Page 35 - AAGLA-APR 2022

Member Update
After Squandering HHH
funds, A New Effort to
Waste More Taxpayer
Money Emerges
WBy Susan Shelley, Howard Jarvis Taxpayers Association
hen voters in Los Angeles approved a $1.2 billion bond to fund the construction of housing for the homeless in 2016, they probably didn’t imagine that that in 2022, the city controller would report that the units were
costing up to $837,000 each. The costs of projects funded by Proposition HHH are rising, Controller Ron Galperin’s latest audit reports, and only half the projects will be ready to house people by 2023.
The homelessness crisis on the streets is worse than ever. Controller Galperin said the homeless population of the city of Los Angeles has grown by more than 40% since voters agreed to make payments for decades to cover the principal and interest on $1.2 billion in bonds. Meanwhile, 14% of the Proposition HHH funded units currently under construction are costing more than $700,000. Overall, there are 125 projects with a total of 8,091 housing units. In 2020, the homeless count determined that there were more than 41,290 people experiencing homelessness in the city of Los Angeles.
Controller Galperin’s office has previously described the per-unit cost of Proposition HHH-funded housing and the three-to-six-year timeline for completion as “not aligned with the magnitude of the homeless crisis.” And now, it’s even worse. On the premise that the purpose of the $1.2 billion bond was to make progress toward a solution to the homelessness crisis, the plan behind Proposition HHH is a failure. However, on the premise that the purpose is to throw lucrative contracts to well-connected developers and consultants, it’s a giddy success. After all, when the per-unit cost reaches $837,000, it’s pretty clear that lots of people are dipping into the funding stream between the taxpayers and the drywall purchases.
If imitation is the sincerest form of flattery, the authors of Proposition HHH must be very flattered to know that a new proposal aiming for the local ballot in Los Angeles would throw even more money into this mess. The “United to House L.A.” initiative would put a new “documentary transfer tax” on property sales of $5 million or more. Any property that sells for between $5 million and $10 million would be hit with a tax of 4% of the sale price. Properties
selling for more than $10 million would get slammed with a tax of 5.5%. That’s a lot of money for transferring documents. The tax would raise an estimated $800 million per year, according to proponents.
The stated purpose of the tax is to address, what else, homelessness. Some of the money would go toward the construction of 26,000 new units of housing over ten years. The rest of the money would go toward homelessness prevention, a combination of emergency rent relief, income assistance for disabled tenants, and free legal services for tenants facing eviction.
Liberal groups say this is fair. “It’s really targeting millionaires and billionaires who have not been paying their fair share in taxes,” according to the director of the Alliance for Community Transit-Los Angeles. It’s targeting commercial property. There are relatively few homes valued at more than $5 million as a percentage of all residential property in Los Angeles, but there are many multi-family apartment buildings, office buildings, shopping centers, movie theaters and other commercial properties that are valued above $5 million.
A tax of 4% or 5.5% on the sale of an apartment building is a big chunk of cash, and when government extracts a big chunk of cash from any business, there’s a likelihood that the prices of that business’s products or services will rise to cover the costs. In the case of rental housing, that means rents will go up. If rents can’t go up, there’s a likelihood that rental accommodations may be withdrawn from the market, which is another way of saying the buildings will be sold, the tenants will be evicted, and the property will become something more profitable.
While we’re on the subject of what’s fair, it’s fair to question the entire premise that street camping can only be prevented if taxpayers provide a free apartment for everybody who demands one, wherever they choose to live. That’s a deal far better than people in Los Angeles can get by working and paying taxes.
Susan Shelley is a columnist for the Southern California News Group and Vice President of Communications for the Howard Jarvis Taxpayers Association. Write to her at Susan@SusanShelley.com. This article was reprinted with permission of its author.
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