.A. Mayor Says Kamala Harris Doesn’t Have California Locked Up

March 28, 2019 By Christopher Palmeri 4 Comments

Atty. Gen. Kamala Harris urges funds for tracking prescription drugsLos Angeles Mayor Eric Garcetti said Democratic U.S. Senator Kamala Harris has strong support for her presidential bid in her home state of California, but she doesn’t have it locked up as her competitors aggressively campaign there.

“Everybody’s been here,” Garcetti said in an interview, citing visits by Democratic candidates including New Jersey Senator Cory Booker, Minnesota Senator Amy Klobuchar, Washington Governor Jay Inslee and Vermont Senator Bernie Sanders, whose rally on Saturday in front of the Los Angeles City Hall drew thousands of supporters. “California will very much be in play.”

California’s presidential primary, historically held in June, has often had less impact than those in other states because the candidate field is thinned by then. The state’s primary has been moved to March next year, which will put it immediately after the traditional early contests in Iowa, New Hampshire, Nevada and South Carolina in early February. …

Click here to read the full article from Bloomberg

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California Housing Crisis Prolonged By Policymakers

February 18, 2019 By Kerry Jackson 6 Comments

housingWith every idea offered as a serious “solution,” it becomes clearer why California has a housing crisis. The thinking is stuck on policies that aggravate rather than improve.

The latest ill-considered proposal picking up support would enact price-gouging laws to keep rental costs in check. Los Angeles Mayor Eric Garcetti, Oakland Mayor Libby Schaaf, and Sen. Scott Wiener, D-San Francisco, have publicly endorsed the idea. Gov. Gavin Newsom has carved out a similar position, railing in his State of the State address against “rent spikes,” and promising to sign “a good package on rent stability this year” if the Legislature sends him one.

Wiener sees price-gouging legislation as a temporary step, telling KPBS News “we need to take action to keep people stable in the housing that they have.” What it will do instead is ensure new units will never go up. If price-gouging laws bar owners from charging market rates, there’s little incentive to build.

Price-gouging laws would be especially damaging in California, which continues to suffer through a brutal housing shortage. The state needs about 100,000 housing units built each year in addition to the 100,000 to 140,000 units that are usually built, says the nonpartisan Legislative Analyst’s Office. Stealing the profit motive won’t get that done.

We’re dealing with an easily understandable law of economics. The record shows, says University of Michigan-Flint economist Mark J. Perry, that “the unintended and unseen adverse consequences of enforcing price-gouging laws are predictable, unfortunate, and avoidable.” Those consequences are artificial shortages.

When government halts the price increases that spontaneously occur due to shortages that follow natural disasters, it would on the surface appear to be a response no decent person could object to. But it’s those few who speak out against price-gouging laws who are the true humanitarians.

Here’s what happens when the law sets limits on the prices of high-demand items after natural disasters: Supplies are exhausted, leaving some emptyhanded. Both established businesses and entrepreneurs will rush goods to these consumers, often from long distances and at heavy costs, but only if they can make a profit. Price caps, however, prevent suppliers from earning profits, which means those who need lumber, generators, fuel, food, and other emergency goods will go without.

One story shows how poisonous price-gouging laws are. In 2005, a Kentucky man bought 19 generators, rented a truck, and drove to Mississippi where hurricane victims were in desperate need of power. He priced the generators at twice the cost he paid to cover his investment and earn a profit. Instead, he was arrested for price gouging, the generators were seized, and 19 Mississippi families who could have had power were forced to further endure 19th century conditions.

Placing rents under price-gouging laws would have the same effect as rent-control laws, as would Newsom’s “good package” of rent-stability legislation. All create a disincentive for developers to increase the housing stock. They won’t – in fact, cannot – build unless they are able to earn a profit.

Like the Carolinas in the aftermath of the hurricane, California’s housing market is also a disaster area – though not due to natural calamity. It’s been wrecked brick by brick through compounded human error. Lawmakers have for decades passed legislation, starting with the California Environmental Quality Act in 1970, and approved local ordinances that have consumed the profit motive needed to build. The tangle of policy, which includes affordable-housing mandates, building-permit snares, county and municipal regulations, and unchecked NIMBYism, is an effective barrier to new housing in California.

While Newsom, Garcetti, Schaaf, Wiener, and others in Sacramento think about strangling an already-wheezing market with price-gouging laws, a coalition of developers, politicians, tenant activists, business leaders, and union representatives has dreamed up something called the CASA Compact “to confront the housing crisis in the San Francisco Bay Area.”

The 10-point plan makes some good points, particularly regarding regulatory and zoning relief, expedited permit and approval processes, and better utilization of public lands. But it also proposes to “establish a Bay Area-wide rent cap that limits annual increases in rent to a reasonable amount.”

Every member of the coalition should know better – and they probably do – than to support rent-control laws. It’s no secret that they discourage building. Even Paul Krugman, the political left’s go-to columnist who once played an economist, acknowledges that rent control’s negative effects are “among the best-understood issues in all of economics, and — among economists, anyway — one of the least controversial.”

That rent control is perpetually floated as an answer to California’s housing crunch helps explain why the crisis has become intractable.

Kerry Jackson is a senior fellow with the Center for California Reform at the Pacific Research Institute.

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Democratic California’s Cautionary Tale

October 24, 2018 By Edward Ring 4 Comments

Democrat DonkeyIt’s become fashionable among certain conservatives, libertarians, and assorted free-market types to claim that Republicans are no better than Democrats. Both parties, according to the disenchanted, have lost their way. Both parties are controlled by establishment cronies, who support big government of one sort or another.

But conservatives who are disillusioned with Republicans need to remember just how much is at stake if Democrats take over. To indulge in understatement, California offers a cautionary tale.

In the name of saving the planet, and helping the poor, Democrats win votes in California. Assisting these Democrats is the most powerful coalition of leftist oligarchs in the history of the world. But the planet is not better off and California’s poor get poorer. How can this be?

Absolute Power Corrupts Absolutely

Since at least 2006 — the year Governor Arnold Schwarzenegger, a moderate Republican, totally capitulated to the Democratic establishment — Democrats have exercised absolute power in California. Their ongoing agenda, much of which has already been implemented, offers insight into just how different Democrats are from Republicans — even those watered down Republicans who struggle to earn votes from true conservatives.

California’s Democrats, in pursuit of environmentalist perfection, have legislated artificial scarcity of everything necessary to civilized life: land, housing, electricity, gasoline, water, transportation, and quality education — you name it. California has the most expensive homes, the highest utility prices, the worst roads, and failing schools. Behind the high-minded environmentalist rhetoric stand oligarchs who profit from scarcity; established corporations, public utilities, large landowners, and “green” entrepreneurs.

It’s no exaggeration to say California is a left-wing, Democrat-ruled oligarchy. If anyone thinks they aren’t poised to take over the rest of the United States, think again. California is merely the epicenter of an uncontained nationwide leftist oligarchy that now controls nearly all traditional media, online media, social media, academia, and the entertainment industry. It has also co-opted most major corporations and government bureaucracies, and draws additional support from powerful government unions as well as most private sector unions.

All of this elitist support is self-serving. All of it is hypocritical. All of it is deeply cynical, and utterly indifferent to working Americans.

California’s Proposition 10 offers an excellent example of how Democrats think. This deeply flawed state ballot initiative addresses the high cost of housing in California by authorizing cities and counties to impose rent control on all rental units, right down to the second homes that middle-class Californians may own in order to earn supplemental income. The negative consequences of a measure like Prop. 10 are obvious not only to anyone with a basic understanding of economics but also to anyone with plain common sense.

If Prop. 10 passes, what few incentives remain for investors and developers to build new housing in California would be further undermined. Who would want to invest in new apartment construction if the rental income from those apartments could be frozen by the whims of populist Democrats as they exert their influence on the local city councils? And what landlord would want to invest to maintain or upgrade their rental properties, if the rental income they can recover on their investment is frozen via rent control? And what renter will move into more appropriate housing as their life circumstances change, if moving means losing the favored low rent they currently enjoy?

Not one Republican supports California’s Prop. 10, but plenty of Democrats do, including the notorious U.S. Rep. Maxine Waters, U.S. Senate candidate Kevin de León, and Los Angeles mayor and future presidential contender Eric Garcetti. And behind these Democrats, also endorsing Prop. 10, are California’s all powerful public sector unions, including the California Teachers Association, the California Nurses Association, AFSCME California, and SEIU California. And, of course, the California Democratic Party.

Prop. 10 is an example of how Democrats are making California’s housing shortage worse instead of better, but it’s not the only one. Also appearing on California’s statewide ballot next month are Prop. 1, which would borrow $4 billion to build “affordable housing,” and, Prop. 2, which would use state tax revenues to build more government-run homeless shelters. It is possible, if not likely, that every one of these propositions will pass.

Scandalous Inefficiency, Unassailable “Compassion”

Democrat “solutions” to the housing crisis aren’t limited to the state ballot, however. In Venice Beach, California, along one of the most expensive, touristy stretches of coastline in the world, are now permanent homeless encampments. To address the challenge, Los Angeles city officials are proposing to build a homeless shelter on 3.2 acres of vacant city-owned property less than 500 feet from the beach. This property, nestled in the heart of Venice’s upscale residential and retail neighborhoods, if commercially developed, would be worth well over $200 million. Imagine what could be done with that much money.

That a solution so scandalously inefficient could even be considered by the Democrats running City Hall in Los Angeles offers additional insights into the Democrat mind. Solving the homeless crisis really isn’t their goal here. Rather the intent is to create additional government-owned properties, hire additional government bureaucrats, while pretending to solve a problem. Should the Venice Beach property be developed as currently proposed, well connected construction contractors will rake in government funds, so eventually a few hundred homeless people will find shelter. Meanwhile, tens of thousands will remain outdoors.

Democrats, and not Republicans, made California’s housing unaffordable by passing restrictive laws such as CEQA, AB 32, SB 375, and countless others at both the state and local level. At the same time, it is Democrats, and not Republicans, who are inviting in the world’s poor en masse to come and live there. An estimated 2.6 million illegal aliens currently live in California. But the rhetorically unassailable compassion exhibited by these Democrats does nothing to alleviate hardship in the nations where these refugees originate, because for every thousand who arrive, millions are left behind.

The result? While California’s Democrats, and not Republicans, engineer a shortage of housing supplies, their welcoming sanctuary policies engineer a burgeoning housing demand. This is the deeply flawed, misanthropic vision Democrats have for America. Democratic power is rooted in wishful thinking by the naïve, and by the savvy because of epic greed. Republicans, no matter how tepid their convictions may be, would never have done to California what these Democrats have done. And it’s not even close.

When conservatives and libertarians think about where to cast their vote, they should look west to California, and think very hard about whether or not they want to live in a nation ruled by Democrats.

This article originally appeared on the website American Greatness.

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The Bank of Los Angeles: A Blank Check for the City?

July 2, 2018 By Jack Humphreville 10 Comments
Photo courtesy of channone, flickr

Photo courtesy of channone, flickr

Last Tuesday, the Los Angeles City Council passed a Herb Wesson sponsored motion, without any discussion, that requested “the City Attorney, with the assistance of the Chief Legislative Analyst, to prepare and present the documents necessary to place on the November 2018 Ballot the necessary amendment to Section 104(g) of the City Charter to authorize the City to form a municipal bank.”

The proposed City owned Bank of Los Angeles would “provide financial services to residents, reinvestment in the City to support the development of affordable housing and local infrastructure, and banking solutions for other local businesses that are not currently served by the commercial banking industry.”  There have also been discussions about the Bank serving the unbanked, cash intensive pot industry.

Yet despite all the hype associated with the municipally owned Bank of Los Angeles, the City has not prepared a business plan or even an outline of a plan for the Bank.  Rather, the City is asking us to give the City Council and Mayor Garcetti a blank check to establish the Bank despite a well thought out report by the Chief Legislative Analyst that identified numerous problems.

These limitations include that there is no identified source of funds to capitalize the Bank (estimated to be more than $1 billion), that City funds could not be deposited in the Bank for at least three years, that the Bank would have difficulty providing adequate collateral to support the City banking requirements, that the Bank would have difficulty qualifying for deposit insurance, and that start-up costs would be “exorbitant” with no available sources of cash to cover these losses.

After listening to the February 28 meeting of the Ad Hoc Jobs Committee where the Chief Legislative Analyst’s report was discussed, it was apparent that the members of the City Council have no clue about the banking business, the need for excellent management and strong credit standards, and that loans are not grants and need to be repaid.

Rather, the members of the City Council view the Bank as a source of cash to fund their pet projects and those of their cronies. But loans, both principal and interest, need to be repaid on a timely basis if the Bank is to remain solvent.   Otherwise, the Bank is out of business, the equity capital is wiped out, and the depositors take a hit.

This was certainly the case with the Los Angeles Community Development Bank that was established after the 1992 riots with money from the Federal Government.  But this loan fund that was under the control of the City Council closed its doors in 2004 because too many of the politically connected borrowers failed to meet their obligations.

However, with the Bank of Los Angeles, it is our money, not the Washington’s, that is lost if the Bank tanks.  And it the City takes a hit, it would have an adverse impact on the already poor level of service we receive from the City.  …

Click here to read the full article from City Watch LA

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Making the Housing Shortage Worse

May 10, 2018 By Charles Crumpley 1 Comment

Rent ControlWe have a severe housing shortage, and last week our mayor said that he’d help make matters worse.

If Eric Garcetti gets his way, rent control could be imposed on far more apartments in Los Angeles and throughout the state. That’d be great for the few folks lucky enough to get a rent-controlled unit. It’d be bad for everybody else.

That’s not a surprising statement. Studies have shown that. Let’s look at one of the latest.

A working paper published in January by the National Bureau of Economic Research examined the effect of a 1994 ballot initiative in San Francisco that slapped rent control on smaller buildings constructed before 1980. Three economists followed what happened to those buildings and compared their fate to similar buildings constructed after 1980.

So what happened? First, there was a reduction in the number of rent-controlled units as landlords decided to convert their buildings to condos or otherwise redevelop their properties. In fact, rent-controlled buildings were 10 percent more likely than the non-rent-controlled buildings to convert, “representing a substantial reduction in the supply of rental housing,” the report said.

Second, there was a 25 percent reduction in the number of renters living in rent-controlled units compared to 1994, largely because of “landlords demolishing their old housing and building new rental housing,” the study said. “New construction is exempt from rent control.”

So there was a drop in the number of rental units as well as a decrease in the number of tenants who enjoyed rent control. No surprise there.

In short, rent control makes matters worse, which pretty much every informed person knows with the apparent exception of Garcetti. What was a teeny bit more surprising was the working paper’s assertion that rent control increased gentrification as well as worsened income inequality in the city.

How so? One of the authors of the working paper, Rebecca Diamond, an assistant professor of economics at Stanford University, was quoted as saying that rent control “pushed landlords to supply owner-occupied housing and new housing – both of which are really the types of housing consumed by rich people,” she said.

“So we’re creating a policy that tells landlords, ‘It’s much more profitable to cater to high-income housing taste than low-income housing tastes.’”

In other words, rent control makes matters much worse.

What’s particularly alarming about last week’s news is that the current move to impose more rent control would make matters even worse than you might expect. That’s because the proposed statewide ballot initiative that would roll back the Costa-Hawkins Rental Control Act (the initiative which Garcetti last week called a news conference to endorse), would not only give cities the green light to allow rent control to be slapped on apartments built after 1978, but it would take the extra step of limiting the ability of landlords to raise rents after one tenant leaves. The way it works now is that when one tenant leaves a rent-controlled unit, the rent can immediately catch up to market rates for the incoming tenant. Rent increases are limited thereafter, until that tenant leaves.

That provision alone is a killer. It would mean landlords would be doomed to falling further and further behind market rates. That means more apartment buildings would not pencil out, and landlords would rush to empty out their buildings, scrape the ground and construct something new – something that’s not an apartment building. We’d see declines much greater than 25 percent in tenants enjoying rent control.

Look, the yearning to do something is understandable. After all, rents have popped up alarmingly and even folks with good incomes are being priced out of homes. But imposing more rent control would only choke supply and make matters much worse.

The real issue is supply. If we had more construction, the shortage would eventually disappear. But for that to happen, developers need to feel confident that they can build with the certainty that they can earn enough income to pay their mortgage and other bills and get a reasonable return. Right now, they can’t. And mayoral endorsements of rent control make matters worse.

 is editor and publisher of the San Fernando Valley Business Journal.

This article was originally published by Fox and Hounds Daily

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Cap and trade is looking more and more like a tax

February 16, 2018 By Susan Shelley 7 Comments

cap-and-trade-mindscanner-sstockThe veneer that keeps everybody from seeing that the cap-and-trade program is really just a tax is coming unglued.

Mayor Eric Garcetti blasted out an email newsletter happily announcing that the Jordan Downs public housing development in Watts will be refurbished with money from the hidden tax you’re paying for gasoline and electricity.

Watts will receive a $35 million grant of cap-and-trade funds, which Garcetti said will help make “dreams come true” with “improved quality of life, a renewed focus on public health, and better access to affordable housing.”

The city said the work on Jordan Downs will include rebuilding “distressed” units, creating recreational programs, and opening “about 165,000 square feet for retail.”

The funds will also pay for solar panels, a food waste prevention program, and 10 electric buses.

The cap-and-trade money comes from the state’s Greenhouse Gas Reduction Fund, which takes in revenue from the sale of allowances to emit greenhouse gases. The allowances, sold at state auctions, are purchased by companies that generate electricity, refine petroleum, make cement and process food. The prices of those things in California now include the cost of buying these permits to emit greenhouse gases.

Other states don’t do this, but in 2006, to save the planet from global warming, California passed a law to require a reduction in greenhouse gas emissions. Under the mandate now set in current law, greenhouse gas emissions statewide must be 40 percent below 1990 levels by 2030.

To achieve this goal, the California Air Resources Board developed the cap-and-trade program. It puts a statewide limit on GHG emissions, and businesses that are under the law are required to have a permit for each ton of GHG emitted. Every year fewer permits are issued, and the minimum price is a little higher.

The money that’s paid to the state for these permits looks a lot like a tax. But a state appeals court ruled that it’s not a tax, because it’s not compulsory. Any business that doesn’t want to pay it, the court reasoned, could simply go out of business.

Now you know why other states don’t do this.

For California politicians, the cap-and-trade funds are like a gift from heaven. Gov. Jerry Brown is spending them on the bullet train, which is barred by law from being funded with a tax increase. And the Legislature can hand out the rest of the loot to local governments and organizations seeking funding for pet projects.

To help spend the money, lawmakers created a committee called the California Strategic Growth Council and tasked it with advancing the revitalization of local communities. The SGC oversees the Transformative Climate Communities program, which considers grant applications from community groups, like the Watts Rising Collaborative, an advocacy organization made up largely of departments of the city government.

So your city tax dollars are being spent to lobby for cap-and-trade funds that come from the extra money you’re paying for electricity, gasoline and anything that’s made or moved in California.

Some of the $35 million grant for Watts will be spent to connect residents with new jobs created by TCC projects, and in a hint of how the spending will work out in practice, the funds will also be used for a “displacement avoidance plan” which will provide resources to “educate residents about their housing rights.” In other words, gentrification.

But nobody’s admitting that. It’s all under the banner of fighting climate change.

The president and CEO of the Housing Authority of the city of Los Angeles, Douglas Guthrie, said the Housing Authority is “proud to be leading this transformational initiative to build a healthier Watts” with “greenhouse gas reduction strategies.”

It’s just a tax. All of California accounts for only 1 percent of worldwide greenhouse gas emissions, so cutting emissions to 40 percent below 1990 levels is an exercise in futility, if what you’re really worried about is climate change.

Politicians are not really worried about climate change.

The cap-and-trade program is turning into a tax for community redevelopment and for a plain old slush fund. It doesn’t help Earth’s climate, but it does real damage to California’s business climate. Cap-and-trade is a hidden tax on energy that is making everything in California more expensive than in other states.

The biggest challenge for regulators is to prevent the prices of the allowances from going up too sharply. It might bring the game to a crashing end if people noticed the economic damage they’re enduring. When the voters put two and two together, things can heat up fast.

 Columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

This article was originally published by Fox and Hounds Daily

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Cap and trade is looking more and more like a tax

February 10, 2018 By Susan Shelley 9 Comments

The veneer that keeps everybody from seeing that the cap-and-trade program is really just a tax is coming unglued.

Last weekend, Mayor Eric Garcetti blasted out an email newsletter happily announcing that the Jordan Downs public housing development in Watts will be refurbished with money from the hidden tax you’re paying for gasoline and electricity.

Photo courtesy of Eric Garcetti, Flickr.

Photo courtesy of Eric Garcetti, Flickr.

Watts will receive a $35 million grant of cap-and-trade funds, which Garcetti said will help make “dreams come true” with “improved quality of life, a renewed focus on public health, and better access to affordable housing.”

The city said the work on Jordan Downs will include rebuilding “distressed” units, creating recreational programs, and opening “about 165,000 square feet for retail.”

The funds will also pay for solar panels, a food waste prevention program, and 10 electric buses.

The cap-and-trade money comes from the state’s Greenhouse Gas Reduction Fund, which takes in revenue from the sale of allowances to emit greenhouse gases. The allowances, sold at state auctions, are purchased by companies that generate electricity, refine petroleum, make cement and process food. The prices of those things in California now include the cost of buying these permits to emit greenhouse gases.

Other states don’t do this, but in 2006, to save the planet from global warming, California passed a law to require a reduction in greenhouse gas emissions. Under the mandate now set in current law, greenhouse gas emissions statewide must be 40 percent below 1990 levels by 2030.

To achieve this goal, the California Air Resources Board developed the cap-and-trade program. It puts a statewide limit on GHG emissions, and businesses that are under the law are required to have a permit for each ton of GHG emitted. Every year fewer permits are issued, and the minimum price is a little higher.

The money that’s paid to the state for these permits looks a lot like a tax. But a state appeals court ruled that it’s not a tax, because it’s not compulsory. Any business that doesn’t want to pay it, the court reasoned, could simply go out of business.

Now you know why other states don’t do this.

For California politicians, the cap-and-trade funds are like a gift from heaven. Gov. Jerry Brown is spending them on the bullet train, which is barred by law from being funded with a tax increase. And the Legislature can hand out the rest of the loot to local governments and organizations seeking funding for pet projects.

To help spend the money, lawmakers created a committee called the California Strategic Growth Council and tasked it with advancing the revitalization of local communities. The SGC oversees the Transformative Climate Communities program, which considers grant applications from community groups, like the Watts Rising Collaborative, an advocacy organization made up largely of departments of the city government.

So your city tax dollars are being spent to lobby for cap-and-trade funds that come from the extra money you’re paying for electricity, gasoline and anything that’s made or moved in California.

Some of the $35 million grant for Watts will be spent to connect residents with new jobs created by TCC projects, and in a hint of how the spending will work out in practice, the funds will also be used for a “displacement avoidance plan” which will provide resources to “educate residents about their housing rights.” In other words, gentrification.

But nobody’s admitting that. It’s all under the banner of fighting climate change.

The president and CEO of the Housing Authority of the city of Los Angeles, Douglas Guthrie, said the Housing Authority is “proud to be leading this transformational initiative to build a healthier Watts” with “greenhouse gas reduction strategies.”

It’s just a tax. All of California accounts for only 1 percent of worldwide greenhouse gas emissions, so cutting emissions to 40 percent below 1990 levels is an exercise in futility, if what you’re really worried about is climate change.

Politicians are not really worried about climate change.

The cap-and-trade program is turning into a tax for community redevelopment and for a plain old slush fund. It doesn’t help Earth’s climate, but it does real damage to California’s business climate. Cap-and-trade is a hidden tax on energy that is making everything in California more expensive than in other states.

The biggest challenge for regulators is to prevent the prices of the allowances from going up too sharply. It might bring the game to a crashing end if people noticed the economic damage they’re enduring. When the voters put two and two together, things can heat up fast.

Susan Shelley is an editorial writer and columnist for the Southern California News Group. Reach her at Susan@SusanShelley.com and follow her on Twitter: @Susan_Shelley.

This article was originally published by the Orange County Register

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Making housing more expensive to build won’t make it more affordable

January 11, 2018 By Susan Shelley 1 Comment

Housing apartmentOnly a politician could believe that making housing more expensive to build will create more affordable housing.

But in Los Angeles, that’s what Mayor Eric Garcetti and the City Council are asserting. In December, they approved a new “linkage fee” on new development aimed at raising $100 million per year toward a goal of building 1,500 units of new affordable housing annually.

Don’t bother with the math. They didn’t.

The idea of a linkage fee, which exists in some other cities, is to get money from developers whose projects will displace residents in existing housing or generate a need for additional housing, something that could happen if a new workplace was built.

Hardly anybody is building a new workplace in Los Angeles unless it has a drive-through, but play along.

The “linkage fee” in Los Angeles won’t specifically be linked to the impact from a project. It’s simply a new fee for building in the city.

The early draft of the linkage fee, which has been on Mayor Garcetti’s wish-list since 2015, would have imposed the same fee for similar developments regardless of where they were located in the city. But some council members objected to the one-size-fits-all charge.

So the final version divides the city into “high-market” areas like downtown, Venice and Brentwood, and “low-market” areas like South Los Angeles.

The linkage fee for office, hotel, retail and other commercial buildings is $3 per square foot in low-market areas, $5 per square foot in high-market areas.

For residential developments, the fee is even higher: $8 per square foot in a low-market area, $15 per square foot in a high-market area.

The money will go into the city’s Affordable Housing Trust Fund, and city officials say they’ll spend it to build hundreds of units of affordable housing.

Unfortunately, the number of Los Angeles residents who are in need of affordable housing is in the tens of thousands, and those are just the people sleeping on the sidewalks.

Meanwhile, the cost of all other new housing will go up, because developers have to pay these huge new linkage fees just to be allowed to build it.

There are two ways that residential developers can avoid the fees. One is by reserving a percentage of units in their projects for low-income renters. The other option, which is also available to developers of commercial projects, is to get out of Los Angeles and build somewhere else.

Many cities in the Southern California region don’t have linkage fees and don’t treat the construction of a commercial or residential building as a sin that requires some sort of political or financial penance.

In some places, local governments even offer incentives for developers and businesses, to encourage building and hiring.

That’s rare in Los Angeles, where the breathtaking decay of the city is considered incentive enough.

The state Legislative Analyst’s Office has done extensive research into the problem of housing affordability in California, including a detailed report released in the spring of 2016 titled, “Perspectives on Helping Low-Income Californians Afford Housing.”

“The scope of the problem is massive,” the report said, “Millions of Californians struggle to find housing that is both affordable and suits their needs. The crisis also is a long time in the making, the culmination of decades of shortfalls in housing construction. And just as the crisis has taken decades to develop, it will take many years or decades to correct. There are no quick and easy fixes.”

The LAO concluded that while “affordable housing programs are vitally important to the households they assist, these programs help only a small fraction of the Californians that are struggling to cope with the state’s high housing costs.”

To build public-subsidized affordable housing for the 1.7 million low-income California households that spend more than half their income on rent would cost more than $250 billion, by the LAO’s estimate.

But the problem is not just math, it’s logic. When it becomes more expensive to build housing, then less housing is built, and what is built is more expensive.

The LAO report said the real solution is more housing construction, and the scale of the problem can only be matched by privately built, market-rate housing.

“Doing so will require policy makers to revisit long-standing state policies on local governance and environmental protection, as well as local planning and land use regimes,” the report concluded.

So there really is something the government can do about housing affordability. It can get out of the way.

This article was originally published by Fox and Hounds Daily

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Will Bay Area political crowd trump LA yet again?

December 8, 2017 By Steven Greenhut 8 Comments

Gavin newsomIt’s been a fait accompli that Gavin Newsom, the former San Francisco mayor and current lieutenant governor, will be California’s next governor after the iconic Jerry Brown heads off into the sunset next year. Moonbeam is a hard act to follow, having served as the state’s youngest and oldest chief executive, but it’s too bad California can’t at least muster a feisty and contentious political debate before crowning another Bay Area pol as successor.

You know, where politicians actually debate issues, take varying political stances and give voters a choice rather than a coronation.

It’s hard to understand Southern California’s inability to exert much clout at the highest levels of California government. Brown is from Oakland. U.S. Sen. Kamala Harris, the former state attorney general who got here start under the tutelage of former San Francisco Mayor Willie Brown, already is touted as the inevitable Democratic nominee for president.

Los Angeles Mayor Eric Garcetti, whose slim accomplishments certainly are on par with those of Harris, is mostly garnering skepticism for his possible presidential run. Sen. Dianne Feinstein is from Marin County and Senate President Pro Tempore Kevin de Leon is, of course, from Los Angeles, but he’s too busy dealing with an unfolding sexual-harassment scandal in his own chamber to have the time for a serious shot at her U.S. Senate seat.

De Leon and the low-key Assembly Speaker Anthony Rendon, D-Paramount, have the top legislative spots, but they’ve mostly rubberstamped the governor’s priorities. No one would suggest that either man is a true power broker – or is on the fast track to the governor’s mansion or the U.S. Capitol. There’s little doubt that Southern California politicians play second fiddle to their Bay Area counterparts and don’t even put up a fuss about it.

They rarely set an agenda that’s distinct from the one set by their Bay Area betters, so perhaps that explains why a region with so many people can’t seem to keep up with the power of an area that’s far less populous. San Francisco Democrats and Los Angeles ones are both progressive – but their priorities should not be interchangeable. The demographics and economies are vastly different between the state’s two megalopolises.

The latest Public Policy Institute of California poll offers some mixed news for Southlanders. For instance, Newsom’s latest lead is far lower than expected. He is favored by 23 percent of surveyed voters, with former Los Angeles Mayor Antonio Villaraigosa, also a Democrat, coming in a surprisingly close second at 18 percent. The other contenders, including the two lackluster Republicans (John Cox and Travis Allen), are in single digits. With the top-two primary system, the top two vote-getters face off in the general election even if they are from the same party.

In the Senate race, Feinstein is besting de Leon by a two-to-one margin, and around half of the voters surveyed had never even heard of de Leon, which is perfectly understandable given his underwhelming tenure in the Capitol. De Leon did throw a really cool $50,000 party at the Walt Disney Concert Hall in 2014 to celebrate his inauguration as Senate president pro tempore, but apparently the “glitz-fest,” as the Sacramento Bee called it, didn’t help any lasting name identification.

On the surface, Villaraigosa’s competitiveness in the gubernatorial race does offer hope that a Southern California politician could once again lead the state. But don’t get your hopes up. He admirably has taken on the teachers’ unions to advance school reform, but he also touched the third rail of politics, when he called for “changes” to 1978’s property-tax-limiting Proposition 13. Instituting a “split roll,” for instance, would dramatically increase the tax bill paid by commercial property owners.

This is more than a policy problem. Villaraigosa’s path to the governor’s mansion involves rallying Southern Californians, Latinos and remaining conservative and Republican-oriented voters. The latter comprise a falling 26 percent of voters, but it’s a significant enough block to create a path to victory. But attacking Prop. 13 tax protection is a nonstarter for that group.

Last November, former Orange County Congresswoman Loretta Sanchez seemed to embrace a similar political strategy (Latinos, mod Dems, Southern Californians, Republicans) to take on Harris for the U.S. Senate race, but despite her more moderate positions, her Latina background and SoCal credentials, Sanchez could only muster 38 percent of the vote. Unless, Villaraigosa expands his appeal, he is likely to face a similar fate.

“It looks just like the Harris race that it’s preordained that the candidate from the Bay Area will get the position rather than a qualified Latino candidate from Southern California,” said Alan Clayton, a San Gabriel Valley-based redistricting expert. “The political class in California protects its own, and they are significantly from the Bay Area.”

For Southern Californians to have a greater voice in Sacramento and Washington, D.C., Southern California Democrats have to speak with a more regional voice – one that focuses on public-sector reform, fiscal responsibility and on working-class concerns (jobs, housing, etc.) rather than the often-bizarre fixations of San Francisco liberals. Until then, expect a county that’s more populous than 40 other states to remain the lapdog to the Bay Area political establishment.

Steven Greenhut is a Sacramento-based writer. 

This article was originally published by Fox and Hounds Daily

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The Delusion of Eric Garcetti for President

December 6, 2017 By Joel Kotkin 4 Comments

Photo courtesy of Eric Garcetti, Flickr.

Someone may be putting something in the Los Angeles water supply. In the past months, two unlikely L.A.-based presidential contenders — Mayor Eric Garcetti and Disney Chief Robert Iger — have been floated in the media, including in the New York Times.

But before we start worrying about how an L.A.-based president might affect traffic (after all this is the big issue in Southern California), we might want to confront political reality. In both cases, the case for our local heroes’ candidacies is weak at best, and delusional at worst.

The Disney fantasies

The Iger case is, if anything easier to dismiss. Iger can sell himself, like Trump, as a business success story, and with probably far-fewer questionable business transactions. Yet Iger, trying to run as a progressive in an increasingly left-wing Democratic Party, will face numerous challenges that dwarfs those faced by Trump.

Iger, for example, will have to run against the sad record of his company’s self-serving interference in Anaheim. Disney is generally a low-wage employer, and, in Orange County, this can be seen as contributing to the enormous disparity between cost of living and low salaries. I don’t suggest that companies should be primarily social justice warriors, but when a corporate executive runs, he’s going to be subject to their scrutiny.

Other problems also abound. For example, in 2016 the firm laid off 250 of its Orlando tech employees, replacing them with H-1B visas holders from an Indian outsourcing firm, and then, insisted that some train their replacements before being laid off. Let’s just say that won’t play well if Iger had to run against populists like Bernie Sanders, Elizabeth Warren, or even Joe Biden.

Should mayors run the world?

If Iger suffers from Mouse made illusions, Garcetti gets his from urbanist circles, who increasingly maintain that mayors should run the world. This may seem strange given that core cities account for barely a quarter of our major metropolitan population. In the Los Angeles metropolitan area, most of regional growth takes place well outside the urban core. The slow growing city, which was first claimed to have reached four million people in 2008, has still not achieved that number according to the U.S. Census Bureau.

Unfortunately for Garcetti, L.A. makes a hard sell as an exemplar for the economic future. Some cities like New York and San Francisco, have enjoyed robust expansions of employment in the past decade, but not Los Angeles. Overall, notes a recent survey in Wallet Hub of 150 cities in the country in terms of job prospects, ranked Los Angeles 115th well below less hyped places as Irvine, Rancho Cucamonga, Ontario and even Fontana.

Garcetti’s has tried to sell L.A.’s “silicon beach” as a hot tech location but, despite the success around the now faltering Snapchat, overall STEM growth over the past decade has been slightly negative. Remarkably for a one-time tech behemoth, the county now has less STEM employment per capita than the national average. At the same time, rankings of inequality and poverty, as measured by urban theorist Richard Florida, place the L.A. area, which includes the surrounding communities, dead last among the 20 largest metros. Overall the poverty rate in both the city proper and in the riot zone is higher now than before the 1992 riots.

Has Garcetti’s density agenda paid off elsewhere? One in four Angelinos, according to a recent UCLA study, spend half their income on rent, the highest again of any major metro.

Garcetti’s backers praise pro-density policies and hail him as a crusader against sprawl. But ordinary citizens are less enthused about his policies for narrowing streets, which has not only slowed traffic but also seen an increase in accidents; congested traffic also tends to generate more greenhouse gas. Garcetti gets kudos for his transit fixation but last year Los Angeles accounted for almost one-quarter of the strong national decline in transit ridership; in the period spanning his first term, Los Angeles lost 113 million annual rides, 16.6 percent of its 2014 ridership.

Deep blue visions on the national stage.

Of course, Mayor Garcetti is not to blame for all L.A.’s troubles, which have been festering for decades. His culpability lies with doubling down on failed policies. If someone is running for the highest office in the land, it’s nice to have something to brag about other than speculative high rises in the inner core and the arrival of two football teams, both scheduled to play in Inglewood.

The good news may be neither of these people are going anywhere. Both Garcetti and Iger seem unlikely to outdo California’s favorite daughter, Sen. Kamala Harris, in the early primaries. She may have little to show for her time in office — except for a genius for grandstanding — but her multi-cultural allure, to coin a phrase, trumps that of white male heterosexuals in today’s identity crazed Democratic Party.

Basically, my old New Yorker’s advice to both these guys is: “fuggedaboutit.” America may be nutty enough to nominate a Californian, but it won’t be either of you.

Originally published in the Orange County Register.

Cross-posted at New Geography.

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