CommentsCORRUPTION WATCH-One would think that people living in the nation’s wealthiest state with a gross state product of $2.746 trillion would be upset that they are the nation’s poorest people. Angelenos seem oblivious.
Poverty is more than one’s dollar income. It is how much each dollar will buy. In a state where costs are significantly higher, the residents are poorer than people who live in lower costs states.
California’s stratospheric housing costs is the cause of our high poverty rate. People naively believe that poverty means being homeless or living in a squalid apartment. Los Angeles has a unique type of poverty – the Poor-Wealthy.
Who Are the Poor-Wealthy?
When they drive down from the Hollywood Hills and see the homeless on Hollywood Boulevard, many Angelenos are deceived into thinking that they are not similar victims. In LA, one family can be wealthy while the family in a comparable home next door can be Poor-Wealthy. Here’s how that works: If you bought your home more than 25 years ago, chances are its value has doubled or tripled while your mortgage has remained low, but if you purchased a home within the last three to five years, you are being ripped off royally to the point that you should realize you are part of the Poor-Wealthy. (Note: people who have yet to buy in LA do not vote here, and people who bought here decades ago do vote.)
Why Pay $1.5M for a Home Worth $400K?
Corruptionism has driven the price of residential property in Los Angeles far above its value as Living Space. If the City had disallowed up-zoning, including variances, exceptions etc., then developers would not have paid above market price for residential properties. Due to the rigged vote trading system at City Hall, every project is unanimously approved. Thus, developers know that they can build whatever they want in order to get a high return. These excessive purchase prices go into the future comps and anyone who wants to buy similar property must pay the new going rate. After a while, the City Hall corruption that has allowed so many developers to construct so much excessive density has caused overall residential values to become exorbitant. A family who wants to live in a house now ends up paying Developer Value.
As a result of paying too much for their home, a family’s mortgage can be $1 million too high. Those mortgage payments seriously limit a family’s options. When 45%+ of income goes into the home, the family must cut corners elsewhere. The people living north of Franklin Avenue should not compare themselves to street people but to families in comfortable homes in Austin Texas or Nashville.
Bad Schools Contribute to the Poor-Wealthy
Because most LAUSD schools are substandard, many families feel the need to pay for private school. Good education which is free in other cities costs a fortune in LA. In 2015, private elementary school annual tuition ranged from $6,000 to over $31,300 and private high school annual tuition was between $14,000 to $33,000. Also, for private schools, tuition is just the base cost.
Carrying a mortgage which can be between $500,000 and $1,000,000 higher than it should be -- and paying up to $100,000 per year for three kids in private school – results in too many Angelenos becoming members of the Poor-Wealthy.
Corruptionism is in the Air
The City has not issued a new Hollywood Plan update after Judge Goodman threw it out in January 2014 for using falsified data. Nonetheless, the City is touting the same bogus data and myths to justify the Wilshire Community Plan. This is an example of how corruptionism operates.
Let’s simplify the LA real estate scam. A few super-wealthy people have purchased land in what are called TODs, Transit Oriented Districts. These super-wealthy people pay off the mayor and city council to approve however much density they desire. Higher density means higher land values which then inflates profits.
Land owners in core areas and along narrow TOD strips, e.g. subway lines, concentrate density on their few parcels of land. City Hall tells us that by heaping dense projects in DTLA or in TODs, we will all benefit. Instead, this drives the destruction of rent-controlled apartments, increases homelessness, increases traffic congestion, over-burdens utilities and drives out Family Millennials. The City’s bogus claptrap has taken LA from the most desirable urban area in 2000 to the least desirable urban area as of 2015.
Density Increases Housing Prices
Density increases housing prices because density increases land prices. A 100 x 100 square foot lot with 20 stories is worth more than the same lot with a single-family dwelling. The City’s New Urbanism treats the thousands of square miles surrounding core areas as if they do not exist and confines high rise office development to the TODs. This planning policy basically steals land value from landowners in the Valleys and transfers that value to the super wealthy landowners in DTLA, Century City and in TODs.
If Los Angeles had expanded according to supply and demand, offices would have followed the people as they moved outward. No one demands to commute from Simi Valley to DTLA. But we know that either crooks or knaves planned LA by looking at morning rush hour. The traffic should be roughly equal in all directions. As many people should be northbound over the Cahuenga Pass as are coming south. Modest office complexes should be spread throughout the area. A fifth grader can quickly figure out what happens when the offices are crowded towards the core.
This is Not Supply and Demand
Bunker Hill was not built due to supply and demand. It was centralized planning with tax dollars which constructed Bunker Hill after people’s supply and demand choices had abandoned Bunker Hill for offices. People wanted offices in the Valleys near their homes, but the crooks who captured City Hall wanted high rises on their tiny plots of land in central city.
The Backlash
As Wendell Cox reports in his piece in New Geography on the “Dispersed City,” people opt out of the New Urbanism by leaving the crowded cores.
Our even smarter Angelenos simply move to a less corrupt town.
(Richard Lee Abrams is a Los Angeles attorney and a CityWatch contributor. He can be reached at: [email protected]. Abrams’ views are his own and do not necessarily reflect the views of CityWatch.) Edited for CityWatch by Linda Abrams.
