LA WATCHDOG - Shall an ordinance funding and authorizing affordable housing programs and resources for tenants at risk of homelessness through a 4% tax on sales/transfers of real property exceeding $5 million, and 5.5% on properties of $10 million or more, with exceptions; until ended by voters; generating approximately $600 million - $1.1 billion annually; be adopted?
Unless you are a summa graduate from Harvard Law School and well versed in the minutiae of Los Angeles housing policies, there is no way you will understand the many details of this 11,500 word initiative sponsored by housing advocates and labor unions. In other words, we are flying blind, especially since City Hall has not made any effort to educate us on this complex, 30 page proposed ordinance.
If approved by a majority of the voters, this ordinance would impose an additional tax of 4% on sales of property valued at between $5 million and $10 million and a 5.5% tax on sales of property valued at $10 million or more. This tax would start at dollar one, meaning that the owner of an apartment or office building valued at $10 million would be subject to a $550,000 tax on its sale. This is in addition to the existing documentary tax of 0.45%, or $45,000.
The proponents of this largest tax increase in the history of Los Angeles are calling it the “Mansion Tax” where millionaires and billionaires will pay their “fair share” when they sell their mega properties.
[Note: This $800 million tax increase is the equivalent of more than 10% in our property taxes.]
While this “soak ax the rich” may be appealing to some, the reality is that 75% of the tax will be derived from owners of apartment and commercial properties. And since there is no such thing as a free lunch, this tax will be passed through to us in one way or another.
Landlords and investors will demand higher rents for apartments to offset this exorbitant tax to achieve the desired return on investment demanded by pension funds like CalPERS. Retailers will also be subject to higher rents and will increase retail prices for essential items as food and clothing.
Real estate developers and their investors will pass on opportunities to build new apartment, office, commercial, and industrial buildings in the City. More than likely, they will also pass on adaptive reuse projects that would provide significant new housing under the new state law. This will have a devastating impact on the real estate industry, one of the City’s major employers.
This will also send a loud and clear message to employers and businesses that the City of Los Angeles is not business friendly. Rather, they are targets for increased taxes.
This proposed tax is unfair to City residents. While the City has 40% of the population of the County, it has 60% of the County’s homeless population. This calls for a countywide tax rather than increasing the burden on Angelenos.
The proponents of this ballot measure and City Hall are saying trust us, we know what is best. But can we trust our corrupt City Council and the self-serving Homeless Industrial Complex who have allowed the homeless problem to increase under their watch? No way.
Vote NO on Measure ULA.
We will have additional articles on the use of funds from this proposed tax since a significant portion is not for permanent supportive housing or shelters for the homeless. We will also examine the lack of independent oversight of our tax dollars.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, the Budget and DWP representative for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. He can be reached at: [email protected].)