☆ Former Palo Alto Mayor: Prop 5 will increase cost of living, tax people out of their homes (3/3)
Prop 5 would make it easier for local taxes and regional bonds like RM4 to pass in the future, by reducing the threshold for approval from two-thirds to 55%. In Part 3 of this exclusive Opp Now series, past mayor Lydia Kou warns that voters will lose their leverage—surrendering it to wasteful, out-of-touch Sacramento pols—if they choose to set a lower bar for approval. With pressure to meet the state’s "impossible" housing need assessment, bonds that don't even target affordability could require property owners to subsidize people who make more than them.
Opportunity Now: What do you think about Prop 5, which will reduce the threshold for approving regional bonds like RM4 in the future?
Lydia Kou: People should think about what it means to go from two-thirds, or 66.67%, voter threshold down to 55% approval for local and regional bonds and taxes.
In my opinion, don't give away voters’ leverage by setting such a low bar that will potentially have impacts. It will increase one's cost of living, it will create generational debt, and it will cause hardships and even homelessness.
Prop 5's ballot measure statement states this will apply to "affordable" housing, but the word "affordable" has been bastardized, so beware.
Additionally, Prop 5 applies to infrastructure; but, again, that word is so general and broad that it can mean almost anything, the cost of which gets passed on to taxpayers.
Prop 5’s proponents say, “This isn’t a new tax." That’s actually misleading. Prop 5 will result in many more taxes because it lowers the approval threshold and will make it easier to pass taxes and bonds, thus transferring the financial burden to taxpayers.
The state legislators overspent the state's budget, causing a huge deficit, and are now shifting the burden to the people to make up the deficit for more of their wasteful spending.
ON: How could Prop 5 impact homeowners in particular?
LK: If passed, it makes it easier for the enactment of local and regional taxes and bonds.
These are special assessments that increase a homeowners' annual property tax bill. This creates generational debt, and could cause those with limited income (like the retired) to fall behind on paying property taxes and lose their homes to foreclosure, thus making a person homeless.
Prop 5 undermines people with blatant deceptive language. It pulls the wool over voters' eyes. These legislators are enacting legislation to limit the power of the people and increase their cost of living.
ON: Earlier, you mentioned that RM4 would have depended on Prop 5 to pass. You also talked about how you believe the Regional Housing Needs Assessment (RHNA) is impossible to meet. But wouldn’t RM4 have helped cities and counties meet their housing need?
LK: RM4's money does not cover the entire cost to build per unit. It costs over $1 million to build a unit, be it affordable or market, which means cities would be only part of the funding solution. Does this mean cities would have to have a bond of their own to cover the gap?
Furthermore, the RM4 language didn’t state specifically how much of the money would go to the truly affordable units. It would have funded units all the way up to 120% of the area median income (AMI) of the county, which in Santa Clara County is $221,150 per year for a family of four.
I mean, 120% AMI. Think about that.
Everybody would pay the tax for RM4, either directly or through their landlord if they rent. So you’d have people earning below the median income, paying to subsidize housing for people earning above the median income. In what crazy metaverse does that make any sense? Only in the State Assembly, apparently.
ON: So developers wouldn’t be as likely to build affordable units as they would market rate units?
LK: Most of the developers are going to be willing to build at the higher end. There would be hardly any units between 0% and 80% AMI.
If the governments want to have a bond, they should at least make sure it funds affordable units, for people that we need to support our communities, like electricians, gardeners, contractors, young teachers, nurses just starting out. These are often the newest homeowners, too.
The state and regional government always talk about affordable housing, but they have never clearly defined the affordable part.
ON: Are you saying you’re open to housing bonds if they are defined better?
LK: Bonds can be done right, but they don’t have to be so big. We have to look at how much they cost people, too.
The taxes needed to pay these bonds are another burden for property owners.
A lot of people are willing to do a little bit to help people who actually need affordability. But even when it comes to local bonds, I don't think a lot of us are willing to go that much into debt, to support people who are actually doing pretty well—the 120% AMI+, for example.
What BAHFA should have done instead was focus the whole thing on the absolute highest priority: fixing homelessness. But instead, they did the usual. They sprinkled money around to everybody who put their hand out. A lot of people can see through that.
ON: Are local governments more likely to get it right?
LK: Sure. Local governments know what is needed in their communities.
A big part of Sacramento’s problem is, the further away you get from a problem, the more abstract that problem gets. The less you see the real-world tradeoffs. And Sacramento is a long way from most of California geographically, and sometimes even further ideologically.
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