How ‘Yes’ on ULA Seriously Responds to Los Angeles’ Homelessness Crisis
Jack Humphreville is a conservative commentator well known for his opposition to even progressive taxes.
It’s no surprise, then, that he’s against the ULA measure, which is a tax on the sales of very expensive properties to provide funding to help seniors and other vulnerable renters avoid eviction and build enough affordable housing to cater for the 40,000 homeless people on our streets and in our shelters.
In a column for CityWatch, Humphreville calls Measure ULA a “free lunch.” He is wrong. Measuring ULA is a fair and effective way to get LA’s wealthiest people — who have prospered thanks to the real estate boom — to help solve what most Angelenos see as the most pressing problem in life, according to the polls. the city.
The ULA measure will raise about $900 million a year to reduce homelessness, create more affordable housing, and protect low-income renters (especially seniors) from losing their homes. Over the next 10 years, this funding will help create more than 26,000 affordable housing units, serving more than 69,000 low-income Angelenos and creating more than 43,000 construction jobs.
Each year, Measure ULA funds will also provide approximately 5,100 households with emergency housing assistance, income support for nearly 13,000 households with the elderly or disabled, and 23,000 households with an attorney and defense against crime. ‘expulsion. The funds would also raise awareness and educate 135,000 tenants on their legal rights and responsibilities as tenants.
Overall, this represents a scale of investment in housing production and tenant stability that Los Angeles has never seen.
That’s why an unusually broad coalition — including the United Way, faith groups, homeless service providers, labor unions, community and tenant advocacy organizations, and affordable housing developers — supports Measure ULA. So is the Los Angeles Timeswho observed in an op-ed that it will create “a strong and steady stream of funding to create and preserve affordable housing through a high-value property transfer tax. This new revenue is essential if Los Angeles ever hopes to reverse the homelessness crisis.
The ULA measurement is not a property tax, which is paid annually by all owners. The ULA measure is a unique transfer tax that only applies to sale of properties over $5 million, including office buildings, large apartment complexes, and single-family mansions and condos.
The Measure ULA tax would only apply to about 4% of all properties sold each year. For example, there are approximately 601,705 single family homes and condominiums in Los Angeles. In the past year, only 28,378 of these properties have been sold. Of these, only 727 sold for $5 million or more, representing 2.6% of all single-family home and condo sales. In other words, only a tiny handful of owners would pay the tax.
Over the past year, there have been 4,502 sales of multi-family buildings (apartments). Only 271 of these transactions were valued at more than $5 million, of which 96 were sold for more than $10 million, or 6% and 2.1% of total apartment buildings sold, respectively. Based on the past year’s sales data, 75% of Measure ULA’s revenue from these apartment buildings would come from properties that sold for more than $10 million. Almost all of the sellers of these apartment buildings were large real estate companies, not “mom and dad” landlords.
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Take the case of the US Bank Tower in downtown Los Angeles. In 2013, OUE Ltd., a Singapore-based real estate company, purchased the building for $367 million. Seven years later, OUE sold the 1.4 million square foot office building for $430 million to Silverstein Properties, a New York-based developer that manages more than 40 million square feet of retail space. residential, commercial and hotel properties across the United States. . In just seven years, the US Bank Tower has appreciated by $63 million. Had the Measure ULA plan been implemented in 2020, this transaction would have generated $23 million for affordable housing investment and tenant support in Los Angeles.
Or consider the 500,000 square foot office tower at 5900 Wilshire Boulevard on Los Angeles’ Miracle Mile. In 2005, developer Wayne Ratkovich acquired the building for $105 million. In 2020, Ratkovich and his partners sold the building for $303.4 million to Rockpoint Group, a Boston-based real estate company. In just 15 years, the property has almost tripled in value, increasing by nearly $200 million. If the Measure ULA plan were in effect in 2020, the sale would have generated $16 million in transfer rights, a small fraction of the appreciation value alone. These funds would have helped solve the city’s housing and homelessness crisis.
Humphreville says real estate developers won’t build new buildings if voters approve Measure ULA. If that were the case, the Building and Construction Trades Council — whose union members include the women and men who construct residential, commercial and industrial buildings — would not be strong supporters of the ULA measure. In fact, as recent report found, “In the Los Angeles market, the annual income from commercial properties as well as the profit made on the sale price of a property will far exceed the percentage taken by the Measure ULA transfer tax. However, the tax will have a greater impact on those with short-term investment horizons who regularly “flip” properties – a practice that inflates housing prices and can lead to evictions.If a side effect of this tax plan is to discourage reversals and speculation is a bonus.
Contrary to Humphreville’s claims, Measure ULA will not encourage landlords to raise rents. New transaction fees will be paid by the seller, not the buyer. The Measure ULA tax increase will not suddenly cause buyers to pay more for the same properties based on existing rental income. Landlords – especially large landlords absent from businesses – are already setting rents as high as possible without losing tenants in apartments at market prices. If landlords chose to raise rents above the market rate, they would be faced with vacant apartments.
Additionally, 60% (650,000) of Los Angeles rental units are covered by the city’s rent stabilization law. Landlords can only increase rents annually by a fixed percentage based on the consumer price index, usually 3%.
Humphreville also claims Measure ULA is anti-business. Still wrong. The high cost of housing in Los Angeles is a serious problem for the city’s many retail businesses. If families in Los Angeles spend half or more of their income on housing, they have little left to spend in local retail businesses. Additionally, as high housing costs push lower-paying workers out of downtown — and even out of town — Los Angeles businesses are struggling to recruit and retain employees. This problem has reached a serious tipping point, with many people – mainly those on modest incomes – leaving the area altogether. According to a report by the Federal Reserve Bank of Chicago, San Francisco and Los Angeles ranked first and second, respectively, in terms of people leaving those areas. A healthy business climate requires cities to have affordable housing for people at all income levels.
Finally, the ULA measure includes oversight provisions to guide the use of its funds. A Citizen Oversight Committee will monitor and audit the program to ensure the transparency and efficiency of program administration. Committee members will be nominated by the Mayor and approved by City Council. The ballot measure requires appointees to have experience in one of the following areas: affordable housing development, management and finance; work; communautary development; transit-oriented development; organization of tenants or legal defense; or experience living in low-income or homeless households. Every three years, the committee will hire a third-party assessor to conduct a needs assessment “with respect to homelessness, housing affordability, tenant protection and the housing needs of vulnerable populations” in the city.
The ULA measure will help provide housing for many Angelenos, including many workers and children, who lack a stable roof over their heads. It will also prevent many at-risk low-income tenants from falling into homelessness.
LA rents are among the highest in the country. In Los Angeles, 27% of renters pay more than half of their income just to keep a roof over their heads. Among families with incomes below $35,450, 69% spend more than half of their income on housing. Elderly tenants have been particularly hard hit by the surge in rents in Los Angeles.
Measure ULA is a well-designed, progressive, fair and effective approach to solving the city’s most serious problem. This will be in the ballot on November 8, but voters can vote earlier by mail if they wish. If you really want to tackle the housing crisis in Los Angeles, vote “yes” to Measure ULA.
Crossposted with permission from the author of CityWatchLA