☆ UN-affordable housing: making things worse
The negative press on the $20 Billion Housing Tax in Regional Measure 4 (RM4) on this fall's ballot is valid, says Gregg Dieguez of 20billionreasons.com, but that press often overlooks an underlying, fatal flaw in the affordable housing market. An Opp Now exclusive.
Yes, there is much to question about a Housing Bond which will cost $48.3B in total debt service, yet yield only $16B in direct county proceeds for housing. At an average of $289K per new unit, what will be built are not Homes, but Subsidized Corporate Apartments, owned by wealthy investors who can benefit from: the 9% investment tax credit, depreciation writeoff, and subsidies of $289K per unit that this Bond would provide them. Importantly, this Bond would continue a trend to institutional ownership of housing, similar to the Mining and Mill towns of the 19th century.
Financial inequality is higher than at any time since the advent of the income tax in 1913. People cannot afford housing because they do not make enough money. They do not make enough money because their wages are too low. And their wages are too low because the profit motive has driven companies to utilize globalization, automation and immigration to off-shore work to cheaper labor markets; to automate jobs out of existence, and to suppress wages with cheaper workforce competition.
Per the Economic Policy Institute: "Wage stagnation for the vast majority was not created by abstract economic trends. Rather, wages were suppressed by policy choices made on behalf of those with the most income, wealth, and power. In the past few decades, the American economy generated lots of income and wealth that would have allowed substantial living standards gains for every family. The same is true looking forward: Overall income and wealth will continue to grow. The key economic policy question is whether we will adopt policies that enable everyone to participate in a shared prosperity, or whether the growth of income and wealth will continue to accrue excessively and disproportionately to the best-off 1 percent.".
The American middle class grew after World War II because of a combination of unionization and the growth in home ownership. Communities of color have spoken to the damage done to generational wealth by their inability to buy houses due to bank 'red - lining' loan practices. We have lost those pillars of middle class financial sustainability: decent wages and home equity.
The wave of cries for more affordable housing come from two sources. The obvious one is from people who cannot afford housing where they want to live. The more surprising demand is from wealthy investors: the real estate and financial services industries who profit immensely from so-called 'affordable housing' programs. These programs are not solving the real problem of wage and wealth inequality facing America; they are worsening it. And there are better alternatives.
It is no coincidence that the growth in income and wealth inequality in the US coincides with the growth of the tax incentives and so-called 'affordable housing' programs. The firms sponsoring those programs are not "non-profits", they are "Pass-Through Profiteers" funneling returns to wealthy investors via tax credits, government subsidies, depreciation write-offs, and royalties on rents. And, in part because of the undue influence of campaign contributions from investor and Real Estate interests to government officials, those programs persist today.
It is time to abandon this last vestige of failed "Trickle Down Economics", and stop giving the Wealthy extra returns to build more corporate rental apartments for the middle and lower earners. There is a growing recognition that we have created a nation of 'rent slaves'. UCLA co-authored the Vacancy Report in 2018 which showed that two thirds of residential property in Los Angeles is owned by investment interests. In recognition, Congress now has before it a Bill which would mandate that investor funds sell off all single-family homes over a ten-year-period.
Affordable Housing programs, and the RM4 Bond Tax, must be replaced by programs that provide equity ownership of housing for an aspiring middle class. There are new, emerging models of equity ownership to rebuild the middle class. One is the Joe Serna, Jr. Farmworker Housing Grant Program (FWHG), recently deployed in Half Moon Bay where workers holding a property for 20 years achieve ownership of the building (not the land). A return to post WWII low down payment, low interest rate loans and tax breaks for first-time home buyers would also help narrow the Wealth Gap. Perpetuating Parasitic Profiteering in "affordable housing" programs is both harmful to our society and perpetuates economic injustice. Whether the residences are condominiums, cooperatives, ADU's, or houses: There will be no equity in housing until RESIDENTS OWN EQUITY in their housing.
The RM4 Bond-Tax is not only wasteful, and furthers an Intergenerational Injustice, it will not solve the REAL problem of Income Inequality - in fact, it will continue to make things worse for the Middle Class who will be taxed to enrich the already wealthy.
by Gregg Dieguez, co-Founder of 20billionreasons.com and Vice Chair of the Midcoast Community Council, here expressing his own opinions.
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