Proposition 19: The Homelessness Machine
By a show of hands in the room (and by room, I mean the State of California), how many homeowners here over 55 intend to sell your house and purchase another one of equal value, taking advantage of maintaining your present tax base? (A handful of people in the room raise their hands)…By a show of hands, how many homeowners here over 55 intend to sell your house and purchase another one of equal value THREE times (and maintain your present tax base)? (One or two half-masts).
And that is because we all love to move, right? Especially in our 50’s, 60’s, 70,s and 80’s. 90-year-olds would especially love to move. Right? And now, Proposition 19 lets them move three times without a reassessment!
Who is Going to Use This?
Yet, this is what we got with Proposition 19. Homeowners over 55 already had the right to move once to a home of equal value and maintain their low property tax assessment under Proposition l3, but Proposition 19 allows them to do it three times instead of once. GREAT. Are they allowed to make a profit on the sale? NO.
By a show of hands, how many homeowners would like your children to inherit your property without facing prohibitive property tax hikes? (Every homeowner parent in the room raises their hand. And by room, I mean the State of California. Thousands? Probably millions)…By a show of hands, how many homeowners have children who can afford to pay $20,000-$30,000 in property taxes on their home every year? (A handful? A quarter? A third?)
So how did we lose this valuable property right in the last election? Proposition 19 has raised the number of times a homeowner over 55 can exchange their property for one of equal value and maintain their low tax rate under Proposition 13 from one time to three times. Proposition 19 took away our children’s right to maintain the tax base on property they inherit from their parents. They do get up to $1,000,000, though so long as they use the property as their primary residence.
By a show of hands, how many 40-, 50- and 60-year-olds want to move your families out of your home and into your parents’ home? (A handful, a quarter, a third?)…By a show of hands, how many 40-, 50- and 60-year-olds would use the property they inherit from their parents as additional income by offering it as a rental to the community? (More hands?)…By a show of hands, how many believe they can offer affordable rental housing to the community when they must pay $30,000 in property taxes? (Eyes look around). That is what I thought.
Finally, by a show of hands, how many California homeowners have had their property value increase to over $1,000,000? (Almost everyone in the room). What Proposition 19 took away was a valuable source of security to our children and the American ancestral home. The right for our children and/or grandchildren to inherit our property without facing prohibitive tax hikes, and gave us little, if anything, in return. There was no disclosure on the ballot that Prop 19 would have the effect of repealing Proposition 58!
Is your blood boiling? You are not alone. But it gets worse.
More and More Homelessness
For a state that purports to care so much about homelessness that it removed the right of Landlords to collect rent or evict tenants (no break on mortgages or property taxes though), Proposition 19 belies their feigned concern and guarantees more homelessness. Let’s take Venice, California for example. Yes, it has yuppies, but it also has long time blue collar black, white, red, yellow, brown (to name a few) Venice families who have owned their homes since the 70’s, 80’s and 90’s. Some even before. As everyone knows, these homes that were purchased for under $500,000 (many old-time families purchased their homes for under $70,000!) are now worth $2 Million to $3 Million. As anyone who does not live in a cave (or left the house during COVID) knows, Venice property values have skyrocketed to multimillion dollars. The $1,000,000 cap of Proposition 19 is not going to help the children of long time Venice locals. Too many people will lose their properties by way of tax liens. They are doomed to join the ranks of tent dwellers so ubiquitous in this part of the city.
Take, for example, Ernesto and his wife, Linda. Ernesto is a retired plumber who purchased his home on Vernon in 1976 for $64,000. He and his wife are retired, living comfortably on social security in their paid off home. Ernest and Linda have a son, Felix. Felix has learning disabilities and continues to live as an adult with his parents. The only thing between Felix and homelessness is his parent’s home. Why should we care about Felix? Because homelessness affects everyone. Under Proposition 19, Felix is doomed to the streets when his parents pass, as are most challenged persons living with their parents.
For many California families, the one thing between their children and homelessness is the multi-generational family home that is found in every community in Los Angeles. Proponents will argue that children can still benefit from the sale of their newly valuable home, but this homogenizes and gentrifies the community. Forcing the sale of the home is just not the answer for blue collar workers, service industry workers, mentally challenged people, and others. This argument fails to take into consideration how long the money received, after taxes, capital gains, etc. will sustain the child, places money above family values and creates homogenous gentrified communities.
Additionally, many people care a lot about their working-class children being able to inherit their home after the parents pass. Even without moving in, in an expensive state like California, these homes provide security to the working-class community who can offer them as affordable rental units until such time as they retire and move in. But not if the property taxes are $20,000. Then they must sell the property to rich people. Hey, I am not against rich people, but I am against homogeneity and homelessness. A balanced community is a healthy community.
Touting the benefits of Propositions 13 and 58 is unnecessary. The main thing is that it was taken away without giving much in return and because of the skyrocketing property values in California, Proposition 19 is going to cause many persons, who stood to continue living in their parents’ homes, to become homeless. Particularly in Venice and San Francisco where the homelessness problem is already so ubiquitous. Can these cities handle more? I think not.
California is a bellwether state that has often set the standard for the rest of the nation. Propositions 13 and 58 were no exception. Proposition 19 is a step backward by placing taxes above the fundamental value of affordable housing and the multi-generational family home. Because of the particularly high increase of property values in this era, there will be an unprecedented loss of family homes and increase in homelessness. No more can someone say “My Grandfather built this house” unless he or she makes over $200,000 per year. This erodes the community and societal fabric on a fundamental level.
Take, for example, John and Janet. John is a building contractor who built his own house in Culver City. His wife and kids helped build the house. They grew up in the house and it contains many special details hand hewn by John. The sentimental value of the house and everything it stands for has roots in the very concept of what it means to be human and the concept of “home.” Well of course, when John and Janet pass, the property taxes will go from $6,000 per year to about $25,000. The family home will be lost, unless one of the kids wants to move in and earns higher than average six figures.
With earning higher than average six figures in mind, back to homelessness. It’s no secret that in the current market, only high earning persons / couples can buy a home in California, and if they divorce, one party cannot maintain it. Therefore, only the wealthy will be homeowners. What is going to happen to the service industry workers? The middle income and minimum wage workers whose parents own homes long paid off? They have the opportunity for some comfort and security. But not with Proposition 19. Unless the home is worth $1,000,000 or less, chances are they cannot afford to keep it. Many of these people will end up in the streets or on Section 8 vouchers.
Proposition 19 is bad planning and should be repealed. We gave up a valuable property right for something hardly anyone will use. Homeowners need to bring back the protections of Propositions 13 and 58 and diligently protect them. Whether this be done by repealing or by a new proposition, I leave to you.
Proponents that unwittingly supported Proposition 19 did so on the basis that it is expected to generate more money for the State. But is that fundamentally what the citizens need over and above housing, security, and income? California is the land of Silicon Valley, Hollywood, Tourism and Theme parks, as well as the San Joaquin Valley, which feeds a third of the world (to name a few HUGE tax generating machines)…. not to mention the highest income per capita in the union.
Did we really need to take this benefit away from the middle class? And with all the huge tax generating machines, are we getting more benefits from the government in proportion to what we gave up? Are they benefits we want or need? I do not know these answers, but I do know that Proposition 19 was a dirty trick.
Jenifer Anisman, Esq. is an attorney at the Law Firm of Harold Greenberg in Los Angeles. You can reach Jenifer at Jenifer@hglaw.pro or via telephone at (323) 732-9536.