Jessie Lopez, the young Santa Ana councilwoman, wants to impose a special tax on vacant commercial properties, stemming from the myopic belief that the way to spur development is to punish property owners.
This is economic policy equivalent of the old saw, “The beatings will continue until morale improves.”
Lopez is a left-wing activist who won narrowly won a three-way electoral split in 2020 to represent Santa Ana’s most conservative ward.
Supporters of such “vacancy taxes” proffer a slew of rationales, such as poking negligent property owners to clean up blighted properties or develop more housing.
But Santa Ana, like any other municipality can deal with negligent owners of blighted properties through robust code enforcement efforts.
As for claims that taxing vacant properties will spur their development, how about this: reform the regulatory and tax environment so housing can be developed faster and cheaper. There’s a reason the same house costs half as much to build in Texas as in California – a regulatory environment that encourages rather than punishes housing providers.
In 2020, prior to the capture of the city council by a youthful left-wing majority, the city reduced the in-lieu fee imposed on housing developments from $15 to $5 per square foot. Prior to that reduction, housing development was at a standstill because the high cost of building means developers invest their capital and time in more welcoming markets.
That enlightened policy making spurred housing development and generated millions for the city’s affordable housing fund.
Unfortunately, Lopez and her progressive colleagues, eschewing reality in favor of ideology, not only raised the in-lieu fee back to $15 per square foot, but tacked on a requirement for builders to use union (i.e. more expensive) labor.
So, the same councilmember who thinks the way to encourage housing development is by making it more expensive to develop, now proposes bludgeoning property owners into economic activity with a tax mallet.
How about an approach that actually works: city hall reforms enabling developers to spend less time and money developing, which will lead to more housing at a lower cost. It’s ain’t rocket science.
The reality is progressive-Left activists like Councilwoman Lopez inhabit cartoonish ideological mindscapes in which business people, developers and property owners are greedy exploiters who enrich themselves at the expense of the poor and therefore must be subjected to punitive taxes for the good of society.
There’s certainly nothing rationale or productive or thoughtful or prudent about Lopez’ proposal.
Staff has been directed to come back with various formulations of a vacancy tax for council consideration. Hopefully, common sense will guide the votes of at least four councilmember and usher this bad idea into well-deserved oblivion – and then address the issue of vacant properties from the standpoint of respect for property rights, markets and human creativity.