There’s nothing angelic about Los Angeles in 2023

Earlier this month, I went on one of my regular visits to Los Angeles, where I have family, to celebrate my granddaughter’s third birthday. I decided to give the Grammys a miss!!

The birthday party was terrific with all the kids eating their pizzas in West Hollywood Park, watching that great movie “Madagascar”.

However, there is a darker side to Los Angeles. On travelling in the city, one cannot help but notice the significant amount of homelessness. It is nothing short of an outrage to see lines of tented shelters in the City of Angels.

In her recent diary column in The Spectator, Dame Joan Collins stated that these areas resembled shanty towns that one would not expect to see in California; in my view not exactly the American Dream.

Having worked in the US, I have always believed that what happens there eventually reaches our shores, so one should know how the City of Los Angeles is dealing with this problem.

I recall seeing Karen Bass on TV soon after she was elected mayor stating that homelessness and the lack of affordable housing were her number one priority.

The answer appears to be Measure ULA, now known as the Homelessness & Housing Solutions Tax. Locals call it the “Mansion Tax.” Not quite what Ed Balls had in mind when he was shadow chancellor.

It needed a public vote to bring it into law and it was passed with 887,642 people voting by 58% to 42%. It will allow the city council to levy a transfer tax on both commercial and residential property on sales from $5m, from 1 April 2023. Ed Balls intended to levy a tax on residential property above a certain level even if it was not sold. This is not the case in Los Angeles.

Tax is already levied by the city council and county at the rate of 0.56%, but from 1 April, the city council will be allowed to levy an additional 4% for properties from $5m and an additional 5.5% from $10m. This is not incremental, so from $10m one pays 5.5% on the entire amount. The Act entitles the threshold to be adjusted for inflation according to the Consumer Price Index. The monies raised will be used to alleviate homelessness and to boost social housing in Los Angeles as well as homelessness prevention measures in the form of rent relief, income support for rent burdened pensioners and legal counsel for tenants facing eviction.

Certain categories are excluded such as government agencies, not for profits/charities and community land trusts, but in its first full year the city is hoping to raise close to $1bn. There will be an oversight committee as to how the monies are spent.

We are all aware that the public sector can be notoriously bureaucratic. Securing appropriate sites and negotiating terms can take months and what with planning, construction etc, I cannot see this tax having much effect for three or four years in building social housing, but it could have an early effect on the other issues mentioned.

We do, of course, have stamp duty, but this goes straight to the Exchequer and is used for general government expenditure.

However, our own key workers are again coming under pressure with the lack of affordable housing and this is going to affect all of us particularly in the inner cities. In addition, homelessness is notably on the increase, as I saw on the Strand in London only this week.

It is common ground that the Mayor of London has not delivered on the scale of affordable housing required and appears to be more concerned with expanding the Ultra Low Emission Zone than solving the social housing crisis.

I cannot see anything like Measure ULA being enacted while a Conservative government is in office. However, if a Labour government is elected in 2024/2025, then in my view city mayors would get a much more sympathetic hearing. The real estate industry was penalised rather than helped during the Covid era, so in my view property ownership above a certain level of value could be a sitting duck.

As a matter of interest, Santa Monica has just enacted a similar measure but with an additional tax of 5.75% on properties sold from $8m.

I am not normally a Labour voter but if Measure ULA is seen to work, then in all good conscience, should we really oppose an opportunity to get many of the homeless off the street and our key workers housed should it be enacted here?