CommentsCORRUPTION WATCH--The inevitable part of predictions is being wrong. In fact, we need a new word for prediction whose root would be the concept that the predicted event will not happen.
How about “pre-errorization?” Used in a sentence, it would be “I shall pre-errorize about Los Angeles’ economic future.”
What Turns a Prediction into a Pre-Errorization?
People tend to think that life moves in a straight line. We should have learned as children that one ice cream cone is nice but eating 10 will make us sick. Life has Trend Halts. A merchant may raise the price of his apples by one cent without sale volume dropping, then two cents without a drop in purchases, but soon a fed-back loop develops among his customers and he is selling fewer apples. If he ignores the Trend Halt and keeps raising prices, the practice that trended his income upward, will halt his income increases. Suppose he had doubled his apple order and by the time his new larger order arrived, he was charging ten cents more and almost no one was buying any of his apples.
Economic trends often contain the seeds of their own reversals. An honest society sees the trend and takes corrective action; a corrupt system pushes the trend into collapse.
Yes, We’re Talking About Los Angeles Housing
The November 17, 2015 report from the City’s HCID agency reported that in the last ten years the city had constructed a glut of affluent housing with a 12% vacancy rate where 5% was equilibrium. In other words, the developers were building for the stratum of the market which did not want the product. The developers were building apartments for people with incomes of $104,360.00. Los Angeles median annual household income is $55,909.
Garcetti calls constructing 150% of demand a “lack of construction.” Relying no doubt upon the maxim that a fool and his money are soon parted, Garcetti used this falsehood to get voters to approve $1.2 Billion in bonds to subsidize additional higher end apartments.
The Halt Mechanism Which Turned Garcetti’s Measure HHH and JJJ
into a Pre-Errorization
As explained in January 15, 2018, CityWatch, Will Sunnyslope Bankruptcy Case Put the Brakes on LA’s Affordable Housing? the federal courts halted this Affordable Housing scam. As Sunnyslope explained: The city gives the developers money to add affordable housing, but then the developers declare BK and the court eliminates the affordable housing component so that the projects are 100% market rate. The city “forgives” the city’s loans.
After Sunnyslope, a developer who gets Measure HHH money is stuck with the Affordable Housing component. Not only is Affordable Housing rental income less than market rate, but people do not like living with “low class affordable housing tenants.” That sentiment makes the rest of the apartments less desirable. One project in WeHo tried to have the poor people use a separate entrance and bar them from the higher end amenities. It was kind of an internal Berlin Wall.
Garcetti’s Fraud of “Lack of Construction”.
It’s gets tricky. The HCID report also states that only 37% of the housing needed for low income persons was constructed (593 unit out of a needed 1,605). That sounds like a lack of construction of low income housing, but let’s look at where the money for low income housing actually went.
Two years earlier in 2011, the city gave billionaire Eli Broad $52 Million to help construct a parking garage next to his museum. It sits on land where Broad pays the city $1 per year for rent. According to California Affordable Housing Cost Study October 2014 page 26, it cost $260,000 to construct an apartment in 2011, the year the city was so generous to Broad. $52M would have built 200 apartments.
Building 150% of demand for moderate income earners meant the city constructed an unwanted 1,958 apartments (50% of 5,874).
Add together the 593 low income apartments with the 200 units Eli’s $52 M would have built along with the 1,958 excess of moderate income apartments, we could have had 2,751 affordable housing units constructed. We had enough cash in 2013 to construct 152% of needed Affordable Housing while building 100% for everyone else.
Meanwhile, Garcetti’s Manhattanization accelerated the destruction of the rent-controlled units from 308 units in 2013 to 1,248 in 2017 to a projected 2,000 in 2018. Destruction of poor people’s homes is not a “lack of construction.”
Prediction or Pre-Errorization?
(1) The homeless problem will grow as Garcetti destroys more rent-controlled housing.
(2) Higher end projects will be constructed as vacancy rates rise.
(3) The LA City Council will unanimously approve every Ellis Act eviction while claiming lack of construction causes homelessness.
(4) The city will ignore that increase density leads to higher land prices.
(5) The city will ignore that more office density in the Basin makes rush hour traffic worse.
(6) Elon Musk will propose a hyperloop to the moon.
(7) Metro will squander billions on subways and fixed rail transit, ignoring that people avoid it whenever possible.
(8) Uber, etc. will increase the number of cars on the road as they have to drive to pick up points and drive away from destinations while self-driven cars are off the road as soon as they arrive.
(9) Self-driven, electric robo-cars will allow people to send their cars on errands, which will increase the number of cars on the road. (Robo-cars will connect to Skynet and kill off scooter riders.)
(10) Self-driven cars allow commuters to engage in other activities during commutes, e.g. read email, write reports, have conference calls, thus making living far away from the city core easier. Commute time will not be lost time.
(11) Enhanced Virtual Presence will substitute for many physical trips outside the home.
(12) As Virtual Presence permits people to stay at home, people will demand larger homes to avoid cabin fever.
(13) The high price of single family homes will crash nearer The Basin. For owners who have over-mortgaged their homes, this crash will not be a big problem unless they are forced to sell.
(14) As housing values drop, owners will demand lower tax appraisals, lowering property tax revenue. The city will lack the money to pay for the billions of dollars in bonds which Garcetti duped Angelenos into approving.
(Richard Lee Abrams is a Los Angeles attorney and a CityWatch contributor. He can be reached at: [email protected]. Abrams’ views are his own and do not necessarily reflect the views of CityWatch.)
-cw
