wimby use of punitive taxes has one aim. Turning us into a nation of unwilling renters is, after all, great for ROI; the recurring revenue generated from eternal rent is the gift that keeps on giving for corporate owners.
I’m hoping LACAHSA can make additional anti-speculation housing policy suggestions to decommodify housing and to enable more Californians of all stripes to become homeowners, as well as to allow more Californians of all stripes to choose where and how they live, broadening housing-lifestyle choices and preserving unique established neighborhoods with varying characters.
I’m hoping LACAHSA can help establish and support extensive community land banks, and do some land banking on our own, including taking over surplus lands from public agencies like Caltrans.
I’m hoping LACAHSA can work to standardize inclusionary housing and density bonus rules to ensure that affordability requirements are in perpetuity (or as long as a property is residential), rather than 55 years or any time-limited period.
I also hope we can come to the conclusion that if we believe housing is a human right, then homes are primarily for living in and not primarily an investment vehicle, and act accordingly.
I’m hoping, if we really care about true sustainability and we truly care about our planet we can take the wisdom of ecological economists, the late and incomparable Herman Daly and Joshua Farley to heart:
…we do not share the view of many of our economics colleagues that growth will solve the economic problem, that narrow self-interest is the only dependable human motive, that technology will always find a substitute for any depleted resource, that the market can efficiently allocate all types of goods, that free markets always lead to an equilibrium balancing supply and demand, or that the laws of thermodynamics are irrelevant to economics.
Ponzi schemes, whether they be ecological or economic, can never be the path towards “abundance.”
I’m really looking forward to the work on the LACAHSA Board — including funding real affordable housing and creating genuine tenant protections. We must not let ourselves be distracted by the whining of Ayn Rando Wimbys for whom “affordable housing” and “tenant protections” are nothing more than Trojan horses for Urban Growth Machine greed.
The Urban Growth Machine shills say housing is for speculators, corporations, hedge funds, and institutional investors. We need to ignore their false narratives and hubris. LACAHSA must say that housing is for real people and ordinary Californians.
We have seen what happens when we let “the Market” run amok, and we must look beyond Market-based solutions. The best way to get affordable housing is to finance, preserve, and produce affordable housing directly, not to “unleash” the Market in the hope it somehow trickles down.
Reliance on the Market will not work, but there are important takeaways from the recent implosion of the Silicon Valley Bank. If the state and federal government can find the money to fund bank bailouts, then they can find the money to fund LACAHSA. They can find the money to allow us to actually build meaningful levels of affordable housing, and they can find the money to actually allow us to provide more than two out of five eligible people with rental assistance. That’s for starters…
The creation of LACAHSA recognizes that affordable housing solutions do not lie in unleashing the “magic” of the Market, but lie well beyond the Market, beyond greed, and beyond pure self-interest. If there be any magic at all, the true magic is the magic that we create ourselves in the coming together and creation of our unique communities, as well as our larger Community.
There’s a lot to do.
It’s time to roll up our sleeves.
(John Mirisch was elected to the Beverly Hills City Council in 2009, and has served three terms as mayor. He is currently a garden-variety councilmember and a contributor to CityWatchLA.com.)
