Jerry Brown signs bill preventing disclosure of immigration status in court

Pushing back against mounting criticism of California’s sanctuary policies, Gov. Jerry Brown on Thursday signed a bill placing strict limits on the disclosure of a person’s immigration status in open court.

Approved in the Senate with bipartisan support last week, Senate Bill 785 was introduced in response to news reports of ICE agents tracking down undocumented immigrants in courthouses across the country. It takes aim at a tactic that advocates say is keeping many immigrants from testifying in court, reporting crimes or simply showing up to pay a ticket.

“Our courthouses should be places of justice, not places where immigrants are threatened with deportation,” said Senator Scott Wiener, one of the bill’s authors, in a statement Thursday. “This law makes everyone in our community safer by ensuring that witnesses and victims of crime are not afraid to report crimes, go to court, and hold criminals accountable.

U.S. Immigration and Customs Enforcement declined to comment. …

Click here to read the full article from the San Jose Mercury News

Giving Common Sense a Chance in California

San Francisco, CA, USAIn California, where Governor Jerry Brown celebrates “the coercive power of the state” and advocates “brainwashing” for the unanointed, victories against Leviathan are rare. Yet last week brought just such a triumph, as a legislative committee rejected an attempt by San Francisco state senator Scott Wiener to take zoning power away from localities in areas within a half-mile of a bus or train stop. Wiener had sold his measure as a solution to California’s housing crisis and a means of bringing about the dense, green, transit-oriented development that the governor and his supporters prefer. Yet it failed, in large part because few cities wish to give up their zoning power and because even affordable-housing advocates don’t believe that handing blank checks to developers will do much to lower rents or housing prices.

But it would be a mistake to see Wiener’s defeat as a triumph of conservative principles of limited government and local control. In fact, two of the senators who voted for the bill in committee were Republicans, both from suburban districts whose constituents would not have been much affected by the bill’s passage. Meantime, some libertarian conservatives, champions of “small government,” supported Wiener’s efforts to expand state power because the proposal would remove regulatory restraints—albeit only in dense cities, not on the periphery.

Some principled moderates and conservatives—like Beverly Hills vice mayor John Mirisch and Anaheim’s Tom Tait—were vocal opponents, as were Republicans from places like Yorba Linda. But to a large extent, Wiener was derailed by his own party: much of the opposition came from solidly Democratic cities, including Los Angeles, San Francisco, and even Berkeley, which might have seemed like natural supporters of his planning notions. But as legislators examined the probable impact of the legislation, it became clear that many neighborhoods—particularly in urban areas like San Francisco—would be stripped of any leverage against developers.

Environmentalists, including the Sierra Club, feared that the bill would allow developers to skirt the state’s often-onerous green legislation. Former LA Weekly editor Jill Stewart, a leader of the anti-Wiener drive, suggests that Wiener took the state’s decades’-long densification drive “off the deep end.” Wiener’s initiative managed to provoke opposition from 37 local progressive groups, and all 13 city council members in Los Angeles wound up opposing it. The killing shot came from the old Left, many of whom live in neighborhoods where the legislation might have had a dramatic effect. Leaders of San Francisco community organizations from the Mission, Chinatown, Cow Hollow, and Excelsior, along with tenants’ rights groups and the local chapter of Democratic Socialists of America, announced their opposition as well. Residents of Los Angeles’s predominately African-American Crenshaw district saw Wiener’s bill as a “declaration of war on south L.A.” Many feared that the legislation would accelerate gentrification by replacing older, affordable structures with new, more expensive ones. Seventy percent of poor Californians already pay the majority of their paychecks for rent costs, which continue to escalate. These forces formed an unlikely alliance with anti-density middle-class residents often denounced as NIMBYs (“not in my backyard”). Many lived in deep-blue but largely suburban areas—some reliably indigo-blue, like Marin—and cities on the San Francisco Peninsula, or less reliably liberal, affluent parts of Southern California, like Newport Beach, Manhattan Beach, and La Canada.

Progressive backers of Wiener’s top-down legislation bemoaned its defeat and are determined to bring it back. The state’s tech oligarchs and “real estate Democrats,” as progressive author Zelda Bronstein calls them, are too powerful to be easily dissuaded. CEOs of Lyft, Salesforce.com, Square, Twitter, and Yelp, as well as senior executives at Google, were among the first to rally behind the bill, and they will likely back similar legislation again. They want dense, expensive housing for their primarily young, childless employees; some would live, as some already do in San Francisco, in glorified boarding houses. To push this agenda, the new elite helped finance the so-called YIMBYs (“yes in my backyard”) as astro-turfed shock troops. In promoting the Wiener bill, the YIMBY contingent sometimes used left-wing rhetoric against rich cities and landlords, though they allied themselves with arguably the most voracious capitalists of all.

The oligarchs, notes author Greg Ferenstein, believe that “urbanization is a moral imperative,” as cities are supposedly “home to more innovation and income equality.” But the Brookings Institution recently ranked San Francisco, already dense, as the second-most unequal city in the nation, while Silicon Valley, like most high-tech areas, is fundamentally suburban. The oligarchs’ view of California’s future—a twenty-first-century version of a medieval gated city, where only a few residents, mostly older whites and  wealthy Asians, own property—has limited appeal. Few people in their thirties want to live in crowded housing or be renters for life.

Wiener and other forced densifiers cast his bill as a step to creating a “greener” California, in which expanded public transit would reduce carbon emissions. Yet, as Los Angeles has densified under its last two mayors, transit ridership continues to drop—in part, notes a recent UC Berkeley report, because incentives for real estate speculation have driven the area’s predominantly poor transit riders further from trains and buses, forcing many to purchase cars.

Except for San Francisco, most of California is not fertile ground for traditional transit. Ridership is declining in dispersed workplaces like Silicon Valley, despite the presence of light rail. Los Angeles has invested $15 billion in light rail—and has lost 16 percent of its riders since 2014. In Orange County, ridershiphas fallen 30 percent since 2008. The real path to a greener future lies in the innovation that once characterized California. Along with ridesharing, electric and autonomous vehicles could play a big role in reducing emissions, and the state is a leader in its percentage of residents working from home.

Claims that packing people together will do much to improve the environment lack evidence. Even the pro-density UC Berkeley Termer Center acknowledges that banning urban-fringe development will account for barely 1 percent of the proposed state greenhouse-gas (GHG) reduction by 2030—not much to show for polices that could drive house prices and rents even higher. Globally, this GHG reduction would represent a statistical rounding error, amounting to .003 percent of annual worldwide emissions.

A frequent rationale for densification assumes that building more units on transit-rich land will help solve California’s housing-affordability crisis. In reality, higher-density housing is costlier to build, running up to 7.5 times more per square foot the cost of building detached housing. Combined with the prohibitive cost of land zoned for these purposes, high-density development is an expensive proposition. Newly publicly subsidized “affordable” apartments in one dense Bay Area development could cost upward of $700,000 to build.

California could address its housing crisis without destroying existing neighborhoods, and in ways that both lower the cost of rental housing and expand the opportunities for homeownership. As many as 275 malls, according to Credit Suisse, will close in the next five years, roughly a quarter of the national total; America already has four to five times as much retail space per capita as the United Kingdom or Japan. A report from the real-estate services firm Cushman and Wakefield predicts that 15 percent of all mall space will need new uses over the next decade. Disused suburban shopping malls are already being redeveloped into housing across Southern California, an effort that could be greatly expanded across the state. Building in outdated retail, office, warehouse, and industrial spots has the virtue of not affecting flourishing neighborhoods and can take advantage of already-existing water, electrical, and road infrastructure.

Perhaps the biggest boost would come from nurturing, as opposed to demonizing, suburban development. Hostility toward the suburbs eliminates the free market for land, driving up prices, while ignoring the preferences and aspirations of Californians. The most recent census data show that, as in the rest of the country, people, notably millennials, are headed to the periphery. Population growth rates in denser places, like San Francisco and Los Angeles, are dropping precipitously, while regions like the San Bernardino-Riverside area are seeing growth.

Density proponents will wave the bloody shirt of sprawl to oppose this cultural shift, but California already has the highest urban-population densities of any state. Los Angeles’s suburban densities are four times those of metropolitan Boston or Atlanta and double those of New York. Further, population growthhas fallen to less than a quarter of the rate in the two decades following World War II. Any suburban housing boom would be, in historic terms, modest. And as MIT’s Alan Berger notes, modern suburban development can be as environmentally positive as big-city densification. Suburban performance can only improve with the shift to electric cars, the increase in telecommuting, and, eventually, autonomous vehicles.

In the long term, Jill Stewart suggests, the defeat of the Wiener bill shows that the public can indeed challenge California’s autocratic planning regime. The measure brought together opposition groups from the Bay Area, Southern California, and the interior. Beverly Hills’s John Mirisch is pushing for a state-wide initiative to ban co-optation of local control.

Unless this alliance formulates a long-term pro-housing agenda, though, the state political establishment will find ways to force the density issue. A new strategy, one that attracts jobs to the places where people are moving and recycles redundant retail and other urban space into new housing, would relieve the pressure of over-inflated urban markets. Such a commonsense approach, of course, would violate the city-planning dogma favored by most academics and the media. Yet, given the clear preferences of Californians, perhaps it’s time to give common sense a chance.

The state’s most controversial housing bill in years just died

Housing apartmentThe most controversial state housing bill in recent memory died with a pretty resounding thud.

Senate Bill 827, which would have forced cities to allow taller, denser development around public transit, got only four votes on the 13-member Senate Committee on Transportation and Housing. Both Democrat and Republican lawmakers voted against the bill.

Authored by state Sen. Scott Wiener, Democrat from San Francisco, the bill would have allowed developers to build five-story apartment buildings near major public transit stops, including neighborhoods previously zoned for single family homes. The bill received a ton of media attention, including a fairly flattering write-up on the front page of the New York Times.

Urbanist “Yes In My Backyard” (YIMBY) groups mourned the bill’s death as yet another roadblock to building the new housing the state so desperately needs. Cities and anti-gentrification groups cheered the demise of what they viewed as an unprecedented inroad on local control.

What to make of all the hubub? Some key takeaways:

Enemies, enemies, got a lot of enemies

It’s tough for anyone to take on cities and counties, who wield enormous power in Sacramento and to whom state legislators often give considerable deference. It’s tough for anyone to take on the construction trades’ union, a major source of campaign contributions for Democratic lawmakers. It’s tough for anyone to take on equity and social justice groups, who can bend the ear of progressive legislators.

It’s really tough to take on all three at the same time. That likely wasn’t Sen. Wiener’s strategy when he first introduced SB 827, but that’s ultimately what helped doom the bill. The support of realtors, developers, YIMBYs and a handful of affordable housing advocates couldn’t muster the votes he needed.

Supporters of the bill arguably made a misstep in not courting social justice groups early enough. A flurry of amendments to protect renters from being displaced and to force developers to include units reserved for lower-income tenants failed to calm their concerns.

Last year, Wiener was able to push through a bill that stripped local control over some housing developments by getting labor and affordability advocates on his side. That bill was also part of a larger package of housing legislation that had something for everyone, including a new revenue source. Gov. Jerry Brown was a driving force behind that package.

None of that that happened this time.

The bill did spark a statewide debate on whether to up density to help remedy our housing crisis

What Wiener was attempting was truly revolutionary. You can debate how dramatically the character of a city would change by building a five-story apartment building next to a single family home. But taking away the power of local governments to block those types of developments was a pretty radical step—a step that a growing number of Californians think is necessary to prevent cities from obstructing new housing.

The bill received a ton of media attention, both in California and nationally. It garnered support from prominent urban planners, environmentalists and civil rights advocates. It’s both cliche and premature to say it shifted the needle on the housing debate. But it certainly framed the conversation squarely around the state’s role in compelling cities to build.

Expect something like this to come back soon.  

Nearly every Democratic legislator who voted against SB 827 caveated their opposition by praising the bill’s vision and audacity. Sen. Jim Beall, Democrat from San Jose and chair of the housing committee, said at the hearing that while he couldn’t support the bill in its current form, he was eager to work on something like it in the months ahead.

Could SB 827 ever rise from the dead? Well for his part, Wiener has vowed to re-introduce something like it in the future. Combining his push for density around transit stations with a broader mix of tenant protections and new funding for affordable housing could make it more palatable to the interest groups Wiener needs to succeed.

This article was originally published by CalMatters.org

New Housing Bill Has People Freaking Out

Housing apartmentMemes of a mild-mannered California legislator photoshopped as a Star Trek villain. A San Francisco supervisor suggesting the city should sue the state, to “thunderous applause.” Wealthy Marin County homeowners and South Los Angeles tenants’ rights groups working as political bedfellows.

All inspired by a wonky state housing bill that has yet to receive a single vote — and faces tough odds of passing the Legislature.

Senate Bill 827, sponsored by state Sen. Scott Wiener, a Democrat from San Francisco, tries to force cities to build more dense housing around public transit hubs. The bill has received a remarkable level of media attention both within California and nationally, providing fodder for think pieces from Slate, Vox, The Boston Globe, Bloomberg and The New York Times — which called it a “bold, divisive plan to wean Californians from cars.”

That attention has only amplified a loud and acrimonious debate over how the bill would transform California cities. Proponents see the bill as a radical and necessary step for the state to solve its endemic housing shortage and meet its ambitious climate change goals. Opponents see it as a blunt overreach of state power that would destroy the character of local communities while displacing long-established residents so developers could build more luxury condo towers for rich people.

Here are four things you should know about California’s most controversial housing bill in decades:

1) This isn’t hype. If it becomes law, the bill could really revolutionize California cities.

As currently written, SB 827 would essentially exempt all new housing built within half a mile of a train stop or quarter mile of a frequent bus stop from most local zoning rules. So, if a city had zoned an area for single-family homes, developers could invoke the bill to build multifamily apartment buildings between four and eight stories high. It would also free those projects from parking requirements and other zoning rules frequently abused by cities to impede new development.

How much area in major California cities would fall under the bill? That’s what makes this so radical. Preliminary analysis by the San Francisco Planning Department shows that basically all — yes, all — of San Francisco and huge swaths of Los Angeles would lose their local zoning regulations. Ninety percent of San Francisco’s residential parcels would have a higher height limit for new development under the bill.

A more rigorous analysis of just how much developers would take advantage of the bill, and how it would apply to smaller California cities, has not yet been conducted. But the potential is huge.

For decades, urbanists across the state have have longed for the type of density SB 827 would bring. Despite major pushback from some quarters of his home city that San Francisco would become unrecognizable should the bill become law, Wiener has stressed that such density is good for cities like San Francisco, and the most effective way to combat the region’s astronomical housing prices.

2) Many environmentalists love this bill

Proponents of SB 827 say it has two primary goals: 1) to increase the supply of housing and thereby lower housing prices, and 2) to reduce greenhouse gas emissions that cause climate change.

Urban planning academics and climate change activists argue the state can only meet its climate change goals—a 40 percent reduction in greenhouse gas emissions from 1990 levels by the year 2030—if it succeeds in getting people out of their cars and onto public transportation closer to where they work. Alternative energy sources and cleaner-burning power plants can only go so far: The leading cause of emissions nationally is the tailpipe. Building tons of housing in major job centers close to good transit seems like a sensible and necessary solution, they argue.

But at least one prominent environmental group with a tradition of opposing new development has balked at the measure. Angering many climate change activists, California’s Sierra Club has argued the bill would only create more local hostility to future transportation projects and would displace low-income residents.

Anti-gentrification groups argue that communities whose residents have lower incomes are much more likely to ride a bus or take a subway to work than commuters who earn more money. If lower-income residents are exiled to the suburbs as a consequence of the bill, its success at cutting carbon emissions will be muted at best.

Anti-gentrification and tenants’ rights groups not so much

Advocates for lower-income renters and urban communities of color have greeted SB 827 with a mixture of skepticism and hostility. A group of prominent Los Angeles anti-gentrification and civil rights groups signed onto a letter opposing the bill last month on the grounds that it lacked sufficient protections for renters whose apartments could be demolished to make way for newer, bigger, market-rate projects. They also expressed the broader fear that “opening the floodgates” around transit corridors would mean rents around shiny new developments would rise out of reach of current residents.

Wiener has addressed some of those concerns by amending the bill to include fairly strict renter protections. Developers who wish to demolish a renter-occupied unit would have to pay for the moving and living expenses of tenants for more than three years, and renters would have the right to move back into the new development at their old rent.

But the changes have yet to attract broad support from major housing equity groups, who fear the larger gentrification pressures possibly unleashed from the bill. It also didn’t help that backers of SB 827 waited until after the bill’s announcement to try to court those groups’ endorsement.

The bill faces a very tough road in the Legislature — a road that goes through Marin County

Bills that override local zoning control are rarely popular in the California Legislature. Homeowners in many regions of the state are, by and large, not thrilled with the idea of new apartment complexes going up next door over their objections. Homeowners are also more likely to vote than renters—a fact state legislators are acutely aware of.

Cities and counties are stealth power players in Sacramento, and are also not fans of having their zoning power stripped away. Up and down the state, mayors, city council members and county supervisors have come out against the bill, including Los Angeles Mayor Eric Garcetti.

Last year, lawmakers passed a handful of laws that encroached on the traditional zoning power of cities. But that housing package took a herculean effort to enact after years of failure, and importantly included new funding sources for subsidized housing, as well as tenants’ protections that attracted support from a wide coalition of housing groups. And the zoning process changes brought by those laws pale in comparison to what SB 827 could do.

Nowhere has opposition to state interference in local planning decisions been as fierce as in Marin County, an affluent northern suburb in the Bay Area. If the bill is to receive a full vote of the Legislature, it will first have to clear a committee controlled by Sen. Mike McGuire, a Democrat who represents Marin. McGuire could prevent the bill from moving past his desk and receiving a vote.

Is a California Housing Revolution on the Horizon?

HousingFrom downtown Los Angeles to Santa Monica, train commuters on the Expo Line journey from asphalt to ocean through some of the most expensive real estate in the United States. Each train pulls into stations of low-slung buildings that soon fade into vast expanses of single-family homes. The view from Los Angeles is hardly unique. Commuters from San Diego to the Bay Area and Sacramento see low-rise suburbs as the norm. And everything costs a fortune.

That might begin to change if the state legislature passes a bill addressing local land-use regulations. Introduced by Scott Wiener, a Harvard-educated attorney and state senator, Senate Bill 827 would effectively abolish zoning restrictions in Wiener’s district of San Francisco and for significant portions of the state’s most populous areas — and likely produce a boom in new housing construction. SB 827 sweeps away many local limits on height, density, and design within a half-mile of a train station—such as for BART or CalTrain—and within a quarter-mile of stops on high-frequency bus routes. So-called transit-rich zones would see local height limits lifted to anywhere from 45 feet to 85 feet—roughly from four to eight stories—depending on factors such as street width and station proximity. Cities could build taller, but they could not require that buildings be shorter. New projects built near transit hubs would also be exempted from minimum parking requirements. And as long as a particular project is up to code, no municipality could introduce design standards preventing developers from including the maximum number of units possible in a building.

Wiener hopes to fight sprawl by allowing Californians more opportunities to live closer to public transit, and to address climate concerns by reducing their need to drive. To Wiener, a liberal Democrat, housing is also about social justice. He believes progressives have “lost their way on housing,” as he told Forbes recently. Young people, the poor, and the elderly are demanding shelter only to find its supply limited by stringent regulations. “Gentrification is fueled by a lack of housing,” Wiener argues. “When there isn’t enough housing and rents skyrocket, landlords have an economic incentive to push out long-term renters by raising the rent or evicting them.”

Nearly a third of households in California’s metro areas can’t afford rent, according to the McKinsey Global Institute. A majority of these rent-squeezed households—some 3.7 million—are in Los Angeles and the Bay Area. In San Francisco and Oakland, even making $90,000 a year barely puts one above the affordability threshold. California’s affordability crisis is rooted in a housing crisis: not nearly enough homes are being built to keep up with demand. “We under-produce by about 100,000 housing units every year, and we have a housing debt that’s growing,” Wiener says. The most feasible way to pay off that housing debt, he believes, is to let developers build more units in concentrated areas.

Housing is the most pressing issue in California politics. Last year, Governor Jerry Brown signed 15 bills aimed at tackling housing affordability. Senate Bill 35, for instance, forces almost all of California’s cities to approve projects that complied with current zoning rules. Another bill placed a measure on the 2018 ballot directing nearly $1 billion a year to subsidize new low-income housing. These efforts are part of a growing trend in Sacramento to preempt local restrictions on housing. Some of these measures, such as a 2016 law easing the approval of new “accessory dwelling units” statewide, appear to be working. Los Angeles is seeing a 20-fold rise in applications for these so-called “granny flats,” built in backyards or above garages.

Transit-oriented development has assumed sacred status among Yes In My Backyard (YIMBY) progressives popping up across California. The ideal scenario for lowering the barriers to housing density near transit is to get more with less: more housing and affordability with less displacement and sprawl. The result is a traditional Main Street for the twenty-first century. After all, compact, mixed-use developments, accessible by foot, were the norm until the rise of the automobile and institution of zoning laws.

Building more housing is broadly popular in California. Sixty-four percent are in favor of more housing in their cities, according to a PPIC poll of the state. In San Francisco, some 70 percent support building more housing to alleviate cost burdens. Leaders in Los Angeles have formulated a plan to add 6,000 new homes within a half-mile of Expo Line stops between Culver City and Santa Monica.

Of course, building in someone else’s backyard is always more popular than construction in your own. Most instances of transit-oriented development, such as the kind that Arlington, Virginia, has pursued, take the shape of a corridor running through—but not impinging on—preexisting tracts of single-family homes. Los Angeles’s Expo Line housing plan up-zoned 250 acres while leaving the surrounding 2,000 acres of homes untouched.

Wiener’s proposal is more aggressive: it would immediately up-zone nearly all of San Francisco, as well as South Los Angeles’s sprawling landscape of single-family homes. Transit corridors in Oakland, San Diego, San Jose, and Sacramento would be able to build for demand. Nearly 3 million housing units could be situated within a half-mile of transit hubs throughout California. With fewer permitting rules, units could be built faster and with a greater variety of housing types between a home and a high-rise.

Critics of SB 827 fear displacement. Los Angeles city councilman Paul Koretz has labeled SB 827 “devastating,” telling the Los Angeles Times that his Westside neighborhood of “little 1920s, ‘30s and ‘40s single-family homes [would] look like Dubai 10 years later,” and without any public say in the matter. Damien Goodmon, founder of the Crenshaw Subway Coalition in Los Angeles, calls the bill a “declaration of war,” seeing it as a mask for large-scale gentrification. Laying on the hyperbole, Goodmon calls Wiener “a modern-day Andrew Jackson” pushing “a legislative agenda to enact a 21st century Trail of Tears.” Housing availability does not mean housing affordability, these critics say; only subsidies and public housing can achieve that.

Wiener acknowledges that his bill is a “heavy lift and isn’t guaranteed to pass” in its current form. There will likely be revisions as it winds its way through committee, with added provisions addressing housing displacement and demolition. Observers believe that Governor Brown, in his final year in office, would likely sign such a bill if it reached his desk.  But whether it passes or not, SB 827 shifts the window of acceptable discourse dramatically in favor of market-oriented reforms of housing policy. On that basis alone, Scott Wiener has positioned himself as a visionary reformer of California’s housing crisis.

Don’t Tax Family Businesses Out of California

tax signFamily businesses are the bedrock of our communities and the economy. A recent study showed that the state’s 1.4 million family businesses employ 7 million people. Family businesses tend to pay their employees better, train them better, and provide more generous benefits than nonfamily companies. We’re also less likely to significantly downsize during tough economic times.

I know because I’m the president of Holt of California, which was established in 1931 and is now owned by three families.

For years, like all businesses, we have had to adapt to ever-higher taxes and ever-more stringent regulations. To no one’s surprise, our state has ranked dead last the past two years in the annual survey of business executives nationwide conducted by CEO Magazine. But we have survived and now provide a wide range of equipment and servicing for construction and agriculture and employ more than 700 people in Northern and Central California.

But just when you think things can’t get any worse, along comes legislation by state Sen. Scott Wiener, D-San Francisco. Senate Bill 726 would place a measure on next year’s ballot to overturn two 1982 initiatives that abolished California’ inheritance tax and impose a 40 percent death tax on California’s family businesses. That would generate an estimated $4.5 billion a year for Sacramento politicians to spend, and would put California family businesses at a huge disadvantage compared to the rest of the nation.

The bill had been scheduled to face its first hearing on April 26 before the Senate Governance and Finance Committee, but after Family Business Association lobbyists organized a coalition of nearly 50 business and farming groups to oppose it, Sen. Wiener made it a two-year bill, meaning it won’t be heard during the remainder of 2017. FBA will do everything in our power to persuade Sen. Wiener to drop the measure altogether and if he declines to do so, to stop this poorly considered measure once and for all.

Why is it important to encourage, not destroy, family businesses?

Because families are in it for the long term, we focus not just on the next fiscal quarter but the next quarter-century. And because we’re based in our communities, we care about them, donating our time and financial support for community-based organizations and projects.

But keeping businesses family-owned is a struggle. Only about 30 percent survive into the second generation, about 12 percent make it into the third generation and just 3 percent operate in the fourth generation and beyond. And one reason for that distressingly low long-term success rate is high inheritance taxes.

While proponents of the current 40 percent federal death tax argue that only “the rich” pay because the first $5.5 million in assets are excluded, many family businesses and farms are land-rich and cash-poor. With the high value of land in California, the total value of assets can easily exceed that seemingly high threshold.

Furthermore, the need for the tax to be paid in cash is particularly troubling as many survivors are left with no other option but to sell homes, family farms and businesses and lay off employees just to pay those taxes. This is money that could have otherwise been used as working capital to create jobs and allow business expansion.

Sen. Wiener says he will only pursue the measure if the federal government abolishes its death tax, as has been proposed, but the bill does not contain such a clause. The bill also refuses to address the very real issue of what would occur if the federal estate tax is reimposed by a future Congress. If reinstated at the same rate, it could result in California estates being taxed at a staggering 80 percent rate.

While family businesses in the other 49 states could be significantly strengthened if the federal government abolishes its death tax, California would punish them and undoubtedly many would leave the state, taking jobs and tax revenue with them. Currently just 18 states impose such a tax – none with rates higher than 18 percent – while four states have repealed their death taxes since 2010.

Family businesses are the foundation of our economy and our communities. Isn’t it time our politicians take steps to keep family businesses operating profitably for the next generation instead of doing everything they can to drive us out of business, or at least out of California?

Ken Monroe is President and CEO of Holt of California and serves as Vice Chair of the Family Business Association of California.

This piece was originally published by Fox and Hounds Daily