Homelessness
California’s Property Tax Loophole makes our Homeless Crisis Worse
California has 151,000 residents currently experiencing homelessness - the largest unhoused population in the country. As this number continues to skyrocket, homelessness services are woefully lacking. Meanwhile, the federal government is not providing the stable and long term support California needs to tackle this crisis humanely.
The corporate property tax loophole, established in the 1970s, has starved California’s local governments of funding that would provide necessary support services for those experiencing homelessness.
California has 12% of the overall U.S. population, but about 25% of the nation’s homeless population. This crisis is largely due to a lack of affordable housing, but the issue is compounded by a lack of job training and supportive services to treat mental illness, substance abuse, and domestic violence.
Closing the Corporate Loophole Provides Critical Local Funding
Local governments are largely responsible for providing assistance to people experiencing homelessness. Local governments are best equipped to implement homeless services within their communities, rather than the state or federal government, but funding remains completely inadequate to bring about systematic change.
Our current public health crisis will make it even more difficult for local governments to provide funding for current homeless services. Closing the corporate loophole will fill a critical void in providing long term and stable funding, so that local governments can establish the programs necessary to ensure lasting change.
Photo by Sergio Ruiz for SPUR
Affordable Housing
Housing is unaffordable for too many. The median rent for a two-bedroom apartment is $2,400. Less than a third of Californians can afford a median-priced home and the situation is worse in some areas – less than a quarter can in San Francisco.
A portion of the $12 billion a year of revenue generated by closing the corporate loophole will be delegated to affordable housing projects. Stable affordable housing protects vulnerable families and individuals from becoming homeless, assists those currently experiencing homelessness, and allows chronically homeless persons to get the necessary support to find more permanent shelter.
Closing the corporate loophole will lead to construction of more affordable housing.
Large numbers of commercial properties, especially in urban areas and nearby suburbs – properties with tremendous potential for beneficial development – are currently empty lots, parking lots, gas stations, strip malls, big box retail, warehouses, or underutilized in other ways. The current commercial property tax system incentivizes these uses with
low property taxes, allowing property owners to hold their land for speculative prices and thereby inflating land values.
Closing the corporate loophole will encourage the development or sale of this underutilized commercial land by raising property taxes and making it more costly to do nothing with the land. More housing overall will help to alleviate some price pressure on housing, yet a sufficient supply of housing to meet the needs of low-income and very low-income people will require significant, targeted investment in affordable housing production.
Increasing the amount of land available and decreasing speculation by land owners will help lower land prices. Given that land is a significant component of the cost of developing housing (as are impact fees, as described above), lower land prices make it more feasible for affordable housing developers to build housing with lower rents or sale prices. Lower land prices also give cities and affordable housing developers more opportunities to purchase land in order to construct affordable housing for low-income families.