How is “Affordable Housing” Working Out For You?

What are the real causes of homelessness?

Legislators pass housing bills
Sacramento Bee: Legislators announce passage of bills

In 2016, there were 550,000 homeless people in the United States, mostly concentrated in large cities such as New York and Los Angeles.  California has the largest percentage of unsheltered (not in emergency shelters) homeless in the U.S. at 66%.  California has 22% of U.S. homeless population (in shelters and unsheltered), and 12% of the total U.S. population.

The currently accepted reason for California’s large homeless population is the state’s traditional resistance to population density — the Not In My Back Yard syndrome.  Therefore, the accepted remedy is to force all counties to build “enough” taxpayer subsidized housing.  However, one could observe other contributing factors:

* Destruction of small transient hotels, where low-income or no-income individuals and families called home.  Old timers will remember the last stand, the battle for survival of the International Hotel.  The low-income residents lost and the developers won.

* Explosive growth in drug use that interferes with gainful employment. Is anyone going after the real causes of the growth?

* Advent of central planning that mandated high population densities along transit corridors and designated large swaths of land as conservation or protected areas closed to development. Some call it the Watermelon Plan, green on the outside and red on the inside.

* Acceptance of words such as “displacement,” “housing rights,” “fair housing.”  Rejection of principles such as self reliance, freedom of movement, local control.  Maybe Orwell’s Animal Farm is no longer read in school.

* Utter rejection of the word “suburban sprawl.”  New rule:  everybody stay put.

One would think that as density rises in confined spaces, housing prices would rise.  Thus, all funding options should be viewed as ongoing and forever increasing – never “enough.”

On September 15, 2017, the open-ended nature of California’s “housing crisis” became clear.  Senate Bills SB 35, SB 2, and SB 3 passed the legislature, and are expected to be signed into law by Governor Brown.  SB 35 further moves decisions on housing from cities and counties to state.  SB 2 loads residents with more fees when they need to file a property-related document.  SB 3 funnels $4,000,000,000 in bond money into subsidized housing.  Supporters in the legislature say “It’s just a start.”

Mello-Roos Taxes and the Peanuts Syndrome

Lucy will always yank the football as Peanuts kicks, and legislation will always fool voters.

LucysFootball 3Lucy yanking the football just as Peanuts kicks – the iconic image created by the great Charles Schulz will forever live in the public consciousness as a badge of trusting souls. No matter how many times Lucy causes Peanuts to tumble as he kicks into empty space, Peanuts trust Lucy to keep the ball in place the next time.

We the People seem to have acquired the Peanuts syndrome.  No matter how many times legislation morphs into other than its intended purpose, We the People remain faithful to the idea that the next law or rule will fix what went wrong.  The immutable rule of legislation is that every law grows to include more stuff.  Eventually the original piece of legislation becomes something else.  Examples abound; but here, let’s talk about the Community Facilities Act, passed by the California legislature in 1982, better known as Mello-Roos to honor the act’s co-authors.

California’s 1978 Proposition 13 chocked off the flow of property tax money.  Predictably, instead of developing fiscal restraint, the legislature established other ways to tax homeowners.  Mello-Roos was enacted as a quasi parcel tax, not subject to Proposition 13, to provide funds for public infrastructure in newly-created development areas.  Not a particularly bad idea.  However, as time passed, Mello-Roos transformed, with significant transformations occurring since 2010.

Senate Bill 555 in 2011 further blurred the distinction, never quite clear, of what was truly a public facility or service and what was private by authorizing the financing of energy-efficient improvements on privately-owned property.  Assembly Bill 2618 in 2016 included seismic safety improvements to what could be financed.

Lawsuits have not been successful in curbing the morphing of Mello-Roos.  The Pacific Legal Foundation filed a suit on behalf of the Building Industry Association against the City of San Ramon, asserting that Mello-Roos applied only to new infrastructure created specifically for residents of a Mello-Roos district.  The court ruled that existing infrastructure was also covered, thereby breaking the link between the services and the residents paying for the services.

A high-profile expansion of Mello-Roos is the construction of San Francisco’s Transbay Center, located within a highly urbanized and dense Mello-Roos district.  Among the community benefits is a magnificent transit terminal that will include inter-city transportation service, leaving little connection between residents of the district and the services provided by the development.

Yet, residents of the Transbay Center Community Facilities District will still pay the Mello-Roos tax in addition to their regular property tax.  Lucy strikes again.