Angelenos wonder: Have we been ripped off?

By Reiss Becker
June 11, 2019

Rapper Biggie Smalls said it best: “Mo Money” means “Mo Problems.” For proof, consider that Californians have generously contributed billions of dollars to solve the problem of homelessness – and the situation has only deteriorated.

In 2016, Los Angeles voters approved Proposition HHH, taxing themselves in order to house the homeless. Supporters recently trumpeted their success – the construction of 10,000 new units to house 20,000 people. That was supposed to be the good news. But dig a bit deeper in their report and we learn that the cost of those 10,000 units was $619 million — or $31,000 per person per year. And there was worse news: an LA County report reveals that, at the same time, homelessness in Los Angeles jumped 16% to almost 59,000 people – a number roughly equivalent to the population of the city of Arcadia. Three years after they approved Proposition HHH, Angelenos rightly wonder, “Have [we] been ripped off?

To answer that, let’s look at a recent public housing development in Culver City. A classic example of extravagant government spending, Tilden Terrace Apartments is a chic, stylish apartment building with amenities that include a sushi restaurant where you can buy rainbow rolls at 15 bucks a pop, a yoga studio specifically tailored to children (how could the children do without yoga?), and a luxury coffee bar. According to Reason magazine, “the $739,000 per-unit price tag is not only higher than in Texas, where affordable housing units cost $126,000 on average, it’s nearly double the median cost of $326,000 in California.”

Unfortunately, Tilden Terrace is but one example of the taxpayer funded indulgence and inefficiency of government housing initiatives. What’s needed is not higher taxation, which only raises the cost of living in an already expensive state. No, what’s needed is less government.

California leads the nation in one of the least impressive metrics– cost of housing construction. And when it comes to why that is, all roads lead to regulation. We have local zoning laws that prohibit high-density construction, rent-control laws that disincentivize development, regulations designed to protect historic neighborhoods, and sundry other factors that impede new growth. To make housing more affordable, Californians must reduce the economic drag of these policies.

Worse still, anti-development initiatives like these rarely stay confined to one locale. They spread into neighboring cities and ultimately increase the cost of housing in entire regions. “In order to avoid taking on all of the region’s new development, cities tend to adopt similar regulatory patterns as their neighbors,” says Kristoffer Jackson, a financial economist at the Treasury Department.

State lawmakers play a bigger role in the manufacture of homelessness. For example, California developers almost invariably confront California’s notorious California Environmental Quality Act, or CEQA. Designed to protect the environment, CEQA has become weaponized, breeding litigation that can delay construction projects of all sorts for “anywhere from three months to five years,” according to UCLA’s Terry Rivasplata.

The failure of Proposition HHH exposes an inherent, underpublicized weakness of such initiatives: government simply cannot solve all our problems. And when it comes to homelessness, politicians have proved incapable of solving any problems. In part, of course, that’s because the problem of homelessness is what social scientists call “over-determined” — that is, caused by multiple factors. Deregulating California’s overregulated housing market isn’t a silver bullet, but it’s a start.

 *   *   *

Reiss Becker is a student at Duke University. He is a research intern for the California Policy Center.

MORE GREAT ARTICLES