Affordable Land in LA, it's only 40 Miles Away
It’s not often than an op-ed drives UrbanTools jump over a paywall, but the LA Times has done the trick with a very good editorial by three planning professors at UCLA’s Luskin School of Public Affairs; a courageous call to sidestep the usually clumsy tactics to provide affordable housing.
In this case, the editorial rightly decries “linkage fees.” Linkage fees also known as “impact fees” charge developers a set price for anything they build that goes into a fund for affordable housing.
It sounds elegant and to some fans of government over-involvement in markets it “fixes” a problem with another problem: increased cost and red tape to developers and legitimate builders who already face barriers to building. On that, it appears that progressive urbanists and builders can agree.
To be sure, it would be difficult to enact a land value tax under the current nightmare regime of Proposition 13. Prop 13 is a litany of failure that has a ghost army of defenders. Anyone who owned the property before 1976 enjoys a frozen assessed value that is now 40 years old. The same property owners enjoy minuscule increases in tax. When the property is finally sold, the old owner cashes out in the real estate casino, and new purchasers are immediately reassessed.
The result is a slow-motion Mad Max anarchic scenario with wildly varying property tax bills not only citywide, but among homes in a neighborhood. Also, he provision of Prop 13 that freezes assessments has been a windfall for nonresidential properties, as they rarely change hands.
The motivation behind a land value tax is simple: the property tax as used all over the US punishes people for fixing up their homes and investing in businesses; the fix requires reducing or even eliminating property tax on buildings and improvements. This is a pro free-market tax to unleash capitalism and workers.
This call for a land value tax gives Los Angeles an opportunity to use market forces and private investment to be a driver for all sorts of construction so people can live, and work in LA at a reasonable cost. Los Angeles and California desperately need to regrow the middle-class, and help lower income people that want to be stakeholders in the community gain a handhold on the ladder of prosperity.
So if California and LA stopped taxing everything that moves, and start emphasizing taxing the one thing that doesn't move we'll have healthier cities, much less urban sprawl, and less expensive housing or business creation cost. It's a way to deploy what used to be All-American values like fair play and equal opportunity. It is the right thing to do, as well the smart thing to do.