Prop. ULA: Red Herring for Helping the Homeless

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Prop ULA will not help those living on the streets.

The way to get the homeless of the streets is to tax the rich, according to Los Angles Proposition ULA, which voters approved on November 8.

Many did not read the proposition closely and instead voted for the sentiment.

People were convinced by the advocacy coalition, United to House LA, that the only reason there are still more than 60,000 people on the street is because there isn’t enough housing. And the only way to get more money to provide affordable housing is to tax the rich.

The December 2 tally by the L.A. County Register, saw ULA described as “funding for affordable housing and tenant assistant programs,” passed 58 % to 42%.

This proposition does not address the lack of winter shelters for the homeless. This proposition does not provide group shelters. It does not help those with addiction problems. It does not aid those with mental illness living on the streets.

City Controller Ron Galperin in February assessed Prop. HHH, which was passed in 2016. There has been $1.2 billion collected in bonds, was supposed to end homelessness. Less than 1,200 housing units were completed. He wrote in his report “Our previous reviews of Proposition HHH concluded that project costs were high and estimated development timelines did not reflect the needs of unhoused residents living in dangerous conditions.” https://lacontroller.org/audits-and-reports/problems-and-progress-of-prop-hhh/

The money collected from Prop. ULA will be used solely to fund the development of affordable housing to serve acutely low, very low, and low-income households, which in theory will stop people from becoming homeless.

The Los Angeles Housing Department (LAHD) would have authority to approve funding of up to $50 million per project. No City Council review or approval will be required.

Instead, a 15-diverse Citizen’s Citizens Oversight Committee, comprised of 13 voting members and two advisory youth members, will be appointed by the Mayor.

This proposition is also a way to bypass restrictions on tax increases. Special taxes generally require two-thirds majority, but taxes brought forth by citizens, such a Prop. ULA just need a simple majority.

Who are the rich that will be taxed? A 4% tax on properties sold or transferred for more than $5 million and a 5.5% tax on properties sold or transferred for more than $10 million. These sales include not only the large homes in many areas of the City but also includes the sale of apartment buildings.

One Palisades resident wrote, “most voters say ‘Yes, tax the first $10M, where do I vote yes?”

“That’s the problem,” the resident said. “Most voters who don’t have wealth could care less and that was reflected in the votes. It’s about a backlash to disparity once you put it on a ballot. Saying all my investments are now worthless, or we have to pay too much tax on our windfall is meaningless to voters who have no windfall.”

The resident pointed out that this proposition leaves owners of any property $5m+ with a 8-10% total transaction fee on the sale of their property in addition to other relevant taxes… whether a loss, a gain. “If you buy a property for $11 million, and sell it for $10 million in a year, you will still be required to pay a $550,000 tax on a $1 million loss.”

The resident added, “if you think the $1 to 4 million dollar properties are exempt, they are not. In fact, they could be next. What’s to stop the next tax on sub-$5m? What’s to stop the 5.5% tax from being 25%?”

Barron’s PENTA November 28 story (“Greenlit by More than 500,000 Voters, Measure ULA is Unpopular with the City’s Real Estate”) “Jon Grauman, of the Grauman Rosenfeld Group at The Agency, said in an email.  ‘While we are all sympathetic to the dire homeless problem that exists in L.A., taxing the wealthiest residents in a city that is arguably already over-taxed—thereby causing many individuals to leave the state—is not the solution,’ he said.”

The story noted that Los Angeles already ranks as one of the top metropolitan areas that local residents are looking to leave, bested only by San Francisco, according to October migration data from property portal Redfin.

Bloomberg’s November 10 story (“Can LA’s Mansion Tax Unlock Affordable Housing Across Callifornia?”) points out that much of the revenue comes from sales of apartment buildings as opposed to mansions. “A real estate executive named Moses Kagan outlined one plausible scenario in a tweet: If a developer builds an apartment complex for $7 million and sells it for $10 million, making a profit of about $2.3 million after costs, then a 5.5% transfer tax would work out to $550,000 (my math, not his). That’s about 24% of the profit. Since a typical split on a deal runs to 80% for investors and 20% for developers, that tax ought to kill the deal.

As Jeremy Padawer wrote on Nextdoor: “I believe this is happening not because of homelessness…but because of hopelessness. Our children no longer believe that they can work hard and have better lives than their parents. As a result, wealth is less aspirational… more despised.

“I grew up in Mississippi and Tennessee and found my way to the Palisades with a good heart, idealistic nature and belief that we all can reach our potential with hard work,” he said. “This sort of tax is contrary to anything remotely close to those ideals. . . We have a $100 billion surplus in California … and then we do this.

“I would have gladly paid a percentage of gain to solve crime, homelessness and educations for my fellow citizens in LA… even with the $100 billion surplus,” Padawer said. “This tax is wrong. It’s not well thought out. And worst of all, it’s not well intended.”

A homeless encampment is below the underpass at 405 and Venice Boulevard.

(Editor’s note: United House LA is composed of many groups, including ActLA-Alliance for Community Transit, IBEW Local 11-electrical construction industry, KIWI -Koreatown Immigrant Workers Alliance, LA Family Housing, American Federation of Labor-representing 48 local unions, LA Can – Los Angeles Community Action Network—helping fight back against oppression, L.A. County Federation of Labor, AFL-CIO, MoveLA – transit, SEIU Local 2015—long term caregivers, SCANPH – Southern California Association of nonprofit housing, SAJE – strategic actions for a just economy, T.R.U.S.T. South LA – community organization and Unite Here! Local 11 – workers in hotel, restaurant, sports arenas and convention centers.)

 

 

 

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6 Responses to Prop. ULA: Red Herring for Helping the Homeless

  1. Robert says:

    Don’t forget that 8% of the tax will be used for “administration”. If they collect $1 billion per year (per one forecast), that creates an $80 million annual honeypot to pay the commission, consultants, community groups, etc. This is blatant avaricious socialism.

  2. Eddie Tabash says:

    Measure ULA is an object lesson in how both generally conservatives and generally liberals will have to accept that certain issues will place us in a post ideologically defined world.

    I am one of our region’s most credentialed social liberals. I am known for my fervent opposition to the agenda of the religious right wing. Yet, I can be moderate on economic issues. I contributed $5,000.00 to the No on ULA campaign. I can assure anyone that this was not motivated by a heartless indifference to the plight of the homeless.

    This Circling the News article points out that this transfer tax doesn’t just apply to the sale of Holmby Hills style mega mansions. Even modest apartment buildings that are the livelihood of people of otherwise modest income can reach a sale price that would trigger this tax.

    One can still be a supporter of the grand social/economic programs of the New Deal and President Johnson’s Great Society and not support an invasive and confiscatory tax like ULA. One can be, like me, the most fervent supporter of the right of same sex marriage and oppose ULA without any actual inconsistency.

    The fact that I, as still a Democrat, support more taxation than most Republicans, doesn’t mean that I don’t acknowledge that there must be an upper limit to taxes that all branches of government impose. The sky cannot be the limit. Singling out those who buy and sell real estate for such a disproportionate tax burden is not fair, even if the motive is helping those who truly need and deserve help.

    In a large area like Los Angeles, with such a serious homeless problem, property owners cannot be expected to shoulder such a steep burden alone. The federal government needs to help fund solutions.

    Each of us, regardless of our general political inclinations, will have different levels at which we will consider a given tax as being too high. We don’t all have to agree on what that demarcation point should be. There will always be differences. However, I do believe that ULA goes too far. Maybe, in a few years, when the damage it causes has become apparent, we can put a measure on the citywide ballot to repeal it.

  3. Jay Leonard says:

    This is expropriation of our property, very similar to what the Communists did to the Ukrainians in 1929-1932. Stalin and his thugs seized ALL the farms in Ukraine to create “collective farms,” killed any people they deemed to be enemies of Stalin and Communism and ultimately caused a famine that killed four million Ukrainians. It CAN happen here and it IS happening. This is driven by murderous envy and a future step could be to kill anyone who is successful and take all their property.
    How sad that in California if you work hard for decades and are fortunate enough to be successful, you are now seen by many as a criminal.

  4. Wharfplank says:

    It is a stated goal of the DSA to abolish private property. Every Democrat should be asked their position on DSA and the planks of that party.

  5. Dana Dalton says:

    No one’s ever gonna listen. The homeless industrial complex is here to stay. The election of Karen Bass is documentation of that. We might be able to shame them into changing, but I doubt it. The change they want is the redistribution of wealth in Los Angeles. That’s a FACT.
    The passage a measure ULA (by simple majority vote) is documentation of other measures to come where these people are going to take all your money and stuff because they truly believe you do NOT DESERVE IT. You guys just don’t get it. Leave the Palisades bubble. Go to Cal State LA, West LA CC … they hate your guts in the Palisades. People are very simple in the end. They vote on feelings . This was a mob rule vote . Mostly affecting the WHITE wealthy suburbs of Los Angeles City. That’s a fact.
    Do your readers a favor and tell them to leave the Palisades and drive around.

  6. Karin Olson-Espinosa says:

    Do we have any recourse? This only applies to real estate what about the other forms of business that generate x amount…will a 4% or 5.5% tax soon apply to them? This becomes a slippery slope. Ca has now become one of the MOST unfriendly states. The envy is evident. Envy is when person A has something that person B wants. B strives to ruin or severely weaken what A has. I am a staunch Democrat. I feel like a criminal for feeling as I do but alas, it is so.

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