Critics Respond to Proposed Property Sales Tax to Fund Homeless Housing in Los Angeles

LOS ANGELES—A group of labor unions and affordable housing advocates have proposed an initiative to appear on the November 2022 ballot that would tax property sales of more than $5 million in Los Angeles to fund permanent supportive housing units for the city’s homeless population.

The local initiative—United to House L.A.—would implement a 4 percent tax on property sales of more than $5 million and 5.5 percent on sales of more than $10 million. The Alliance for Community Transit-Los Angeles (ACT-LA) is leading the effort, alongside organizations such as IBEW Local 11, Venice Community Housing, Move LA, and Renters’ Right to Counsel.

Documents for the measure were filed on Dec. 16, 2021.

The idea behind the measure, according to ACT-LA, is to have the city’s elite pay their fair share to help solve the homelessness crisis through the building of more affordable housing. Advocates say more supportive and affordable housing units will help get people off the streets.

“This housing and homelessness crisis is the number one issue to voters, and in response not-for-profit neighborhood organizations, labor unions, and community members who live in Los Angeles have come together, with the assistance of local policy experts–not politicians–to support a ballot initiative that will ask millionaires and billionaires to pay their fair share to address this crisis,” Laura Raymond, director of ACT-LA, told The Epoch Times in an emailed statement.

She said the measure is different from Proposition HHH—a $1.2 billion bond voters approved in 2016—in that it will uniquely “invest in new, innovative solutions to create housing more quickly and at a lower cost than what we’ve seen before.”

“It will also provide immediate support to those at risk of losing their homes and provide a range of housing opportunities to those experiencing homelessness,” Raymond said.

Others are more skeptical of the tax, which may burden an already tax-heavy state recovering from the COVID-19 pandemic. Howard Jarvis Taxpayers Association President Jon Coupal told The Epoch Times regarding the initiative that “it’d be bad for the economy.”

“The more money they throw toward the homelessness issue, the worse it gets,” Coupal said. “There are really good ways to deal with homelessness, and California doesn’t do any of those things.”

Soledad Ursua, a Venice community officer and landlord, has been a vocal critic of her district’s handling of the homelessness crisis. She said this proposed tax would “end up really hurting commercial or mixed-use properties.”

“In NYC, there is a millionaire’s tax of 1 percent on anything over $1 million,” Urusa told The Epoch Times. “It’s never been adjusted for inflation, and most places are over a million. You will see that it’s not worth selling a place over that, and why you see so many apartments going for $999,000. When you go over that amount, you limit the number of potential buyers because the buyer will have to pay that tax.”

Researchers have found that many Californians are already leaving the state due to high taxes and an increased cost of living. According to the Los Angeles Homeless Services Authority, California cut affordable housing investments from $1 billion to zero in 2011, and the pandemic recently exacerbated rising housing costs and job losses.

The Public Policy Institute of California found that California’s new housing hasn’t kept up with its growing population in a December 2021 report. According to researchers, California has added 3.2 times more people than housing units over the past decade. There are now 2.93 Californians for every occupied housing unit, behind Utah (3.09), tied with Hawaii (2.93), and higher than the average of all other states (2.53), according to the study.

The new proposed tax would be considered a documentary transfer tax, which means if a property changes ownership or is purchased through a municipality, the buyer would have to pay that tax. Los Angeles already has a transfer tax in place, but it’s lower than what’s being proposed in the United to House L.A. initiative.

And with the homelessness crisis being a critical issue for Los Angeles voters in 2022, 51 percent of voters said they would support a tax increase to support the development of more permanent supportive housing, according to a 2021 poll conducted by the Los Angeles Business Council and Hart Research in cooperation with the Los Angeles Times. The survey interviewed 906 eligible voters living in LA.

Los Angeles County has more than 66,000 homeless individuals on the streets, with 41,000 in the City of Los Angeles alone. Some frustrated residents have pointed to the failures of Proposition HHH, which has only created 347 of its promised 10,000 supportive housing units, according to an independent audit in 2021.

The city and county have opted to fund lower-cost interim housing through the development of Tiny Home villages and low-barrier shelters while permanent supportive housing units are still being built.

Taxes from the proposed initiative would be used to create 26,000 additional homes over the course of 10 years, help nearly 500,000 renters remain in their units annually and acquire various forms of affordable or low-income housing, and fund other supportive housing projects.

Los Angeles also recently allocated millions of dollars in funding to expand homeless housing services in a series of motions approved in November 2021. California Gov. Gavin Newsom’s proposed 2022 budget includes adding an additional $2 billion on top of 2021’s $12 billion in homeless aid funding.