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Sun, Jul

The City Could Have Averted the Homelessness Crisis

LOS ANGELES

THE VIEW FROM HERE - The city has pushed its Big Lie #1 that the lack of construction caused the homeless crisis for one reason. The city depends on construction like a narco drug state depends on opium fields. 

In 1960, LA had 2.5 million people; by 1990, we had added a little more than one million people.  Thus, construction had become a huge business, dumping hundreds of millions of dollars into the LA economy.  During the same time, Hollywood grew from 160,383 ppl to 213,858 ppl: that’s a 33% increase. Then, the influx slowed, then stagnated, and turned into an exodus, but the construction addiction continued. 

Developers Followed the Economic Maxim of Buy Low, Sell High 

In face of a reducing demand for new apartments and condos, developers lowered costs by destroying poor people’s apartments and modest single-family homes. Obviously, poor people’s housing costs the least to buy.  The result was that so many poor people were thrown onto the streets that the traditional homeless agencies could not process them.  

It does not take a math genius to figure that destroying poor people’s homes to construct expensive apartments and condos will create a shortage of low-income housing and a surplus of market rate housing.  Without the destruction of RSO units, LA never would have had a homeless crisis.  The role of government, moreover, is to set the parameters of economic activity to “promote the general welfare” (Preamble US Constitution).  The government outlaws a mugger from sticking a gun in your back and demanding, “Your money or hour life,” but it does not outlaw a developer from tearing down poor people’s homes because he can make a bigger profit.  Far too many powerful people see only their rights and ignore the fact our society was set up to have the rule of law to mutually protect everyone’s inalienable rights and not the Hobbesian state of nature where life was “nasty, brutish and short.”  As the saying goes, the devil is in the details.  The role of the government is to get the details right and that certainly means to stop outrageous lies that benefit the wealthy. 

The City Had Options to Prevent Homelessness 

A corollary to the lie that lack of construction created the homeless crisis was the misrepresentation of the city’s legal inability to expand rent control.  There were other options. 

(1) Since the city council unanimously approved the destruction of any RSO complex that a developer desired, obviously rent control did not prevent homelessness. 

(2) There were and still are non-rent control measures to reduce homelessness.  

The city could have passed an ordinance that any project which replaced a rent controlled complex (RSO) could have only 25% the density of the RSO complex.  Economists have known forever that density increases prices.  Thus, reducing density would act to hold down prices while not shoving the poor onto the streets. 

At the same time, the city could have made low-cost loans to owners of RSO units to update them.  When an owner knows that he cannot sell out to a developer, then improving his property is the best option to make a decent profit.  Instead of helping the Mom and Pop owners of RSO units, the city’s CRA (Community Redevelopment Agency) chose to make loans to developers for large mixed use projects and then forgive the loans.  Also, under the CRA, none of its projects paid property taxes.  Thus, the city taxpayers lost coming and going; the loans were often forgiven, turning into gifts, plus the city received no property tax revenues. The Bunker Hill CRA project got away with about $1 Billion.  The property tax money went to the CRA which then doled it out to the developers for more unneeded projects. Legally, the city did have the power to take CRA money and apply it to fire, police, libraries, streets, etc., but another lie arose.  Garcetti and the city council falsely claimed that they could not divert the CRA funds. 

The Destruction of Poor People’s Homes Became An Economic Necessity 

A developer could honestly argue that he had no choice but to prey on the poor because his competitors would undercut him at sales time since they had saved so much money by destroying poor people’s homes and using CRA money.  When such a situation arises, the government has a duty to protect the helpless while creating a level playing field for others.  That is the essence of antitrust legislation. 

The City Was Not Helpless 

The city council could have passed the ordinance that a new project could have only twenty-five percent (25%) of the density of the destroyed RSO complex or signal family home. That would make poor people’s homes financially unattractive.  Such an ordinance is not rent control, which why the lament “We cannot do anything to due The Costa–Hawkins Rental Housing Act” was bogus. 

How The Vote Trading System Created the Current Nightmare 

Let’s remember the $1.3 Billion the city is spending on homelessness in fiscal year 2023-2024 was caused by the corrupt Vote Trading System at city council.  It makes bribery very lucrative.  A developer has to be nice to only one councilmember.  Without the Vote Trading System, a developer would have to pay off a majority of the city council.  Without the Vote Trading System, bad projects would not have gotten through the city council. CD 13 Councilmember Hugo Soto-Martinez, for example, seems hell bent on destroying the 40 RSO units at 1719-1731 North Whitley Avenue in Hollywood.  Even though the developer already lost in court, CD-13 is letting him start all over . Unless his Eminence Hugo places the motion to destroy the RSO complex on the city council agenda, the project is dead.  Obviously, the grand, self-proclaimed champion the poor has not communicated this to the developer. Forty (40) RSO units house one hundred (100) people (40 units x 2.5 per LA household).  How much money has the city spent to house 100 homeless?  In 2022, it was  $8.7 M per 100 poor people   Of course, the city gives these millions to the developers who caused the homeless crisis. 

One result of such an 25% Ordinance would have been large developers’ leaving Los Angeles, which would have been a good thing. Then, Mom and Pop size contractors would get the business to upgrade existing RSO properties.  With modest financial help from the city, RSO owners could afford to put in window a/c units.  They could afford to rat proof their units. They could afford to install hardier water fixtures that broke less often. 

The city, however, would have to cooperate not only with low interest loans, but with allowing evictions for destruction of property.  Far too many renters have the attitude, “Screw it, I don’t have to pay for it.”  Landlords should be allowed to increase the rent to cover the cost of vandalism or careless destruction of their property without the cost of eviction.  Also, a neutral third party should maintain an on-line website of tenants who have vandalized property.  

The local LA economy would have benefitted when money went into the pockets of local businesses who owned RSO units and local contractors, but not to huge multi-billion dollar corporations. 

The City Still Insanely Allows Destruction of RSO Units 

It is irrational for Karen Bass to talk about getting the homeless off the streets while she allows RSO units to be destroyed.

(Richard Lee Abrams has been an attorney, a Realtor and community relations consultant as well as a CityWatch contributor.  You may email him at [email protected])