LA’s Housing Market and China

Grind for February 8th
“The only Zen you can find on the tops of mountains is the Zen you bring up there.” – Robert M. Pirsig

Deja Vu

The Headline

China’s response to the coronavirus isn’t what we thought

The Grind

Eight Chinese doctors were arrested in December after attempting to notify the public of what they believed to be cases of SARS using the social media network WeChat.

Days later, Chinese authorities confirmed they had ‘taken legal measures’ against the doctors for ‘spreading rumors.’

When the coronavirus was officially reported on December 31st, authorities threatened to punish anyone caught spreading “rumors” about the virus or sharing foreign news articles about the outbreak.

Employees working at train stations and airports were told not to wear face masks so as not to alarm passengers. On social media, posts by users whose relatives had died from the coronavirus were deleted.

Entire cities were put on lock down with little-to-no advance notice. Many patients were turned away by hospitals, and those who died were cremated immediately after death.

The Details

Reports suggest China significantly downplayed the severity of the outbreak in Wuhan for up to one month, including the false claim that no new cases were detected between January 3rd and 16th. Authorities have also been accused of claiming the disease was not contagious despite proof of human-to-human transmission at medical facilities.

By January 28th, the coronavirus had spread to every inhabited content and caused over 100 deaths. On January 30th, the World Health Organization declared the coronavirus a “global health emergency.”

To date, the virus has killed 427 people and infected more than 20,000 worldwide.

The outbreak is reminiscent of SARS, a highly contagious coronavirus that killed nearly 800 people in 2002-2003 after originating in China.

China’s poor handling of the SARS pandemic, including under-reporting, is widely believed to have facilitated the spread of the disease. And while China was initially lauded for its quick and transparent response to the novel coronavirus, it seems the country hasn’t made as much progress as we had hoped.


The Headline

In Los Angeles, city officials are trying to force landlords to sell property

The Grind

As part of a strategy to keep rents affordable in Los Angeles, City Councilman Gil Cedillo is trying to force landlord Thomas Botz to sell his 124-unit apartment building.

“We will use all of the resources of the city, both legal and fiscal, to protect these tenants,” argues Cedillo. “The city is in crisis…with respect to housing and affordability.”

The building, known as Hillside Villa, was constructed in 1986 using nearly $5.5 million in loans from the city. In exchange, developers promised to keep rents at affordable prices for the next 30 years. That agreement expired in 2018.

“If the city goes and expropriates buildings from private developers like us, who have made their 30-year deal…just to have the building taken away at the end, no private developer would build another unit of housing in cooperation with the city of LA ever again,” argues Botz, who rejected a proposal from Cedillo last year.

The Details

Now, Cedillo hopes to acquire the building using the LA Board of Public Works’ power of eminent domain.

The Board of Public Works has long used eminent domain to buy private property for public infrastructure projects such as schools, bridges, and fire stations. The city’s housing department lacks this authority, however, and Cedillo will need to prove that he can legally force Mr. Botz to sell Hillside Villa to preserve affordable rent.

If he succeeds, the city will need to pay fair market value for the building – a price that could take years in court to determine.

If Cedillo fails to obtain Hillside Villa, tenants will face rent increases of up to 50% later this year. In at least one unit, monthly rent is expected to jump from $889 to $2,500.

Cedillo has broad support from tenant rights groups, who insist the acquisition of existing buildings is a better way to prevent homelessness than building affordable housing from scratch.

The Takeaway

Housing and homelessness are real problems in California, but forcing landowners to sell their apartment buildings is not the answer, nor is it legal.

Cedillo’s proposal is actual socialism: the forced sale of private property to a city for the city’s own purposes.

This is not the same thing as eminent domain, wherein land is purchased for projects in the public right of way, but an attempt to compete with private industry. If Cedillo is successful, we can expect the city to establish a price advantage for the next forced sale, and the next, until the city eventually takes whatever property it wants without paying landlords a dime.

Did you know… The onion is named after the Latin word ‘unio’ meaning large pearl.