Los Angeles is spending up to $837k to house a single homeless person
ktla.com
ktla.com
For the 1.2 billion dollars they are spending, if all of the apartments were built to the spec of a roadside motel room (~350 sq ft - or more than double the average SRO), they should realistically be able to build over 10,000 units for that kind of money (that's including California's exorbitant cost per square foot).
It would be like if the government banned motorcycles, and then said "okay, instead we'll make you a nice, compact crossover", and then handed over design and construction of the crossovers to a company that builds snowplows.
What's frustrating is that SROs used to be provided by the private market, largely free to taxpayers! How much better a use of government money it would have been to just improve the situation in SROs than to quietly let them shutter and hope the poverty they represented just disappeared with them.
In CA, it's my firm belief that people have a tad too much power over the minutae of government operations. What did we even elect people for if we are going to try to solve everything with referendums and protests?
Which issues, pray tell, are best governed by local control and which are best governed by top-down, remote decision makers?
Is it really tyrannical to, say, elect officials to act on our behalf and consider long-term impacts and x-order effects?
Because to me that just sounds a little more "republic" and a little less "direct democracy".
- We don't want the minority enforcing on the majority
- We don't want a plurality or even a majority enforcing on a minority under certain circumstances
So, for instance, even if 300 million Americans think "sfe22 should be stripped of their assets and have it given to us 300 million" that's not going to happen. Yes, that is 'tyrannical' of you to have such power but it is so nonetheless.
That is a good point.
Tent cities are preferable to poorly built dangerous masonry.
The next HN comment immediately talked about how that building is a slum.
You literally cannot see the residents inside. It's impossible to tell. It's the same building but now somehow it was ruining the character of the neighborhood. Strange.
What modern Westerners seem entirely unwilling to acknowledge or accept is that if you require by decree that all accommodations look like middle-class accommodations, then you'll absolutely be able to get rid of all those worse accommodations, but you won't have done anything to address the reasons they existed in the first place.
What exactly do you mean when you say "as nice as middle-class apartments"? Are you talking about how nice the carpeting and hardwood flooring is? How nice the building looks from the outside? How likely the roof is to leak or collapse? How safe the electrical wiring and fire suppression systems are?
In the West that's exactly what we've done. We've said, sorry, no, you can't provide housing that looks like that, so the operators of those establishments said, OK, then, I won't. And now those men sleep on the street.
We seem to think that we can demand of proprietors whatever we want and they'll have no choice but to comply. But it's simply not true. At some threshold they'll just shut down. And then I guess we can celebrate the elimination of "substandard" housing and declare ourselves morally cleansed.
Secondly, I think it's a false dichotomy in practice. I find it very hard to believe that basic safety codes alone cause the difference between SRO-style buildings and "luxury" or even "middle-class" apartments. What percentage of that $800k was spent on the GFCI outlets in the kitchen?
So, yes, I agree with you. Surely there must be some limit. But what's optimal?
The remarkable part is the people who still defend the measures as for-the-poor's-own-good.
In fact, my first apartment, ironically in LA was a very small step up from an SRO. It had a private bathroom, but not much else.
Now the city has effectively made this housing illegal to build.
These units for the homeless are basically luxury condos. It's never been about helping people, Garcerti and the boys just ripped off the people of Los Angeles.
A more realistic plan would be to offer relocation assistance or at the very least relax building requirements.
None of that will happen, my first, my beautiful 600$ apartment is now 1300$. I miss the city LA used to be.
I had the privilege of living in a neighborhood with 3$ bottles of Soju and 4$ Tortas. It was absolutely amazing.
What is luxurious about them? Or are you referring to the price?
Are you defining a unit with a kitchen and bathroom as a 'luxury apartment'? Would you live without them?
The problem is that not everyone has a well-paid IT job, and some people barely make ends meet. These people need a place to live, too, a cheap, non-advanced place, with many corners cut for the sake of it being cheap to build and maintain. It's still much better than living in a tent as your primary residence!
> If the other option is living on the street, why not?
Those aren't our only choices.
> some people barely make ends meet. These people need a place to live, too, a cheap, non-advanced place, with many corners cut for the sake of it being cheap to build and maintain.
And they also, like other humans, need kitchens and bathrooms. Also, kitchens save a lot of money - cooking is by far the least expensive way to eat.
But it's better to have one kitchen for several units ("single rooms"), than none at all, and not even a single room.
Back to the beginning: I don't think that decrepit SRO buildings had to be perpetuated. But I suppose that moving people out of them should have included an offer of some other affordable housing, back in the time they were being removed, I need to find out what has been done.
I guess, but I wonder if kitchen construction is really holding back affordable housing.
> I suppose that moving people out of them should have included an offer of some other affordable housing, back in the time they were being removed, I need to find out what has been done.
I know that in the mid-20th century, in at least some cities, when the governments cleared African-American neighborhoods for freeways, white developments, etc., there were some promises but mostly people were left high and dry. Also, remember that black people couldn't get loans- direct policy of the Federal government and New Deal - or even decent-paying jobs (or an education to get jobs ...), so they didn't own the properties where they lived (they rented) and wouldn't have received that compensation.
That's a big "if." Surely not a significant portion of this $800k or the cost of any "luxury" apartment is due to it having a kitchen and bathroom.
I don't know about you, but given the choice between sleeping on the streets or having to share a shower with a reasonable number of other people, I'd share that shower.
Instead LA built a bunch of vanity projects which provide no real help to the vast majority of homeless people. The only thing you can really do is move your feet, which is what I did .
Anyone struggling to find affordable housing in LA should get out. You can move to Vegas and drive in every other week to see your friends.
Shipping the homeless elsewhere than California's most expensive cities is way outside the Overton window.
Why? Unless you can show proof that most of the homeless in SF and LA are locals who fell on hard times rather than junkies who moved in for better weather and benefits, shipping them out seems completely reasonable.
And where will you ship them to? Smaller cities don't want them and they'll be inhospitable enough they won't want to be there either - they'd rather ship themselves back where they can stay close to their drug sources and still rotate with their panhandling around enough that the locals don't get too familiar with them.
So if you want to do something about the vagrant encampments being in the city you live in, the most effective thing that you can do is move to where they aren't, which is what everyone else who cared that much about it already did long ago.
Morality and optics of forced relocations aside, because it leads to cycles of retaliation by the places they are shipped to.
> Unless you can show proof that most of the homeless in SF and LA are locals who fell on hard times
I don't know about LA, but this has been studied for SF, repeatedly, and they are.
My friends who couldn’t afford Santa Monica moved east. Riverside, San Bernardino, etc. They bear horrible commutes but did what they needed to do to afford housing for their families.
Why do we just assume that homeless have some god given right to be housed precisely where they happen to be sleeping. Regular people migrate all the time to accommodate their own economics. Let’s build homeless some cheap housing. And let’s do it somewhere in the middle of no where where land is cheap and building costs are low.
I fail to see how this is controversial if it isn’t controversial for my friends who voluntarily do the same.
Some of the best times in my life.
For my senior year I moved into an apartment with my own bathroom and kitchen. It turned out to be a step down.
I don't think those would be allowed in most (American) cities either, I don't think 20 sqm is rentable.
Ideally I'd have had a slightly smaller room, but with a private toilet (there was certainly enough space in the footprint for a 2m*1m toilet/sink/shower), but apart form that it was great (given the cost - about half my net income), far better than sharing a house. As a young person needing to be close to a London office but without the luxury of having parents giving me a free room.
I'm reminded of a previous thread where I asserted that America's poor have a higher standard of living than medieval kings :-/
"Criticizing hotel life was one thing; effectively controlling it was another. By 1910, reformers had established the idea that hotel housing was a public nuisance. From 1900 through the 1940s, interlocking groups of reformers and landowners transformed objections about hotel life into practices to control living in hotels. For the goals of the culturally and socially reorganized new city to succeed, aberrant forms of housing had to be prevented and removed—slum and hotel alike. Yet gaining control was neither automatic nor preordained. Hotel housing was entrenched in some areas and in others, still expanding (fig. 8.1). A few handfuls of reformers had to do more than galvanize public opinion against the notion of living in hotels; they also had to establish whole new governmental organizations and procedures to give cities and states the necessary legal and bureaucratic power." https://publishing.cdlib.org/ucpressebooks/view?docId=ft6j49...
"As with the SFRA's applications of blight and nonbuilding, the actions of other hotel-closing agencies were not (in their own minds) aiming the wrecking ball at the homes of the poor but "eliminating dead tissue," "applying the scalpel," "clearing away the mistakes of the past," and building "an attractive new city." About a Norfolk, Virginia, hotel district, one planning journal editor reported in 1961 that "progress had reached the demolition stage." Local agents crowed that they had "reduced to rubble . . . scores of flophouses not renowned for adding luster to their city's good name."
https://publishing.cdlib.org/ucpressebooks/view?docId=ft6j49...
> handed over design and construction of the crossovers to a company that builds snowplows.
Who is analogous to the snowplow building company?
> SROs used to be provided by the private market, largely free to taxpayers!
What do we know about SROs and their outcomes?
That they housed people who today live in nylon tents with no plumbing/hvac/security.
Seattle's flop houses are mostly gone now...Spokane's are disappearing rapidly and is creating a new homeless problem in an area that used to be fairly immune to it (because of access to cheap housing).
China/Hong Kong and some of Asia have created a new spin on SROs with capsule and pod housing, China leverages a lot of sub-basements for SRO housing (without access to windows because underground), while Japan has cheap 2.5 tatami sized small room apartments. None of these would be allowed in the west, they are barely living, but maybe we should start thinking about them as an alternative to a much worse situation?
A developer bought them out, them combined every 2-3 SROs to make a (still small) luxury apartment.
I do not begrudge the developer. If you were to propose the opposite (taking an existing set of luxury apartments, and subdivide them into more rent paying units), it would probably be more profitable, but you would never get the plans approved.
I'm not sure it would be in this market. Catering to people with money is pretty profitable. Catering to lower income tenants...even with more scale on your side, might not work out, especially with the extra overheads involved (with Seattle's strict eviction laws, for example). Most small-scale landlords in Seattle are trying to get away from even moderate income housing that might require them to fund moving costs because of future rent increases (as well as rising eviction costs...it doesn't make much sense to rent to anyone but a very well funded and low risk techie).
https://www.seattleweekly.com/news/somethings-rotten-in-roos...
> Most in the crowd were furious about the Sisleys’ refusal to help keep up the neighborhood. “I feel like I’m watching a neighborhood crumble,” said David Ahrens. Another angry resident added, “These are transient places. People are moving in and out. I think you need to get more aggressive with them.”
> In 1994, after the DCLU took action on a number of violations at Sisley properties, including the illegal conversion of a house that was zoned single-family into a six-unit “residents’ club” house, Gilbert brought a similar suit against city officials.
Then there's all of the Carl Haglund stuff.
I think people have tried to cater to low income tenants, and all of them have been run out of town.
Ah, "The Publix" - I saw it a few times in ID and was confused with the SE/Florida based Grocery Store.
These types of housing just aren't available in Vancouver (or NA in general), but I can totally see a market for it.
It didn't last long, he gave the place to my uncle after running it for a few years. My uncle quickly sold it after fixing it up a bit, he didn't want to be in that kind of business either.
The other possibility is that we should root out the corruption in this process. I am not generally a fan of privitization at all. In the private market however you're building 2/2s in LA for less than half of the cost including furnishings and fixtures.
By that I mean a 2 bed, 2 bathroom, with all of the traditionally middle class loved touches including faux marble, and faux wood flooring etc.
The situation LA is in is unconscionable as 4,000/mo apartments are going up for rent and developed for less than 350k.
The issue here is definitely corruption and not ability, cost, or the need to put people in Parasite style apartments.
You claim corruption, but provide no evidence of such, just that the result doesn't make sense to you. But instead of corruption, maybe it is just capitalism at work here? Developers go with what the market demands, and that demand comes through what the market is willing to pay. In that case, they develop $350k units because they can rent them out for $4k, that sounds really profitable. Why would they bother doing what you think they should do if they can't make money doing it that way? Or is it alleged corruption that allows this behavior? If so, what kind of corruption?
That would be why specifically 800+k for a unit described smells of corruption.
It sounds like that "up to" in the title is doing a lot of work if 86% are below $700k. I would also like to throw in the added context that the median home price is roughly $915k[1]. Also be mindful whether we are discussing LA county or LA city. The article is about an LA city program. Housing in LA county will be cheaper and the median there is just under $800k[2]. So all of these projects are under the median cost of housing and the overwhelming majority are at least 25% below median.
This doesn't seem like much of a controversy once you know that context. Housing in LA is simply expensive.
[1] - https://www.redfin.com/city/11203/CA/Los-Angeles/housing-mar...
[2] - https://www.latimes.com/business/story/2021-11-04/what-l-a-c...
To put it another way, we are taking people out of homelessness, and putting them in houses that are more expensive than 30-40% of units on the market. So the members of the program are getting a much worse deal than if they were just given money directly to pay rent.
The cost to house homeless shouldn't be slightly below median. Realistically, it should be in the 1th percentile.
You also can't just give this money to homeless people and let them buy or rent their own places because the fundamental problem is a lack of supply. Simply giving them money would increase the cost of homes for everyone else and in turn feed into a cycle of creating more homeless people. The city needs to build new homes to increase the supply.
If someone needed a car to get to work, you would never think of providing them with a brand new one. But we are kind of in that situation with housing.
I think the city could have saved a bunch of money here sourcing existing housing, then putting the savings into funding general new construction. But a $100 million kickback to a developer to add 1500 units is somehow less politically popular than $1 billion dollars for 1200 units.
Even assuming this is true, there are plenty of reasons this might be a good deal. One is greater control over construction, alignment of incentives (i.e., the developer incentive is to put up the worst pieces of junk they can get away with), long-term ownership if this is to be a long-term program, etc.
There are programs like that, including large ones like federal Section 8. It's not simple at all: Landlords will often refuse to rent to Section 8 participants. Also, people who are unhoused often need other services in order to get back on their feet.
That said, it's a hassle for landlords. They have a separate contract and commitments with the local housing authority that disburses the subsidy, in addition to the lease with the tenant. And are subject to annual home inspections by that housing authority. And most importantly in a booming market, there are legal caps to how much a tenant's annual income can be dedicated to housing and utilities. Between the income limits to qualify for section 8 and the cap on income that can go to housing, the amount that an individual can actually spend on top of the subsidy is fairly limited and may not bridge the gap to going-rates for private rentals in an area. Between that and the stigma attached to the quality of tenants using section 8, it's common for private landlords in a good market with a standard or better unit to pass on a section 8 applicant and hold out for another tenant with fewer strings attached to the transaction.
[1] https://www.hud.gov/topics/housing_choice_voucher_program_se...
But do we have data anywhere? (I don't.)
The tradeoff is that the government always pays on time, and there is some motivation for tenants to behave (e.g., noise, nuisance, property upkeep) in order to keep their section 8 voucher in good standing.
You'd be surprised to learn how little planning is done for the next step. Authorities (at least here in SF) are myopically focused on moving people into housing; there is no step 2 after that. That's why we have to keep building more housing, as people are not graduating out of the housing to make room for others.
In SF you have to account for the fact that the city is de facto prohibited from spending money on anything other than piecemeal programs, not to mention the upkeep and staffing to alleviate the deterioration of existing housing options. Every few years somebody manages to convince enough Supervisors that they've found a silver bullet and to give them some money for a meager pilot program to help a hard problem that requires actual money, experts, and priority. Oh, but there's pushback from $300K/yr techbros who have lived in SF for over two years and are sure it's all gone out of control ever since they had to step over a needle once. There are lots of knowledgeable and motivated people working in homeless and drug outreach along with related organizations that have like zero dollars. I'm not one of these experts and experienced people, but I'm pretty sure they should be funded and integrated more into an overall program.
In Sacramento they're preparing to kick people out of their hotel program, but the Sheriff is waiting with bated breath right outside the door: https://www.sacbee.com/news/local/article258051333.html I half expect them to describe putting the homeless in jail as a savings.
Unless they are housing functioning tenants (the easier homeless cases that don't involve mental illness or substance abuse, the ones that can get back on their feet with some help), those units are likely to get damaged quickly and require extensive refurbishment within a year or two. Hopefully they are using discretion in who gets that housing, or it will wind up costing them another $100k every couple of years to keep the unit inhabitable.
Hard cases...I'm not sure if many of them are ever going to be normal again. Many people with fentanyl addictions are just really messed up, and there isn't much we can do to solve their addictions. Same to a lesser extent for alcoholism, and mental health problems. Housing first also doesn't work well for them, because their addictions are so strong that they trash housing given to them, sell what they can, and wind up on the streets again because it is the best way to support their addiction.
I think because hard cases are so hard to solve, we should devote almost all of our resources on (a) kids (so they can avoid this fate) and (b) easy homeless cases so we can prevent them from becoming hard cases.
Many homeless advocates seem to want it both ways: that not every homeless is an addict (true), but that we should throw the exact same resources at addicts as we do at people who just couldn't pay rent (false). I don't understand why they do this, it doesn't help their cause (and they don't make progress because their solutions are not well matched to the problems they are solving).
Part of the issue is the zoning code as it is really only makes it possible for developers to build larger/luxury developments. You don’t see many 4plexes getting built because all of the red tape makes it less profitable than building a new SFH on a multi-unit lot (which I’ve unfortunately seen happen when a charming but old 4plex got demolished in place of a new build McMansion). Hopefully sb9 and sb10 change that.
I’m short, I think that at least among new build condos, Los Angeles social housing is still at or below median price per unit. It’s a shame it’s that expensive, but that’s the hole CA dug itself into by not allowing more housing to be built organically.
for people unfamiliar with los angeles, is very much a city of landed gentry. republican legislation designed to curtail rising taxes for elderly residents 40 years ago wound up creating a cloistered elite of land-owners that pay nearly nothing in tax and resist any attempt to create additional housing. They coast on a bubble of six-figure increases in equity per year with little to prevent a ramshackle bungalow in inglewood from fetching a cash-only two million dollar price.
when legislators typically try to address the very same landed gentry's cries for relief from the homeless, they wind up collecting windfall bond measure revenue. as they gain momentum and start striking ground, most communities put up fierce NIMBY opposition and mire whatever initiatives that are approved in court. the city in turn eventually gives up, settles, and uses the remaining funds to quietly continue sanitation and cleanup efforts of camps, occasionally running the homeless away for a day or two.
for the city to bemoan rising costs and slow pace is a bit ironic as well. when LA decided to give up on property taxes it had to find a way to make up the difference. hence a league of esoteric inspections and byzantine permitting started popping up for new homes. it means contractors sit idle and watch the price of lumber skyrocket while your self-licking ice cream cone melts in the sun.
I don't think it was known, in advance, that this would be the resulting cost, assuming that figure is accurate. I don't think any rational person would put forward such a program and that $837,000 to build a single studio house seems insane to everyone, not just non-Californians.
I think the point OP is trying to make is that the skyrocketing cost is partly caused by a certain class of privileged Californian's continuing to fight the effort to build more housing.
That's not what is happening. Per the article:
14% of the units build exceeded $700,000 each, and one project in pre-development is estimated to cost almost $837,000 per unit.
The problem with this is that there were only two contractors that met the requirement, and as a result they could charge whatever they wanted since it was practically a no-bid contract.
Los Angeles could've spent dramatically less, and housed more people, had they simply purchased housing on the open market with the money. These prices are pure graft.
Corruption deep on both sides of the aisle.
Yes, but “find a political cypher of a celebrity, run in an irregular election leveraging a crisis created by Republican state and federal policies, and appoint an listen to a lot of establishment Dems as advisers while ignoring Republican Party insiders and donors because you don't need them once you have the dual advantages of celebrity and incumbency and don't care about the party as such” isn't really a structurally-repeatable strategy.
Man those were some crazy times.
Do you have any evidence of that?
> Spending $837,000 to build a single studio to house a single homeless person seems insane to most of the country.
That's not what is happening, in any meaningful way.
This is a totally valid question. Wouldn't the overwhelming liberal majority rule in California be evidence in and of itself? I guess there could be liberals in name who enact conservative policy (or maybe little policy at all), but I haven't seen evidence of that.
Good points.
First, what do the outcomes depend on? Policies of California state and local government are only limited factors. They do not create the economy, migration, weather, real estate development, etc. etc. (though they some limited effect on all of them). There are many other powers in the world. The government's power to control events is pretty limited.
Second, do we see any correlation between California government and these outcomes? Homelessness has existed worldwide probably for all time. A fundamental question is, with what is increased homelessness correlated?
Third, we don't know what the outcomes would be without the policy or with other policies. Negative outcomes don't indicate bad decisions - things could be worse. If you are dying of terminal disease, you don't assume the doctor's decisions are the cause, and therefore we'd be better off without healthcare. We are dealing with a difficult problem.
Finally, not all decisions and policies are partisan; people and publics are not politically consistent anwyay, and make policies for all sorts of reasons. And California has had Republican government on and off for a long time, and anything effects of government policy you see now are the outcome of decades of governance.
You can find a nice graphic of homelessness by state here: https://www.usich.gov/tools-for-action/map/#fn[]=1300&fn[]=2...
States like CA and NY seem to have the most growth in homeless population. That might be considered supporting evidence.
"They do not create the economy, migration, weather, real estate development, etc. etc. (though they some limited effect on all of them). There are many other powers in the world. The government's power to control events is pretty limited." I disagree with this statement, look at all the shutdowns as of late. The government seems to have almost unlimited power which court systems are unwilling to check, they can literally shut entire sectors of the economy down and stop home showings, in direct contradiction to your statement. In normal times they hold enormous influence over these sectors with licensing requirements, regulatory schemes, and political corruption. The result is migration, which also as of late has resulted in net outflows in CA, NY, and IL.
> The result is migration, which also as of late has resulted in net outflows in CA, NY, and IL.
Those outflows began decades before Coronoavirus.
It's a very good point. I find it very disingenuous to claim republicans are at fault in a blue state like Claifornia. The null hypothesis should be democrats are responsible for the state (good or bad) of California. Anyone, who claims otherwise, should provide evidences for their claim.
That, of course, was Proposition 13, a ballot initiative. The fallout was exactly what people predicted.
Prop 13 did two things. It capped property taxes, though there have been a variety of ways of getting around that. The other thing was it capped increases in property taxes.
Not quite Prop 13 but you can't have high increases in property values, and simultaneously have affordable housing.
Imagine, here in the SF Bay Area, 100,000 apartments magically appeared tomorrow morning. I don't think we'd see rents going up 15% a year after that.
If you means test things, it can work better. If you're an artist or a retiree in san francisco, and then someone goes and invents the internet, prices will go way way up around you. If you don't want to force the artists and retirees to learn to code to keep up with housing catering to newcomers, something like prop 13 helps. But then if they do go and learn to code, taking advantage of the new skyrocketing job market, then they don't need prop 13 protections. Prices went up but their income kept pace, so they don't need the protections.
A lot of these kinds of issues seem to come back to lack of means testing or poorly implemented, non-holistic, perverse incentivizing means testing.
Artists? They can cash out for enormous windfall profits if they can't sell enough art.
Renters have little protection in most communities.
Sure you can, you just also need to build new housing. The key is that the new housing has to be higher density than the old housing — the value is primarily in the land, not the house.
If a developer could legitimately and easily build a 4-plex where any single-family home exists right now, the prices of SFHs would likely stay high — they are still a luxury, and become more so as they become rarer, raising prices further — while the units in a 4-plex (still housing!) are more affordable.
Everyone wins. Except we can’t do that, because we can’t build denser housing in basically any of California.
Definitely a step in the right direction though!
Certainly allowing something as modest as allowing say 25% of lots in R-1 areas to be duplexes would go a long way to helping, as would allowing so called granny units (small houses in back yards or as part of garage) would also make quite a difference.
It does have the problem you describe of landed gentry not getting hit with high property taxes, but also it does protect middle class people from getting kicked out of their homes due to the popularity of the area they live in. My parents are the perfect example of this, my dad is a plumber and my mom is a teacher, my entire life they barely broke 100k combined and were BARELY able to give me and my sibling a decent life in LA. If their property taxes had risen with the rate of the area that they bought a house in as we grew up, we would have been unable to continue living there and forced to leave. The same thing goes with my grandparents.
California has very high income tax, which arguably compensates for the low property taxes. This strikes me as more fair, as the high earners are the ones hit with the tax bills rather than my grandma, who made nothing and had no way to pay the tax that comes with a $2M property valuation, despite having worked hard to buy her house when she was younger.
So yeah, you're right in some sense, but its not fair to completely ignore the alternative of lower/middle class people being kicked out of their homes if they didn't have prop 13. The real problem here is the NIMBYism that you describe and restrictive zoning.
ALSO, the landed gentry are sort of limited as well. Yes their primary home (the one they live in) has a limited tax bill, but additional homes they own, they will probably end up renting out, and that rental income will be subject to California's high income tax.
It's called the California Tax Postponement Program and solves exactly the problem you're discussing.
We're ensuring stability for the older generation, at the expense of a younger generation who couldn't possibly afford the same neighbourhood they grew up in.
Those with millions in real estate equity can use that equity and financial engineering to defer the property tax increases until their death.
Now with Prop 19 children can only keep the lower tax basis if they use the home as their primary residence and it only excludes up to 1m in value.
https://www.hollisterlawoffice.com/the-llc-loophole-in-the-a...
I'd rather see us adopt lower but uniform property tax rates that are revenue-neutral with Prop 13 rates.
Of course I'm only an aspiring property owner so I have a significant bias here.
Yes. Prop 13 is priced in to the market. Buyers are willing to bid higher because they expect that tax cut.
Often rent alone isn't profitable in CA if you have to get a mortgage and even if you don't - the rent you would get is a low ROI, so investors rely more on appreciation. For some it's considered a win if the monthly cashflow is around break even, but some investors bet so heavily on appreciation and rely on the low property taxes that they find having a renter isn't worth the risk. They just want to own something that's going up in value $100,000 every year with minimal hassle.
On top of this, when they go to sell, it will often be through a 1031 exchange where they can sell the property and not have to pay taxes on the appreciation right away as long as they quickly buy another-like property within a short period after. Eventually they will have to pay the capital gains if they ever just want to sell and keep the money, but they've spent years with a negative cashflow (especially if they just let the buildings stay empty) which will help out with those capital gains taxes.
This is similar to arguing that people shouldn't even be allowed to own land in the first place. We're all just renting from the government and the government should ratchet up the price so that only the richest and most successful people should get to live in the nice desirable areas.
>When you have an asset you get taxed on its value.
I mean, no? We tax different assets in different ways. If you buy a bunch of stocks you don't have to pay tax on it as its value changes month by month or year by year. You only pay when you liquidate it. We can choose how to tax things for different reasons.
What does this statement actually mean for an individual family? Most working class people cannot just demand more money from their employer. So really it just means "get ready to move out and find a new home", which means uprooting your family, commuting further, finding new schools for your kids to attend, potentially worse ones because its probably a cheaper/poorer neighborhood.
>It's also not clear that being forced to sell over high property tax bills is a bad thing
I just plain old disagree with this; my family would have been forced to move because some rich people would have displaced my working class parents, and it honestly sounds like you consider that a good thing, "well they're poorer so they don't deserve to live in a place where a lot of people want to live" is really what that argument boils down to. Even though they worked hard and saved for many years to afford to buy that place. There are very few condos in the neighborhood I grew up in, and the ones that exist are on the edge of the city in much less desirable areas. I would have had to go to a different (worse) school, lose touch with my friends and generally have much less space than I had as well. Your argument only makes sense if you consider people as wanting to live somewhere purely as a financial enterprise rather than a good safe place to raise a family.
If you eliminated the zoning restrictions and power of the NIMBYs then this would allow for the best of both worlds. We could continue to allow a tax rate for working class people, but also allow the development of more profitable/denser units. As people naturally move around, companies could buy the houses and redevelop them into denser units.
The local government will get the money in a different way so you end up paying twice.
>The local government will get the money in a different way
This is a feature IMO, the government can get that tax revenue but in a more fair way e.g. income taxes that are skewed higher towards the ultra wealthy rather than just kicking people out of their homes, where they probably do want to live.
yeah right... this is all 'the republicans' fault. Say what you will about conservatives, but a party that has held majority since the nineties (and more recently a supermajority) has no one but themselves to blame.
Obviously prop 13 / single family zoning has had an effect on housing, along with taxes, onerous building codes and environmental regulation. However, as long the Homeless Industrial Complex controls the narrative with well-intention voters, and gets to call the shots on where / how to 'address' to problem, the problem of pervasive homelessness is not going to be fixed. We've simply created the wrong set of incentives.
A sham? Unless you argue that most people are buying property under false pretenses, especially given the public nature of property taxes, the expectation would be that those purchasing land do so understanding the existence of on-going financial duties.
As to why land is potentially materially different from other assets:
1. Land is only yours while some party will coerce all other parties to respect your claim. The cost of that infrastructure is on-going.
2. Most land might accrue some small value because of the actions of the land owner, but mostly accrues in value because of externalities from the action of others. Taxing those externalities so that the commons benefits rather than the individual seems at least equally as just as the current model where the wealth generated by collective action is overwhelmingly privatized. Reasonable arguments can be made for deferring that tax until sale or equivalent, rather than on a continuous basis.
3. In terms of being inexorably linked to specific governments, land is much more akin to citizenship and / or residency than fungible widgets. Citizenship and residence also frequently incurs ongoing tax duties.
4. Other scarce asset classes have been controlled in the past: https://en.wikipedia.org/wiki/Executive_Order_6102
You're right, everyone knows it's a sham, that doesn't make it NOT a sham.
City infrastructure needs constant maintnence, city services need to be constantly funded. And local schools (where most property tax in much of the USA goes) keep going even after your house is built (suffice it to say, areas with the best schools have the highest property taxes).
> And why is the amount you need to pay pegged to what other people in the neighborhood around you are doing?
The more developed your property is, the more city services you consume. And this is ignoring the speculation deterrence that property tax enforces, which is very important also.
https://www.latimes.com/archives/la-xpm-2003-jun-30-me-prope...
I'm convinced most government agencies cannot manage this type construction in an affordable way, including my home county of Sonoma where we are spending $250k - $350k per homeless person to house them in refurbished hotel rooms (remodeling, not new construction).
I don't know what the solution is, but I have become convinced that local governments cannot build their way out of this. We have to come up with something better.
Land cost was $500k in 2018, but its 3 acres, had existing utilities, and I can re-build another existing structure on the property what was red-tagged and will be 2 bed 2 bath, ~1800sq/ft primary dwelling. The one currently under construction is technically the accessory dwelling unit, but it really is a stand-alone house.
With just the new ADU, we will be in ~$850k but appraised value is expected to be $1-1.3m. When we spend another $350-$400k re-building the primary dwelling, it will probably be worth $1.6-$2m with ability to rent one unit.
The metric I care most about is my sq/ft build cost which will be around $300/ft. This is incredibly low for a custom home which ranges in the $400-650 ft range for a decent quality custom and $1000+ ft for higher-end residences.
The sqft size of units in LA is not mentioned, but based on the video, they are between 400-600 ft. $837k / 600 sqft = $1395 ft. Wayyyyyyy too high for "affordable" housing.
> It's the same thing that happens in social media, trolls and bots pollute the information so it's impossible for most people to tell the truth apart from fiction.
Isn't that 'real free market', unregulated?
As someone who has spent years in a low income situation due to health issues that hasn't been my experience. At least up until the pandemic food as well as many manufactured products, which are relatively unregulated, were quite affordable even for the lowest incomes. There's a large enough market of low income people so that companies like Walmart, dollar stores and even Amazon can make money serving that market.
Housing and medical care, on the other hand, are completely unaffordable for a significant fraction of the population without government assistance.
> At least up until the pandemic food as well as many manufactured products, which are relatively unregulated, were quite affordable even for the lowest incomes.
The data shows otherwise, that many people haven't been able to afford food (think of school lunch programs) and especially quality food. Also, large 'food deserts' exists in poor communities where food is unavailable beyond very expensive small stores.
> There's a large enough market of low income people so that companies like Walmart, dollar stores and even Amazon can make money serving that market.
I've thought that, but it turns out that they don't often don't serve low-income people. I've also spent plenty of time in low income areas, and retail options are very slim. I've been in the best grocery store in the neighborhood, where fruit scales were rusty, and it stunk of something rotting. It was packed.
So what I am saying does not contradict the claim that many people can't afford enough food, since most of their money is going to rent.
So arguably housing fits into the monopoly bucket, especially if you lean towards a land value tax.
Safety and a monopoly on force most would argue are the domains of government.
But the rest of your examples seem fine to be market based, though the devil is in the detail.
I agree, but you are omitting two other cases: Equity and availability.
Again, markets are built to serve those who provide the highest profit. That's fine for iPhones, but not for health, safety, education, basic food, and basic shelter. Everyone should have those, regardless of how much profit they provide.
Markets also depend on 'creative destruction', businesses fail and their goods and services go away. That can't happen with healthcare, food, education, safety, and shelter. There are 'food deserts' in poor communities, where people can't get anything but expensive corner-store groceries. We can't have a safety, education, shelter, or healthcare desert (or a food desert).
I'll reiterate for safety and land I think these things fail for the reason I mentioned originally.
Healthcare I could certainly see working in a mostly market led way, I'm personally from the UK (So extra heretical to say)
Food is a bad example, as availability is ultra high. Fresh produce is scarce in areas due to low demand. Low demand leads to higher prices.
Not if the vendor goes out of business.
> Food is a bad example, as availability is ultra high. Fresh produce is scarce in areas due to low demand. Low demand leads to higher prices.
That's not the case, based on the reports I've seen. What have you seen that supports that?
If a super market goes out of business there are several others though perhaps further away.
The idea of "Food deserts" is around the poor availability of affordable "nutritious" food. There is plenty of food in these food deserts with many different food providers.
So it's not about general food availability, it's around what food is stocked. Which food are stocked is almost completely determined by supply and demand. We know the supply exists, so if there a lack of stock it's due to demand.
What other explanation is there ? A shadowy cabal making sure the poor can't access certain foods ?
A ludicrous suggestion.
The "free market" optimizes for one single thing: Profit.
Providing housing for homeless people is not profitable, and so a free market would never do it.
> Constant government intervention in the housing market, the stock market, education, healthcare, and everything else under the sun has led us to where we are today.
Health care is in the same boat. If a poor person gets cancer, the free market would gladly let them die. They wouldn't be able to pay for treatment.
Education is similar. If the government didn't provide schools, a considerable portion of children would go uneducated.
So the obvious question is how you balance those negative effects against the positive. This is where regulations and governments have to step in, though that certain has it's own massive issues.
Health care has a lot of unsolved problems, from my perspective no group is actually doing well (Just varying shades of bad, I'm from the UK). There are so many ailments that can't currently be treated well (Despite having spent decades studying them, though that seems to be a systematic failure of academia)
But it also leads to a poorer customer experience (long hold times as call centers are understaffed, cheap and flimsy materials, I could go on...), exploitative dark patterns, rent-seeking, and more.
And then there's the fact that corporations would happily dump toxic waste into rivers to save a few dollars if the EPA didn't exist to stop them. They will gladly burn the atmosphere in order to show growth on their quarterly report.
> So the obvious question is how you balance those negative effects against the positive. This is where regulations and governments have to step in, though that certain has it's own massive issues.
Agreed. Corporations can't be free to do whatever they want, but finding that happy medium of reining them in without stifling them is hard.
It doesn't help that our politicians are for sale. Corruption runs rampant.
The government would do better if it only acted as a buyer. "We will pay for any new units that are constructed that meet these qualifications" and let the thousands of independent developers and contractors do what they do.
How in the world? I got multiple bids in Seattle to add a 200sqft dormer, 125k was the lowest bid I got.
A single bathroom around here costs a minimum of 15K to build, just to get people out to install the basics.
Without knowing much about your project, a dormer add can get expensive because you are modifying the structural envelope of the home. although the new sq footage may be small, the building process is involved and risk is high because your modifying roof-lines, bearing walls etc. A dormer addition is not simple.
If we're actually going to do something substantial about homelessness, we need to focus on abundance, not scarcity, and supply-side progressivism: https://www.nytimes.com/2021/09/19/opinion/supply-side-progr...
If you are housing actual homeless, you MUST offer supportive services on-site or have some other types of supervision or these units are going to be trashed.
You MUST budget for a lot of ongoing costs.
I'd say $800K+ per unit + maybe $100K+/year for supportive services / maintenance etc?
One question is, would that 800K + $100K/year go further somewhere else?
Where is that money going now? Who gets this money now and why would they give it up?
Government stole it from tax payers to then act as a poorly run pseudo-charity, which is actually just a way for them to skim cream like mobsters while pretending to "do good." The foolish lap this up and immediately get defensive at anyone who proposes that, maybe, just maybe, politicians are lying to them and using their good nature against them. Maybe.
So, we get a consistently declining standard of living for everyone, decaying urban centers, and increasing numbers of homeless people, or, the truth: real lives that need real help being used as political chess pieces by a cadre of narcissists who are master manipulators.
Actually, we agreed that it was a good idea and organized our government to carry it out, and we broadly support it.
> The foolish
Commenters and citizens who disagree with you are "foolish"? People can't possibly disagree with you for legitimate reasons? Is your opinion the standard by which we measure legitimacy? Lucky I met you!
> decaying urban centers
Urban centers have been doing well overall, absent the pandemic, though certainly, as with everywhere, there are problems.
Which programs do you mean? There are many watchdog agencies in and outside government, including the press, and including right here right now.
> Government officials by and large don't care how much they spend and don't question when stuff like this happens
A broad statement, but what is it based on? There are honest and dishonest people in government, just like the people on my block.
There's a price to pay for living in an organized civil society, because people have learned the hard way that having an organized, civil society is better for their families and life conditions.
14% of the units build exceeded $700,000 each, and one project in pre-development is estimated to cost almost $837,000 per unit.
I ask because the housing department housing in SF is mind boggling expensive just to operate even after they did the build piece especially if you do all in costs vs revenue (ie, tax base is low -> govt owned often exempt and service needs are high from maintenance, policing, health response etc).
That's not what it says: It say only 14% cost 700K+ (i.e., 86% cost less than 700K), and one project might cost 837K. In other words, the 837K are a small number of outliers (unless it's a really big project, of course) and based on a projection.
> Is that all inclusive of all necessary services
Yes, I agree that should also be considered, and I think those services are essential. However, it's important to keep down construction costs too.
We are paying extra to correct years of bad zoning and healthcare policies. This is the price of bad city planning and expensive non-universal healthcare.
I wonder if UBI would be more cost efficient, especially for people who are not yet homeless but in danger of becoming homeless.
Still, I think getting people housing is the right general approach.
It's perhaps possible that this isn't a deliberate display of incompetence, but a set of systemic problems that make housing in California very expensive to build.
Sometimes this is masked, by regular maintenance, retrofits, and repairs. But if left to pot, a house is eventually worthless, then even a cost, for the new owner has to tear it down and rebuild.
Land appreciates. A house costs.
I have had a few friends who were in that position because they had to move but couldnt sell their houses (2008-2014 era roughly). They would have been better off taking the loss on leaving it empty after taking out loans to undo the damage done.
Though the article doesn't actually say anything about average costs or cost per type of unit, and since this is a professional news outlet they don't link their sources...
You would think so! Unfortunately, this is not the case. In SF, some of the systemic issues are planning processes voted into the city charter decades ago, so the city doesn't get to bypass them. Some of the larger issues, such as land price and CEQA, are state-wide issues that cities can't avoid.
But I have trouble thinking that’s an efficient use of funds.
That’s a ridiculous sum of money for one unit of housing any way you look at it.
I’m glad they’re housing the homeless, but are you telling me that there’s no way to build this cheaper?
I left LA for numerous reasons, absolutely unaffordable housing was one of them. Most people are doing extremely poorly in Los Angeles.
It's the only city where you both have to pay an insane amount of rent, and own a car. The bare minimum survive in LA is probably around 80 k. But the median income there is only around 70k.
Of the people I was meeting, almost no one had a job or any real interest in working. Very bad things tend to happen if you're around people like that.
I moved to Chicago after being disenchanted with LA, and I met an amazing partner with a great career . I only meet people in real life after a particularly scary app experience. Like I said, bad things happen if you're around people who don't work. Not that you need to make too much in Chicago to live.
A two bedroom in Chicago will run you from 1300 to 1600. You don't need a car since it has one of the best public transit systems in America, and a monthly Metro passes about a hundred bucks.
So let's say you want to split a two-bedroom with a friend, for your transportation and housing. Housing you're only spending about $1,000 a month.
Compared to LA where that same two bedroom cost $2,600, and you need to own a car. Most people just run out and finance something. So once you make your payments and your insurance, and your maintenance and your gas, you're easily spending between $700 to $900 on transportation alone.
Base cost of living in Chicago, 1k + a few hundred for food , utilities and fun. In LA your taking 2100$ + that same few hundred.
Plus I got a pretty significant raise when I moved to Chicago! No rational person should stay in Los Angeles !
'But my family's here.' Most of my family ended up leaving because they just can't afford to it anymore. Why be the last person off of a sinking ship.
The time to fix California's affordable housing crisis was decades ago before Prop 13 was passed. Too late now
There may have been a possibility prior to the 90s before it was widely known about and the world’s population was much smaller, but it has been a few decades since it has been obvious that demand for coastal California is insatiable, and obviously the people living there are not going to want to share it with everyone in the world that wants to live there.
It's sad because this used to be the place to be (one of them, I mean). At least that's what we wanted to believe.
I'm still in LA because I happen to be paying a ridiculously low monthly rent for a 4 bedroom house in an area where I have friends and family (yeah... I know). As soon as that rent shoots up, LA will have to be in my rear view mirror. Probably California all together.
Some are probably gonna downvote me, but guess what, I got highly downvoted back in ~2015 when I was pointing out the decline of San Francisco; now it's issues are commonly accepted. You can't explain away the need for poop patrols, the garbage overflowing in the streets, or the fentanyl zombies. Eventually people won't be able to deny that LA is suffering serious socio-economic issues, just as how few will apologize for SF anymore.
Believe it or not, I want these places to succeed. That's why I openly criticize them. Cities in California are my home.
What's especially weird is that this city is so flat, the weather is so decent, and the distances are so small, you could easily make Denver a paradise for walking and biking. But instead we just keep doubling down on cars for getting around the city, street parking, and unsustainable car suburbs.
Can you say more about this?
How typical is that? where is it? how long is it expected to last? what other features does it have? Does that include one-time architecting costs that make future developments cheaper?
> HHH project includes 8,091 housing units — most with connected services for mental health and substance abuse treatment
so how much of the $800k goes to the mental health etc services? the paper apparently read the audit, but doesn't bother going into any detail about this.
Is it clear that any of it is meant for those services, or could they all be extra costs above and beyond it?
It's not like you _must_ go there, but to expect tax payers to build homes where it's far too expensive to build...
It's like sending the same people to a fancy restaurant. In what way does it make sense?
To me, government intervention caused this, so maybe they should just peel back their building restrictions?
https://en.wikipedia.org/wiki/Public_choice
That is precisely why these things happen.
But the mechanism would be the contract itself. It comes with requirements. Make high quality and low cost among the requirements. Actually hold the contractors to them. Require open competition for the bids.
So why does this not work? I'm in defense contracting, not building, but at least in that realm, there isn't meaningful competition and no credible bill comes in low for a variety of reasons, but the biggest I can think of is the security and compliance requirements are so high that they represent a minimum regulatory hurdle very few contractors can clear, no matter how good and/or cheap their work might be, and when smaller operations emerge that do a good job and threaten the entrenched incumbents, the existing oligopoly just buys them.
What can be done about that is the FTC not approving so many mergers and acquisitions on the part of giant contractors, and automating and/or streamlining some of the security hurdles. I don't think removing them is an option, since critical defense systems will be under constant attack by nation state actors and need to hold up under conditions of persistent warfare.
https://commonsenseinstituteco.org/the-economic-footprint-of...
But drilling down finds 10% of that is direct budgeted other other 90% indirect like the cost of police sweeps, mental health, etc.
The idea that the only solution to homelessness in LA is to build $500-800k units is plain pure foolishness.
My ability to see that LA is not actually looking for a solution, leads me to want to capture some of the cash they are foolishly setting fire to in order to prolong their problem.
Also, my socioeconomic status is such that I could really use a half-mil, tbh.
The title says that the city "is spending" an amount, which suggests that this is a routine cost, leaving the reader of the headline to fill in the blanks 'oh, is spending annually?'.
But the tense in the article itself is different:
> Most of the units are studios or one-bedroom apartments. The audit found 14% of the units build exceeded $700,000 each, and one project in pre-development is estimated to cost almost $837,000 per unit.
"Is spending" != 'expected to spend'.
The former has the unstated implication that this is a recurring cost, or at least that this is a cost the city is in the process of spending, whereas the article explains that this is only a projected cost.
We're spending around $4m (USD 2.87m) per person to house refugees in Nauru offshore detention. Because reasons.
Persionally, I'd rather let the formally recognised refugees come to Australia and pay them each $100k a year for a savings of 3.9m/year/person. Bargain!
Someone is making a lot of money...
The secondary aspect of this is that these people will fight tooth and nail to ensure that crappy things don't exist but will put up some token "We should have X" to get the good thing built. Progressives...
So now we have to pay down our tech debt. As you can see from the reaction to programs like this, we're more likely to simply sink escalating maintenance costs into the existing system instead.
They're homeless because they're mentally ill, not because of the tautological nonsense of "they're homeless because they haven't a home". The mental illness is exceeded only by the stupidity of the policies.
Instead of the singular focus on establishing state-paid housing, _requiring_ treatment for the chronically homeless is far overdue. The option of shooting-up and camping on the streets clearly has not worked in any way -- show me the data for how that helps anybody.
I don't know if there are "one time" or "one shot" solutions. Certainly there are some unhoused that can be helped by that but I'm under the impression that most have issues that go substantially beyond a one time check or a pill or a one time treatment.
Some but not all. There are many disparate causes of homelessness and mental illness is just one of them.
> _requiring_ treatment for the chronically homeless
That is hard to implement in a free country.
The past 2 years proves that entirely untrue.
You can demand an end to "mandates" and public health emergencies, but you must then applaud when those things end.
> Free country
That choice is a radio button, not a checkbox. Can't have both.
sure its such a difficult proposition to implement in a free country. i mean i am in india and every poor household gets basically free rations every month, free healthcare in government hospitals and now even a medical insurance for treatments in private run hospitals at no cost. sure that costs a shit tonne of money but what else to do with the tax collections? spending on weapons is one but other than that, yeah.
i have to ask, why is construction costs so outrageous in the US? here, labor costs ~$6-8/day, on an average the cost of construction per Sqft is around inr 2000-3500 or $25-$44 /sqft. there are resources that say usa average costs around $100-$200.
that is a lot confusing because the article mentions $837000/150=5580 sqft. is that a good size home for homeless?
Who said anything about communism? I was talking about forcing people to undergo mental health treatment against their will simply because they can't afford a place to live.
Almost all people you see on the streets end up there after burning all bridges in their personal lives because of their illness. You may not be aware of this but there are in fact a lot of options in existence for housing such people, it doesn't work because they are ill and without treatment (forceful), it is hopeless trying to help them.
1. https://www.usnews.com/news/politics/articles/2021-08-07/men...
Back in June or July 2021, the governor invited the homeless to come to California with promises of free housing during a press tour.
I'm currently owner building a house. It's going to end up costing 100k and I'm doing this paycheck to paycheck.
Doing it because I can't afford a house. I'm too old to have a 30 year mortgage.
Is LA willing to send me 1/8 of that cost to house my wife and I? And we'll do it ourselves.
Can the homeless build their own houses? Are these people just going to be getting hand-outs forever?
Why don't they just give Habitat money? This is insanity. I hope the LA administrators that started this mess are fired beyond fired.
What is the average cost? 800,000 per unit is high. But that appears to be the upper end of the bell curve.
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Thanks, I guess?
Is there a proportion of homelessness that is to some extent - although I hesitate to use this word - "voluntary"? Is there really nowhere else to go other than to sleep on the streets?
So a developer wants to build a hundred basic units (350 square feet/30 square metres) in a block and the cost is costing eighty million dollars?
We can do much better. Where are the factories building the prefabricated units to build apartments from?
I have a friend from East Germany who's parents grew up in the Stalinist apartments. They solved this exact problem in the early 1950s. What is wrong with LA?
And not to pick on LA. This is a problem throughout the West as far as I can tell. What is wrong with us? Why can we not efficiently build housing?
There are a lot of hands to be filled as money goes from the "house the homeless" fund to the actual projects.