By Rod Wright
We can all agree that housing, particularly affordable housing, is a crisis in California, and Los Angeles in particular.
However, like many well-intentioned propositions, Proposition 10 on the state November ballot could actually make matters worse. The basic problem with housing in Los Angeles is Economics 101, short supply and high demand.
If you take a look at the population of the city of Los Angeles in 1970, it was 2.8 million. Today it is estimated at more than 4 million, an increase of nearly 70 percent.
Housing construction and development hasn’t nearly kept pace with this demand. Moreover, and here I would agree with the proponents of Proposition 10, Wall Street is in large part the primary villain in this crisis, but instead they choose to attack the mom-and-pop rental housing providers and individual homeowners. The majority of rental properties in South Los Angeles are privately owned, not corporate, as implied.
Proposition 10 will not cause or assist a single housing unit to be built. In fact, by limiting the rate of return on investment, it will have the opposite effect, causing fewer units to be built.
Less than two years after passing a rent control ordinance in 1977, the city of Los Angeles amended the law, restricting rent control on units built after 1978 in the city. Why? After passing rent control, the new construction of rental units ground to a halt, particularly units funded with private dollars.
Proposition 10 seeks to repeal the Costa-Hawkins legislation of 1995, which, by the way, I worked on. Costa-Hawkins did three things. It made single-family houses and individual condos totally exempt from rent control. When a tenant moves out of a rent-controlled unit, the rent resets to market rate on the new tenant. Private units built after 1995 are exempt from rent control.
That’s what the proponents of the proposition seek to repeal. So if you are a homeowner, this proposition would take away a protection you currently enjoy. That’s right, the government could dictate how much you could rent your house for, and under what terms.
The proponents of Proposition 10 claim that cities can’t enact rent control laws because of Costa-Hawkins. Several cities, including Beverly Hills and most recently, Los Angeles County, just last month have enacted rent control, so this is just factually wrong.
But we should look at something that every city that has passed rent control saw. Older neighborhoods deteriorate and massive gentrification occurs in communities of color. Look at Harlem, San Francisco and yes, Los Angeles, as examples.
In Los Angeles, the total number of units under rent control has been reduced by more than 50 percent since its inception. Without any incentive to improve or upgrade units, they simply go out of service.
This creates blighted neighborhoods, which exacerbates gentrification. To watch this in real time look no further than Baldwin Village, formerly known as “The Jungle.”
Once a prime rental community, it is now blighted and being rebuilt, with new tenants and, yes, gentrification. Many of the former rental units are being converted to condos, making the rental housing market even more congested.
Finally we need to address this crisis with real solutions. We need more housing, particularly rental housing.
We need to revise some of our local restrictive zoning laws which inhibit development. Some lots in Los Angeles, should be allowed greater density, which will lower costs.
We need to restore some of the tax benefits that have been taken away over the last 40 years, including property tax and interest deductions for more than two units. We must review some of the current environmental regulations which can now be used as weapons to block developments, often having nothing to do with the environment.
We need to review the source of funding for mortgages. We have never replaced the savings and loan institutions that provided most of the mortgages, particularly for African-American homeowners.
The Wall Street attack on those institutions was nothing short of criminal. The state must enforce existing laws that require cities to develop housing or face penalties. The state has not been enforcing the housing element laws already on the books.
Cities have an obligation to address some of these issues and simply elect not to.
After more than 40 years in government and 43 years as a rental property owner and manager, I have been in this fight for some time. We have to encourage African-American young people who can afford to, to purchase homes rather than renting.
Better to be an owner in South Los Angeles than a tenant in Ladera Heights or Leimert Park. We have to teach our children to retain the wealth of family homes, rather than see houses sold at auction in probate court. This is a crisis that will require all hands on deck, local, state and federal governments.
Financial institutions, private large and small rental housing owners and investors all have a role to play. Simply scapegoating property owners is no solution, it will only make matters worse.
Roderick “Rod” Wright is a former state legislator and a rental property owner.