This fall, California voters may have the opportunity to amend Proposition 13, one of the most regressive tax laws in the country. The 1978 initiative essentially freezes the assessed value of real estate at the time of sale—inevitably establishing and perpetuating wild inequities between the young and old, renters and landlords, immigrants and incumbents. How can California’s political “third rail” be reformed, albeit incrementally, with lasting, sustainable progress? There are several ways.
Evolve California is currently gathering signatures to place a measure on the 2018 ballot to allow re-assessments of commercial aka business properties—a move that could generate ~$10 billion a year for health care, education and other badly need investments in California society.
Another significant contributor to inequality, segregation, and the housing crisis stands unchallenged in 2018.
Article 34 of the California Constitution, enacted by voters in 1950, states that no cities, towns or counties may ”develop, construct or acquire” any “low-rent” housing “unless approved by a majority of qualified electors of the city, town or county” at the ballot box. Practically, this means our local governments and representatives are prevented from directly providing the homes struggling Californians need so direly today.
Article 34’s proponents intended to control the development of large, federally-funded public housing tower projects. The law also restricts local governments from efficiently building even mid-rise public housing or subsidizing low-income housing. A mid-century, single-story city building, or even a vacant lot, could become a five-story building with affordable rents and public services on the ground floor. Alas, we can’t really have that without an expensive ballot referendum and subsequent approval by a majority (or supermajority) of voters.
Moreover, the referendum process makes the provision of publicly-owned housing intractably slow. In California, prudent politicians tend refrain from placing affordable housing bonds on the ballot until they absolutely know the measure can win a supermajority of voters. When municipal coffers fill up with tax revenue or development fees, cities cannot use it to invest in modern mid-rise public housing directly, absent an expensive and risky Article 34-triggered election.
The crux of the issue is this: California’s landowners have become vastly more wealthy and powerful, by government fiat, at the expense of renters. This inequality is unsustainable. Homeowners receive exponentially more in public subsidies, and Proposition 13 tax rates disproportionately reward greater wealth and “incumbency” of property owners, but renters ultimately foot their landlords’ property tax bill. Not only do renters get little to no relief from this regressive system—because of Article 34, they are essentially forced to beg localized pockets of voters for the direct public provision of badly-needed affordable housing. Property owners, on the other hand, do not have to ask for their Mortgage Interest Deduction through a popular referendum every time they claim it.
Say it with me: public housing already exists. It exists largely not as shelter for the neediest, but as vestiges of historic inequality that abstractly, disproportionately rewards legacy homebuyers with secure asset wealth.
There have been concerted efforts to overturn this unfair system for almost as long as we’ve had it. Former Assembly Speaker Willie Brown led two unsuccessful efforts to repeal Article 34 in the ‘70s and ‘80s. The most recent effort, in 1992, was defeated before an entire generation of eligible voters was born, so the current electorate may feel differently about our status quo.
Perhaps its time has finally come.
Since 1950, California courts have whittled down Article 34’s power, and some cities work around the law by delegating the job of affordable housing construction to privately-run nonprofits. But given the severity and depth of our affordable housing shortage, California cannot afford more roadblocks to directly providing publicly-owned affordable housing.
To state the obvious, Article 34 also maintains racial and economic segregation. Requiring voter approval for the development of publicly-funded affordable rental housing means that racially and economically homogenous communities can effectively veto integration. The electorates of San Francisco, Oakland and Berkeley have consistently voted to approve low-income housing placed on the ballot at regular intervals. Compare the generosity of those voters to, say, communities in Marin County or Palo Alto—I can guarantee that the results will not surprise you.
Governing by popular referendum may sound ideal, but California’s experience with direct governance over the last 107 years has demonstrated that local pluralities of voters can sometimes succumb to fear, uncertainty, and outright animus towards marginalized groups.
If you think this is all ancient history, think again: in 1994, nearly 59% of California voters approved of Proposition 187, designed to bar undocumented people from accessing public services like health care and education, prior to it being ruled unconstitutional by the courts. More recently, California voters repudiated marriage equality by approving Proposition 8 in 2008, only for it also to be overturned by jurists. In 2016, California voters brought back the death penalty.
Occasionally, the state’s voters have been unwise enough to approve unconstitutional legislation, and federal courts have found such laws especially offensive when they discriminate against political minorities in the exercise of civil rights or use of public programs, as was the case with Prop 187. Unfortunately, the United States Supreme Court found no such violation by Article 34 of equal protection under the 14th Amendment in James v. Valtierra (1971).
Renters from Santa Clara and San Mateo counties sought to have Article 34 invalidated on the basis of racial and wealth discrimination. Instead, Justice Hugo Black, writing for the 6-3 majority found such mandatory referendums on low-rent and public housing to indicate a “devotion to democracy, not to bias, discrimination, or prejudice.” (If only!)
Article 34 of the California Constitution, much like the general political aversion to subsidized housing, is explicitly rooted in prejudice against poor people, people of color, and immigrants writ large. The history is stark and ugly, and it is high time for California to face it head-on. That history, as it unfolded in Oakland, will be the subject of Part 2 in this series.