L.A. Turns to Feds for Help With Homeless

homelessStruggling to slow L.A.’s spike in homelessness, city leaders have booked an appointment with the federal government.

“Secretary Julian Castro will be in Los Angeles on Tuesday to meet with Mayor Eric Garcetti, City Council members and county supervisors, HUD spokesman George Gonzalez said,” according to the Los Angeles Times.

Hoping for cash

Despite the crisis, which has drawn unfavorable media attention amid L.A.’s recent boom in homeless-heavy areas like the city’s downtown, expectations were set low. “No major announcement was expected to come out of the meeting. Gonzalez said it was intended as an ‘exchange of ideas’ on the state of homelessness in Los Angeles,” the Times added.

City leaders hope the agency’s concern could manifest in additional funds to fight what Mayor Eric Garcetti has declared a public emergency around homelessness, as Los Angeles city and country governments both prioritized the issue. As the New York Times reported last month, the announcement marked the first time a U.S. city had made such a proclamation. “National experts on homelessness say Los Angeles has had a severe and persistent problem with people living on the streets rather than in shelters — the official estimate is 26,000,” noted the Times.

Uncertain goals

After announcing his initiative, Garcetti said, “he received a call from Castro, who had toured Skid Row earlier this year,” as the Los Angeles Daily News reported.

“The focus on homelessness came after a count conducted this year by Los Angeles Homeless Services Authority showed that the number of homeless people in the county increased by 12 percent since 2013. More than 44,000 people are homeless in Los Angeles County and about 70 percent of them live on the streets, in vehicles or in make-shift encampments.”

Questions remained as to what exactly Castro intended to accomplish through his visit. “He did indicate several times that HUD approved of the way that local elected officials were tackling homelessness,” Southern California Public Radio observed; in remarks, Castro noted that “more than anything else, I’m here […] to listen,” while insisting that “criminalizing homelessness is not the best approach. That is something that HUD has recognized very firmly.”

Despite the focus on L.A.’s significance to the Department of Housing and Urban Development, city officials appeared to place their funding hopes in the Federal Emergency Management Administration. Although former Secretary of Labor and current L.A. Supervisor Hilda Solis recently invoked the agency, the Daily News observed, its spokesman for the area covering Los Angeles threw doubt on the idea. “For homelessness, I’ve never heard that as a cause of an emergency because that’s a local social issue that would generally be handled at the city or county or state level,” he said.

A big pledge

In the interim, Los Angeles has pledged to allocate substantial sums to curbing homelessness, which has become an especially galling problem among veterans. “Members of the City Council say they are working on a $100 million plan to combat homelessness,” SCPR reported. “County supervisors this month voted to boost spending on homelessness to $100 million for the year. Earlier, Mayor Eric Garcetti had said he would release a blueprint to end homelessness in August.”

Garcetti’s priorities around urban issues have not been without their critics. At a recent speech in South Los Angeles, the mayor was confronted by Jefferson Park protesters, some of whom pounded on his vehicle and demanded the resignation of the current Los Angeles Police Department chief Charlie Beck. “I am disappointed that our conversation was cut short when there is so much work for us to do together to make our neighborhoods stronger and safer,” Garcetti later remarked, according to CBS Los Angeles. “I believe in our city and my commitment to our shared concerns continues stronger than ever.”

Originally published by CalWatchdog.com

Why the SF Chronicle is Wrong on Prop. 13

http://www.dreamstime.com/-image14115451The San Francisco Chronicle wants to raise property taxes on homes. That has to be the conclusion from it editorial that criticizes Gov. Brown for saying he will not support a “split roll” taxing businesses differently than homes. The Chronicle calls this a “primary” reform. Clearly, the editorial writers have in mind a secondary reform: changing the property tax formula for homes.

The proof of the Chronicles’ position is the argument that Prop. 13 “masquerades” as a homeowners’ friend; that poor sap voters “believe” the measure saves money and prevents jumps in taxes. Look for one shred of evidence to back up this foolish statement that Prop. 13 has not been a tax saver for voters and you won’t find one.

Here’s the truth. If the property tax system reverted to what it was prior to Prop. 13 passing, property would be taxed at full market value at 2.7 percent. Even if the property tax rate remained at 1 percent as prescribed by Prop. 13, the increase in market values, especially in San Francisco, would send a shock to the system of property taxpayers. Yes, the people’s belief is correct — Prop. 13 does save money and prevents jumps in taxation.

As to the fairness question raised by the editorial – that has been dismissed by both the California and United States Supreme Court. Property taxes are not a fee for service tax. Different properties have always paid varying amounts for the services they receive from local government. The Proposition 13 formula did not change that fact but it did for the first time give certainty to the taxpayer instead of the tax collector.

Proposition 13 not only protects taxpayers from runaway property taxes but also has made the property tax the most stable of all California revenue sources, increasing at a steady pace above inflation and population growth ever since it passed.

If the Chronicle wants to take out its ire it should do so against the public employee unions who convinced friendly legislators to kill a reform bill that would have reined in the few businesses that game the system to prevent property tax increases when the businesses are sold. The unions didn’t want that small fix; they wanted big property tax increases with a split roll — and if the Chronicle has its way, more property taxes from all kinds of property.

Originally published by Fox and Hounds Daily

A shorter version of this article was published in the San Francisco Chronicle.

California: “Land of Opportunity” or “Land of Poverty”?

For decades, California’s housing costs have been racing ahead of incomes, as counties and local governments have imposed restrictive land-use regulations that drove up the price of land and dwellings. This has been documented by both Dartmouth economist William A Fischel and the state Legislative Analyst’s Office.

Middle income households have been forced to accept lower standards of living while less fortunate have been driven into poverty by the high cost of housing. Housing costs have risen in some markets compared to others that the federal government now publishes alternative poverty estimates (the Supplemental Poverty Measure), because the official poverty measure used for decades does not capture the resulting differentials. The latest figures, for 2013, show California’s housing cost adjusted poverty rate to be 23.4 percent, nearly half again as high as the national average of 15.9 percent.

Back in the years when the nation had a “California Dream,” it would have been inconceivable for things to have gotten so bad — particularly amidst what is widely hailed as a spectacular recovery. The 2013 data shows California to have the worst housing cost adjusted poverty rate among the 50 states and the District of Columbia. But it gets worse. California’s poverty rate is now more than 50 percent higher than Mississippi, which long has set the standard for extreme poverty in the United States (Figure 1).

cox1

The size of the geographic samples used to estimate the housing adjusted poverty rates are not sufficient for the Supplemental Poverty Measure to produce local, county level or metropolitan area estimates. However, a new similar measure makes that possible.

The California Poverty Measure                           

The Public Policy Institute of California and the Stanford Center on Poverty and Inequality have collaborated to establish the “California Poverty Measure,” which is similar to the Supplemental Poverty Measure adjusted for housing costs.

The press release announcing release of the first edition (for 2011) said that: “California, often thought of as the land of plenty” in the words Center on Poverty and Inequality director Professor David Grusky, is “in fact the land of poverty.”

The latest California Poverty Measure estimate, for 2012, shows a statewide poverty rate of 21.8 percent, somewhat below the Supplemental Poverty Measure and well above the Official Poverty Measure that does not adjust for housing costs (16.5 percent).

The California Poverty Measure also provides data for most of California’s 58 counties, with some smaller counties combined due to statistical limitations. This makes it possible to estimate the California Poverty Measure for metropolitan areas, using American Community Survey data.

Metropolitan Area Estimates

By far the worst metropolitan area poverty rate was in Los Angeles, at 25.3 percent. The Los Angeles County poverty rate was the highest in the state at 26.1 percent, well above that of Orange County (22.4 percent), which constitutes the balance of the Los Angeles metropolitan area. However, the Orange County rate was higher than that of any other metropolitan area or region in the state (Figure 2). San Diego’s poverty rate was 21.7 percent. Perhaps surprisingly, Riverside-San Bernardcox2ino (the Inland Empire), which is generally perceived to have greater poverty, but with lower housing costs, had a rate of 20.9 percent. The two counties, Riverside and San Bernardino had lower poverty rates than all Southern California counties except for Ventura (Oxnard) and Imperial.

 

The San Francisco metropolitan area had a poverty rate of 19.4 percent, more than one-fifth below that of Los Angeles. San Jose has a somewhat lower poverty rated 18.3 percent (Note 1). The metropolitan areas making constituting the exurbs of the San Francisco Bay Area had a poverty rate of 18.7 percent. This includes Santa Cruz, Santa Rosa, Stockton and Vallejo. Sacramento had the lowest poverty rate of any major metropolitan area, at 18.2 percent.

The San Joaquin Valley, stretching from Bakersfield through Fresno to Modesto (Stockton is excluded because it is now a San Francisco Bay Area exurb) had a poverty rate of 21.3 percent, slightly below the state wide average of 21.8 percent. The balance of the state, not included in the metropolitan areas and regions described above had a poverty rate of 21.2 percent.

County Poverty Rates

As was noted above, Los Angeles County had the highest 2012 poverty rate in the state (Note 2), according to the California Poverty Measure (26.1 percent). Tulare County, in the San Joaquin Valley had the second-highest rate at 25.2 percent. Somewhat surprisingly, San Francisco County with its reputation for high income had the third worst poverty rate in the state at 23.4 percent. This is driven, at least in part, by San Francisco’s extraordinarily high median house price to household income ratio (median multiple). In this grisly statistic, it trails only Hong Kong, Vancouver and Sydney in the latest Demographia International Housing Affordability Survey. Wealthy Santa Barbara County has the fourth worst poverty rate in the state, at 23.8 percent. The fifth highest poverty rate is in Stanislaus County, in the San Joaquin Valley (county seat Modesto), which is already receiving housing refugees from the San Francisco Bay Area, unable to pay the high prices (Figure 3).

cox3

The two lowest poverty rates were in suburban Sacramento counties (Note 2). Placer County’s rate was 13.2 percent and El Dorado County’s rate was 13.3 percent. Another surprise is Imperial County, which borders Mexico and has generally lower income. Nonetheless, Imperial County has the third lowest poverty rate at 13.4 percent. Shasta County (county seat Redding), located at the north end of the Sacramento Valley is ranked fourth at 14.8 percent. Two counties are tied for the fifth lowest poverty rate (16.0 percent), Marin County in suburban San Francisco and Napa County, in the exurban San Francisco Bay Area (Figure 4).

Weak Labor Market and Notoriously Expensive Housing

The original Stanford Center on Poverty and Inequality press release cited California’s dismal poverty rate as resulting from “a weak labor market and California’s notoriously expensive housing.” These are problems that can be moderated starting at the top, with the Governor and legislature. The notoriously expensive housing could be addressed by loosening regulations that allow more supply to be built at lower cost. True, the new supply would not be built in Santa Monica or Palo Alto. But additional, lower cost housing on the periphery, whether in Riverside County, the High Desert exurbs of Los Angeles and San Bernardino Counties, the San Francisco Bay Area exurbs or the San Joaquin Valley could begin to remedy tcox4he situation.

The improvement in housing affordability could help to strengthen the weak job market, by attracting both new business investment and households moving from other states.

Regrettably, Sacramento does not seem to be paying attention. Liberalizing land use regulations is not only absent from the public agenda, but restrictions are being strengthened (especially under the requirements of Senate Bill 375). In this environment, metropolitan areas like Los Angeles, San Francisco, San Jose and San Diego could become even more grotesquely unaffordable, and the already high price to income ratios in the Inland Empire and San Joaquin Valley could worsen. All of this could lead to slower economic growth and to even greater poverty, as more lower-middle-income households fall into poverty.

Note 1: San Benito County is excluded from the San Jose metropolitan area data. The California Poverty Measure does not report a separate poverty rate for San Benito County.

Note 2: Among the counties for which specific poverty rates are provided.

isiting professor, Conservatoire National des Arts et Metiers, Paris

Cross-posted at New Geography.

Regulators Want All New CA Homes To Use ‘Zero Net Energy’

Solar panelsPlacing a big bet on solar power and new regulations, state officials have rolled out ambitious new requirements aimed at slashing energy use in newly-constructed homes.

“Buildings built in California starting in 2016 will have to comply with the nation’s toughest energy conservation standards,” the Central Valley Business Times reported. “The California Energy Commission has unanimously approved building energy efficiency standards that it says will reduce energy costs, save consumers money, and increase comfort in new and upgraded homes and other buildings.”

In single-family homes, that would amount to a drop in energy use by almost a third, relative to 2013 standards, the CVBT noted.

Cost and consequences

The New Residential Zero Net Energy Action Plan, as it has been dubbed, aimed “to establish a robust and self-sustaining market so that all new homes are zero net energy (ZNE) beginning in 2020.” Critics have reiterated longstanding objections to a statewide push of this kind, especially around the prospect of rising energy costs.

“The most complex issue will be valuing the homes, which will cost more upfront,” according to Greentech Media. “Currently, the CPUC is quoting an extra $2 to $8 per square foot after incentives. There will likely need to be incentives or creative utility billing, especially if the homes are providing demand-side services as the CPUC envisions. The CPUC says that the utilities are on board and will have to evaluate locational benefits of having net-zero homes on the system.”

As Greentech Media noted, planners have built in some would-be loopholes designed to make progress on ZNE without imposing the new standards too quickly: “Homes can be ZNE-ready, rather than actually being energy-neutral. That could mean they are solar-ready, for instance, but perhaps don’t have solar panels already installed.”

But even supporters of the plan have cautioned that executing on its goals may be a daunting challenge. At the Huffington Post, one analyst noted, “as California’s clean power goals rise, new capacity could begin to slow.”

“Some planned large projects are now on hold due to financial problems. Others face environmental challenges, such as threats to bird flyways and desert habitats. Large-scale solar plants, particularly those using solar thermal technology, are losing appeal to investors as photovoltaic panel prices plunge. And utilities, having largely reached their current renewable procurement targets, have few new projects in the pipeline. What’s more, the federal solar investment tax credit program for new utility projects drops from 30 percent to 10 percent after 2016, and ends completely for individuals.”

Unifying the grid

Nevertheless, optimism among policymakers and activists has remained high — largely because of the role of technological innovation centered in California. Apple and Google have embarked on so-called “grid-scale” renewable energy projects, while Tesla has pushed into the home energy storage business.

But some experts have implied that the problem of rising energy costs could best be addressed by linking up the net-zero energy industry with the zero-emission automobile industry. “A recent California study estimated that utility companies could earn $2.26 to $8.11 billion in net revenues from large-scale commercialization of EVs,” as reported in Fortune. “This is sufficient to allow utilities to invest both in installing charging infrastructure and return some of the revenues to their customers in the form of lower rates.”

By supplying ubiquitous EV charging stations, observers surmised, utilities could eventually recoup electrical power from cars embedded into the same flexible grid as homes. “The value of having a flexible load on the grid will grow even further with higher amounts of wind and solar,” Fortune continued. “Electric vehicles can be programmed to charge during peak solar or wind generation periods, preventing this valuable electricity from being wasted. In the future, electric vehicles could increase their value by putting electricity back into the grid as well[.]”

Originally published by CalWatchdog.com

Seller’s market: Bay Area real estate deal-making accelerates

As reported by the San Jose Mercury News:

How fast is fast? For Bay Area real estate, the speed of deal-making is accelerating this spring as homes spend less time on the market and cash deals close at bullet-train speed.

Just ask Steve Pierce, whose house in Redwood City attracted 17 offers last month and raced so quickly through the escrow process that he and his wife, Sheila, requested a delay so they could spend Easter dinner with the family: “It was like boom, boom, boom,” he said. “The buyers couldn’t wait to get in. All cash.”

Or ask Mei Zhang, who moved a year ago from Shanghai — another hot market — to the East Bay. In February, with all their loan pre-approval documents in order, she and her husband, Yudang, leapt on a house in Orinda, pushing it to contract in seven days. “We really liked it at first glance,” said Mei Zhang, “and so we made an offer really quick” — $41,000 over the $1,469,000 asking price. …

Click here to read the full article

SoCal’s Housing Crisis: Middle Class, Minorities May Not Survive

urban-housing-sprawl-366c0What kind of urban future is in the offing for Southern California? Well, if you look at both what planners want and current market trends, here’s the best forecast: congested, with higher prices and an ever more degraded quality of life. As the acerbic author of the “Dr. Housing Bubble” blog puts it, we are looking at becoming “los sardines” with a future marked by both relentless cramming and out-of-sight prices.

This can be seen in the recent surge of housing prices, particularly in the areas of the region dominated by single-family homes. You can get a house in San Francisco – a shack, really – for what it costs to buy a mansion outside Houston, or even a nice home in Irvine or Villa Park. Choice single-family locations like Irvine, Manhattan Beach and Santa Monica have also experienced soaring prices.

Market forces – overseas investment, a strong buyer preference for single-family homes and a limited number of well-performing school districts – are part of, but hardly all, the story. More important may be the increasingly heavy hand of California’s planning regime, which favors ever-denser development at the expense of single-family housing in the state’s interior.

In both the Bay Area and Southern California, plans are now being set to force the building of massive new towers in a few selected “transit-oriented” zones. In a bow to political realities, the planners say they won’t bring superdensity to the single-family neighborhoods beloved by Californians; the wealthy – including those who bought early and those with access to inherited money – will still be able to enjoy backyard play sets, barbecues and swimming pools. 

Home prices skyrocket

The rest of you had better get used to cramming. House prices over the past two years in Orange and Los Angeles counties have risen at a rate more than 10 times the relatively paltry increases in weekly paychecks, among the nation’s worst ratios of home prices to income. Now, you can’t buy a house in much of Orange County or West L.A. without a triple-digit income; in Manhattan Beach, buying a median-price house requires an income of more than $300,000 a year.

With development on the periphery basically shut down for lack of sufficient transit usage, the bright folks at SCAG, MTC, ABAG, SANDAG (the regional planning agencies in Los Angeles, the San Francisco Bay Area and San Diego, respectively) foresee a future of ever-increasing density, with apartment towers interspersed throughout the cities.

To be sure, city life and density might seem great, and could even work to some extent in smaller, scenic areas like Laguna Beach or Santa Monica, with their accessible walking districts. But such locales are only a small part of Southern California.

To live in a high-rise in Ontario or Garden Grove might please planners, but density without much amenity – and nothing that will ever be close to a New York-style transit system or even a system as good as that serving downtown Los Angeles – seems more a ticket to a neo-tenement purgatory than paradise.

For areas that lack ocean breezes or scenic views, we are looking at something more like the congested chaos of Mexico City or Tehran than the tourist’s Paris on the Pacific (more than 80 percent of Paris, France, is outside the compact core).

The biggest losers, as usual, will be those people – working and middle-class families as well as minorities – who have looked to the periphery for housing opportunities and a chance for a better life. Los Angeles County is already a majority-renting community, and attempts to force densification in other counties could bring this reality to Orange, San Bernardino, Riverside and Ventura counties as well. 

Where minorities can thrive

Until recently, the periphery has offered housing salvation for younger middle-income homeowners, particularly families. Homeownership rates are more than 25 percent higher in the Riverside-San Bernardino area than in the Los Angeles-Orange County area. Minorities also do much better. The homeownership rate inland is a quarter higher among African American and Asian households. The rate for Hispanics is nealy half again higher than in Los Angeles-Orange.

But as housing prices have soared, and opportunities to move outward have shrunk, Southern California has developed some of the worst crowding in the nation. Three of the most crowded areas – based on people per room – are in Los Angeles County: South Los Angeles, the Pico Union area near downtown LA and Huntington Park. Southern California trails only Miami, Fla., for the highest percentage of residents who spend 40 percent or more of their incomes on rent or a mortgage.

The impact of high prices extends well beyond the poor and minorities. As a recent report from the state’s Legislative Analyst’s Office suggests, the lack of affordable housing is one reason why California companies have trouble attracting employees, particularly those with families. To keep the digital hearths going in places like Silicon Valley, companies rely on either young people (often with family money) or, increasingly, low-wage workers, called “technocoolies” by some, imported from Asia.

The LAO is spot on about the disadvantages of California housing, which now costs two and half times the national average, and rents that are 50 percent higher than in the country as a whole. Homeownership rates now stand at 48th among the states. Unfortunately, the proposed solutions follow the same script adopted by our planning elites that seeks to further densify large swaths of central Los Angeles and the San Francisco Bay Area, which, since 2000, have accounted for roughly 10 percent of all growth in the state. 

Affluent exempt

This planning fiat is sure to spark fierce resistance. Don’t expect to see high-rises sprout amid the expanses of single-family housing in Malibu or Beverly Hills, due to the organized power of their overwhelmingly “progressive” residents. Higher-density development likely will be jammed, instead, into already denser, less-affluent and less politically powerful areas, such as the east San Fernando Valley, North Orange County and some inland communities.

There’s nothing wrong with appealing to a market for apartments, but limiting the expansion of single-family construction will only exacerbate our looming demographic dilemmas. Southern California’s family population is decreasing more than any of the nation’s other large metro areas. Homes are increasingly owned by an aging population lucky enough to have bought before the new planning regime helped drive prices into the stratosphere. Young workers may be amused by dense, high-cost rental space, at least until they desire to start families and own homes. But the crucial middle-class households headed by thirty- and fortysomethings may find themselves forced out of the region if they are unwilling to accept a lower quality of life.

Some of the logic behind densification was based on the perception that the suburban dream is dead. Yet, despite persistent claims by planners and pundits, this turned out to be less a matter of altered market preferences than of temporary effects of the Great Recession. Roughly 80 percent of Americans still prefer single-family homes. So do Californians: In the past decade, single-family units represented the vast majority of all new homes built in the state.

Now that the economy is coming back to life, suburban communities, particularly the much-disdained exurbs, appear to be on the demographic rise again around the nation. By rejecting this option for the next generation, we are essentially putting the California Dream on ice, all but pushing upwardly mobile, but not rich, families to pursue their futures in notably lower-cost, less-regulated places, like Texas.

All this is for a dubious philosophy that has long derided suburban communities and their single-family homes as an environmentally wasteful, anti-social extravagance. Yet, today, many new suburban developments are eco-friendly, including such features as high-efficiency construction and renewable solar power, and employment patterns increasingly allow for work from home or in nearby firms. Business growth near homes in Irvine, often pilloried as the epitome of sprawl, notes former California State University, Los Angeles demographer Ali Modarres, has resulted in some of the nation’s shortest commutes and highest rates of people working at home.

Add to the equation more fuel-efficient cars and the environmental justification for forced sardinization becomes even less compelling. Densification might well increase over time as some people prefer more urban lifestyles. But the opportunity to own a single-family home should not be limited to the very rich, or to aging baby boomers, by Sacramento bureaucrats and unelected regional planning agencies. Yet, precisely this is the inevitable result of the massive attempt at social engineering now advancing throughout the region and state.

This piece is cross-posted at Citywatchla.com

Joel Kotkin is executive editor of NewGeography.com… where this piece was most recently posted …  and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism is now available at Amazon and Telos Press. He lives in Los Angeles, CA

The Ever Shrinking Homeowners Exemption

During the holidays, most Californians are focused on their homes.  This is the time when homeowners – and renters too – are decorating and extending hospitality to friends and neighbors.  But heavy taxes and fees imposed on homes by the Grinches in government make it hard for Californians to hang on to their homes .

Homeowners, who work hard to pay for and maintain a house, pay property taxes that often do not fund property related services. These revenues go into local government coffers and can be spent for any purpose.  To pay for services to property, like sewer, water and refuse collection, the homeowner pays extra through fees, assessments and other charges added to the property tax bill. Additionally, homeowners throughout California are also hit hard with bonds.  Virtually all bonds for schools that must be repaid by property owners pass due to Proposition 39 that reduced the two-thirds voter approval requirement to 55 percent.

Even now, there are lawmaker Scrooges in Sacramento who want to make it even easier to load up your property tax bill even more. They argue that because of Proposition 13’s low property tax rate, they should be allowed to squeeze more from average homeowners by making it much easier to increase local taxes.  They ignore the fact that while the property tax rate may be lower than in many states, because the median price of a California home now stands at about $450,000, while nationally it is at $208,000, what the homeowner actually pays is comparatively high.  (California is in the top third of states in per capita property tax collections).

One of the few benefits to homeowners in California – besides Prop 13 – is the Homeowners Exemption.  This exemption simply lowers the taxable value of a primary residence by $7,000, which translates into a paltry $70 reduction in a homeowner’s tax liability.  Not only is the amount of tax savings negligible, the Homeowners Exemption hasn’t been adjusted since 1972.  If the exemption had been allowed to keep up with inflation, today it would be way higher – at least $35,000 for a saving of $350.  And if inflation were based on the increase in California housing costs, it would be even higher still.

The 1972 bill — SB 90 authored by Democratic Senator Ralph Dills and signed by Republican Governor Ronald Reagan — that established this homeowners exemption amount, also included a renters tax credit that allowed the renter to deduct from $25 to $45 from their income tax.  Here, too, state government has been a piker.  Today, the income tax credit sits at $60 for single renter or $120 for head of household or married couple filing jointly.  While at least here there has been a modest increase, it does not come close to keeping up with inflation.  Had it been indexed for the CPI, the $25 credit of 1972 would be $140 today.

It’s past time for our political elites to acknowledge the high cost of owning and maintaining a home as well as the sky high rents in many communities, by addressing these human concerns with an increase in the Homeowners Exemption and the Renters Tax Credit.

The tax-and-spend lobby in the Legislature and all those who receive a check from the taxpayers will say that they cannot afford any loss of revenue.  They will confirm the old saying that taking a dollar from a bureaucrat is like taking a piece of raw meat from a hyena, a lot of shrieking ensues. But with the Sacramento politicians bragging about the increase in state revenues that is billions ahead of projections and has resulted in a surplus, they can afford to leave a few bucks in taxpayers’ and renters’ pockets, money that can improve the quality of life for average Californians, money that, when spent, will help to stimulate the economy.

It is long past time to provide some well-deserved relief to those who are struggling to keep a roof over their heads while trying to keep up with constant additions to their property tax bills, as well as to those straining to pay escalating rents.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This piece was originally publish by HJTA.org

An Economic Win-Win For California – Lower the Cost of Living

A frequent and entirely valid point made by representatives of public sector unions is that their membership, government workers, need to be able to afford to live in the cities and communities they serve. The problem with that argument, however, is that nobody can afford to live in these cities and communities, especially in California.

There are a lot of reasons for California’s high cost of living, but the most crippling by far is the price of housing. Historically, and still today in markets where land development is relatively unconstrained, the median home price is about four times the median household income. In Northern California’s Santa Clara County, the median home price in October 2014 was $699,750, eight times the median household income of $88,215. Even people earning twice the median household income in Santa Clara County will have a very hard time ever paying off a home that costs this much. And if they lose their job, they lose their home. But is land scarce in California?

The answer to this question, despite rhetoric to the contrary, is almost indisputably no. As documented in an earlier post, “California’s Green Bantustans,” “According to the American Farmland Trust, of California’s 163,000 square miles, there are 25,000 square miles of grazing land and 42,000 square miles of agricultural land; of that, 14,000 square miles are prime agricultural land. Think about this. You could put 10 million new residents into homes, four per household, on half-acre lots, and you would only consume 1,953 square miles. If you built those homes on the best prime agricultural land California’s got, you would only use up 14 percent of it. If you scattered those homes among all of California’s farmland and grazing land – which is far more likely – you would only use up 3 percent of it. Three percent loss of agricultural land, to allow ten million people to live on half-acre lots.”

So why is it nearly impossible to develop land in California? The answer to this is found in the nexus between financial special interests, who benefit from asset bubbles, and powerful environmentalist organizations who apparently view human settlements as undesirable blights that should be minimized. In the San Francisco Bay Area, to offer a particularly vivid example, the Santa Cruz mountains are being targeted to be cleansed of human habitation. Instead of creating wildlife corridors, they are eliminating human corridors. Is this really necessary?

20141203_Ring

If you are familiar with the San Francisco peninsula, you will see that the area proposed for the “Great Park of the Santa Cruz Mountains” encompasses nearly the entire mountain range. A coalition of environmentalist organizations and government agencies are proposing to create a park of 138,000 acres, that’s 215 square miles, in an area that ought to make room for weekend cabins, mountain dwellers, and vacation communities. Why, in a region where homes cost so much, is so much land being barred to human settlement? The pristine stands of redwoods in Big Basin and Henry Cowell State Park were preserved a century ago. There is nothing wrong with preserving more land around these parks. But do they have to take it all?

This is far from an isolated example. Urban areas in California, primarily Los Angeles and the San Francisco Bay Area, have been surrounded by “open space preserves” where future development is prohibited and current residents are harassed. Ask the embattled residents of Stevens Canyon in the hills west of the Silicon Valley, if there are any of them left. Once you’re in a “planning area,” watch out. Backed by bonds sold to naive voters, endowments bestowed by billionaires, and the power of state and federal laws that make living on any property at all increasingly difficult, the relentless land acquisition machine continues to gather momentum. Anyone who thinks there isn’t a connection between setting aside thousands of square miles in California for “habitat” and the price of a home on a lot big enough to accommodate a swing set for the kids needs to have their head examined.

It doesn’t end with open space that is actually purchased, cleansed of humanity, and turned into government ran preserves for plants and wildlife, however. Acquiring permits to build on any land is nearly impossible in California. Land developers who fight year round to try to build housing for people shake their heads in disbelief at the myriad requirements from countless state, federal and local agencies that make the permit process take not months or years, but decades. And it isn’t just farmland, or wetland, or special riparian habitats where development is blocked. It’severywhere. Even semi-arid rangeland is off limits for housing unless you are prepared to spend millions, fight for decades, and have the staying power to pursue multiple expensive projects simultaneously since many will never, ever get approved.

What is the result? Here is an aerial photo of a subdivision in the Sacramento area, one that every hedge fund billionaire turned environmentalist in California – especially one who runs cattle on his own special 1,800 acre fiefdom in the Santa Cruz mountains on a property that just happens to be in a “non-targeted area” – might consider living in for the rest of his life in order to understand the human consequences of his ideals – cramped homes on 40′ by 80′ lots, at a going price in October 2014 of $250,000. Notwithstanding being condemned to a claustrophobic existence at a level of congestion that would drive rats in a cage to madness, $250,000 is a pittance for a billionaire. But for an ordinary worker, $250,000 is a life sentence of mortgage servitude. And even this, the single family dwelling, is under attack by “smart growth” environmentalists and public bureaucrats who prefer density to having to divert payroll and benefits to finance infrastructure. The excess! The waste! Stack them and pack them and let them ride trains!

Priced to Sell at $250,000 – Housing for Humans on 40′x80′ Lots

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When public employee union leadership talk about the importance of paying their members a “middle class” package of pay and benefits, they’re right. Government workers should enjoy a middle class lifestyle. But they need to understand that the asset bubbles caused by high prices for housing are not only making it necessary to pay them more, but are also creating the inflated property tax revenue that they rely on for much of their compensation. They need to understand that the phony economic growth caused by everyone borrowing against their inflated home equity is what creates the stock market appreciation that their pension funds rely on to remain solvent. And they need to understand that all of this is a bubble, kept intact by crippling, misanthropic land use restrictions that hurt all working people.

There is another path. That is for public employee union leadership to recognize that everyone deserves a chance at a middle class lifestyle. And the way to do that is not to advocate higher pay and benefits to public employees, but to advocate a lower cost of living, starting with housing. One may argue endlessly about how to regulate or deregulate water and energy production, essentials of life that also have artificially inflated costs. But as long as suburban homes consume less water than Walnut orchards – and they do, much less – build more homes to drive their prices way, way down. There’s plenty of land.

Ed Ring is the executive director of the California Policy Center.