12 Step Program to Create a Housing Crisis

(from LAProgressive)

A UCLA Luskin Center study on homelessness in Los Angeles traces this unresolved social problem back to the 1930s, when homeless encampments were called Hoovervilles.  In response, Los Angeles began its own public housing program, a responsibility assumed by the Federal government between 1934-1937, with the formation of the Federal Housing Administration.  For the next four decades the Federal government undertook the funding of public housing and publicly subsidized housing through local housing authorities.

There were exceptions, such as California’s 400 local redevelopment agencies.  Until the State Legislature and Governor Brown dissolved them in 2011, they devoted 20 percent of their tax increment financing to publicly subsidized housing, usually built through non-profit housing corporations.

Given this noteworthy history, how have we ended up with a steadily worsening housing crisis in the United States, with at least 600,000 people homeless on any given night.  Furthermore, a basic two-bedroom apartment is beyond the financial reach of the poorest renters in every American county.  According to the National Low Income Housing Coalition:

“In most areas of the U.S., a family of four with poverty-level income earns no more than $25,750 and can afford a monthly rent of no more than $644. The national average fair market rent for a one-bedroom home is $970 per month and $1,194 for a two-bedroom home, far from affordable for a family in poverty.”

This housing crisis did not happen by itself.  It is the result of deliberate policy decisions at every level of government over the past half century. 

Of course, in expensive housing markets like Los Angeles, the housing crisis is much worse because the average rent for a two bedroom apartment in LA is $2,900 per month.  About 10 percent of the country’s homeless live in Los Angeles County, with individuals and encampments visible in every community, no longer corralled into DTLA’s historic Skid Row neighborhood. 

This housing crisis did not happen by itself.  It is the result of deliberate policy decisions at every level of government over the past half century.  These are the most important steps that produced this crisis, with every expectation it will continue for years to come.

• Step 1) Beginning with the Nixon Administration (1968-1973), the Federal government gradually liquidated HUD public housing programs.  This purge gas been so complete that some local activists use the European term, social housing.  Are they unaware that 1.1 million units of legacy public housing remain in the United States, and they house 2 million people?  If these HUD programs had continued, this country could be filled with an additional million units of low cost public housing to meet the needs of the homeless, rent burdened, and over-crowded.

• Step 2) Failing to index the 2009 Congressionally adopted $7.25/hour minimum wage to inflation or the price of housing has left millions priced out of housing.  The supply is there, but for too many tenants, the rent is too damn high.  The cost of existing housing forces them to live in overcrowded conditions, pay more than 30 percent of their income on rent, live in cars, or sleep on sidewalks.

• Step 3) Dissolving California’s Community Redevelopment Agencies in California in 2011 eliminated a major source of funding for non-market low cost housing.

• Step 4) Cutting back spending on social services, mental health, and addiction outreach in California left many of those forced to live on the streets without proper care.

• Step 5) Relying on the Los Angeles Police Department to treat homelessness as a crime has forced many encampments to relocate to other neighborhoods, without ameliorating the underlying causes of homelessness.

• Step 6) Privatizing public housing, by, for example, offering density bonuses to private developers who pledge to rent approximately 10 percent of completed units to low-income tenants has not succeeded, according to LA City Controller Ron Galperin

• Step 7) Avoiding sending Los Angeles Housing and Community Investment Department  (HCID) inspectors to private sector density bonus apartments means that the City Hall is unable to verify that promised low-priced apartment units exist and are rented to vetted low-income tenants.

• Step 8) Failing to compile an accurate HCID registry of density bonus apartments and low-income tenants who qualify for density bonus housing makes LA’s housing crisis worse, not better.

• Step 9) Counting building permits issued for density bonus apartments, instead of low cost rental units completed and rented to certified low-income tenants, creates a false impression that the privatization of public housing is a viable alternative to HUD and CRA projects.

• Step 10) Neglecting to monitor the grandiose claims of up-zoners, that zone changes reduce homelessness, increase transit ridership, and decrease Green House Gas emissions, also makes the housing crisis worse.

• Step 11) Attributing the housing crisis and racial inequality to zoning ordinances adopted 75 – 90 years ago ignores far more salient factors.  In fact, according to the Brookings Institution, few Blacks now live in LA’s originally red-lined neighborhoods, and many once white neighborhoods have become multi-racial without zone changes.  Furthermore, in areas where City Hall adopted up-zoning ordinances, such as LA’s extensive commercial/transit corridors, few apartments have been built, despite immediately available by-right zoning and density bonuses.

• Step 12) Blaming immigrants in red states for the housing crisis and owner-occupants of single-family houses in blue states for homelessness conceal the real culprits.  The elected officials responsible for cutbacks in public housing and public health programs are off the hook.  Meanwhile, the speculative real estate investors who so benefit from up-zoning evade media attention.  This is why the counter-terms of WIMBY (Wall Street in My Backyard) and Fauxgressive (fake progressives) have been deployed to reveal who is hiding behind the curtain.

These are the most important steps responsible for the current housing crisis.  They also explain why this crisis will not heal itself, but that it could be reversed so everyone will have a roof over their head, regardless of their income or location.

Dick Platkin

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The Invention of Individual Responsibility (The transformation of "responsibility" from something social to something individual)

 

Injustice

Injustice

Natalie Edwards Was Imprisoned this Month by the U.S. for Blowing the Whistle on Wall Street Banks’ Laundering of Dirty Money
Pam Martens and Russ Martens, September 8, 2021 [Wall Street On Parade]

Edwards is the heroic former Treasury official who tried in vain to get her superiors in the federal government to act on her concerns. Left with no other options to get action, she turned over documents to a BuzzFeed News reporter that became the core of the FinCEN Files, a collaborative investigation involving BuzzFeed News, the International Consortium of Investigative Journalists and 108 other news organizations.

In effect, Edwards spawned an international news bureau focused on exposing the flow of dirty money around the globe by big name banks such as JPMorgan Chase, Deutsche Bank, HSBC, Standard Chartered, and Bank of New York Mellon. One in-depth report at the International Consortium of Investigative Journalists (ICIJ) captures the magnitude of Edwards’ service to the public interest with this headline: “Global banks defy U.S. crackdowns by serving oligarchs, criminals and terrorists: The FinCEN Files show trillions in tainted dollars flow freely through major banks, swamping a broken enforcement system.”

….Edwards deserves a pardon from President Biden, not to be sitting in a Federal Prison Camp where she cannot have visitors because COVID-19 is skyrocketing in the state of West Virginia.

Please consider signing the Pardon Petition for Edwards and forwarding it to your email contact list with a note asking your friends and family to do the same.

The Victorian Age

 From John Fowles' The French Lieutenant's Woman chapter 35:

In you resides my single power
Of sweet continuance here. -- Hardy, "Her immortality"

At the infirmary many girls of 14 years of age, and even girls of 13, up to 17 years of age, have been brought in pregnant to be confined here. The girls have acknowledged that their ruin has taken place...in going or returning from their (agricultural) work. Girls and boys of this age go five, six or seven miles to work, walking in droves along the roads and bylanes. I have myself witnessed gross indecencies between boys and girls of 14 to 16 years of age. I saw once a young girl insulted by some five or six boys on the roadside. Other older persons were about 20 or 30 yards off, but they took no notice. The girl was calling out, which caused me to stop. I have also seen boys bathing in the brooks, and girls between 13 and 19 looking on from the bank --Children's Employment Commission Report (1867)

What are we faced with in the nineteenth century? An age where woman was sacred; and where you could buy a thirteen-year-old girl for a few pounds--a few shillings, if you wanted her for only an hour or two. Where more churches were built than in the whole previous history of the country; and where one in sixty houses in London was a brothel (the modern ratio would be nearer one in six thousand). Where the sanctity of marriage (and chastity before marriage) was proclaimed from every pulpit , in every newspaper editorial and public utterance; and where never--or hardly ever--have so many great public figures, from the future king down, let scandalous private lives. Where the penal system was progressively humanized; and flagellation so rife that a Frenchman set out quite seriously to prove that the Marquis de Sade must have had English ancestry. Where the female body had never been so hidden from view; and where every sculptor was judged by his ability to carve naked women. Where there is not a single novel, play or poem of literary distinction that ever goes beyond the sensuality of a kiss, where Dr. Bowdler (the date of whose death, 1825, reminds us that the Victorian ethos was in being long before the strict threshold of the age) was widely considered a public benefactor; and where the output of pornography has never been exceeded. Where the excretory functions were never referred to; and where the sanitation remained--the flushing lavatory came late in the age and remained a luxury well up to 1900--so primitive that there can have been few houses, and few streets, where one was not constantly reminded of them. Where it was universally maintained that women do not have orgasms, and yet every prostitute was taught to simulate them. Where there was an enormous progress and liberation in every other field of human activity; and nothing by tyranny in the most personal and fundamental.

At first sight the answer seems clear-it is the business of sublimation. The Victorians poured their libido into those other fields; as if some genie of evolution, feeling lazy, said to himself: We need some progresss, so let us dam and divert this one great canal and see what happens. 

While conceding a partial truth to the theory of sublimation, I sometimes wonder if this does not lead us to the error of supposing the Victorians were not in fact highly sexed. But they were quite as highly sexed as our own century--and, in spite of the fact that we have sex thrown at us night and day (as the Victorians had religion), far more preoccupied with it than we really are. They were certainly preoccupied by love, and devoted far more of their arts to it than we do ours. Nor can Malthus and the lack of birth-control appliances quite account for the fact that they bred like rabbits and worshiped fertility far more ardently than we do. Nor does our century fall behind in the matter of progress and liberalization' and yet we can hardly maintain that this is because  we have so much sublimated energy to spare. I have seen the Naughty Nineties represented as a reaction to many decades of abstinence; I believe it was merely the publication of what had hitherto been private, and I suspect we are in reality dealing with a human constant: the difference is vocabulary, a degree of metaphor. 

The Victorians chose to be serious about something we treat rather lightly, and the way the  expressed their seriousness was not to talk openly about sex, just as part of our way is the very reverse. But these "ways" of being serious are mere conventions. The fact behind them remains constant.

City Planning and Affordable Housing, in Reality

 (c) by Mark Dempsey     

The Davis Vanguard's editor, David Greenwald, recently wrote about The Left's Dissonance on Housing, pointing out correctly that liberals are among the first to raise those Not-In-My-Back-Yard (NIMBY) objections to developers building more housing--particularly affordable housing.

The problem of affordable housing is not new, nor is it unique to California. For example, using Australia as an example, the website RealEstate4Ransom.com reminds us that speculation in real estate makes prices rise until they reach the maximum lenders will lend. Since ~90% of  home purchases are typically financing, and since lenders make more money the bigger the loan, banks do everything they can to promote price rises. 

Rethinking the Economics of Land and Housing by Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane echoes this point and adds that studies show 80% of the price rises in real estate come from increases in the price of land--and land prices rise with land speculation. Higher real estate taxes prevent land speculators from holding their land off the market to await the maximum price, so ironically, such taxes can make land cheaper.

If, for one example, real estate taxes were to rise, and what's paid in tax cannot service a loan, tax rises would make such lending and speculation less profitable. If we quell speculation, then prices might actually retreat. Yes, Proposition 13 made real estate more expensive, never mind the $12 billion in annual property tax revenue California loses because of Prop 13's commercial property loophole.

What loophole? If you buy a new house, its property tax comes from a revised assessment based on the sale price. If people buy less than 50% of commercial real estate, though, its taxes don't change, no matter what the sale price. Michael Dell (of Dell computer) bought a Santa Monica hotel, splitting title between himself, his wife and a corporation he controls. The property remained taxed at, in effect, its 1978 value. (Prop 13 passed in 1978). That's true throughout the state, and the loophole is unevenly applied--not every buyer takes advantage of it--so its impact on business is also uneven. In fact, the loophole actually discourages new businesses from building their own buildings--they would be assessed at current prices, and higher costs make them less competitive. In other words, it's nuts, and the California electorate is so anti-tax that it refused to pass a recent proposition (Prop 15) that would have closed that loophole.

Land speculation

If you doubt land speculation--an activity that increases prices--is big business in our region, take a look at North Natomas, just north of Downtown Sacramento. This is thousands of acres of 20-foot-underwater floodplain, surrounded by weak levees. It was so unsuited for development that a federal grant to increase the regional sewer plant's capacity included a $6 million penalty if that capacity served North Natomas. 

The speculators who controlled that land were undaunted. They went to then-vice-president G.H.W. Bush to get that penalty payable in installments, rather than the prohibitive up-front payment. As part of this negotiation, the speculators also got $43 million in federal levee improvement grants to bring the levees surrounding North Natomas up to pre-Katrina standards. North Natomas' levees need millions more to reach post-Katrina standards, but the speculators are long gone and won't be paying for that.

So...a pretty good deal! Pay $6,000,000 in installments and get $43,000,000! But wait, there's more! The speculators bought that land for ~$2,000 an acre. After they got the entitlements to develop, they sold it to builders for ~$200,000 an acre. If your calculator isn't handy, that's a 10,000% gross profit. North Natomas is nearly built out and...Surprise!...the speculators are proposing even more outlying development.

With that kind of incentive, roaches will scuttle out from under the baseboards to do land speculation. The "unearned increment"--that outrageous profit and a component of the 80% rise in real estate prices--goes into land speculators' pockets.

In Germany, the developers have to sell the land to the local government at the agricultural land price, then buy it back at the development land price if they want to build on outlying land. The public retains all of the profit--called the "unearned increment." And German infrastructure is first rate--not, as in the U.S, rated C minus by its engineers. German universities offer classes with free tuition, even for foreigners, and the arts budget of the City of Berlin exceeds the National Endowment for the Arts for the U.S. of A. Meanwhile we're begging for crumbs from the speculators' feast.

Zoning Obstacles

Beside what amounts to covert subsidies offered for the land speculators, the obstacles presented by the planning bureaucracy prevent several good solutions for any housing shortage. For example, single-family zoning prevents mixing multi-unit apartments among the McMansions. What's often cited is that mixing poor folks among the rich will somehow devalue the neighborhood. 

But that's simply untrue. The most valuable real estate in the Sacramento region is the neighborhood around McKinley Park. There, you can find multi-unit apartments, granny flats, and small, separate multiple cottages among the mansions.

 

 

 

 

 

 

 

13 units among the mansions in McKinley Park

McKinley park's charm--besides the park itself, and some beautiful older homes--is that it offers amenities like offices, restaurants and transit within a comfortable and dignified walk of its residences. At an average of nine units to the acre, the neighborhood itself is slightly lower than the ideal density that Berkeley planner Robert Cervero observed in the East Bay: 11 units per acre. Higher densities support transit and commerce because they generate enough pedestrian traffic to patronize these things.

Density and the Public Realm

Increasing typical neighborhood density makes for viable neighborhood commerce and transit, yet suburbanites (who live in 5-7 units per acre) typically greet any proposal for denser development with howls of derision. Yet buyers pay premiums to live in McKinley Park, never mind far denser, more valuable New York City. Again: McKinley Park is the most valuable real estate in the Sacramento region.

Compact development itself is not enough to warrant the protests, but are there legitimate objections to density? Certainly dropping a bunch of strangers who are likely to be poorer into any neighborhood is hardly a recipe for enthusiastic acceptance, but one genuine problem is that under current law, residential property taxes don't pay their own way for needed public services. 

Since prop 13, funding for infrastructure, schools, fire protection, etc. requires more than the property tax revenue residences produce. If some multi-family housing lands in a neighborhood, odds are it will  make the amenities worse, increasing demands on them without providing funding to match.

Second, the U.S. has embarked on a multi-generational public policy project to de-fund the public realm. The public realm is everything from sidewalks to parks to public buildings from libraries to museums. Britain's National Museum is free. Locally, the Crocker has a fee for admission.

The public realm is everything accessible even to poor people. Like those German universities, the public realm is available to the entire population, without charge. A robust public realm is absolutely required for acceptable denser housing.

I was going to say "so neighbors would feel secure," but ultra-dense New York City has lower per-capita crime than sprawling Phoenix, AZ.

Anyway....government used to build, or fund, low-income housing. The Nixon administration put a moratorium on such federal building. The Reagan administration cut taxes on the wealthy roughly in half, even as Reagan and his successor raised payroll taxes eightfold. They also cut HUD's affordable housing budget 75%. As governor of California, Reagan also closed the asylums, evicting the mental patients to wander the streets. Gosh, I wonder why the mentally ill homeless and income inequality are such problems now?

Anyway, defunding the public realm means making society a dog-eat-dog battle for access to the best schools, to the streets leading to employment, and to housing itself. This makes housing into a scarce commodity, raising its prices to the delight of lenders, and ignoring the fact that people need housing as surely as they need food. Do we really want to motivate workers with the whip of starvation? How about homelessness? (Answer: sadly, yes.)

So yes, liberals have been conned into believing multi-family housing is always a burden. Yet California won't handle the current crisis in affordable housing without denser development. 

The Good News

Besides California's recent mandate that all new streets provide pedestrian access, one proposal that is actually getting traction now is redeveloping commercial corridors and malls to include housing. This could rescue the brick-and-mortar retail suffering from online competition and provide attractive, low-cost residences for the aging population whose fastest growing demographic is those over 85. 

The city of Citrus Heights has such a plan now for Sunrise Mall. Evidence is that such "lifestyle centers" can offer housing in addition to retail, and build for customers who can walk to the food court, etc. They are not just financially viable, such centers are apparently even more profitable than the single-use retail of sprawl. So yes, liberals have been conned into opposing affordable housing, but it needn't continue to be that way.

The author was in the real estate business for nearly two decades, and spent half that time sitting on a Sacramento County Planning Advisory Council, hearing development proposals.