Page 16 - AAGLA-APR 2022

Executive Director’s Message
of my earlier editorial tirades, is your best defense. There are many valid reasons why a T.O.P.A. is misdirected and completely wrong...let me count the ways for you.
T.O.P.A. Law is Completely Unnecessary
There are no laws prohibiting any non-profit organization, government entity, or one or group of renters from making an offer to purchase a multifamily property today – absolutely and positively none! To that end, there are no prohibitions imposed upon non-profits, governments or tenants stopping them from making an unsolicited offer to an owner of an unlisted property – again, absolutely, positively none whatsoever! Non-profits, governments, and tenants are welcome to operate in our supposedly free, capitalist economy. The last time I checked, it was a free marketplace.
To go one step further, to protect the public good, government jurisdictions have the power of Eminent Domain and are welcome to pay a market price for any property government desires. T.O.P.A. is completely unnecessary to further goals of creating affordable housing. T.O.P.A. is an awful and unnecessary concept.
No Affordable Housing Will Be Created, Absolutely None!
T.O.P.A. does not and never will create new housing, let alone affordable housing. In fact, the exact opposite will happen when a T.O.P.A. law is imposed. Why would anyone invest in rental housing if their eventual “exit opportunity” for the property is compromised? Better to invest in triple-net, single family homes, or gamble on Wall St. That will reduce supply of rental housing, demand will be far greater than the available supply, and prices will soar. In a rent controlled market that is already supply restricted, this can only mean one thing...the olde ”Double Whammy.”
The T.O.P.A. goal is to convert existing market rate housing, available to me and you, and anyone else at any time into low- income housing, forever. Like virtually all rent regulations and tenant protections with guaranteed, unintended consequences imbedded in them, a T.O.P.A. may apply to all types of rental housing, including the kind that is considered “Class A” with their plethora of amenities such as swimming pools, dog runs, workout rooms and the like. With these regulations, the blanket is always cast over everything... kind of like a freeze on rent increases protecting the wealthy renters or those that have been unaffected during the pandemic. And on top of that, converting Class A or any other units to deed-restricted, low-income units merely reduces the supply for families that can afford and are looking for market rate units.
Non-Profits and Government Entities Do Not Pay Property Taxes
Do I need to say more? We Californians and Angelenos have been very generous voting in favor and passing various bond initiatives to fund low-income house projects – to the tune
of billions of dollars. On top of that, government may want a T.O.P.A. law in place to...lower property taxes by taking properties off the tax rolls. This is not a smart business move, but who the heck said anything about government is smart, particularly most elected officials here in California.
What’s next when property tax revenues decline? More taxes! Less government services! More bad news!
Wait, There’s More Tax Problems!
Pushing rental housing under non-profit or government ownership does not generate taxable income of any kind, particularly income taxes. It takes private investors to create capital and generate taxable income, and to grow assets and income. Non-profit companies and government entities are motivated in the opposite direction and can merely consume and destroy capital for the benefit of the relatively “few.” While many non-profit organizations and some government entities due some wonderful publich good, in this instance, in the matter of T.O.P.A. laws, this is absolutely no good...I say, no bueno.
But, Wait, There’s More...To Say!
As I started out, good luck with that 1031 Exchange transaction – any T.O.P.A. will eat up your 180-day period and you will never complete your transaction on time. Also, “kiss goodbye” that lease to buy deal because you cannot promise your tenant a right of first refusal any longer. And, good luck finalizing that quick sale because you badly need cash – T.O.P.A. will put a bullet in that one too.
When a T.O.P.A. law is enacted, there are always “winners’ and “losers.” The winners are well connected non-profit organizations and public employee unions that have elected officials in their deep pockets. And the losers, well they are the many local businesses that provide goods and services to private property owners, the employees that generate the revenues, and the multitude of local entities relying on “good olde” tax revenues. As T.O.P.A. was once described to me, it is a “wrecking ball” on housing. Those poor tenants living in a poorly run, non-profit or government owned property do not know what they are in for – always be careful what you wish for.
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16 APRIL 2022 • WWW.AAGLA.ORG