A number of bills in the legislature would attempt to “solve” the state’s housing challenges by overriding local municipal zoning ordinances and statutorily allowing developers to build up to Sacramento-mandated levels of density. The most notable of these bills is SB50, which has no provisions to make any of the housing built affordable, but espouses a “trickle-down” theory which suggests that market-rate (i.e. luxury) housing will “filter” down to create more affordable housing.
This “theory” not only has its foundations in Reaganomics, but is both opportunistic and false. Building more Porsches won’t bring down the price of Priuses. And however you try to frame it, upzoning is a wealth transfer from the public to the private sector. Mind you, on principle I oppose preemptive statutory upzoning that comes from either Sacramento or Washington. I believe that each community has its own unique DNA and, especially in major metropolitan areas, it is important for us to be able to make lifestyle choices which give us the ability create a sense of place, a sense of home and a sense of belonging, all of which are best created within individual communities. In an increasingly cold, impersonal and faceless world, Community is more important than ever.
Statutory upzoning as proposed by Sacramento politicians, taking a number of chapters from the Trump Administration’s playbook, is the urban planning version of turning copper into platinum. Plain and simple, it’s a wealth transfer from the public to the private sector; in most cases that’s probably exactly the point. Strengthening communities made up of real, live people is not the ultimate goal of these policies, but rather the creation of corporate wealth on the backs of the larger community. Real estate interests and developers donate a lot of money to the political campaigns of Sacramento politicians and in our plutocracy, profits often outweigh people.
Nonetheless, politicians are crafty, and, at least in California, they understand that instituting policies which amount to corporate welfare don’t play well among the public. So they need to use that most effective of political tools: spin. The “public” goal of these developer giveaways is, at least ostensibly, to create affordable housing and thereby ultimately to serve the public good. But for all those California politicians who don’t want to wear their plutocratic tendencies on their sleeves and who want to envelope themselves in the mantle of progressivism, the true-believers in blanket upzoning should clearly support ways to limit the wealth transfer and to capture the value that their proposed upzoning creates.
One solution would be to introduce a progressive upzoning tax. Such a tax would work in a similar fashion to the way a progressive income tax is structured: the more expensive a luxury condo or apartment created through statutory upzoing is, the higher the tax rate would be.
Public services and infrastructure need to be funded (not to mention public employee pensions – but that’s another story); creating more development and adding more people to the mix clearly leads to increased needs. In fact, numerous nexus studies have shown that increases in market rate and luxury housing actually exacerbate the need for more affordable housing — a simply logical conclusion, confirmed by data.
Progressive upzoning taxes would not only help to capture the value created by Sacramento policies but would also provide local communities the resources to address the inevitable impacts. With more people comes a need for more housing, transportation, infrastructure, schools, childcare, green space, etc.
A progressive upzoning tax could be implemented in a number of ways. It could be levied on the developer directly, but since Sacramento and the Trump Administration seem more concerned with developer profits than affordable housing (including self-styled progressives like Senator Nancy Skinner, who authored SB330 at the behest of developers), it would be more likely that such a charge should be levied on the well-heeled buyers or end-users.
The reasoning is also fairly simple: someone who can afford a $25 million luxury condominium or $50,000 in monthly rent for a luxury apartment can also afford to pay an additional 40% in upzoning taxes. This is simply another tool to address growing income inequality, which is one of the root causes of our state’s housing affordability challenges.
The sliding scale of an upzoning tax would clearly and obviously not apply to affordable housing.
Studies and surveys repeatedly and continually show that the level of trust of citizens for their local communities and locally elected officials is much greater than their trust for Sacramento or Washington politicians. It isn’t even close. And it’s understandable. Local communities are where we live and we can participate in our communities in a way that Sacramento and Washington don’t allow. When done right, local government is inherently more transparent and democratic than state or federal government, which is yet another argument for why subsidiarity should be a guiding principle within our democracy.
Progressive upzoning taxes would make the best out of a bad, preemptive situation in which Sacramento politicians show their disdain for local communities across the state. They would at least allow communities to capture some of the value created by Sacramento’s peremptory wealth transfer and put those funds to better use within our diverse and unique communities, to serve the residents and to alleviate the impacts of bad policies from Sacramento and Washington.
And what of the self-styled liberals who would oppose such a truly progressive way of mitigating this unprecedented wealth transfer and of capturing value for the public? They simply out themselves as what they really are: Trumpian corporate shills who are more concerned with Wall Street profits than anything else.
This piece first appeared on Fox and Hounds Daily.
John Mirisch has served on the Beverly Hills City Council since 2009. He is currently serving his third term as the city’s mayor.